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) : August 4, 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
July 28, 2017
(All yen amounts are rounded down to the nearest million.)
Consolidated Financial Results for the Three Months Ended June 30, 2017 (from April 1, 2017 to June 30, 2017)
(Note) Comprehensive income
: Three months ended June 30, 2017
21,173 million yen
-%
: Three months ended June 30, 2016
(11,935) million yen
-%
Consolidated Operating Results (Percentage figures represent increase (decrease) from previous period.)
Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
Three months ended June 30, 2017
Millions of yen
%
Millions of yen
%
Millions of yen
%
Millions of yen
%
110,044
11.2
18,807
(1.8)
18,126
(2.0)
11,279
(10.8)
Three months ended June 30, 2016
98,975
(5.3)
19,151
(3.9)
18,500
(7.1)
12,646
(8.7)
Profit per share
Diluted profit per share
Three months ended June 30, 2017
Three months ended June 30, 2016
Yen
35.07
38.87
Yen
35.01
38.81
Consolidated Financial Position
Total assets
Total net assets
Ratio of net worth to total assets
June 30, 2017
Millions of yen
Millions of yen
%
768,113
442,314
56.1
March 31, 2017
759,434
427,593
54.9
(Reference) Net worth : As of June 30, 2017 431,077 million yen
: As of March 31, 2017 416,740 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, 2017
Yen
Yen
Yen
Yen
Yen
-
20.00
-
20.00
40.00
Year ending March 31, 2018
-
Year ending March 31, 2018 (forecast)
21.00
-
21.00
42.00
(Note) Revision of cash dividend forecast during this period : None
Forecasts of Consolidated Financial Results for the Fiscal Year Ending March 31, 2018
(Percentage figures represent increase (decrease) from previous period.)
Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
Profit per share
Six months ending September 30, 2017
Millions of yen
%
Millions of yen
%
Millions of yen
%
Millions of yen
%
Yen
205,000
5.5
33,000
(3.7)
31,500
(2.7)
20,000
(7.9)
62.18
Year ending March 31, 2018
420,000
4.7
67,000
6.0
68,000
5.3
45,000
23.7
139.91
(Note) Revision of forecasts of consolidated financial results during this period : None
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
June 30, 2017
327,560,196 shares
March 31, 2017
327,560,196 shares
June 30, 2017
5,904,851 shares
March 31, 2017
5,915,570 shares
June 30, 2017
321,652,770 shares
June 30, 2016
325,332,733 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
These quarterly financial statements are not subject to the quarterly review procedure.
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 and Notes ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 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
(Note on the Assumption as a Going Concern) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Significant Changes in Stockholder's Equity)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Additional Information) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Consolidated Balance Sheet) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
(Consolidated Statement of Income) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9
(Segment Information)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 10
- Qualitative Information on Quarterly Financial Statements
-
Explanation of Business Results
During the three months ended June 30, 2017, the Japanese economy remained on a moderate recovery course, underpinned by improvements in the employment and income environment. Among overseas economies, developed economies, such as the U.S. and Europe, were robust, while emerging countries experienced a slowdown in economic growth.
The NGK Group saw sluggish performance in NAS® (sodium-sulfur) batteries in the Power Business Segment, while overseas shipments of insulators increased. In the Ceramics Business Segment, the volume of automotive ceramics increased due to steady progress of passenger car sales in Europe and truck sales in China, despite a slowdown in passenger car sales in the Chinese and U.S. markets. In the Electronics Business Segment, the quantity of ceramic components for semiconductor manufacturing equipment increased as semiconductors became increasingly shrinking.
As a result of the above, consolidated net sales for the three months ended June 30, 2017 increased by 11.2% year on year to ¥110,044 million. In terms of earnings, despite an increase in net sales, as a result of increased R&D and depreciation costs, among other factors, operating income decreased by 1.8% year on year to ¥18,807 million, ordinary income decreased by 2.0% to ¥18,126 million and profit attributable to owners of the parent decreased by 10.8% to ¥11,279 million.
By segment, the Power Business Segment posted ¥14,586 million in net sales, an increase of 9.1% year on year, and an operating loss of ¥619 million, compared to an operating loss of ¥1,428 million in the same period of the previous year. In the Ceramics Business Segment, net sales increased by 7.8% year on year to ¥64,971 million and operating income decreased by 20.6% year on year to ¥15,332 million. In the Electronics Business Segment, net sales increased by 20.3% year on year to ¥30,509 million and operating income increased by 219.8% year on year to ¥4,091 million.
-
Explanation of Financial Position
As of June 30, 2017, total assets were ¥768,113 million, an increase of ¥8,679 million from the previous fiscal year-end. This was mainly due to increases in tangible assets and cash and bank deposits despite a decrease of securities.
Total liabilities decreased by ¥6,041 million from the previous fiscal year-end to ¥325,799 million. This was mainly due to a decrease in income taxes payable despite an increase of long-term borrowings.
Total net assets stood at ¥442,314 million, or ¥14,721 million higher than the previous fiscal year-end, due to increases in foreign currency translation adjustments and retained earnings.
- Explanation of Forward-looking Statements including Forecasts for Consolidated Financial
-
Statements
With regard to the financial results forecasts for the full year ending March 31, 2018, no revisions have been made to those announced on April 28, 2017 and the previous forecasts remain unchanged. If there is any necessity to revise the full year forecasts, updated information will be disclosed immediately.
Financial results forecasts are based on information that are currently available and actual results may differ materially from those in the forecasts due to various factors.
2.Consolidated Financial Statements and Notes (1)Consolidated Balance Sheet(Millions of yen)
As of June 30, 2017
As of March 31, 2017
AssetsCurrent assets
Cash and bank deposits 128,583 119,145
Notes and accounts receivable trade 94,243 92,181
Securities 62,602 71,659
Inventories 117,575 119,081
Other 31,723 37,062
Allowance for doubtful accounts (720) (867)
Total current assets 434,009 438,263 Non-current assets
Tangible assets
Buildings and structures
74,874
66,293
Machinery and vehicles
98,018
97,018
Other
67,714
65,795
Total tangible assets
240,607
229,107
Intangible assets
2,931
2,962
Investments and other assets
Investment securities
73,686
72,526
Other
17,026
16,723
Allowance for doubtful accounts
(147)
(148)
Total investments and other assets
90,566
89,101
Total non-current assets
334,104
321,170
Total assets
768,113
759,434
(Millions of yen)
As of June 30, 2017
As of March 31, 2017
Current liabilities
Liabilities
(2)Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of IncomeNotes and accounts payable trade
39,529
38,898
Short-term borrowings
6,046
6,016
Current portion of long-term borrowings
7,443
6,973
Income taxes payable
※1
9,378
21,056
Provision for NAS battery safety measures
3,494
3,650
Provision for loss related to competition law
9,167
9,167
Other
36,786
42,676
Total current liabilities
111,846
128,439
Long-term liabilities
Long-term borrowings
169,430
161,160
Net defined benefit liability
21,165
20,926
Other
23,357
21,314
Total long-term liabilities
213,952
203,401
Total liabilities
325,799
331,841
Net assets
Shareholders' equity
Common stock
69,849
69,849
Capital surplus
72,043
72,055
Retained earnings
294,843
289,996
Treasury stock
(12,385)
(12,407)
Total shareholders' equity
424,349
419,492
Accumulated other comprehensive income (loss)
Unrealized gain on available -for-sale securities
24,912
23,458
Deferred loss on derivatives under hedge accounting
(23)
(20)
Foreign currency translation adjustments
(7,993)
(15,475)
Defined retirement benefit plans
(10,168)
(10,713)
Total accumulated other comprehensive income (loss)
6,727
(2,751)
Stock acquisition rights
887
898
Non-controlling interests
10,349
9,953
Total net assets
442,314
427,593
Total liabilities and net assets
768,113
759,434
(Millions of yen)
Three months ended
June 30, 2017
Three months ended
June 30, 2016
Net sales 110,044 98,975 Gross profit 35,413 35,240Cost of sales 74,631 63,734
Operating income 18,807 19,151Interest income 141 106
Selling, general and administrative expenses 16,605 16,088 Non-operating income
Dividend income 644 638
Equity in earnings of unconsolidated subsidiaries and associated companies
- 16
Gain on valuation of derivatives - 1,159
Other 482 314
Total non-operating income 1,268 2,235 Non-operating expenses
Interest expense 553 490
Equity in loss of unconsolidated subsidiaries
and associated companies 531-
Foreign exchange loss 176 2,285
Loss on valuation of derivatives 354 -
Other 333 111
Total non-operating expense 1,949 2,887
Ordinary income 18,126 18,500Extraordinary income
Gain on sales of fixed assets 11 8
Gain on sales of investment securities - 2
Total extraordinary income 11 11
Extraordinary loss
Loss on sales and disposals of fixed assets 267 57
Impairment loss - 1,157
Provision of reserve for loss related to
competition law -1,062
Total extraordinary loss 267 2,277
Income before income taxes and
17,869 16,233 Consolidated Statement of Comprehensive Incomenon-controlling interests
Income taxes - current
※1
4,589
2,213
Income taxes - deferred
1,813
1,382
Income taxes - total
6,403
3,596
Profit
11,466
12,637
Profit (loss) attributable to non-controlling interests
186
(9)
Profit attributable to owners of parent
11,279
12,646
(Millions of yen)
Three months ended
June 30, 2017
Three months ended
June 30, 2016
Profit 11,466 12,637Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities 1,466 (2,294)
Deferred loss on derivatives under hedge accounting (4) (111) Foreign currency translation adjustments 7,812 (23,045)
Defined retirement benefit plans 523 752
accounted for by using the equity method
(90)
125
Total other comprehensive income (loss)
9,707
(24,573)
Comprehensive income (loss)
21,173
(11,935)
Comprehensive income (loss) attributable to:
Owners of parent
20,759
(11,516)
Non-controlling interests
414
(418)
Share of other comprehensive (loss) income of associates
(3) Notes to Consolidated Financial Statements (Note on the Assumption as a Going Concern)Not applicable
(Significant Changes in Stockholder's Equity)Not applicable
(Additional Information)With respect to transactions between NGK and its Polish subsidiary from the fiscal year ended March 31, 2007 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. While NGK made a payment of approximately
¥6.2 billion in tax penalties including local taxes, it filed a complaint. NGK later requested the Nagoya National Tax Tribunal to carry out an administrative review, and on June 24, 2016, 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. Believing that cancellation should be made in the full amount, NGK filed an action for revocation of the correction with the Tokyo District Court on December 20, 2016.
While NGK believes that it could still take a considerable amount of time before judgment is passed on the claim, on June 23, 2017 NGK received a correction notice based on transfer pricing taxation for the fiscal year ended March 31, 2011 through the fiscal year ended March 31, 2015. Accordingly, based on the premise that NGK would be subject to the said correction for the fiscal year ended March 31, 2016 and the fiscal year ended March 31, 2017 as well, ¥8.5 billion in tax penalties for fiscal years from March 31, 2011 through March 31, 2015, and estimated tax amounts for the fiscal year ended March 31, 2016 and the fiscal year ended March 31, 2017 were added and factored into the financial statements for the fiscal year ended March 31, 2017. In addition, estimated tax amounts for the three months ended June 30, 2017 were recognized under "Income taxes - current" for the fiscal year ending March 31, 2018.
(Consolidated Balance Sheet) ※1. Income taxes payableWith respect to transactions between NGK and its Polish subsidiary, NGK received a correction notice based on transfer pricing taxation on June 23, 2017. Therefore, the amount includes estimated tax amounts based on the premise that NGK would be subject to the said correction for the period from the fiscal year ended March 31, 2016, to June 30, 2017.
- 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 three months ended June 30, 2017, 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.
(Consolidated Statement of Income) ※1. Income taxes - currentWith respect to transactions between NGK and its Polish subsidiary, NGK received a correction notice based on transfer pricing taxation on June 23, 2017. Therefore, the amount includes estimated tax amounts for the three months ended June 30, 2017 based on the premise that NGK would be subject to the said correction.
(Segment Information)Three months ended June 30, 2017 ( from April 1, 2017 to June 30, 2017 )
(Millions of yen)
Business Segment
Elimination or Adjustment
Consolidated
Power
Ceramics
Electronics
Total
Sales
14,579
64,956
30,509
110,044
-
110,044
Sales to customers
Intersegment sales
7
15
-
23
(23)
-
Total sales
14,586
64,971
30,509
110,067
(23)
110,044
Operating income(loss)
(619)
15,332
4,091
18,804
2
18,807
Three months ended June 30, 2016 ( from April 1, 2016 to June 30, 2016 )
(Millions of yen)
Business Segment | Elimination or Adjustment | Consolidated | ||||
Power | Ceramics | Electronics | Total | |||
Sales | 13,365 | 60,241 | 25,367 | 98,975 | - | 98,975 |
Sales to customers | ||||||
Intersegment sales | 2 | 13 | - | 15 | (15) | - |
Total sales | 13,367 | 60,255 | 25,367 | 98,991 | (15) | 98,975 |
Operating income(loss) | (1,428) | 19,300 | 1,279 | 19,151 | - | 19,151 |
(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 products, and molds |
NGK Insulators Ltd. published this content on 28 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2017 09:53:02 UTC.
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