CEO Message for Q2 2016
New car sales in Europe have continued to increase for 34 consecutive months on a year-on-year basis thanks to strong sales in Southern Europe countries such as France, Italy and Spain. Sumida’s automotive business has significantly benefited from this trend of growth in Europe. Our profit performed well through good sales, but it was greatly enhanced by cost reduction being achieved through savings in wages due to freezing of wage increase in China and depreciation of renminbi. The low prices of copper and other raw materials related to low oil prices helped to keep the total manufacturing costs down, too. In the meantime, Britain’s vote to exit the EU surprised the world financial markets. We need to closely monitor the aftermath of the UK’s decision since the volatile Euro against the U.S. dollar/yen may affect our business environments in many ways for quite some time to come.
In the second quarter of 2016, automotive-related sales were strong with a focus on Europe. Due to yen’s sharp appreciation, total sales were down 4.7% from the previous year to 20,921 million yen, which, however, were higher than last year’s on a local currency basis. In terms of profit, operating income was up 45.8% from the previous year to 1,785 million yen with ordinary income up 54.9 % to 1,528 million yen and net income up 143.1% to 1,097 million yen, respectively. They were all record-high profits on quarterly basis, thanks to freezing of wage increase in China, depreciation of renminbi and other factors not forgetting our manufacturing team’s overall cost reduction programs. In the last several months, people from mass media and the Ministry of Economy, Trade and Industry visited us to learn about Sumida’s corporate governance. It seems that corporate governance systems at Japanese corporations have attracted a lot of attention these days with Stewardship Code and Corporate Governance Code released from the government. Sumida was the first listed company in Japan that adopted Committee System in 2003. We are determined to continue to seek ideal corporate governance in order to maximize our corporate value.