Nitto Group Report 2017

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Top Message9Nitto Group Report 2017During the scal year ended March 31, 2017, the overseas economy took an unexpected turn toward a more turbulent path as a result of major political events, including Britain’s decision to withdraw from the EU and the outcome of the U.S. presidential election. Nonetheless, modest growth continued throughout the year as the U.S. economy subsequently rebounded and the Chinese economy held up. The Japanese economy also continued to recover, albeit modestly, as exports increased and the strong yen was corrected on the back of the overseas economy’s turnaround later in the scal year.Under these economic circumstances, the Nitto Group successfully improved the earnings of its mainstay Optronics segment by deftly capitalizing on a pickup in production volume in the IT industry in the second half of the year, despite sluggish business in the rst half. For the Industrial Tape segment, the protability of functional base products improved due to productivity enhancement, while that of the Transportation business remained almost at. For the Life Science segment, on the other hand, the Nitto Group forged ahead with the reform of its business portfolio. As a result, contract manufacturing of oligonucleotides showed substantial growth in the U.S., and an exclusive license agreement with a leading pharmaceutical manufacturer in the U.S. for a liver cirrhosis drug, which the Group had been working on for many years, led to the receipt of an upfront payment. The change in annual average yen-dollar exchange rate from 120.2 yen for the previous year to 108.9 yen for the scal year under review had a negative impact on the Group’s performance. As a result, revenue decreased by 3.2% from the same period of the previous year (changes hereafter are given in comparison with the same period of the previous year) to 767.7 billion yen. Operating income decreased by 9.6% to 92.5 billion yen, income before income taxes dropped by 10.0% to 91.7 billion yen, net income fell by 22.3% to 63.6 billion yen, and net income attributable to owners of the parent company declined by 22.3% to 63.4 billion yen.Business Summary of Fiscal 2016• Business Performance of Each Segment*(Yen in Millions)Fiscal 2015Fiscal 2016Year-on-year ComparisonIndustrial TapeRevenueFunctional base products191,134186,18797.4%Transportation125,534124,22999.0%Total316,668310,41698.0%Operating income24,88526,214105.3%OptronicsRevenueInformation ne materials380,805352,90592.7%Printed circuit boards51,53342,87183.2%Process materials23,62523,41099.1%Total455,963419,18791.9%Operating income69,05850,62373.3%Life ScienceRevenue23,97644,459185.4%Operating income2,28721,357933.9%OthersRevenue29,56226,03988.1%Operating income2,917-1,034–Excluding “Intercompany eliminations” in “Business Performance of Each Segment” on page 6.*Business segmentation has been partially altered.To our stakeholdersOn behalf of the Nitto Group, I would like to express my appreciation for the understanding and patronage that the Nitto Group continues to receive from our shareholders, investors, customers, business partners, and local communities. This report will outline our activities in scal 2016 and present our key initiatives for scal 2017 and beyond.Hideo TakasakiBoard Member President, CEO & COO Nitto Denko Corporation