Top Message

Dear Shareholders,
For the first-half of the current fiscal, the SATO Group has performed largely as planned to record ¥56.5 billion in net sales (up 3.0% from the same period last year), ¥3.3 billion in operating income (up 30.8%), ¥3.2 billion in ordinary income (up 34.7%) and ¥1.9 billion in profit attributable to owners of parent (down 20.4%(*)). Our auto-ID solutions business was strong in Japan and overseas, with increased sales and profits for both segments. We have meanwhile continued R&D in the IDP business in line with plans to invest strategically in the technology as one of the future business pillars.
(*) The six-month period in the previous year had included extraordinary income of ¥2.7 billion gained from the sale of non-current asset.

■ Auto-ID solutions business (Overseas)

Outside of Japan, we posted higher sales and profits in our auto-ID solutions business, maintaining the overall recovery. Group companies in all regions have made steady progress in “selling the solution, not the product” to improve customers’ on-site operations with solutions around our strategic CLNX printer series. While sales and profits declined in the Americas due to the absence of large-scale deals that were recorded for North America in the same period last fiscal year and the economic instability in Argentina, sales and profits increased in Europe (including contributions from Russia’s Okil), Asia and Oceania on account of steady top-line growth in the respective regions.

■ Auto-ID solutions business (Japan)

Labor shortages are creating prominent needs for improving productivity, tracking work and automating worksites in the Japan market as its food and health care sectors, in particular, face rising needs to comply with new labeling regulations. Amid such market circumstances, efforts of our sales frontlines at accurately addressing the pain points of customers have paid off to boost mechatronics sales (primarily printers), leading to better-than-expected sales and profits for our domestic auto-ID solutions business, even as the business took a transient slowdown in its existing growth trend due to natural disasters that occurred around the country. Going forward, we target to further strengthen our ability to propose solutions for the increasingly sophisticated challenges of our customers to grow this business stably.

■ IDP business

Our IDP business centering on the Inline Digital Printing technology has progressed according to plans for up-front R&D investments while recording a steady increase in sales for its already commercialized base business. Within SATO Group, we have launched specific initiatives aimed at creating synergies with existing operations with the goal of reaching operating profitability for this business by FY 2020.

■ Dividends

Total dividend for FY 2018 is planned at ¥70 (¥35 each for interim and year-end dividend), up five yen from the year before. Keeping to our Credo of sharing the returns from our business with our four stakeholders, we aspire to improve capital efficiency and shareholder value based on our policy of providing increased dividends in a steady and sustainable manner. Our group companies will work as one to continue to implement our medium-term management plan with speed in the second half so as to achieve our full-year target figures for this fiscal.
On behalf of employees and the management, I sincerely ask for your continued support of our businesses.

Excerpted from the 69th Interim Report, December 2018

President and CEO
Ryutaro Kotaki