Yaskawa Electric : Consolidated Results for the First Three Quarters of the Fiscal Year Ending March 20, 2017

Consolidated Results for the First Three Quarters of the Fiscal Year Ending March 20, 2017 [Japan GAAP]

Listed company name: YASKAWA Electric Corporation https://www.yaskawa.co.jp/en/

Representative: Hiroshi Ogasawara, Representative Director, President Stock exchange listings: Tokyo (First section), Fukuoka

Stock ticker number: 6506

January 23, 2017

(Note: This document is a summarized translation of the financial statement submitted to the Tokyo Stock Exchange and Fukuoka Stock Exchange for the period stated above. Figures under ¥1 million are rounded down.)

1. Summary of Consolidated Results for the First Three Quarters of the Fiscal Year Ending March 20, 2017 (March 21, 2016 to December 20, 2016)

2. Consolidated Statements of Income

   (Millions of yen, except ratio and per share data)
   Nine months ended December 20, 2016	Change	Nine months ended December 20, 2015	Change
   Net sales	284,679	(7.1)%	306,421	6.6%
   Operating income	21,618	(20.5)%	27,190	23.3%
   Ordinary income	22,491	(18.6)%	27,613	15.9%
   Profit attributable to owners parent	14,721	(19.3)%	18,245	1.9%
   Earnings per share (basic, Yen)	55.28	-	69.30	-
   Earnings per share (diluted, Yen)	-	-	68.65	-

   Note1: Earnings per share (diluted) for the nine months ended December 20, 2016 is not shown as there is no dilutive shares.

   Note2:	Nine months ended December 20, 2016	Change	Nine months ended December 20, 2015	Change
   Comprehensive income (Millions of yen)	14,351	(19.3)%	17,774	(43.1)%

3. Consolidated Financial Position

   (Millions of yen, except ratio)
   As of December 20, 2016	As of March 20, 2016
   Total assets	380,653	373,533
   Net assets	192,904	183,901
   Shareholders' equity ratio (%)	50.0	48.5

   Reference: Shareholders' equity

   As of December 20, 2016: ¥190,298 million As of March 20, 2016: ¥181,281 million

4. Dividends

   Year ended March 20, 2016	Year ending March 20, 2017	Year ending March 20, 2017 (forecast)
   End of 1Q	-	-	-
   Dividends per share (Yen)	End of 2Q	10.00	10.00	-
   	End of 3Q	-	-	-
   	Year-end	10.00	-	10.00
   Annual total	20.00	-	20.00

   Note: Revisions to the most recently announced dividend forecast: None

5. Projected Consolidated Results for the Fiscal Year Ending March 20, 2017 (from March 21, 2016 to March 20, 2017)

   Projected consolidated results are revised as follows based on the nine months results and the order

   trends in the core segments.

   (Millions of yen, except per share data)
   Year ending March 20, 2017	Change
   Net sales	395,000	(4.0)%
   Operating income	31,000	(15.6)%
   Ordinary income	31,500	(12.1)%
   Profit attributable to owners parent	20,000	(10.6)%
   Earnings per share (Yen)	75.10	-

   Note: Revisions to the most recently announced sales and earnings forecast: Yes

   Reference: These forecasts are based on average exchange rate assumptions of 1 USD = 115 JPY and 1 EUR = 120 JPY during the period from December 21, 2016 to March 20, 2017.

   *Notes:

6. Major change in scope of consolidation: None

7. Use of accounting methods that are specific to the preparation of the quarterly consolidated financial statements: None

8. Changes in accounting policies, changes in accounting estimates, and restatements:

9. Changes in accounting policies accompanying revisions in accounting standards: Yes

10. Changes other than in 1.: Yes

11. Changes in accounting estimates: Yes

12. Restatements: None

    Note: Please refer to "(3) Changes in accounting policies, changes in accounting estimates, and restatements" of "5. Notes to Summary Information" on page 4.

13. Number of Common Shares Outstanding

14. The number of shares outstanding including treasury shares: As of December 20, 2016: 266,690,497 shares

    As of March 20, 2016: 266,690,497 shares

15. The number of treasury shares:

    As of December 20, 2016: 386,793 shares

    As of March 20, 2016: 400,990 shares

16. Average during period (quarter cumulative):

17. Nine months ended December 20, 2016: 266,292,475 shares

    Nine months ended December 20, 2015: 263,290,993 shares

    *Information concerning implementation status of quarterly review procedure

    This quarterly financial report is not subject to the quarterly review procedure prescribed by the Financial Instruments and Exchange Act. The review procedure for the quarterly consolidated financial statements had not been completed when this report was released.

    *About the appropriate use of business forecasts

    Forward-looking statements in these materials are based on information available to management at the time this report was prepared and assumptions that management believes are reasonable. Actual results may differ from these statements for a number of reasons.

    Supplementary materials on 3Q results will be available on our website.
18. Qualitative Information on Quarterly Results

    Business performance of the first nine months of the fiscal year 2016 (Fiscal year ending March 20, 2017)

    • The business environment surrounding the Yaskawa Group was generally positive although there was instability in overseas economic conditions.

    • In the U.S., the low crude oil prices led to a decline in capital expenditures in energy-related industries, however, consumer spending continued growing steadily because of the improvement in the job market and income environment.

    • The European economy saw gradual recovery as the downside risk of global economies arisen by the BREXIT issue turned out to be limited.

    • Market conditions in China were brisk because sophistication and automation of production facilities were aggressively promoted

    • The overall Japanese economy was on a moderate recovery trend, as the yen, which rose in the first half, depreciated in the third quarter.

    • Under these market conditions, the Yaskawa Group aimed to expand business by developing new business in the clean power area, and by improving competitiveness and profitability by launching new products, but rapid appreciation of the yen had a major negative impact on its business results.

      The business performance of each business segment for the first nine months of fiscal 2016 is as follows.

      (Millions of yen, except ratio)

      Nine months ended December 20, 2016
      Business segment	Net sales (change from the corresponding period of previous fiscal year)		Operating income (loss) (change from the corresponding period of previous fiscal year)
      Motion Control	134,743	(down by 6.3%)	15,544	(down by 10.5%)
      Robotics	102,050	(down by 10.7%)	7,928	(down by 35.3%)
      System Engineering	31,190	(up by 13.8%)	(773)	( - )
      Other	16,694	(down by 20.0%)	(140)	( - )

      Motion Control

    • Motion Control segment is comprised of 2 main businesses; AC servo motor and AC drive.

    • AC servo sales were robust due to the continued strong demand for capital expenditures in smartphone- and automotive-related industries especially in China. The profitability improved from the corresponding period last year because of the progress in switching to the new product "Σ-7" series and the effect of local production in China.

    • AC drive business saw sluggish growth in sales as the demand in oil and gas related industries and for PV inverters in Japan stayed stagnant, while the export-related market in China showed a sign of recovery.

    • Both sales and operating income of the segment decreased from the same period last year, because of the effect of yen's appreciation.

      Robotics

    • In the automotive related field for our main products of welding and painting applications, and so on, the global demand was firm especially in Japan and Europe.

    • We focused our efforts on sales activities to expand robot application in non-automotive general industries such as food, medical and cosmetics industries in Japan, as well as 3C (computer, communication and consumer) markets in China.

    • Both sales and operating income of the segment decreased from the same period last year, because of the effect of yen's appreciation.

      System Engineering

    • The profitability of the segment improved as we captured the demand for facility renovation while the new demand remained weak in the steel plant and social system business.

    • The segment aimed at expanding the fields of its clean power business by acquisition of R&D and manufacturing sections of marine drive products of Wärtsilä Norway.

    • The sales increased from the same period last year, and operating loss decreased accordingly.

      Other

    • The Group's information technology business and logistics business are included in this segment.

    • The net sales decreased from the same period last year, and the operating loss accrued. The main reasons are restructuring of related subsidiaries and enhancement in the sales function of new businesses.

19. Notes to Summary Information

1. Major change in scope of consolidation None

2. Use of accounting methods that are specific to the preparation of the quarterly consolidated financial statements

   None

3. Changes in accounting policies, changes in accounting estimates, and restatements Changes in accounting policy

(Application of accounting standards related to business combination)

Beginning with the first quarter consolidated accounting period, the Group adopted the provisions of the Accounting Standards for Corporate Combination (ASBJ Statement No. 21, September 13, 2013), the Accounting Standards for Consolidated Financial Statements (ASBJ Statement No. 22, September 13, 2013), and the Accounting Standards for Business Divestitures (ASBJ Statement No. 7, September 13, 2013). As a result of this change in accounting policy, differences resulting from the changes in Group holdings in subsidiaries remaining under Group control are recorded as capital surplus and expenses related to acquisition are recorded as expenses for the first quarter consolidated accounting period in which they were incurred. The accounting standard for business combination occurring after the beginning of the first