FY2017 2nd Quarter Consolidated Financial Results (April 1, 2017 to September 30, 2017) (PDF:105KB)

FY 2017 SECOND QUARTER (CUMULATIVE) CONSOLIDATED FINANCIAL RESULTS‌‌‌‌‌

(April 1, 2017 to September 30, 2017)

1. Company Name : SANKEN ELECTRIC CO., LTD.

2. Code NO :

   6707

3. Headquarters : 3-6-3 Kitano, Niiza-shi, Saitama 352-8666, Japan 4.URL : http://www.sanken-ele.co.jp/

5.Contact : Finance and Investor Relations Division Tel. [phone]

1. FINANCIAL RESULTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2017

2. Consolidated Results of Operations (Millions of yen)

   Net sales (percentage change from the previous year)		Operating profit (percentage change from the previous year)		Ordinary profit (percentage change from the previous year)		Profit attributable to owners of parent (percentage change from the previous year)
   Six months ended Sep.30,2017	86,000	(13.1%)	5,457	(152.5%)	5,665	(297.5%)	-13,113	(	-	)
   Six months ended Sep.30,2016	76,055	(-1.6%)	2,161	(-26.4%)	1,425	(-6.6%)	-72	(	-	)

   Note: Comprehensive income: -12,752 million yen ( －%) for the six months ended Sep.30, 2017 / -5,610 million yen ( －%) for the six months ended Sep.30, 2016

   Net income per share (yen)	Diluted net income per share (yen)
   Six months ended Sep.30,2017 Six months ended Sep.30,2016	-108.20 -0.60	－ －

3. Consolidated Financial Position (Millions of yen)

4. Total assets	Net assets	Shareholders' equity ratio
   As of September 30, 2017 As of March 31, 2017	171,991 182,700	41,552 54,736	24.0% 29.8%

   Reference: Shareholders' equity: 41,195 million yen as of Sep.30, 2017 / 54,401 million yen as of Mar.31, 2017

5. DIVIDEND INFORMATION

   Dividend per share
   First quarter	Second quarter	Third quarter	Fiscal-year-end	Annual
   Fiscal year 2016 Fiscal year 2017	- -	0.00yen 3.00yen	-	3.50yen	3.50yen
   Fiscal year 2017 (forecast)	-	3.00yen	6.00yen

   Note: Revision to recently disclosed dividend forecast: No

6. FISCAL YEAR 2017 CONSOLIDATED FINANCIAL FORECAST (April 1, 2017 to March 31, 2018)

   (Millions of Yen)

   Net sales (percentage change from the previous year)		Operating profit (percentage change from the previous year)		Ordinary profit (percentage change from the previous year)		Profit attributable to owners of parent (percentage change from the previous year)		Net income per share
   Full Year	173,000	(9.0%)	10,000	(68.6%)	9,000	(79.0%)	-13,700	－	-113.04yen

   Note: Revision to recently disclosed financial forecast: No

7. OTHER

9. Changes in significant subsidiaries during the six months ended September 30, 2017 (changes in particular subsidiaries accompanying the change in scope of consolidation): No

10. Application of particular accounting method for quarterly consolidated financial statements: Yes

11. Changes in accounting policies, changes in accounting estimates, restatements

    • Changes in accounting policies according to revision of accounting standards, etc. : No

    • Changes in accounting policies due to reasons other than above : No

    • Changes in accounting estimates : No

    • Restatements : No

      Sep./2017:	125,490,302	Mar./2017:	125,490,302
      Sep./2017:	4,302,803	Mar./2017:	4,293,460
      Apr./2017-Sep./2017	121,193,327	Apr./2016-Sep./2016	121,213,464

12. Number of shares outstanding (common share)

    • Number of shares outstanding at the end of the period (including treasury stock)

    • Number of treasury stocks at the end of the period

    • Average number of shares outstanding during six months ended September 30

• This quarterly financial report is not subject to quarterly reviews.

• The above description about future matters including financial forecast is based upon information available as of the present time and assumptions we considered valid, and we do not promise that these forecasts will be accomplished. Due to various factors, our actual performance could greatly differ from the forecast.For assumptions and precautions to use the forecasts, refer to following "DESCRIPTION OF CONSOLIDATED FINANCIAL FORECAST, etc".

1. QUALITATIVE INFORMATION ABOUT CONSOLIDATED BUSINESS RESULTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2017
1. DESCRIPTION OF CONSOLIDATED OPERATING RESULTS

   During the six months ended September 30, 2017, the US economy and the European economy held steady, and the Chinese economy showed signs of recovery thanks to government policies. The Japanese economy remained on a moderate recovery track mainly due to recovery in capital investment and personal consumption. Under these circumstances, the Company maintained a basic policy for the current fiscal year for realizing growth by stressing activities to "Focus on growing markets" and "Enhance financial performance." Under the policy, we strove to expand sales of new products in the key strategic markets related to the environment, energy saving, and green energy while focusing on measures to improve our earnings structure by reducing fixed expenses. Further, as disclosed on July 18, 2017, the Group raised funds for future growth through a private placement of new shares at Sanken North America, Inc., a US subsidiary. In order to improve its non-consolidated financial performance and make better its financial conditions - two pivotal management challenges we have faced - as well as to accelerate the growth of the US business, the Group has worked on restructuring initiatives such as its withdrawal from the power modules business, realignment of its business in the semiconductor devices business, and implementation of a special early separation program. The Group has also started to take measures toward growth across the Group.

   In the six months ended September 30, 2017, sales of products for white goods and automotive products in the semiconductor devices segment remained favorable. As a result, net sales were ¥86,000 million, an increase of ¥9,944 million (13.1%) as compared to the same period in the previous year. For income, operating profit was ¥5,457 million, an increase of ¥3,295 million (152.5%) year on year resulting from increased net sales and the exchange rate influenced by a weaker yen compared with the exchange rate set at the beginning of the current fiscal period. Ordinary profit was ¥5,665 million, an increase of ¥4,240 million (297.5%) year on year. However, loss attributable to owners of parent was ¥13,113 million (loss attributable to owners of parent of ¥72 million in the same period in the previous year) due to the recording of extraordinary losses of ¥16,531 million resulting from the restructuring initiatives, including withdrawal from an unprofitable sector.

   Overview of business by segment is as follows. From the first quarter consolidated fiscal period, the former power module business and power systems business are integrated into the power systems business, and reportable segments are changed into two segments, namely, the semiconductor devices segment and power systems segment. The following descriptions of financial performance for each reportable segment in comparison to the same period in the previous year are stated according to the segment after the change.

   In the semiconductor devices segment, sales of products for white goods such as air conditioners, washing machines and refrigerators continued to increase, and sales of automotive products also remained favorable with the progress of electrification. As a result, consolidated net sales from this segment were ¥71,705 million, an increase of ¥9,059 million (14.5%) as compared to the same period in the previous year. For income, consolidated operating profit was ¥7,015 million, an increase of ¥2,638 million (60.3%) as compared to the same period in the previous year, resulting from increased net sales.

   For the power systems segment, sales of products for the AV and OA markets, including unprofitable adapters for TVs, decreased due to sales controls, while sales of products for mobile phone base stations in the telecommunication market recovered. As a result, consolidated net sales from this segment were ¥14,294 million, an increase of ¥884 million (6.6%) compared to the same period in the previous year. For income, we recorded consolidated operating loss of ¥60 million (consolidated operating loss of ¥712 million in the same period in the previous year) due to decreased sales of unprofitable products, resulting in improved financial performance.

2. DESCRIPTION OF CONSOLIDATED FINANCIAL POSITION
3. Status of Assets, Liabilities and Net Assets

   Assets as of the end of September 30, 2017 were ¥171,991 million, a decrease of ¥10,708 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease in inventories of ¥12,626 million, cash and deposits of ¥2,887 million, and an increase in other current assets of ¥1,904 million, property, plant and equipment of ¥1,784 million.

   Liabilities were ¥130,439 million, an increase of ¥2,475 million from the end of the previous consolidated fiscal year. This was mainly due to an increase in accrued expenses of ¥2,716 million, notes and accounts payable-trade of ¥2,180 million, and a decrease in commercial papers of ¥1,500 million.

   Net Assets were ¥41,552 million, a decrease of ¥13,184 million from the end of the previous consolidated fiscal year. This was mainly due to a decrease in retained earnings of ¥13,537 million.

4. Status of Cash Flows

   Balance of cash and cash equivalents at the end of the six months ended September 30, 2017 was ¥19,399 million, a decrease of ¥2,837 million as compared to the end of the previous consolidated fiscal year.

   Net cash provided by operating activities was ¥6,861 million, a decrease of ¥2,344 million as compared to the same period in the previous fiscal year. This was mainly due to an increase in cash outflow by income taxes paid.

   Net cash used in investing activities was ¥6,991 million, an increase of ¥2,070 million as compared to the same period in the previous fiscal year. This was mainly due to an increase in purchase of property, plant and equipment.

   Net cash used in financing activities was ¥2,497 million, an increase of ¥700 million as compared to the same period in the previous fiscal year. This was mainly due to redemption of commercial papers.

5. DESCRIPTION OF CONSOLIDATED FINANCIAL FORECAST, etc.

6. With regard to the consolidated financial forecast, we have made revisions to the consolidated financial forecast for the full year ending March 31, 2018 disclosed on May 10, 2017 in the FY 2016 CONSOLIDATED FINANCIAL RESULTS, in light of recent market performance, the recording of extraordinary losses resulting from the restructuring initiatives at the closing of the current second quarter, and other factors. For details on the reasons for the revisions, etc., please refer to the "Notice of Extraordinary Losses Incurred and Revision of the Business Results Forecast" disclosed on October 25, 2017.