For Shareholders/Investors

The supply of "DANTOTSU" (Outstanding) products is proceeding at full swing The establishment of a foundation for sustainable growth

Performance in the 54th fiscal year (Term ending December 2016)

Although sales of connectors for laptop PCs and smartphones were weak, sales of automotive components marked the highest levels ever achieved

Firstly, our Electric and Electronics Components Business experienced a slowdown from the impact of sharp appreciation in the value of the yen mainly in the first half of the year, in addition to a reduction in the demand for our primary products, miniature radio frequency (RF) coaxial connectors and small gauge coaxial connectors, due to poor sales of laptop PCs and stagnation in the growth of smartphones. On the other hand, sales of FPC/FFC connectors and board to board connectors saw an increase, because deliveries of our full shield connectors for high frequency noise prevention developed as one of our future "Dantotsu" products got into full swing from the second half of the year. Sales of  HDD-related components were weak due to poor sales of those for use in laptop PCs.
Secondly, sales in our Automotive Components Business, mainly of sensors contributing to fuel efficiency and safety performance, were successful owing to steady automobile sales in North America and China as well as the advancement of car electronics. Furthermore, sales in our Automotive Components Business as a whole has been setting new records for four consecutive fiscal years, due to the increase in the number of car models adopting our own brand of connectors for LED headlights.
As for our Equipment Business, with the influence of concern for the economic downturn in China and the East Asian countries, a move to refrain from investing was seen among our main clients, such as semiconductor manufacturers, and orders for semiconductor molding machines and molds etc. stagnated.
As a result of the above, our sales were 45.8 billion yen, operating profit 400 million yen, ordinary profit 800 million yen, and this fiscal year's net income attributable to shareholders 150 million yen, all of which marked decreases compared to the first half of the year. Despite these results, on the basis of our basic policy of continuously distributing stable dividends, we take the business environment etc. into account comprehensively and so we have continued the previous fiscal year's year-end dividend of 10 yen per share and annual dividend of 15 yen, including the interim dividend.

Priority strategies for the 55th fiscal year (Term ending December 2017)

Preparation for the increase in demand for automotive components due to sales led by "Dantotsu" products

Electrical and Electronic Components Business

With an anticipated increase in the number of full shield board to board connectors adopted in PCs and mobile phones, and in combination with FPC/FFC connectors, which will feature a new product soon, we plan to increase sales by 1.7 times compared to the previous fiscal year. For miniature radio frequency (RF) coaxial connectors and small gauge coaxial connectors, we will advance strategies in which the products are deployed in high speed transmission solutions in order to meet new IoT-related demands in fields such as robotics and medicine, where market expansion is anticipated, and we will promote sales of full shield small gauge coaxial connectors for PCs. As for HDD-related components, we will undertake the initiative of establishing production & supply systems overseas in response to our customer needs, and strive to expand sales in our new business model (process support) whereby we partially take over our customer's processes.

Automotive Components Business

In view of further advancements in car electronics, mainly in the spread of collision avoidance and autonomous driving assistance systems, the demand for automotive sensors and other electronic components is likely to continue increasing. The number of LED headlights adopting our own brand of connectors is also on the increase. We have been expanding our production system both domestically and overseas in order to capture these demands to the extent possible, however, we will further reinforce these initiatives, reorganize the structure to enable the flexible allocation of company resources to our automotive business, and increase our plant capacity. We will also make continuing efforts to promote sales of our own brand of connectors and develop new products.

Equipment Business

We will continue to work on development and prototypes pertaining to ultra-thin molding technology, for which an expansion of market need is anticipated, feed the results of this development back into our molding machines and molds etc., and aim to launch products onto the market. We will also continue to work on opening up new areas of business that apply the molding technologies we have cultivated through molding machines.

New Business

Our "ESTORQ", the first capacitance-type torque sensor in the world* and which was developed as one of our future "Dantotsu" products, has been adopted in a collaborative industrial robot made by Yaskawa Electric Corporation, and supply is in full progress. We hope that the adoption of ESTORQ will gain momentum as we push its appeal not only in the industrial robot market, but also in the fields of medical and nursing care, on the basis of its record of use in a collaborative robot which has made it possible for humans and robots to work together in the same place without safety fences. As part of this initiative, we formed a capital tie-up with Reif Co., Ltd. who are progressing the use of walking rehabilitation support robots both in Japan and overseas. We will leverage the synergy effect of this collaboration to enter into the fields of medical and nursing care.
We also succeeded in the development of an MEMS mirror device as our second-phase MEMS following the earthquake detector. We have used our original technology to downsize the device compared to conventional products, and a wider range of applications are anticipated as it represents the first time lasers can be mounted in the equipment. We will continue efforts to arrive at a "Dantotsu" product in which an MEMS device is mounted.

* Based on research by our company.

To our next stage of development with "Dantotsu" products

Since the 53rd fiscal year, work has been underway to produce the "Dantotsu" products of the future, key products that generate over 20% of sales in each business area, and as outlined above, we have been making good progress so far. In order to produce new "Dantotsu" products, and ensure that they play the role of propelling sales and leading the company to the next stage of development, we will continue to actively invest and pursue research and development, including collaborations and tie-ups with external sources.

I would like to ask all our shareholders to continue the kind support they show our group into the future.

KONISHI Hideki
President
Dai-ichi Seiko Co.,Ltd.