Among other bad news, Hoya Corp. apologized in its latest quarterly financial report last month for shipping a very small quantity of sub-standard products from its own line of shock-resistant plastic lenses for eyeglasses, adding that it will make more efforts to improve quality control and thus prevent such incidents to occur again.
The Japanese group recorded a net loss of 2,125 million yen (e16.7m-$17.9m) in the 3rd quarter ended last Dec. 31, as compared to a profit of 5,142 million yen. Hoya's total sales rose by 8 percent to 61.6 billion yen (e483.1m-$518.9m) in the period, and its operating income grew by 33.4 percent to 13.4 billion yen (e105m-$113m), despite a lower profitability in its vision care segment. However, provisions of 1.7 billion yen (e13.3m-$14.3m)for early retirements in the vision care and crystal divisions and charges of 15 billion yen (e118m-$126m) from the dissolution of an employee pension fund led to final loss. The provisions were evidently related to shifts in production outside Japan.
No other major extraordinary charges are expected over the balance of the year, leading the group to predict a net profit of about 20 billion yen on sales of 247 billion yen for the full year. For the 9-month period ended Dec. 31, the group reported a reduced net profit of 12.7 billion yen (e99.6m-$107m) on 5.2 percent higher sales of 184.6 billion yen (e1.4bn-$1.6bn).
The 8.9 percent appreciation of the euro against the yen during the 9-month period benefited Hoya's overall business including its vision care division, whose total sales increased by 2.2 percent to 70.3 billion yen (e551.3m-$592.2m), generating a 16 percent operating profit, up from 14.6 percent in the same period a year ago. While domestic sales fell by 9.6 percent in this sector, due to continued tough market conditions and price deflation, sales outside Japan rose by 11.6 percent to represent 57.4 percent of turnover in vision care.
In the latest quarter, Hoya's vision care sales increased by 2 percent to 23 billion yen (e180.4m-$193.7m), with a slightly reduced operating margin of 13.1 percent. Sales outside Japan grew by 7.8 percent to 58.7 percent of the total turnover in this sector.
In the health care segment of its business, Hoya's sales of contact lenses continued to rise in the quarter thanks to stronger promotion of high value-added products such as bifocal lenses and lenses for astigmatics. Sales of intraocular lenses grew sharply.
Overall, sales of health care products, including hearing aids, rose by 11.1 percent to 6.7 billion yen in the quarter, and their operating margin jumped from 16.0 to 18.6 percent, but 99.8 percent of the business was still in Japan. For the 9 months ended Dec. 31, their sales were up by 16.9 percent to 19.9 billion yen (e156.1m-$167.6m), with an operating margin of 18.9 percent. The group's largest division, electro-optics, reached a much higher margin of 31.3 percent.