Consolidated Financial Results for the six months ended September 30, 2014 (U.S. GAAP Financial Information) (English translation of "KESSAN TANSHIN" originally issued in Japanese)
October 31, 2014 Makita Corporation Stock code: 6586 URL: http://ww.makita.biz/ Shiro Hori, President, Representative Director 1. Summary operating results of the six months ended September 30, 2014 (From April 1, 2014 to September 30, 2014)
1. Amounts of less than one million yen have been rounded. 2. The table above shows the changes in the percentage ratio of net sales, operating income, income before income taxes, net income attributable to Makita Corporation, and comprehensive income against the corresponding period of the previous year.
The forecast for cash dividend announced on April 28, 2014 has not been revised. l. The projected amount of dividends for the year ending March 31, 2015 has not been determined yet. For further 2. details, refer to "Explanation regarding proper use of business forecast, and other significant matters" on page 3. 1
3. Consolidated Financial Performance Forecast for the year ending March 31, 2015 (From April 1, 2014 to March 31, 2015)
4. Other
(Refer to [Qualitative Information and Financial Statements] Section 4. "Other" on page 5.) (1) Changes in important subsidiaries during the period (Changes in specified subsidiaries accompanied by changes in scope of consolidation during the quarter): None (2) Adoption of simplified accounting methods and accounting methods that are specific to the preparation of quarterly consolidated financial statements: Yes (3) Changes in accounting policies, procedures and presentation rules applied in the preparation of the quarterly consolidated financial statements: 1. Changes due to revisions to accounting standards: None 2. Changes due to other reasons: None (4) Number of shares outstanding (common stock) 1. Number of shares issued (including treasury stock): 2. Number of treasury stock: 3. Average number of shares outstanding:
Information regarding quarterly review This consolidated financial results report is not subject to a quarterly review stipulated under the Financial Instruments and Exchange Act. As of the release date of this document, the quarterly review under the Financial Instruments and Exchange Act has not been completed. Explanation regarding proper use of business forecasts, and other significant matters Regarding the assumptions for the forecasts and other matters, refer to [Qualitative Information and Financial l . Statements] Section 3. "Explanation of Information Relevant to Forecast such as Consolidated Financial Performance Forecast" on page 5. The financial forecasts given above are based on information as available at the present time, and include potential risks and uncertainties. As a consequence of the factors above and other, actual results may vary from the forecasts provided above. 2. Makita's basic policy on the distribution of profits is to maintain a consolidated dividend payout ratio of 30% or greater, with a lower limit on annual cash dividends of 18 yen per share. However, in the event special circumstances arise, computation of the amount of dividends will be based on consolidated net income attributable to Makita Corporation after certain adjustments. The Board of Directors plans to meet in April 2015 for a report on earnings for the year ending March 31, 2015. At the time, in accordance with the basic policy regarding profit distribution mentioned above, the Board of Directors plans to propose a dividend equivalent to at least 30% of net income attributable to Makita Corporation. The Board of Directors will submit this proposal to the General Meeting of Shareholders scheduled for June 2015. The consolidated dividend payout ratio is calculated as annual dividends per share divided by consolidated net income attributable to Makita Corporation per share (after adjustments for special circumstances) and multiplied by 100. [Oualitative Information and Financial Statements] 1. Explanation of Consolidated Operating Results Looking at the global economic situation during the first six-month period of the fiscal year ending March 31, 2015, in Western Europe, the U.K. economy remained solid, while economic growth gradually lost momentum in the euro zone. The Russian economy began slowing down due to political uncertainty in Ukraine. The U.S. economy kept growing against the backdrop of solid consumer spending and housing investment. The Asian economy gradually recovered, led by exports to advanced countries despite a decrease in construction investment in China. Meanwhile, in Japan, consumer spending, which had declined sharply after the consumption tax rate hike, began picking up. Under these circumstances, on the development side, we continuously launched into the market high-capacity lithium-ion battery products and power tools with brushless motors featuring compact design and high power, strengthening our product lineup. On the production side, to establish a production system that can flexibly cope with changes in demand, we continued enhancing functions of our plants in China and Romania. We also improved our quality control system to maintain our high-quality brand. On the sales side, we ran a TV commercial for a cordless brush cutter in Japan this year again, which met with a favorable reception last year, further spreading brand image in the field of outdoor power equipment (OPE*). Overseas, we relocated offices of our local subsidiaries in Russia and Colombia to upgrade systems to supply products and services. Through such steps, we tried harder to meet diversified needs and to maintain and improve our sales and after-sales services near the customers. Our consolidated net sales for this period increased by 11.7% to 207,642 million yen compared to the same period of the previous year. This is due to favorable sales in Japan and abroad and the depreciation of the yen against major currencies such as the US dollar and the euro. Operating income increased by 47.7% to 37,986 million yen (operating income ratio: 18.3%), supported by an improvement in cost of sales ratio due to the influence of currencies in addition to sales growth. Income before income taxes increased by 37.3% to 37,094 million yen (income before income taxes ratio: 17.9%) and net income attributable to Makita Corporation shareholders increased by 33.5% to 25,505 million yen (ratio of net income attributable to Makita Corporation shareholders: 12.3%) from the same period of the previous year.
Net sales results by region were as follows:
Net sales in Japan increased by 9.8% to 32,427 million yen compared to the same period in the previous year. This was because demand remained steady in construction sites and lithium-ion battery products also drove sales. Net sales in Europe increased by 10.7% to 91,105 million yen. This was because the yen depreciated against the euro as compared to the same period in the previous year and sales remained solid in main Western European markets. Net sales in North America increased by 14.1% to 28,026 million yen. This was because favorable sales to the same period in the previous year to home improvement retailers. Net sales in Asia increased by 19.5% to 19,725 million yen compared to the same period of the previous year, although demand in Southeast Asian countries was mixed. The sales situations in other regions are as follows. Net sales in Central and South America increased by 5.0% to 15,299 million yen due to steady sales, despite a stagnant market. In addition, net sales in Oceania grew to 11,116 million yen, up 12.7% compared to the same period in the previous year and those in the Middle East and Africa increased to 9,944 million yen, up 16.5% compared to the same period in the previous year because demand recovered in these regions. *OPE stands for "Outdoor Power Equipment," which is used for outdoor work such gardening, agriculture and forestry. 2. Explanation of Consolidated Financial Position Total assets as of September 30, 2014 increased by 25,881 million yen to 545,002 million yen compared to the balance as of March 31, 2014. The increase was mainly due to an increase in "Cash and cash equivalents" and "Inventories". Total liabilities as of September 30, 2014 decreased by 45 million yen to 79,632 million yen compared to the balance as of March 31, 2014. Total equity as of September 30, 2014 increased by 25,926 million yen to 465,370 million yen compared to the balance as of March 31, 2014. This increase was mainly due to an increase in "Retained earnings" and "Accumulated other comprehensive income". 3. Explanation of Information Relevant to Forecast such as Consolidated Financial Performance Forecast According to "Revision of Forecast for Performance" announced on October 29, 2014, we have not revised our consolidated financial forecast for the full-year of the current fiscal year announced on April 28, 2014 because global business circumstances and the demand trend in the third quarter and later remain unclear.
4. Other
(1) Changes in important subsidiaries during the period (Changes in specified subsidiaries accompanied by changes in scope of consolidation during the quarter): None (2) Adoption of simplified accounting methods and accounting methods that are specific to the preparation of quarterly consolidated financial statements: With regard to the income tax expenses, Makita computes interim income tax expense by multiplying reasonably estimated annual effective tax rate, which includes the effects of deferred taxes, by year-to-date income before income taxes for the reporting period. (3) Changes in accounting principles, procedures and presentations: None 5. Consolidated Financial Statements (Unaudited)
(4) Note on the assumptions for a going concern: None (5) Note in case there is any significant change in the shareholders' equity: None (6) Condensed Operating Segment Information
income taxes, and Net income attributable to Makita Corporation against the corresponding period of the previous year. 2. Please refer to [Qualitative Information and Financial Statements] Section 3. "Explanation of Information Relevant to Forecast such as Consolidated Financial Performance Forecast'' on page 5.
the periods presented. Accordingly, it differs from "Condensed Operating Segment Information" on page 10. The table above shows the changes in the percentage ratio of net sales compared to the corresponding period of the previous year.