Looking Back on Second Quarter Operational Results for our Fiscal Year Ending March 2015 (consolidated).
Our net sales was 90.0 billion Yen (1.9% increase from same period last year), for the 102nd period, second quarter consolidated. Ordinary profit was 2.8 billion Yen (24.1 % increase from same period last year), resulting in this term's net income of 1.7 billion Yen (31.4% increase from same period last year).
This term, environmental changes of the weaker Japanese Yen and the raise in Japanese consumption tax, affected our business as well.
Lifestyle sports products including running shoes and competitive sports products showed strong sales overall. However, our golf and baseball products in the mid to high price range struggled.
Sales decreased in Japan and the Americas, while the EU, Asia/Oceania showed increase.
For operating profit, we absorbed the cost increases due to the weaker Yen with our cost reduction efforts by improving the process of product development and manufacturing, leading to a gross margin percentage up by 0.9 points. There was also an increase in advertising and promotional as well as marketing expenses, but we managed to achieve increase in profits.
Regional Operating Results
Sales in Japan was 58.7 billion Yen, down 4.8% compared to the previous year. This is partly due to transferring control of exportation to our distributors in Asia, from Japan to two consolidated subsidiaries.
Running popularity continues, as our walking shoes sales also showed growth, through our opening direct retail wellness shops targeting health conscious consumers.
For competition sports, our brand appeal during world-class tournaments affected certain sporting goods sales such as soccer and swimming to grow favorably. However, reaction to the raise in consumption tax affected our sales more than expected, heavily influencing sales of our mid to high price range products in golf and baseball. As a whole, sporting goods sales fell below last year's results.
On the other hand, our sports facilities and service business had steady orders for appointed management operation and sports facility construction. Senoh Corporation also had favorable growth, with indoor athletic facilities leading the way.
Direct Retail Store Wellness Shop, Motomachi Kobe
Walking Shoes LD40 ST"
Sales revenue in Europe was 7.7 billion Yen (Yen conversion 18.7% increase), a 7.2% increase compared to the previous year on local currency basis.
In Europe, enhanced product lineup for indoor sports including handball, lead to expansion in sales. Also, progress of brand awareness lead to continued strong growth in running product sales. On the other hand, golf club sales were stagnant with hyper price discounts due to excess dealer inventory placing them in a difficult situation.
Sales revenue in the Americas was 14.4 billion Yen (3.6% decrease), an 11.1% decrease from the previous year on a local currency basis. Running products as well as golf products could not produce enough sales, which lead to a decrease in sales revenue. On the contrary, volleyball products maintained market top share showing strong sales.
Sales revenue in Asia/Oceania was 9.1 billion Yen (80.0% increase) and a 73.5% increase on a local currency basis from the previous year, due to the effects of transferred control of exportation from Japan to a consolidated subsidiary in Asia. In total, we are showing steady performance, most notably in Taiwan, mainly in lifestyle sports products. We have successfully exerted our brand superiority and increased promotional efforts to provide positive results.
Golf product business struggled with intense competition, while brand saturation of running products, which is our main pillar for revenue, lead to expansion in sales, contributing greatly to operating performance.
As for China, though income fell due to business restructuring, profits and losses improved greatly.
Europe's Handball Shoes
WAVE STEALTH 3
Mizuno Korea / Running Shoes Advertisement
Our Efforts for Future Growth
Aspiring for growth in Asia, we opened a new subsidiary in Singapore, April 2014.
In Europe, we have moved our sports headquarter functions from England to our subsidiary in Munich, Germany and will expand on active marketing. We have also established a subsidiary in Norway and will start business in April 2015.
Additionally, we have opened for the first time in Taiwan, a direct retail shop for running, and will further increase Mizuno's brand equity to our customers across each region.
Mizuno Germany Branch (Munich)
Taiwan direct retail shop
Mizuno Running Store in Taipei
Forecasts of full-year results for financial year ending March 2015
Observing the second quarter operating results as well as indications from our current business condition, full-year operational forecasts for fiscal year ending March 2015 have been revised as follows.
Full year revenues 186.0 billion Yen
Ordinary profit 6.0 billion Yen
Net income 3.4 billion Yen
The main factors for this forecast revision is for the stagnant sales of sporting goods in the mid to high price range, increase in purchasing costs due to the weaker Yen, and on top of the above issues within Japan, there was also decline in sales in the global golf products market influenced by intensified price wars.
Furthermore, stagnant running shoes business in the Americas, which had shown continuous growth up until the last fiscal year, affected our business greatly. However, actions were implemented for this issue for a swift resolution. We are still in a difficult business environment, but will vigorously push forward to resolve our business challenges and to reinforce our business foundation.
The second quarter consolidated operating results for fiscal year ending March 2015 were grim, however, with the mentality of this fiscal year's business slogan "Move Forward!" we will take swift action, and proceed to make improvements to return towards a growth track.
For the realization of our corporate philosophy "Contributing to society through the advancement of sporting goods and the promotion of sports," and to contribute to our shareholders as well as all of our stakeholders, each and every employee will be exerting further efforts, and so we would greatly appreciate your continued understanding and support.