Let me begin by expressing my gratitude for your continued support of IBIDEN CO., LTD. and the IBIDEN Group. We wish to extend our deepest sympathy to all those who have suffered hardship from the Kumamoto earthquake.
The fiscal year ending March 31, 2016 marked the halfway point of our consolidated medium-term management plan, “Challenge IBI-TECHNO 105,” for the five years started from April 2013. The main focus of our medium-term management plan is to create a corporate culture that enables us to stay ahead of changes in the business environment and continuously grow our business for the next 100 years and beyond. More precisely, we aim to facilitate IBI-TECHNO innovation, our unique improvement activities, focusing on “5S,” “Jikoutei kanketsu (built-in quality with ownership) activities,” and “cross-sectional teamwork activities” based on “Genchi (actual site), Genbutsu (actual thing), and Jigakari (on-site solution of problem).” By proactively solving problems on-site through exercising their creativity, all employees are able to improve their skills and increase their motivation towards work, resulting in developing human resources. In addition to achieving management goals, we challenge ourselves to attain higher goals by instilling a sense of achievement in employees while improving teamwork. Through these activities, we aim to promote a positive “spiral up” effect. In the medium-term management plan, we are facilitating activities to increase the competitiveness of our business with the aim of creating a stable earnings structure consisting of three business segments: Electronics Operation, Ceramics Operation, and Other Operation.
Looking at the business results for the fiscal year ended March 31, 2016, we have facilitated the restructuring of our Electronics Operation to respond to the recent expansion in the smartphone and tablet-type devices markets as well as shrinking of the PCs market. As part of the effort, we have enhanced our unique technological capabilities and improved production efficiency by integrating package substrate operation for PCs, a small-sized thin substrate operation for smartphones and tablet-type devices, and a printed wiring boards (PWBs) operation for smartphones and tablet-type devices. However, the business results in the Electronics Operation were very severe due to the further shrinking of the PCs market, coupled with a clear slowdown of the high-end smartphone market since the second half of the fiscal year. In the Ceramics Operation, as part of our major diesel particulate filters (DPFs) business, we started mass production at IBIDEN Mexico Co., Ltd. in June 2015 as a new production base for DPFs for large vehicles where market expansion is expected in line with the implementation of more stringent exhaust emission regulations in the future. As a result, we have completed the development of a global production framework including Japan and Europe. In addition, we have also facilitated the development of a framework to improve our capabilities to propose solutions to customers by leveraging the synergies with the AFP and SCR businesses. Although the overall sales of the Ceramics Operation remained solid, backed by the robust auto market, operating income declined due to changes in the product mix, impact of a fall in sales prices, and costs to launch IBIDEN Mexico Co., Ltd. In the Other Operation, we have decided to merge IBIKEN Co., Ltd. and IBIDEN KENSO Co., Ltd., two of our group companies in Japan, with the aim of further strengthening our housing materials business. Going forward, we will strive to expand our business by leveraging products with distinguished features such as our unique component housing and anti-viral melamine decorative laminates. With the completion of renovation work at the Higashi-Yokoyama Power Plant, all of our power plants have become compliant with renewable energy feed in tariffs (FIT). We will continue to solidify the position of the Other Operation as a third source of revenue through expansion of business with distinguished products and long-term stable earnings through the power business.
For the fiscal year ending March 31, 2017, continued shrinking of the PCs market and a further slowdown in the high-end smartphone market are forecast in the Electronics Operation. In addition, the launch of fan-out wafer-level packaging (FO-WLP) is expected to have a significant impact on our CSP business. As a result, a year-on-year decline of about 20% is forecast in the sales of the Electronics Operation. We will strive to increase the number of orders received by looking for new customers and expanding the purpose of usage. The business environment surrounding us is expected to remain highly challenging and uncertain. However, guided by our medium-term management plan, we will make all-out efforts to strengthen our true competitiveness to overcome the challenging situation and restore our business performance by the fiscal year ending March 31, 2018, the final year of our medium-term management plan. We will strive to put our business back on a sustainable growth path towards the next 100 years.
With respect to a year-end dividend for the fiscal year ended March 31, 2016, we decided to pay \20, which is the same amount as the previous fiscal year. As a result, the annual dividend including the interim dividend will be \35 per share, which is the same amount as the previous fiscal year. In addition, to carry out an flexible capital policy in response to changes in the business environment aimed at increasing shareholder value, we acquired 5,000,000 shares of treasury stock and retired 10,000,000 shares of treasury stock in the fiscal year ended March 31, 2016.
We thank you for your continued support and understanding of the Group.
President & CEO