1. Results of Operations
(1) Analysis of Full-Year Results Overview of FY2016
Consequently, the GUNZE Group’s consolidated net sales for the fiscal year under review amounted to ¥136,579 million (a year-over-year decrease of 1.3%). Consolidated operating income amounted to ¥4,206 million (a year-over-year increase of 14.9%). Consolidated ordinary income was ¥4,671 million (a year-over-year increase of 490.5%). As a result, GUNZE posted a consolidated net income attributable to owners of the parent amounting to ¥3,102 million compared to a consolidated net loss attributable to owners of the parent of ¥1,201 million recorded in the previous fiscal year
Results by Business Segment
In plastic film, mainstay shrink films enjoyed robust sales in Japan and Southeast Asia. The efforts to develop new markets in China by leveraging differentiating functions, and the increase in demand for industrial-use plastic film for Chinese smartphones, also contributed to firm overall sales of plastic films. In engineering plastics, tubes for industrial applications and semiconductor-related products both performed strongly, but this was not enough to offset the drop in sales caused by the sluggish office equipment market.
Innerwear sales were robust due to expanded sales for differentiated products mainly in the women’s innerwear category, and expansion of high-growth channels. In leg wear, sales of the mainstay SABRINA brand performed impressively, driving overall category sales. Consequently, the apparel business posted net sales of ¥71,629 million (a year-overyear increase of 5.1%). This included sales contributed by the apparel retailers, which became subsidiaries of GUNZE in April 2016. The apparel business’s operating income was ¥2,505 million (a year-over-year increase of 12.2%).
(2) Analysis of Financial Position
1) Assets, Liabilities and Net Assets (Fiscal 2016 Overview)
As of March 31, 2017, total assets were ¥169,460 million, a decrease of ¥289 million compared to the end of the previous fiscal year. The main components of an increase in total assets included a ¥2,198 million increase in cash and cash equivalents, a ¥1,853 million increase in investments in securities, and a ¥1,207 million increase in buildings and structures. The main components of the decrease in total assets were a ¥4,315 million decrease in machinery, equipment and vehicles, and a ¥1,119 million decrease in notes and accounts receivable. Total liabilities were ¥61,106 million, a decrease of ¥2,003 million compared to the end of the previous fiscal year. The main components of the decrease included a ¥2,696 million decrease in long- and short-term debt (including commercial paper),. Net assets were ¥108,353 million, an increase of ¥1,714 million compared to the end of the previous fiscal year. The main components of the increase were a net income attributable to owners of the parent of ¥3,102 million recorded for the period under review, and a ¥1,666 million increase in unrealized gains on available-for-sale securities. Main components of a decrease were dividend payments of ¥1,589 million and a ¥1,321 million decrease in non-controlling interests.
(3) Summary of Cash Flows for FY2016
1) Cash Flows
As of March 31, 2017, consolidated cash and cash equivalents were ¥9,670 million, or ¥2,198 million more than at the end of the previous fiscal year. Below is an overview of cash flows and reasons for changes during the fiscal year under review. Net cash provided by operating activities for the fiscal year under review totaled ¥13,832 million, an increase of ¥2,057 million compared to the previous fiscal year. The major components of cash inflows included income before income and other taxes of ¥3,315 million, depreciation and amortization of ¥6,811 million, and a ¥1,121 million decrease in notes and accounts receivable.
(4) Outlook for FY2017
For the upcoming fiscal year, the Japanese economy is expected to experience increasing labor shortages in some industries and a stronger positive mindset among businesses, with expanding capital investment in equipment. Still, there are several risk factors that will cause the business environment surrounding the GUNZE Group to remain unpredictable. These include the potential for a downturn in the economy due to soaring raw material prices, unstable international situations, and a slowdown in growth rates in emerging economies. There is also anxiety about the future caused by the increasing burden of social insurance premiums, which caused consumers to remain strongly budget-minded. Against this backdrop, fiscal 2017 marks the initial year of the second phase of GUNZE’s medium-term management plan, called “CAN 20.” Toward the goals specified by its medium-term management plan, GUNZE will clarify key strategic challenges for each business segment and strive to sustainably enhance its corporate value.