Message from the President

To Our Shareholders and Investors

Let me begin by expressing my gratitude for your continued support of IBIDEN CO., LTD. and the IBIDEN Group.

The market environment surrounding IBIDENís Electronics Operation is likely to remain challenging during the second half of the fiscal year ending March 31, 2017 (FY2016), due to a decelerating PC market, increased competition among players amid a slowing high-end smartphone market, and the CSP Business posting lower sales, affected by the market launch of fan-out wafer-level packaging (FO-WLP) products. On the back of these developments, the Company is forecast to record an extraordinary loss in the Electronics Operation of approximately •50.0 billion for FY2016 in the form of an impairment loss on noncurrent assets, among others, as a business restructuring charge. As a first step, we posted an extraordinary loss of •42.5 billion for the six months ended September 30, 2016 in the form of an impairment loss on noncurrent assets, among others. From now, we will further examine our business plan and assets closely until the end of 2016, while preparing for a return to profitability from the year ending March 31, 2018 (FY2017). At the same time, to put the Electronics Operation on a growth track again, we will acquire new customers and continue to expand operations as we address new areas such as the IoT, in-car products, and data centers, in addition to attaining higher market shares in leading-edge areas where IBIDEN has excelled to date, thereby striving to achieve a recovery in order intake from FY2017.
In the Ceramics Operation, in response to a trend towards tighter gas emission regulations in Europe and across the world, a growing proportion of customersí product demand is accounted for by items with next-generation specifications (high-performance products meeting tighter regulations). In response to such changes in the business environment and product demand, IBIDEN is projected to record an extraordinary loss in the Ceramics Operation of approximately •5.0 billion for FY2016, in the form of charges for renewing the production platform and rebuilding an optimal production system, as a business restructuring charge.
As a result, IBIDEN has announced a revision of its forecasted consolidated financial results for the fiscal year ending March 31, 2017. The revised forecast is as follows: net sales of •255.0 billion, operating income of •0.1 billion, ordinary loss of •6.0 billion, and loss attributable to owners of parent of •63.5 billion. We regret the burden this places on shareholders.

Regarding the business results for the six months ended September 30, 2016, the Electronics Operation recorded extremely challenging results due to: i) the above-mentioned intensifying competition among players resulting from a changing market environment; and ii) the CSP Business posting lower sales, affected by the market launch of FO-WLP products.
In the Ceramics Operation, while sales volumes were strong because the global car market remained robust, both net sales and operating income declined year on year, affected by the yenís appreciation against other major currencies and product price falls, resulting from changes in product mix. Towards achieving a recovery in profitability, we will implement a business reorganization, including a production platform optimization, and bolster our capabilities for making proposals to customers in the emissions area, based on synergies of the DPF, AFP, and SCR businesses, thereby enhancing our business competitiveness.
In the Other Operation, sales and profits increased year on year, as we expanded our business by leveraging the products with unique characteristic of the domestic Group companies and all of our power plants became compliant with renewable energy feed-in tariffs (FITs) in the power business.

Our operating environment is expected to remain highly challenging and uncertain. However, guided by our medium-term management plan, we will make every effort to strengthen our competitiveness and meet challenges head on, restoring our business performance by the fiscal year ending March 31, 2018, the final year of the management plan. We will strive to return our business back to a sustainable growth path for the next 100 years.

IBIDENís basic policy of returning profits to shareholders calls for continuing to pay stable dividends despite the severe business outlook for the fiscal year ending March 31, 2017. For the interim period under review, we decided to pay •15 per share, which is the same amount as the same period last year. In addition, we plan to pay •20 per share for the year-end dividend, the same amount as in the previous fiscal year, based on the premise that our business performance will recover in the fiscal year ending March 31, 2018.

We thank you for your continued support and understanding of the Group.

November 2016
President & CEO
Hiroki Takenaka