Company Name : NGK INSULATORS, LTD. Stock Exchange Listings : Tokyo and Nagoya Listing Code : 5333
URL : http://www.ngk.co.jp/english/ Representative : President Taku Oshima (Mr.)
Contact : General Manager Finance & Accounting Department Hideaki Shindo (Mr.)
(TEL) +81-52-872-7230
Date of the Filing of Securities Report "Shihanki Hokokusho" (Scheduled) : February 3, 2017 Date of Dividend Payment (Scheduled) : ー
Availability of supplementary explanatory materials prepared for financial results : None Briefing session on financial results to be held : None
January 31, 2017
(All yen amounts are rounded down to the nearest million.)
Consolidated financial results for the nine months ended December 31, 2016 (from April 1, 2016 to December 31,2016)
(Note) Comprehensive Income
: Nine months ended December 31, 2016
40,006million yen
11.0 %
: Nine months ended December 31, 2015
36,054million yen
(47.0)%
Consolidated operating results (Percentage figures represent increase (decrease) from previous period.)
Net Sales
Operating Income
Ordinary Income
Profit attributable to owners of parent
Nine months ended December 31, 2016
Millions of yen
%
Millions of yen
%
Millions of yen
%
Millions of yen
%
293,345
(5.5)
49,834
(18.1)
49,544
(18.7)
34,754
(10.7)
Nine months ended December 31, 2015
310,306
14.7
60,864
40.6
60,907
43.4
38,898
8.7
Profit per share
Diluted profit per share
Nine months ended December 31, 2016
Nine months ended December 31, 2015
Yen
107.56
119.13
Yen
107.38
118.90
Consolidated financial position
Total assets
Total net assets
Ratio of net worth to total assets
December 31, 2016
Millions of yen
Millions of yen
%
735,118
433,742
57.5
March 31, 2016
711,897
417,972
57.1
(Reference) Net worth : As of December 31, 2016, 422,619million yen
: As of March 31, 2016, 406,743 million yen
Dividend payment
Cash dividends per share
First quarter-end
Second quarter-end
Third quarter-end
Year-end
Total (Full-year)
Year ended March 31, 2016
Yen
Yen
Yen
Yen
Yen
-
18.00
-
20.00
38.00
Year ending March 31, 2017
-
20.00
-
Year ending March 31, 2017 (forecast)
20.00
40.00
(Note) Revision of cash dividend forecast during this period :None
Forecasts of consolidated financial results for the fiscal year ending March 31, 2017
(Percentage figures represent increase (decrease) from previous period.)
Net Sales
Operating Income
Ordinary Income
Profit attributable to owners of parent
Profit per share
Year ending March 31, 2017
Millions of yen
400,000
%
(8.2)
Millions of yen
63,000
%
(22.1)
Millions of yen
64,000
%
(21.5)
Millions of yen
35,000
%
(34.4)
Yen
108.44
(Note) Revision of forecasts of consolidated financial results during this period :Yes
Notes
Significant changes in subsidiaries during this period (changes in specified subsidiaries, "tokutei kogaisha" defined in the "Cabinet Office Ordinance on Disclosure of Corporate Information, etc.", involving a change of the scope of consolidation during this period) : None New ― company ( ) , Exclusion ― company ( )
Application of special accounting methods for preparing quarterly consolidated financial statements : None
Changes in accounting policies, accounting estimates or retrospective restatements
Changes due to revisions of accounting standards : None
Changes in accounting policies other than the above (i) : None
Changes in accounting estimates : None
Retrospective restatement : None
December 31,
2016
327,560,196 shares
March 31,
2016
327,560,196 shares
December 31,
2016
5,945,107 shares
March 31,
2016
981,389 shares
December 31,
2016
323,100,875 shares
December 31,
2015
326,535,436 shares
Number of shares outstanding (Common Shares)
Number of shares outstanding at period end including treasury stocks
Number of treasury stocks at period end
Average number of shares outstanding over period
Presentation regarding the implementation status of review procedures
These financial statements are outside the scope of review procedures in accordance with the Financial Instruments and Exchange Law of Japan. At the time of disclosure of this report, the review procedures of the consolidated financial statements in accordance with the Financial Instruments and Exchange Law of Japan are in progress.
Explanation of appropriate use of results forecasts and other notes
This document contains forward-looking statements that are based on information and certain assumption NGK INSULATORS, LTD. ("NGK") has acquired and deemed reasonable as of the time of the release and NGK does not guarantee the achievement of them. Actual future results and trends may differ materially from those in the forecasts due to a variety of factors.
Contents of Appendix 1. Qualitative Information on Quarterly Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 2(1) Explanation of Business Results ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 2
(2) Explanation of Financial Position ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 2
(3) Explanation of Forward-looking Statements including Forecasts for Consolidated Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 3
2. Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4(1) Consolidated Balance Sheet ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4
(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ・・ 6
Consolidated Statement of Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 6
Consolidated Statement of Comprehensive Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7
(3) Notes to Consolidated Financial Statements ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Changes in accounting policy) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Additional information) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Note on the assumption as a going concern) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Significant changes in stockholder's equity)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Consolidated Balance Sheet) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9
(Segment information)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9
1. Qualitative Information on Quarterly Financial Statements-
Explanation of Business Results
During the nine months ended December 31, 2016, the Japanese economy remained on a moderate recovery course underpinned by improvements in the employment and income environment, despite some signs of weakness. Among overseas economies, developed economies, such as the U.S. and Europe, were robust, while China and other emerging countries experienced a slowdown in economic growth.
The NGK Group saw sluggish performance in the Power Business Segment due to a decrease in overseas shipments of insulators and a lack of large shipments of NAS® (sodium-sulfur) batteries. In the Ceramics Business Segment, demand for automotive ceramics increased due to factors including favorable sales of passenger cars in the U.S. and European markets, in addition to an increase in small passenger car sales in response to tax reduction measures and an increase in truck sales in response to strict controls on overloaded vehicles in China. In the Electronics Business Segment, demand for ceramic components for semiconductor manufacturing equipment grew against the backdrop of increased capital investment by semiconductor manufacturers on 3D-NAND flash memories and semiconductor foundries, while demand for ceramic packages was sluggish with its recovery delayed.
As a result of the above, combined with the impact of the stronger yen compared to the previous year, consolidated net sales for the nine months ended December 31, 2016 decreased by 5.5% year on year to
¥293,345 million. In terms of earnings, as a result of decreased net sales among other factors, operating income decreased by 18.1% year on year to ¥49,834 million and ordinary income decreased by 18.7% to
¥49,544 million. Profit attributable to owners of parent decreased by 10.7% to ¥34,754 million.
By segment, the Power Business Segment posted ¥39,643 million in net sales, a decrease of 19.6% year on year, and an operating loss of ¥3,595 million, compared to an operating income of ¥694 million in the same period of the previous year. In the Ceramics Business Segment, net sales decreased by 2.6% year on year to
¥179,391 million and operating income decreased by 6.0% year on year to ¥49,916 million. In the Electronics Business Segment, net sales decreased by 3.2% year on year to ¥74,523 million and operating income decreased by 49.9% year on year to ¥3,541 million.
-
Explanation of Financial Position
As of December 31, 2016, total assets were ¥735,118 million, a increase of ¥23,221 million from the previous fiscal year-end. This was mainly due to increases in cash and bank deposits, inventories and tangible assets despite decreases in notes and accounts receivable trade and securities.
Total liabilities increased by ¥7,451 million from the previous fiscal year-end to ¥301,376 million.
Total net assets stood at ¥433,742 million, or ¥15,769 million higher than the previous fiscal year-end, due to increases in retained earnings and unrealized gain on available-for-sale securities.
- Explanation of Forward-looking Statements including Forecasts for Consolidated Financial Statements
Nine months ended December 31, 2016 ( from April 1, 2016 to December 31, 2016 )
(Millions of yen)
Business Segment
Elimination or Adjustment
Consolidated
Power
Ceramics
Electronics
Total
Sales
39,629
179,192
74,523
293,345
-
293,345
Sales to customers
Intersegment sales
14
198
-
212
(212)
-
Total sales
39,643
179,391
74,523
293,558
(212)
293,345
Operating income(loss)
(3,595)
49,916
3,541
49,862
(27)
49,834
Nine months ended December 31, 2015 ( from April 1, 2015 to December 31, 2015 )
Regarding forecasts related to consolidated financial statements, net sales, operating income, ordinary income, and profit attributable to owners of parent are all expected to exceed previous forecasts due to factors including a weak yen, as well as increased demand for automotive ceramics in the Ceramics Business Segment and ceramic components for semiconductor manufacturing equipment in the Electronics Business Segment. Accordingly, the financial results forecasts for the full year ending March 31, 2017 have been revised.
For details, please refer to " Notice Regarding Revisions to the financial results forecasts for the full year ending March 31, 2017" that has been released today, January 31, 2017.
2.Consolidated Financial Statements (1)Consolidated Balance Sheet(Millions of yen)
As of December 31, 2016
As of March 31, 2016
AssetsCurrent assets
Cash and bank deposits 134,141 97,481
Notes and accounts receivable trade 82,062 102,575
Securities 51,642 72,503
Inventories 123,634 108,945
Other 28,169 31,654
Allowance for doubtful accounts (645) (826)
Total current assets 419,004 412,333 Non-current assets
Tangible assets
Buildings and structures | 68,143 | 62,252 |
Machinery and vehicles | 94,837 | 86,606 |
Other | 60,017 | 56,135 |
Total tangible assets | 222,999 | 204,993 |
Intangible assets | 2,876 | 3,019 |
Investments and other assets | ||
Investment securities | 75,769 | 78,675 |
Other | 14,624 | 13,049 |
Allowance for doubtful accounts | (154) | (174) |
Total investments and other assets | 90,238 | 91,550 |
Total non-current assets | 316,114 | 299,563 |
Total assets | 735,118 | 711,897 |
(Millions of yen)
As of December 31, 2016
As of March 31, 2016
Current liabilities
LiabilitiesNotes and accounts payable trade | 35,619 | 36,052 |
Short-term borrowings | 5,453 | 4,549 |
Current portion of long-term borrowings | 6,923 | 20,242 |
Income taxes payable | 4,143 | 7,137 |
Provision for NAS battery safety measures | 4,107 | 5,405 |
Provision for loss related to competition law | 3,916 | 4,307 |
Other | 36,383 | 34,767 |
Total current liabilities | 96,548 | 112,463 |
Long-term liabilities | ||
Long-term borrowings | 158,676 | 139,180 |
Net defined benefit liability | 22,131 | 21,418 |
Other | 24,020 | 20,861 |
Total long-term liabilities | 204,828 | 181,461 |
Total liabilities | 301,376 | 293,924 |
Net assets | ||
Shareholders' equity | ||
Common stock | 69,849 | 69,849 |
Capital surplus | 72,082 | 72,092 |
Retained earnings | 288,371 | 266,580 |
Treasury stock | (12,469) | (1,363) |
Total shareholders' equity | 417,832 | 407,158 |
Accumulated other comprehensive income
Unrealized gain on available -for-sale
securities 27,537 20,832
Deferred loss on derivatives under hedge
accounting | ||
Foreign currency translation adjustments | (8,918) | (5,888) |
Defined retirement benefits plans | (13,762) | (15,358) |
Total accumulated other comprehensive income | 4,786 | (414) |
Stock acquisition rights | 934 | 875 |
Non-controlling interests | 10,188 | 10,352 |
Total net assets | 433,742 | 417,972 |
Total liabilities and net assets | 735,118 | 711,897 |
(70) -
(2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of Income(Millions of yen)
Nine months ended
December 31, 2016
Nine months ended
December 31, 2015
Net sales 293,345 310,306Cost of sales 195,835 200,750
Gross profit 97,510 109,555Selling, general and administrative expenses 47,675 48,690
Operating income 49,834 60,864Non-operating income
Interest income 344 517
Dividend income 1,274 1,487
Foreign exchange gain 882 ー
Other 913 2,490
Total non-operating income 3,415 4,495 Non-operating expenses
Interest expense 1,532 1,474
Equity in loss of unconsolidated subsidiaries
and associated companies 2281,094
Foreign exchange loss ー 1,508 Loss on valuation of derivatives 1,567 ー
Other 377 375
Total non-operating expense 3,705 4,452
Ordinary income 49,544 60,907Extraordinary income
Gain on sales of fixed assets 185 38
Gain on sales of investment securities 1,793 453
Subsidy income ー 153
Total extraordinary income 1,979 644
Extraordinary loss
Loss on sales and disposals of fixed assets 192 174
Impairment loss 3,228 ー
Provision of reserve for loss related to
competition law 1,0626,097
Total extraordinary loss 4,483 6,271
Income before income taxes and non-controlling interests | 47,041 | 55,280 |
Income taxes -current | 10,791 | 13,961 |
Income taxes -deferred | 1,407 | 2,167 |
Income taxes - total | 12,199 | 16,129 |
Profit | 34,841 | 39,151 |
Profit attributable to non-controlling interests | 86 | 252 |
Profit attributable to owners of parent | 34,754 | 38,898 |
(Millions of yen)
Nine months ended December 31,
2016
Nine months ended December 31,
2015
Profit 34,841 39,151Other comprehensive income
Unrealized gain(loss) on available-for-sale securities 6,730 (66)
Deferred loss on derivatives under hedge accounting (71) (7)
Foreign currency translation adjustments (2,633) (3,521)
Defined retirement benefit plans 1,524 426
Share of other comprehensive (loss) income of associates
accounted for by using the equity method | ||
Total other comprehensive income | 5,165 | (3,096) |
Comprehensive Income | 40,006 | 36,054 |
Comprehensive Income attributable to: | ||
Owners of parent | 39,955 | 35,896 |
Non-controlling interests | 51 | 157 |
(383) 73
(3) Notes to Consolidated Financial Statements (Changes in accounting policy)Not applicable
(Additional information)(Adoption of "Implementation Guidance on Recoverability of Deferred Tax Assets")
Effective from the first quarter of fiscal 2016, NGK adopted the "Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No. 26, March 28, 2016).
(Filing of action for the revocation of correction
and risk of receiving correction for the subsequent fiscal years based on transfer pricing taxation)
With respect to transactions between NGK and its two overseas subsidiaries from the fiscal year ended March 31, 2006 through the fiscal year ended March 31, 2010, NGK received a correction based on transfer pricing taxation issued by the Nagoya Regional Taxation Bureau in March 2012, and NGK made a payment of approximately ¥7.9 billion in tax penalties including local taxes, while filing a complaint. With respect to approximately ¥1.7 billion of the aforementioned tax penalties concerning the transactions with a U.S. subsidiary, NGK received approximately ¥1.4 billion refund in total in Japan and the U.S. upon agreement under a Japan-
U.S. Mutual Agreement, which has been reflected in the financial results for the year ended March 31, 2014.
On the other hand, with respect to the remaining tax penalties of approximately ¥6.2 billion concerning the transactions with a Polish subsidiary, NGK requested its cancellation and in August 2014 requested the Nagoya National Tax Tribunal to carry out an administrative review. On June 24, 2016, NGK received a written verdict, which partially rescinded the correction. However, it went only so far as to refund approximately ¥0.1 billion of corporation taxes and local taxes, etc., and NGK believes that cancellation should be made in the full amount. To reclaim the remaining tax penalties paid, NGK filed an action for revocation of correction to the Tokyo District Court on December 20, 2016.
NGK, however, believes that it could still take a considerable time for the judgement on the claim to be made. Meanwhile, there is a risk of receiving a correction on transactions arising from subsequent fiscal years after April 1, 2010 (fiscal year ended March 31, 2011) in whole or in part, as a difference of view with the tax authorities remains.
(Note on the assumption as a going concern)Not applicable
(Significant changes in stockholder's equity)NGK acquired 5,000,000 shares of treasury stock based on the resolution at the meeting of the board of directors held on April 28, 2016. With this acquisition, treasury stock increased ¥11,106 million in the nine months ended December 31, 2016, and treasury stock as of December 31, 2016 amounted to ¥12,469 million.
(Consolidated Balance Sheet)Contingent liabilities
The NGK Group is subject to an international investigation on the situation of competition.
Since the receiving of a subpoena by a U.S. subsidiary of NGK from the U.S. Department of Justice (DOJ) in 2011, NGK has cooperated in the investigation concerning ceramic substrates for catalytic converters including establishing the Independent Committee in 2012. In September, 2015, NGK entered into a Plea Agreement with DOJ, agreeing to pay a fine of US$65.3 million based on charges that it violated U.S. laws including the antitrust law in connection with some transactions for ceramic substrates for catalytic converters, and paid the total amount in November 2015. We have entered into negotiations for compensation for damages with the relevant customers. In addition to some customers requiring monetary compensation, civil lawsuits (class action) have also been filed.
In consideration of such progresses, the NGK Group made an estimate of potential losses, and recognized the estimated amount as of the end of nine months ended December 31, 2016, as "provision for loss related to competition law," however, additional losses may arise with the emergence of new facts. Overall details of the investigation and negotiations are not disclosed because they may put the NGK Group at a disadvantage.
(Segment information)(Millions of yen)
Business Segment | Elimination or Adjustment | Consolidated | ||||
Power | Ceramics | Electronics | Total | |||
Sales | 49,297 | 184,017 | 76,990 | 310,306 | - | 310,306 |
Sales to customers | ||||||
Intersegment sales | 26 | 196 | - | 223 | (223) | - |
Total sales | 49,324 | 184,214 | 76,990 | 310,529 | (223) | 310,306 |
Operating income | 694 | 53,094 | 7,075 | 60,864 | - | 60,864 |
(Notes) 1. Elimination or adjustment of operating income (loss) is an adjustment of intersegment transactions.
2. Main products by business segment
Business Segment | Main products |
Power | Insulators, hardware for insulator assemblies, current limiting arching horns, bushing shells, fuse cut-outs, APM, line arrester and NAS® (sodium-sulfur) batteries |
Ceramics | Automotive ceramics for exhaust gas purification, corrosion-resistant ceramic apparatuses for chemical industries, gas analyzers, industrial heating systems, refractory products and radioactive waste treatment systems |
Electronics | Ceramic components for semiconductor manufacturing equipment, ceramic components for electronics, beryllium copper wrought products, and molds |
NGK Insulators Ltd. published this content on 31 January 2017 and is solely responsible for the information contained herein.
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