Interim Report

Interim Report
2015 (January 1 – June 30)
Wooden
Message to Shareholders
During the first half of fiscal 2015 (from January 1 to June 30, 2015),
the economic outlook remained unclear overall. In Japan, the
effects of the Bank of Japan’s ambitious monetary easing policy
and measures to depreciate the yen spread throughout the
economy, and capital investment picked up on the back of strong
corporate earnings. On the other hand, the depreciation of the yen
drove up prices for imported raw materials, and growth in
international markets declined. Consequently, the Japanese
economy is at risk of a downturn.
In these circumstances, the PILOT Group focused on marketing
its highly profitable own products, particularly the FRIXION series,
Hiromoto Watanabe
Representative Director and President
in its core stationery products business. The Group also worked to
develop distinct new product lineups and achieve a globally costcompetitive production system, while carrying out ongoing
initiatives to bolster its R&D capabilities and cut costs further by
optimizing the efficiency of its operations.
We intend to leverage these unique products and the Company’s competitive advantages to expand business
in the years ahead. This means securing a realistic amount of profits by manufacturing and marketing highvalue-added products that offer superior quality and functionality, without engaging in aggressive price
competition. Most important of all is to develop products that are a pleasure to use and satisfying for users,
based on our management policy of always considering the customer first.
As PILOT Corporation approaches 2018—the 100th anniversary of its establishment—we are striving to be a
manufacturer of writing instruments that bring the highest level of customer satisfaction in the world. All
members of the PILOT Group are working as one to promote and establish the PILOT and NAMIKI brands
throughout the world as symbols of outstanding quality and superior value.
During the first half of fiscal 2015, PILOT conducted a two-for-one stock split effective as of July 1, 2015. The
purpose of this move was to raise the liquidity of our stock and attract a larger number of investors, especially
private investors, by reducing the amount of investment per share to make it easier to invest in the Company.
To express our gratitude to PILOT’s shareholders for their ongoing generous support, the Company pays a
dividend of 20 yen per share for the interim period of fiscal 2015, comprising an ordinary dividend of 15 yen per
share together with a commemorative dividend of 5 yen per share to celebrate the 10th anniversary of our sales
launch of the FRIXION series. Following the stock split, we are planning to pay a year-end dividend of 11 yen per
share, comprising an ordinary dividend of 7.5 yen per share along with a commemorative dividend of 3.5 yen
per share to celebrate the seventh anniversary of our release of the globally strategic ACROBALL series of pens.
Unadjusted for the stock split, this would bring the full-year dividend to 42 yen per share, an increase of 12 yen
over the 30 yen per share paid in the previous fiscal year.
In closing, we humbly ask the Company’s shareholders for their continued support and suggestions in the
years to come.
September 2015
1
Business Performance
Stationery Products Business in Japan
In Japan’s stationery market, PILOT’s strength is its marketing system,
which is based on direct sales to retail stores. Leveraging this
competitive advantage, the Company is channeling its efforts into
Orange, white, and black were added
as new colors in the COCOON series.
marketing its own highly profitable products.
PILOT has achieved steady sales in Japan by marketing products as
a series tailored to the personal tastes of targeted consumers. During
the first half of fiscal 2015, the Company posted strong sales of its
FRIXION series of erasable ink, in particular, including FRIXION LIGHT
highlighters, popular FRIXION BALL KNOCK pens, and FRIXION BALL
3 pens, which come in a variety of colors and feature a 0.38 millimeter
tip for extra-fine writing. Sales of replacement pen refills for these
products also grew. Overall, sales of the series rose year on year,
reflecting our efforts to respond to increasingly diverse customer needs
24 colors available
A wide selection of IROSHIZUKU
fountain pen ink in mini sizes is now
available.
with a wider lineup of products, including FRIXION stamp, a handy
erasable stamp for decorating notebooks and cards.
PILOT’s oil-based ballpoint pens also sold well, including its globally
strategic ACROBALL series of pens featuring a tire-tread grip designed
for a comfortable fit in the hand, and ACROBALL INK, a low viscosity
ink designed for smooth writing and thick lines. Sales were also strong
for the Dr. Grip 4 + 1, a package of ballpoint pens in four colors plus a
mechanical pencil. Designed for effortless writing free of fatigue, these
pens also use ACROBALL INK.
PILOT posted steady sales of its BOARD MASTER series of
whiteboard markers, which are designed to make continuously thick
The ACROBALL series of pens now
writes even more smoothly and with
thicker lines.
lines. These markers come with a refillable ink cartridge, making them
more economical and environmentally friendly. The addition of new
products in the lineup, including the BOARD MASTER S with an
attached eraser on cap, also contributed to increased sales.
New 0.38 millimeter extra-fine writing
refills are now available in three colors
in the popular FRIXION BALL 3 pens.
2
Business Performance
Stationery Products Business and Other Businesses
in Japan
PILOT’s mechanical pencils sold well in the first half of fiscal 2015,
particularly the Dr. Grip series, including the Dr. Grip CL PlayBorder,
which allows users to rearrange the grip to create personalized
FRIXION BALL KNOCK pens for women
can be enjoyed as fashion items.
mechanical pencils. Strong sales were also posted for NEOX
GRAPHITE pencil leads that make possible smooth writing without easy
breakage.
Among PILOT’s lineups of premium writing instruments, 2+1 EVOLT,
a combination of ballpoint pens and a mechanical pencil made with a
beautiful and shiny aluminum body, continued to enjoy solid sales.
Sales were also strong during the interim period for other brands. These
included KAKUNO fountain pens, which are popular with children and
adults alike for their ease of use, the COCOON series of fountain pens
that mainly targets people in their 20s and 30s, and IROSHIZUKU
fountain pen bottle ink, which is available in a wide range of colors,
including sketches of the beautiful landscapes so often seen in Japan.
Supported by these results, business conditions remained
This new COLORIM series of stationery
features simple designs in bright colors.
My Own Headband Kit
favorable for PILOT’s stationery business overall. Sales to tourists
visiting Japan also contributed to results. Owing to all of these factors,
net sales in the Japan segment amounted to 19,884 million yen, a
year-on-year increase of 3.5%. Meanwhile, operating income totaled
8,341 million yen, up 40.7% compared to the interim period of the
previous fiscal year.
Girls can have fun making original
headband by choosing fabric and
accessories in up to 40 different
combinations.
Mel-chan and Nene-chan
Waku-waku Food Court
A new product in the Mel-chan series,
Waku-waku Food Court encourages children
to learn about table manners and use their
power of imagination by playing with
Mel-chan and her sister Nene-chan.
3
Stationery Products Business Worldwide
The Americas
In the Americas segment, sales were robust in the United States, the
G-2 water-based gel ink rollerball pens
are mainstay writing instruments in the
United States.
PILOT Group’s primary sales region. In addition to strong sales of the
popular G-2 series of mainstay retractable-type gel ink rollerball pens,
PILOT’s global strategic products—namely, the ACROBALL and
FRIXION series—gained a firmer foothold in the market.
Owing to these results, net sales in the Americas segment rose
19.8% year on year to 12,777 million yen in the first half of fiscal 2015,
while operating income jumped 69.0% year on year to 662 million yen.
Europe
In the Europe segment, PILOT posted solid sales of its product groups
PILOT has taken ACROBALL
smooth-writing ballpoint pens with
oil-based ink from Japan to the world
market.
already on the market, led by whiteboard markers, as well as sales
growth for its FRIXION series particularly in France, Scandinavia and
Eastern Europe.
As a result, net sales in the Europe segment increased 5.0% year on
year to 11,645 million yen in the interim period of fiscal 2015. Operating
income amounted to 1,678 million yen, up 7.3% compared to the same
period of the previous fiscal year.
Asia
In this segment, PILOT posted strong sales of whiteboard markers
throughout Asia. In China, the Company carried out marketing activities
The FRIXION series of erasable pens is
popular in every country where it is sold.
and improvements to its sales system intended to achieve stable growth,
resulting in robust sales especially for the G-2 series and FRIXION
series. In Hong Kong, Singapore, and elsewhere in Asia, sales volume
grew significantly owing to proactive marketing campaigns focused on
PILOT’s FRIXION series and Juice series of gel ink rollerball pens.
As a result of these factors, net sales in the Asia segment totaled
5,099 million yen, an increase of 28.6% compared to the same period
of the previous fiscal year, while operating income soared 80.2% year
These cartridge-system whiteboard
markers are selling well in countries
worldwide.
on year to 289 million yen.
Note: The segment totals for operating income include intersegment amounts.
4
Topics
Maki-e Fountain Pens
The NAMIKI Collections
Luxurious NAMIKI Maki-e fountain pens first appeared in
1930 as Dunhill-NAMIKI brand products, realized through a
partnership with the British firm, Alfred Dunhill Ltd. Over
the many years that have passed since then, NAMIKI pens
have gained a strong reputation in countries worldwide as
hand-crafted pens that represent the traditional culture of Japan.
The NAMIKI Website
The NAMIKI brand website features details on seven NAMIKI collections, as
well as information and beautiful photos and videos related to the many
sophisticated lacquerware techniques and production processes, the history of
NAMIKI products, and the Kokkokai lacquerware artisans’ collective.
http://pilot-namiki.com/en/
Opening of NAMIKI Maki-e Atelier
In January 2015, PILOT opened NAMIKI Maki-e Atelier as a lacquered
fountain pen museum in Hiratsuka, Kanagawa Prefecture. To create
this facility, the Company remodeled a late Taisho Period
(1912–1926) brick building, which had formerly been used as a naval
arsenal, situated on the grounds of its Hiratsuka Factory. PILOT
began selling lacquered Maki-e fountain pens after it was established in
1926 as Namiki Manufacturing Co., Ltd. In the nearly nine decades
since then, it has passed down lacquering techniques using gold and
silver, a time-honored handicraft in Japan. The museum displays
about 100 valuable lacquered items and Maki-e fountain pens made by
the Company as well as historical documents and posters.
5
Business Performance
Consolidated Balance Sheet for the Interim Period
Term
(Millions of yen)
Interim period-end
(As of June 30, 2015)
Item
Assets
Current assets
69,639
Noncurrent assets
35,294
Property, plant and equipment
21,687
Intangible assets
5,093
Investments and other assets
8,513
Total assets
104,934
Liabilities
Current liabilities
35,330
Noncurrent liabilities
6,668
Total liabilities
41,999
Net assets
Shareholders’ equity
61,882
Accumulated other comprehensive income
Minority interests
(29)
1,081
Total net assets
62,935
Total liabilities and net assets
104,934
6
Statement of Consolidated Income for the
Interim Period
Term
Net sales
(Millions of yen)
Interim period
(January 1 to June 30, 2015)
Item
Net sales
Cost of sales
Gross profit
Selling, general and
administrative expenses
Operating income
80,000
23,462
60,000
25,944
40,000
15,796
20,000
10,148
0
692
Non-operating expenses
508
Ordinary income
Extraordinary income
19
Extraordinary losses
57
Net income
39,556
FY2013
44,935
FY2014
FY2015 Interim
Ordinary income (full year)
Ordinary income (interim)
16,000
Net income (full year)
Net income (interim)
14,778
12,000
10,332
9,501
8,928
8,000
6,683
Minority interests in income
49,407
(Millions of yen)
3,611
Income before minority interests
90,268
Ordinary income and net income
10,294
Income taxes
82,564
Interim
(Jan. to Dec. 2013) (Jan. to Dec. 2014) (Jan. to June 2015)
10,332
Income before income taxes and
minority interests
100,000
49,407
Non-operating income
Full year
(Millions of yen)
5,453
57
4,000
6,626
0
6,626
7,532
4,868
3,813
2,336
FY2013
FY2014
FY2015 Interim
(Jan. to Dec. 2013) (Jan. to Dec. 2014) (Jan. to June 2015)
Statement of Consolidated Cash Flows for the
Interim Period
Term
Item
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Effect of exchange rate change on cash and
cash equivalents
Net increase in cash and cash equivalents
(Millions of yen)
Interim period
Net income per share
(January 1 to June 30, 2015)
Full year
(Yen)
6,415
117.78
(255)
Cash and cash equivalents at end of period
19,183
100
50
4,224
14,959
142.82
150
172
Cash and cash equivalents at beginning of period
192.57
200
(2,108)
Interim
0
105.02
50.49
FY2013
FY2014
FY2015 Interim
(Jan. to Dec. 2013) (Jan. to Dec. 2014) (Jan. to June 2015)
Note: PILOT conducted a two-for-one stock split of its ordinary stock
effective as of July 1, 2015. Figures for previous years in the graph
above have been adjusted to reflect this stock split.
7
Corporate Profile (as of June 30, 2015)
Shareholder Information
Number of shares authorized������������� 90,000,000
Number of shares issued���������������� 23,407,200
Number of shareholders������������������ 4,297
Major shareholders
Number of
shares held
% of total
voting rights
4,355,300
18.60
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
859,300
3.67
Trust & Custody Services Bank, Ltd. as trustee for
Mizuho Bank, Ltd. Retirement Benefit Trust Account
re-entrusted by Mizuho Trust & Banking Co., Ltd.
801,000
3.42
Japan Trustee Services Bank, Ltd. (Trust Account)
657,500
Name
Daiwa Capital Markets Singapore Ltd. Nominee Ko
Hong Myong
Employees’ Stockholding
Asahi Mutual Life Insurance Company
Breakdown of shareholders by sector
Other corporations
102 (2.37%)
Foreign corporations
and others
145 (3.37%)
Treasury stock
1 (0.02%)
Financial institutions
50 (1.17%)
Financial
instrument
firms
23 (0.54%)
Individuals and others
3,976 (92.53%)
Breakdown of shares by sector (shares)
Other corporations
3,772,600 (16.12%)
598,200
567,000
Treasury stock
31 (0.00%)
2.80
2.55
Foreign corporations
and others
6,245,393 (26.68%)
Financial instrument
firms
181,004 (0.77%)
2.42
Individuals and others
4,569,572 (19.52%)
Mitsubishi UFJ Trust and Banking Corporation
550,200
2.35
The Master Trust Bank of Japan, Ltd. (Trust
Account)
548,700
2.34
SHOCHIKU Co., Ltd.
486,000
2.07
The Dai-ichi Life Insurance Company, Limited
450,000
1.92
Notes:
1.Treasury stock (31 shares) is not included in the calculation of the shareholding ratio.
2.PILOT conducted a two-for-one stock split of its ordinary stock effective as of July 1, 2015.
8
Financial institutions
8,638,600 (36.91%)
Outline
Corporate name:
PILOT CORPORATION
Headquarters:
2-6-21, Kyobashi, Chuo-ku, Tokyo 104-8304, Japan
Telephone:
+81-3-3538-3700
URL:
http://www.pilot.co.jp/company/english/
Foundation:
January 4, 2002
Establishment:
January 27, 1918
Capital stock:
2,340,728,000 yen
Number of employees:
1,082
Management Team
Directors
Executive Officers
Representative Director and
President
Hiromoto Watanabe
Representative Director and
Senior Managing Director
Ikuo Goto
C. H. Tan
Senior Managing Director
Yoshio Kokubo
Takashi Kataoka
Director and Senior Advisor
Kiyoshi Takahashi
Masami Muramatsu
Directors
Shu Itoh
External Director
Senior Executive Officers
Executive Officers
External Corporate Auditors
Masahiko Suzuki
Ryo Narumai
Naoki Soramoto
Hiroshi Asaba
Masakazu Shirakawa
Yasuo Horiguchi
Hiroyuki Gozono
Sanae Tanaka
Tsutomu Kimura
Kazuhiko Yokoyama
Corporate Auditors
Standing Corporate Auditors
Dennis Burleigh
Takashi Suzuki
Katsuji Hatano
Tatsuo Soutome
Fumio Fujisaki
Hiromi Niwa
Takashi Sasaki
Sachio Itasawa
Takeshi Kodaira
Front cover photo: Capless Wooden
PILOT’s Capless retractable-type-fountain pen, which is made with birch wood. It offers a unique
texture that becomes finer with use.
9
This Business Report is an English
translation of the Business Report
for shareholders in Japan.