FINANCIAL REVIEWNet salesDuring the scal year ended September 30, 2018 (from October 1, 2017 through September 30, 2018), Japan’s economy generally traced a gradual recovery trend as capital investment rose backed by improved corporate earnings. Nevertheless, the economic outlook became increasingly opaque towards the end of the term due to concerns about the impacts of global trade disputes and policy trends. Given these circumstances, our Group strove to expand net sales and earnings by promoting basic and applied research leveraging our proprietary photonics technologies, as well as continuing to move forward with development of high-value-added products that addressed customers’ needs and to make capital investments aimed at boosting production capacity. As a result, we closed the scal year 2018 with net sales of JPY 144,338 million (US$ 1,266,123 thousand), up by 10.6% from the previous year, thanks to higher domestic sales and overseas sales. Performance by segment, sales in the Electron Tube business comprised of Photomultiplier Tubes (PMT) and Imaging Devices and Light Sources amounted JPY 56,184 million (US$ 492,844 thousand), up by 15.3% from the previous year. Sales of Opto-semiconductor was JPY 66,569 million (US$ 583,941 thousand), up by 9.9% over the previous year. Sales of the Imaging and Measurement Instruments business resulted to decrease 0.4% to JPY 17,145 million (US$ 150,397 thousand). Net sales from other business, mainly semiconductor laser business, hotel operations and a business relating to the proprietary products of Beijing Hamamatsu Photon Techniques Inc., which is a subsidiary in China, were JPY 4,439 million (US$ 38,940 thousand), up by 12.5% over last year.Operating incomeCost of sales increased 7.2% or JPY 4,715 million (US$ 41,363 thousand) over the previous year to JPY 70,385 million (US$ 617,417 thousand). The cost of sales ratio strengthened 1.5 points to 48.8% this year. Selling, general and administrative expenses were JPY 33,857 million (US$ 296,996 thousand), up by 12.1%, JPY 3,658 million (US$ 32,089 thousand). Research and development expenses were JPY 12,830 million (US$ 112,551 thousand), up by 9.0% from previous year. As a result, operating income was JPY 27,263 million (US$ 239,157 thousand), up by 19.3%. Operating income for Electron tube, Opto-semiconductor and Imaging and measurement instruments business segment was JPY 19,697 million (US$ 172,780 thousand), up by 15.9%, JPY 21,320 million (US$ 187,025 thousand), up by 17.4% and JPY 3,584 million (US$ 31,440 thousand), up by 1.1%, respectively. Other business recorded an operating income of JPY 69 million (US$ 608 thousand), down by 75.3%.Prot attributable to owners of parentOther income, on net basis, was JPY 313 million (US$ 2,746 thousand), compared with JPY 720 million (US$ 6,324 thousand) net of other incomes for the previous year. Reecting the previously cited factors, prot attributable to owners of parent for the scal year ended September 30, 2018 was up by 19.3% to JPY 21,222 million (US$ 186,160 thousand) from JPY 17,777 million (US$ 155,942 thousand). Consequently, earnings per share increased from JPY 113.00 (US$ 0.99) to JPY 136.50 (US$ 1.19). Dividend per share applicable to the scal year was JPY 37 (US$ 0.32).Net sales160140120100806040200(¥ billion)Operating income302826242220181614121086420(¥ billion)Profit attributable toowners of parent2220181614121086420(¥ billion)16171816171816171812


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