Setsuo Iwashita, President and CEO
Setsuo Iwashita, President and CEO

Review of Operations for Fiscal 2018

Sales and profit declined due to the impact of postponements in capital expenditures

During the fiscal year ended June 30, 2019 (fiscal 2018), market conditions, which had been favorable until the previous fiscal year, became subdued, and the ULVAC Group failed to achieve the performance initially planned.

Looking back on business conditions for fiscal 2018, orders received and net sales of FPD and PV production equipment declined year on year despite the contribution of orders received, especially from China, for LCD production equipment for large-screen TVs and OLED production equipment for smart phones. Orders received and net sales of semiconductor and electronic devices production equipment both declined year on year due to the impact of the postponement of capital expenditures by semiconductor memory manufacturers, despite of the robust performance from items such as production equipment for high-performance devices for mobile devices and power semiconductors. Components performed well, with growth in orders received and net sales. However, orders received for general industrial equipment decreased, and net sales remained at the same level as in the previous fiscal year. Orders received and net sales of materials declined year on year, under the impact of factors such as reduced equipment operation in South Korea.


Operating profit margin decreased to 10.8% from 14.2% in the previous fiscal year, and all profit categories declined, as an increase in Selling, general and administrative expenses compounded the decrease in net sales.


As a result, for fiscal 2018, on a consolidated basis, orders received decreased 10.1% year on year to ¥218.5 billion, net sales decreased 11.5% to ¥220.7 billion, operating profit decreased 32.6% to ¥23.8 billion, ordinary profit decreased 30.7% to ¥25.6 billion, and net income decreased 48.0% to ¥18.7 billion.


Accelerating initiatives based on ULVAC’s growth strategy in view of mid- to long-term market prospects, despite the predicted failure to achieve quantitative targets for fiscal 2019

At present, we face a business environment where capital expenditures are temporarily weaker due to delays in the resumption of investments by semiconductor memory manufacturers, and factors such as a hiatus in business negotiations regarding capital expenditures for LCD production equipment for large-screen TVs. 

In the semiconductor memory market in particular, active investment by memory manufacturers in 2017 and 2018 has led to continuing oversupply and price declines, and a full-scale resumption of capital expenditures is expected from 2020 or later, as the market continues to be affected by high-tech trade frictions between the United States and China.In this environment, in fiscal 2019, the current decline in orders received and net sales of FPD and PV production equipment is forecast to continue, as we expect to experience a lull in orders received for LCD production equipment for large-screen TVs, and it appears likely that our customers for OLED production equipment  investment plans for smart phones will be from fiscal 2020. On the other hand, an upturn is expected in orders received and net sales of semiconductor and electronic devices production equipment, with growth expected in new non-volatile memory (PCRAM), logic, communications devices, sensors and power devices, as well as the resumption of investment in semiconductor memory from the second half of the fiscal year.

Based on these predictions, for fiscal 2019, on a consolidated basis, we forecast orders received of ¥206.0 billion (-5.7% year on year), net sales of ¥205.0 billion (-7.1%), operating profit of ¥22.5 billion (-5.6%), ordinary profit of ¥23.5 billion (-8.1%), and net income of ¥15.5 billion (-17.0%). We are actively making R&D investments in future growth fields such as semiconductor memory and logic, MEMS and sensors, power devices, and OLED displays. We plan to invest ¥9.8 billion in capital expenditures for R&D (+¥3.2 billion year on year) and ¥9.6 billion in R&D expenses (+¥0.4 billion). Based on our current three-year mid-term management plan (covering the period from fiscal 2017 to fiscal 2019), we have set consolidated earnings targets of “net sales of ¥265 billion” and “operating profit of ¥38 billion”, but as mentioned previously, our earnings are forecast to fall short of these targets. However, the future targets that we have set for fiscal 2022 remain unchanged. We aim to achieve “net sales of ¥300 billion” and “operating profit margin of 16%” on a consolidated basis under our growth strategy, based on the mid- to long-term market prospects described below.

Future Market Prospects and Growth Opportunities

ULVAC’s vacuum technology: supporting a sustainable society


Despite suffering the effect of temporary market changes at present, in terms of the mid- to long-term market prospects, the ULVAC Group’s business environment presents great opportunities for growth, with the advent of the “smart society” in which various industries shift to electronics. Under the “smart society” where technological revolutions such as AI, IoT, AR/VR and 5G communication require advanced key devices, ULVAC, as a comprehensive vacuum product manufacturer, will continue to provide deposition processing technology and equipment fundamental technology, as well as a broad technological coverage combining these core technologies.

Among the fundamental technologies that support the “smart society,” there is a need for semiconductors with higher processing speed and lower power consumption, in response to rapidly growing volumes of data. The ULVAC Group is responding to this need with the development and supply of production equipment for non-volatile memory such asPCRAM. In addition, we will help bring about the numerous applications that comprise “smart society” through advanced thin-film processing technology and new materials. These applications include the technologies, supporting CASE transformation in the automotive industry, advances in mobile devices such as smartphones and the expansion of 5G communications networks, biomedical devices contributing to the medical and healthcare fields, and energy management supporting a sustainable society through power generation, storage and conversion.

ULVAC’s strengths are not limited to our superior technologies, but also lie in the broad technical coverage, product lineup, and the establishment of a supply chain in growth regions such as China. Going forward, we will utilize these strengths to gain even more opportunities for growth, with better marketing to capture the change, and more effective initiatives to approach the end users beyond our corporate customers from the development stage, thus expanding our circle of cooperation and collaboration across the globe.

Message to our shareholders

Innovating to survive in the global competition

The ULVAC Group implemented an organizational restructuring as of July 1, 2019. We are working to advance the integration of our six business divisions, namely, Semiconductor Equipment, FPD・PV, Advanced Electronics Equipment, Industrial Equipment, Components,and Materials, as well as our group companies engaged in related operations. We have also established the Innovation Center of Excellence, which supports each business by reviewing of operations and systems from the perspective of enhancing management efficiency, the New Business Development Center, which effectively utilizes the Group’s combined management resources to create new business value, the Corporate Sales & Marketing Center, which integrates the marketing function and sales management function and strengthens the global marketing structure, and the Manufacturing Center of Excellence, which enhances the manufacturing capabilities, productivity, and collaboration with overseas production bases.

Under this new organizational structure, we will strive to further expand sales and marketing activities that accurately capture the needs of our customers, and enhance the efficiency of group management. We will continue to transform ourselves company-wide, to survive in the global competition.

It is the ULVAC Group’s mission to support the smart society, characterized by the IoT and 5G as mentioned previously. However, as a comprehensive vacuum products manufacturer, there are also many other fields in which we can contribute to solve environmental and social problems on a global scale, as addressed by ESG and SDGs.

For example, we will respond to the explosive rise in demand for electrical power, as smart society grows, with solutions such as solar cells and power devices, as well as responding to climate change issues, with responsibility as a manufacturer.

Through technologies such as vacuum freeze drying and cryogenics, we will contribute to the reduction of food loss with solutions such as freeze-dried food, as well as fields including health care, with powdered vaccines, medicines, and regenerative medicine.


Through these contributions, we aim to be a company that is needed by society continually.


We hope all of our shareholders to expect ULVAC’s next leap and look forward to your continued and long-term supports.


August, 2019