The financial results briefing for the third quarter of the fiscal year ending December 31, 2022 was held online on February 10, 2023.
Speaker: Kohei Tanabe, President, Representative Director, and Kazuhiro Ogawa, Managing Executive Officer
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 10, 2023) and are subject to risks and uncertainties. Actual results may differ materially from these forecasts.
Q：Please tell us the situation with parts procurement in 2022, as well as the current status in 2023, and your outlook for the future.
A：The year 2022 was one in which we struggled with parts procurement. In addition to placing advance orders and undertaking market procurement, we endeavored to ensure a stable supply by adopting alternative items and reviewing production plans. Although some severe conditions have eased upon entering 2023, the current situation continues to be difficult for the procurement of electronic components and the power supply components on which electronic components are mounted. We project that this situation will continue throughout this year.
Q：In 2022, Dental was negative in actual terms. In 2023, on the other hand, it’s expected to rise 23% year on year, which would be the most growth among your business segments. Please tell us about the driver of that growth.
A：We saw restrained buying ahead of IDS, the largest dental industry exhibition, to be held in Germany in March this year, after a hiatus of four years, as well as cautious capital investment demand due to the recessionary mood in the US and Europe. In addition, due to increased competition with local products or competitors in some areas, we launched a sales promotion campaign in the fourth quarter. On the other hand, sales grew significantly in Vietnam and India, where digitization is progressing. In 2023, we will strive to expand sales of the new, high-production DWX-53DC model to developed countries and exclusive models to growth markets where growth is expected.
Q：Your sales outlook for new products such as resin printers and UV printers looks quite bullish, but just how confident are you?
A：We have placed “business portfolio transition” as a core strategy of our mid-term plan, and aim to break away from our past dependence on eco-solvent printers for the sign (signboard and advertising) market. As part of this effort, we started to develop printer platforming with the goal of streamlining development. As the first step in this direction, we launched the TrueVIS VG3/SG3 series in March 2022, while the second step was the release of the TrueVIS series of three products with six models in January of this year. We strive for development efficiency and lineup expansion, including non-solvent type products (VC-Other), for which we will pursue greater sales growth while maintaining sales of eco-solvent products.
Q：The EU has imposed economic sanctions on Russia. What is the status of your response?
A：When the decision was made to impose sanctions on Russia following the invasion of Ukraine, we clearly stated and signed on to an embargo in our contracts with our European dealers that prohibit them from selling to areas with trade restrictions. In addition, we had them submit a written pledge to comply with our import and export policy or STC policy, and our auditors have reported no problems.
Q：Please tell us about the order backlog for December against September 2022.
A：The order backlog at the end of December was about 100 million yen, compared to 800 million yen at the end of September. We are almost back to normal operations.
Q：Please tell us the reason why your R&D expenditure ratio is declining.
A：Over the past several years, we have been working to improve product development efficiency, mainly through platforming efforts in the development of printers. In January, we were able to announce the launch of a series of new products. We haven’t cut R&D expenditures, but their ratio has fallen in line with net sales expansion. Going forward, based on our mid-term plan, we will continue investing aggressively in R&D.
