The Company will provide a forecast for the consolidated financial results for the fiscal year ending March 31, 2021, which was formally described as “undetermined” in the “Summary of Consolidated Financial Results for the Three Months Ended June 30, 2020 [IFRS]” released on July 30, 2020, given that it was difficult to reasonably project business results at that time. Note that the cost of structure reform of 10.5 million yen is included in the forecasted operating loss of 13.0 million yen. Further, the exchange rate assumptions for the forecast are 105 yen to the U.S. dollar and 120 yen to the euro.
As the COVID-19 pandemic continues to unfold, a challenging situation persists in the six months ended September 30, 2020 where economic activities are restricted across geographies. At this time, it is uncertain as to when the outbreak will level off, and various risks and opportunities for businesses are still expected. Given such circumstances, the Company foresees that repeated waves of COVID-19 will continue to be seen around the world, restricting economic activities and people’s behavior in certain ways due to limited lockdowns. However, the Company has developed its forecast with an assumption that strict nationwide-level lockdowns that were seen in March and April this year will not be placed in the Company’s major markets. With such business environment assumptions in mind, the Company is ready to proactively enhance the earning power of each business and pursue structural reforms to improve its profitability, without relying too much on an upturn in the economic environment.
The Company foresees the risks and opportunities for the time being as follows:
In the Digital Workplace Business, although client companies across the globe will still have to deal with telecommuting and certain restrictions in their business activities, printing volume at offices in the fourth quarter ending March 31, 2021, is expected to return to around 90% of the level compared to the same period last year, and product sales will see a recovery. In addition, the Company’s IT service solution and “Workplace Hub,” which support people’s new working style such as telecommuting, will be able to respond to an increasing demand for document sharing as well as automated and digitalized operation processes under a secured environment. Particularly, sales opportunities will grow in the area of optical character recognition (OCR) and robotics process automation (RPA), which are supposed to contribute to operational reforms and workload reductions for the following: public sectors, such as the U.S. governmental organizations and Japanese local governments; and medical institutions and other businesses that are essential to the society.
In the Professional Print Business, the Company foresees that sales of digital printing equipment which enables automated, manpower-saving, and skill-less work will increase going forward given the following circumstances: the printing market will shift more towards medium- and large-sized printing companies, while central reprographics departments and small- and medium-sized printing companies will see a shrink in demand; digital printing in the area of label and packaging, whose printing volume keeps growing amid the pandemic, will keep expanding; and many client printing companies will continue to be forced to work remotely or conduct daily operation with less people.
In the Healthcare Business, the number of outpatients is supposed to return to about the same level before the COVID-19 outbreak by the end of the fiscal year ending March 31, 2021, except for the United States. It may take some more time for investments on diagnostic equipment to recover; however, the number of genetic testing will increase as the number of outpatients picks up. Moreover, the Company’s backlog will decrease and sales will increase in the area of drug discovery support service once clinical trials conducted by pharmaceutical companies restart. The Company plans to continue expanding businesses that support a sustainable medical environment, including infection control measures, in areas such as remote medical solutions, community collaboration solutions, dynamic X-ray systems and AI image reading support solutions, and nursing support solutions.
In the Industry Business, although client companies’ investment in flat panel display (FPD) production lines has stalled, more variety in types of FPDs will be seen in the market. Given such circumstances, the Company expects that the market will continue growing and sales opportunities will increase going forward for its measuring instruments and high-value-added functional films. In addition, more sales are expected in measuring instruments that support labor saving at customers’ production lines through automated inspection systems.
With regard to the financial foundation, the Company entered into another commitment line agreement in May 2020 in order to prepare for a possible deterioration in future cash flows amid the spread of COVID-19. The total balance of credit lines is 300 billion yen as of September 30, 2020, all of which remains untapped, securing the Company’s liquidity on hand at a sufficient level. Moreover, the Company is committed to streamline its business operations through strictly tightening inventory at a minimum level, strengthening its cash flow management by sorting and reducing the level of capital spending as well as investment and lending transactions, and pursuing the cost-benefit mindset.