The financial results briefing for the fiscal year ending December 31, 2021 was held online on February 18, 2022.

Speaker: Kohei Tanabe, President, and Toshiharu Uwai, Director

Summary of Q&A session

Cautionary statement


This is a summary of the question-and-answer session at the financial results briefing.

This contains forward-looking statements concerning the financial forecasts, plans, strategies of the Company, which are not historical facts. They are based on management's assumptions made in accordance with information available at the time of the briefing (as of February 18, 2022) and are subject to risks and uncertainties. Actual results may differ materially from these forecasts.

Q: The forecast for sales growth in 2022 is nearly 10%, which seems bullish given the trend of decline in sales of the past few years. Have there been any significant changes?

A: As part of “Transition into a lean organization,” one of the main points of our Mid-term Plan, we are also working on reforming our business operation structure. Promoting the visualization of various indicators has enabled us to grasp the state of management and the progress of strategies at any time, allowing us to make decisions based on data and speed up the management process. We assume that the impact of COVID-19 will continue in 2022, but we will continue to make changes to facilitate business growth.

Q: FY2022 forecast is based on the assumption that the parts procurement environment will improve. How realistic is that?

A: Regarding semiconductors and other products, we are striving to secure parts by placing orders in advance for future production and adopting alternative parts, as well as reviewing production plans as necessary to ensure a stable supply. If the procurement environment worsens beyond the current situation, we assume that it will also pose a downwards risk to our business performance.

Q: What is the background to the rapid growth in net sales of dental milling machines?

A: In advanced countries, the demand for ceramic materials is increasing due to the soaring cost of metal materials used in dentistry, and the demand for capital investment is rising due to the increasing shift of dental procedure manufacturing back to domestic production. The digitalization of dental procedure has entered a growth phase in growth markets. Given this situation, we are confident that the strong demand for dental milling machines will continue in the future.

Q: Is the development of eco-friendly ink progressing?

A: The development of eco-friendly ink is progressing as planned, so we will release it at the appropriate time.

Q: In VC-Other, are UV printers what you expect to grow?

A: VC-Other also includes UV printers. The demand for UV ink is currently increasing, and we recognize that it is an important issue to launch products that match the market needs at the right time. We will continue to introduce interesting products to the market this year that will bring excitement to it.

Q: What are the differences between the first half and the second half in the company's forecast?

A: In the current fiscal year, there will be a difference between selling, general and administrative expenses in the first and second half due to expenses for promotional activities in the first half. From the second half of the fiscal year onward, we expect the effects of this promotion to become apparent, and we also expect sales of dental milling machines, which have a higher gross profit margin, to increase. We therefore anticipate an improvement in the gross profit margin.

Q: From FY2022 onwards, will there be the same disclosure categories as before, or will there be new categories based on the Mid-term Plan?

A: We plan to disclose the information under the new categories as announced in the update to the Mid-term Plan. We will endeavor to disclose the information in such a way that it can be compared with the previous categories.

Q: No major new products have been announced. Did the early retirement program on the research and development department have any effect?

A: In the development of printers, we started working on platforms several years ago to improve the efficiency of development. We believe that we have been able to offset the impact of the reduction in the number of employees by adopting new development methods to achieve both quality and development speed. In addition, parts procurement issues have delayed the launch of new products. We will release new products on an ongoing basis while paying attention to the future situation.

Q: Please explain the factors behind the increase in net sales of printers in FY2021 compared to FY2019.

A: Due to the various changes in the environment caused by the COVID-19 pandemic, more and more people are starting their own businesses or setting up small businesses at home, and our BN-20 has been a popular product. In FY2020 and FY2021, sales increased rapidly, especially in North America.

Q: Could you tell us the amount of impact of the soaring cost of parts and transportation in FY2021 and how much of the soaring cost of parts and transportation has been factored into the budget for FY2022?

A: For FY2021, the impact of soaring parts and transportation costs was 400 million yen. We have factored in a rise of 100 million yen in FY2022 compared to FY2021. We will continue to monitor the situation and control costs.

Q: In the second half of the year, net sales of printers are expected to recover to 2016 levels. How certain are you of this?

A: Currently, in addition to the ongoing backlog of printer orders, existing sign output demand is recovering, and capital investment demand in the sign market is expanding. We believe that we can achieve our target by capturing market changes and proposing new applications in the second half of the fiscal year.