To Our Shareholders and Investors

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

Performance Review

For FY2016, ended March 31, 2017, our Electronics Operation was hit hard by a decelerating PC market, intensifying competition among players amid a slowdown in the high-end smartphone market, as well as the adoption of fan-out wafer-level packaging (FO-WLP) for some high-end products. Faced with a drastic environmental change in orders, we went ahead with structural reforms centered on the impairment of noncurrent assets, in order to align the value of assets with the level of incoming orders. We will make aggressive efforts to cultivate a new customer base by leveraging the thin, high-density packaging technology, quality, and development capability we have gained in the areas of PCs and smartphones as we expand into new fields that address Internet of things (IoT), in-car, and data center applications. Besides, we will work to increase our market shares in cutting-edge areas, in which IBIDEN has excelled to date, all with the aim of improving our bottom line.
Our Ceramics Operation saw operating income decline due to the yen's appreciation against the euro, changes in product mix, and falling sales prices, although overall sales remained robust due to a booming automobile market. To turn our business around, this fiscal year we integrated the DPF and SCR Units into the ECP Unit, under which we positioned business units by product line, to allow for more agile and efficient operations. Under the new organizational structure, we will take advantage of the synergies of the DPF, SCR, and AFP businesses to bolster our capabilities for making proposals to customers and optimized production systems across the globe as we work to enhance our competitive edge in exhaust system components.
In Other Operation, we will expand operations by leveraging the unique products of our domestic affiliates and capitalize on steady income from our power generation business with the vision of establishing them as long-term stable revenue sources.

Initiatives Aimed at Sustainable Growth

This fiscal year we launched the Automotive Functional Product Development Center, Future Mobility Product Development Center, Advanced Ceramics Development Center, and Biomaterial Product Development Center to facilitate development of new products in specific areas that will support our sustainable growth over the medium to long term. These new product development centers will enable us to quickly commercialize and expand sales of new products. On April 27, 2017 IBIDEN formed a capital and business alliance with Denso Corporation, a company boasting considerable expertise and a proven track record in the automotive component industry. The two companies will work on joint development at the Automotive Functional Product Development Center and the Future Mobility Product Development Center to give impetus to product development.
While our operating environment is expected to remain highly challenging and uncertain, we will move ahead steadily with bolstering the competitiveness of our existing businesses and developing new products as we continue to focus on personnel development as a foundation-building initiative. All of us at IBIDEN will work together to turn our business around in FY2017, the final year of the current medium-term management plan.

Taking Charge in a New Role

At the Board of Directors' meeting, which was held following the closing of the June 16, 2017 Ordinary General Meeting of Shareholders, I took over the position of President & CEO from Hiroki Takenaka. We will start preparing for the FY2018 launch of a new five-year medium-term management plan under our new management team. While focusing on personnel development as our foundation, we will work to bring new products to the market as soon as possible with the aim of becoming a company that continues to grow and embraces diversity in the workplace.

Shareholder Return

We implemented a new special benefit plan for shareholders who had one or more units of shares as of March 31, 2017. For the year-end dividend, we decided to pay ¥20 per share, which is the same amount as last year's year-end dividend, because paying stable dividends to our shareholders is important to us, despite the challenging business results. Combined with the interim dividend, we will pay an annual dividend of ¥35 per share, the same amount as the annual dividend for FY2015.
We thank you for continuing to support the Group.

June 2017
President & CEO

Takeshi Aoki