2017

ANNUAL REPORT

Fiscal year ended March 31, 2017

Financial Summary CONTENTS

Five-Year Summary 2

Analysis of Operating Results 3

Business and Other Risks 5

Consolidated Balance Sheets 6

Consolidated Statements of Income 8

Consolidated Statements of Comprehensive Income 9

Consolidated Statements of Changes in Net Assets 10

Consolidated Statements of Cash Flows 12

Notes to Consolidated Financial Statements 13

Independent Auditor's Report 41

Five-Year Summary

FUJI MACHINE MFG. CO., LTD and Consolidated Subsidiaries Years ended March 31

Millions of yen

Thousands of

U.S. dollars

(Note)

2013

2014

2015

2016

2017

2017

For the Year

Orders

¥

62,783

¥

68,269

¥

92,019

¥

82,651

¥

94,024

$ 839,500

Net sales

64,349

65,566

85,266

86,642

86,397

771,402

Domestic

8,467

7,769

9,903

15,337

11,877

106,045

Overseas

55,882

57,797

75,363

71,305

74,520

665,357

Operating income

3,914

3,028

12,067

11,902

9,794

87,446

Income before income taxes

4,133

3,720

12,797

11,012

9,948

88,821

Net income attributable to owners of the parent

2,699

2,593

8,629

7,237

7,055

62,991

Capital expenditures

7,253

6,937

4,917

5,641

6,175

55,134

Depreciation

3,922

5,002

5,352

4,934

5,158

46,054

Research and development expenses

7,884

6,334

7,491

6,613

6,789

60,616

Cash flows from operating activities

7,331

13,770

9,477

8,086

17,380

155,179

Cash flows from investing activities

( 7,372)

( 7,885)

( 5,463)

( 6,308)

(10,160)

(90,714)

Free cash flows

(41)

5,885

4,014

1,778

7,220

64,465

Cash flows from financing activities

( 4,116)

( 4,393)

( 2,005)

4,273

(10,916)

(97,464)

At Year-End

Total assets

¥

131,090

¥

135,942

¥

153,890

¥

156,958

¥

158,407

$ 1,414,348

Net assets

115,739

120,794

135,044

132,069

130,948

1,169,178

Cash and cash equivalents at end of year

47,877

50,659

54,207

59,357

55,359

494,277

Number of employees (Persons)

2,013

2,027

2,104

2,108

2,117

Per Share Data (yen and U.S. dollars)

Net income

¥

27.60

¥

26.52

¥

88.27

¥

74.13

¥

76.19

$ 0.68

-

-

-

74.03

70.90

0.63

1,183.90

1,235.64

1,379.19

1,372.18

1,461.63

13.05

13.75

16.00

28.00

28.00

30.00

0.27

－Basic

－Diluted

Net assets

Cash dividends

Ratios (%)

Overseas sales ratio

86.8

88.2

88.4

82.3

86.3

Operating income ratio

6.1

4.6

14.2

13.7

11.3

R&D expense ratio to net sales

12.3

9.7

8.8

7.6

7.9

Return on assets

2.0

1.9

6.0

4.7

4.5

Return on equity

2.4

2.2

6.8

5.4

5.4

Equity ratio

87.9

88.9

87.6

84.0

82.5

Note: U.S. dollar amounts are converted from Japanese yen, for convenience only, at the rate of ¥112 to U.S.$1.00.

Analysis of Operating Results Overview

In the fiscal year ended March 31, 2017, while the Japanese economy saw the business environment recover moderately, companies continued a cautious stance toward capital investment. In terms of the global economy, the European economy continued a moderate recovery and there were signs of recovery in the manufacturing industry in North America against the backdrop of improved corporate earnings. In China, capital investment showed signs of improvement as well after the continuing manufacturing industry slowdown.

In this environment, under the slogan of "Excite and Inspire," the Company and its subsidiaries (hereinafter referred to as the "Group") have taken on the challenge of reforming, and have undertaken efforts to develop highly original products as one of the world's leading robot manufacturers, while striving to promote swift management and to provide the market with products that are highly cost competitive in a timely manner. We have also worked to improve customer satisfaction by strengthening the domestic and overseas sales and service systems, through cooperation among the Group companies and expansion of the dealer network, and by promoting solution-based sales approaches. At the same time, we have sought to improve profitability through efforts to pursue exhaustive QCD (quality, cost, and delivery) by strengthening supply chains and through production reforms.

Starting from the fiscal year ended March 31, 2017, the reportable segment formerly known as "Electronics Assembly Equipment" has been changed to "Robotic Solutions." This change is in name only, and does not have any impact on segment information.

Net sales

Net sales for the fiscal year ended March 31, 2017, decreased by ¥245 million (0.3%) from the previous fiscal year, to

¥86,397 million, due to decreased sales in the Machine Tools segment despite higher sales in the Robotic Solutions segment.

Overseas sales increased by ¥3,215 million (4.5%) from the previous fiscal year, to ¥74,520 million, due to strong demand in the markets of automotive equipment and computer equipment including servers thanks to the spread of IoT, as well as sales expansion in the major market of China. Furthermore, the percentage of overseas sales to total net sales was 86.3% (China: 45.1%, United States: 12.5%, Other

Asian countries: 12.0%, Europe: 11.4%, Others: 5.3%), representing an increase of 4.0 percentage points from the previous fiscal year. Meanwhile, domestic sales decreased by

¥3,460 million (22.6%) from the previous fiscal year, to

¥11,877 million, due to factors including sluggish demand in automotive-related machine tools, the Company's focus market.

Operating income

Operating income decreased by ¥2,108 million (17.7%) from the previous fiscal year, to ¥9,794 million, due mainly to the effects of falling sales prices as a result of fierce price competition and yen appreciation, and an increase in fixed costs, despite an increase in the number of units sold and efforts to reduce costs through cost cutting and increasing efficiency.

Net income attributable to owners of the parent

In terms of other income (expenses), income (net) of ¥154 million was reported, due mainly to the absence of the impact of impairment loss on fixed assets associated with the consolidated subsidiary, Kunshan Fuji Machine Mfg. Co., Ltd., which was recorded in the previous fiscal year, a decrease in foreign exchange loss, and an increase in dividend income, which, in turn, resulted in income before income taxes of

¥9,948 million, a slighter drop of ¥1,064 million (9.7%) compared with the decrease recorded in the previous fiscal year.

Net income attributable to owners of the parent decreased by ¥182 million (2.5%) from the previous fiscal year, to ¥7,055 million.

In addition to the results above, the average number of shares during the period decreased due to an increase in treasury stock, and net income per share increased by ¥2.06, to ¥76.19, from the ¥74.13 recorded in the previous fiscal year.

Business Results by Segment Robotic Solutions

In the Robotic Solutions business, net sales increased by

¥3,318 million (4.7%) from the previous fiscal year to ¥74,105 million, and operating income was ¥14,546 million (up 0.1% from the previous fiscal year) due mainly to a fall in sale price stemming from yen appreciation.

While certain segments of the markets appeared to be cautious in investing in capital equipment due to uncertainties continuing to the second quarter, movements toward active investment were seen from the third quarter. In addition to the Company's main market of telecommunications equipment, demand was strong in the markets of automotive equipment and computer equipment including servers thanks to the spread of IoT, and sales expanded particularly in the major market of China.

Machine Tools

In the Machine Tools business, net sales decreased by ¥3,626 million (24.8%) from the previous fiscal year to ¥10,997 million, and operating loss was ¥713 million (operating income for the previous fiscal year was ¥614 million).

Due to sluggish demand in the Company's focus market of automotive-related machine tools, sales decreased mainly in Japan and North America.

Research and Development Expenses and Capital Expenditures Research and development expenses

Based on the company motto, "We will endeavor to work hard in research and development to provide excellent techniques to respond to customer confidence," the Group continues to make untiring efforts in the research and development of state-of-the-art automated equipment and systems to meet the needs of the world's most advanced customers.

Research and development expenses increased by ¥176 million (2.7%) from the previous fiscal year, to ¥6,789 million. Major research and development activities included further reinforcement of the functions of robotic mounters including the mainstay NXT Series in the Robotic Solutions segment, and development to introduce next term's strategic machines to market. The Company also carried out development to enhance the functions of Nexim, the integrated manufacturing system that will enable smart factory solutions in the

customers' electronics mounting process.

Fuji Machine Mfg Co. Ltd. published this content on 25 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 25 July 2017 06:49:02 UTC.

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