To our shareholders
I would like to express my deep gratitude to all our shareholders for the kindness you have shown us.
Alpine announced the integration of its management with Alps Electric Co., Ltd. on July 27. Then In August we moved our head office to the location of the head office of Alps Electric Co., Ltd. We are planning to accelerate our synergy as a group by switching over to the holding company system in April 2019. Under the holding company Alps HD, Alps Electric Co., Ltd. and Alpine will become nonfinancial subsidiaries aiming for total sales of 1 trillion yen centered on the electronic parts business and the automotive information and communication equipment business.
In the first half of this fiscal year, the Japanese economy gently recovered while the gradual expansion of business in the United States and Europe continued. The future of the world economy was unclear as a consequence of political trends and an increase of geopolitical risk in the far east, resulting from the new administration in the United States.
In the midst of such circumstances, in addition to our car-specific navigation systems, and high sound quality speakers which have earned high praise in the market place as branding products, and new products such as the wireless head unit compatible with Apple’s CarPlay®, Alpine has started to sell ALPINE STYLE customized cars with totally coordinated interiors and exteriors. Also, in our OEM business, we expanded orders of high sound quality speakers and amps for premium cars as well as thin, light-weight speakers that designed for reduced automobile fuel consumption and greater consideration of the environment.
Alpine also expanded sales of domestic brand products and OEM parts to auto makers in the Chinese market and boosted value of its sales thanks to a lowered rate of exchange for the yen. And profitability also exceeded expectations as a result of increased revenue and reduction of fixed expenses achieved by rationalizing software development. As a result, consolidated performance in the first half of this fiscal year was total sales of 126.2 billion yen and operating income of 3.7 billion yen, for year-on-year increases in both revenue and profits.
And along with the results of a revision of the exchange budget rate for the second half of the fiscal year, we have revised our predicted performance for the entire year from the initial total sales of 250 billion yen to 260 billion yen, and operating income from 6.5 billion yen to 9 billion yen. The environment is predicted to change in various ways again during the second half, but we will share our hope of enriching the car life of our customers throughout the company, and under the theme of “Creation, Passion, Challenge,” will achieve this fiscal year’s performance.
Alpine has adopted and is now working to realize VISION 2020 goals (total sales of 330 billion yen, and operating profit rate of 5% in FY2020), which is our long-term management plan, with the target year of 2020. We have almost completed the reorganization of our domestic subsidiaries, underway since the previous fiscal year, and can now count on the results of this reorganization in the future.
Our other plans are also proceeding smoothly and the achievement of our goals has come into sight, but amidst dramatic changes in the environment that are now occurring, as we respond appropriately to this change, we have enacted and are now implementing the 14th Mid-term Business strategy to achieve VISION 2020. With the 14th Mid-term Business strategy positioned as the “Period of achievement of VISION 2020,” we are developing policies for the market trends: Autonomous Driving, Connected, EV (electric vehicles), and Car Sharing. The business environment is undergoing further change including links within the auto industry or with other industries, and participation in joint projects, and is increasing in intensity. Alpine will aggressively conduct joint development activities with its parent company, Alps Electric Co., Ltd. and alliances with various partners at home and abroad. We will accelerate our business activities and respond to change. And we will develop our business through selection and concentration: deploying resources to fields that take advantage our own strengths such as ADAS (Advanced Driver-Assistance Systems).
Alpine celebrated its 50th anniversary this year. We are deeply grateful to all our shareholders who have continued to support us. Keeping in mind our gratitude to all of you, we will continue to strive to create greater future value in the next 50 years.
I request that all our shareholders continue to honor us with your support and encouragement.