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Review of Operations Special Products

Turning to the Asian market, sales of POS printers in China were sluggish during the fiscal period under review. In contrast, trends were firm in the both the U.S. and Europe and solid on the domestic front. Looking at the fiscal year ending December 31, 2019, Japan is projected to spearhead growth. This is largely due to the forecast pickup in demand associated with the consumption tax rate hike.

SPECIAL PRODUCTS

SALES BY SEGMENT NET SALES OPERATING INCOME & OPERATING INCOME RATIO

Business Environment and Results in the Fiscal Period Ended December 31, 2018

SALES IN THE SPECIAL PRODUCTS SEGMENT

In the Special Products Segment, Star Micronics is engaged in the global sale of mainly POS printers. In addition to conventional products that communicate with POS terminals or PCs, demand for mPOS printers that utilize mobile devices including smartphones and tablet terminals has enjoyed a steady increase in recent years. In addition to a series of new thermal printers, Star Micronics is focusing on the sale of mPOS peripheral devices also under the mCollection® brand name.

In the fiscal period ended December 31, 2018, sales of POS printers were solid in the U.S. market. Sales were also strong in the European market on the back of robust sales trends mainly in leading industrial markets. While sales were sluggish in the Asian market including a drop in demand in China, the market in Japan remained solid overall despite weak large project demand. As far as mPOS printers are concerned, sales are increasing steadily worldwide. Expectations that the Japanese market in particular will expand going forward are especially high. Given these expectations, Star Micronics established Star Marketing Japan Co., Ltd., a sales subsidiary in July 2018, in an effort to strengthen its domestic sales organization.

Accounting for each of these factors, sales in the Special Products Segment came to ¥12,652 million (US$113,982 thousand) and operating income to ¥2,266 million (US$20,414 thousand)*.

Outlook for the Current Fiscal Year and Business Strategies

POS printer TSP650 II

Spearheaded mainly by the market in Japan, demand is projected to remain firm in the fiscal year ending December 31, 2019. mPOS printers in particular are expected to experience ongoing growth while driving the Special Products Segment forward. Again, in the domestic market, mPOS-related demand is anticipated to climb on the back of a variety of factors. This includes the introduction of reduction tax rate measure subsidies in line with the increase in Japan’s consumption tax rate in October 2019 and incentives aimed at encouraging the use of cashless payment terminals. Working largely through Star Marketing Japan Co., Ltd., a sales subsidiary established during the fiscal period under review, every effort will be made to strengthen the Group’s sales organization. In addition, energies will be directed toward cultivating new markets and increasing the Group’s market share by bolstering the sales structure and bases in Europe where sales are expanding.

In the fiscal year ending December 31, 2019, sales in the Special Products Segment are expected to reach ¥13,240 million. From a profit perspective, operating income is forecast to come in at ¥1,930 million.

* The consolidated fiscal period for the fiscal period ended December 31, 2018 is based on and presented for a 10-month period for the Company and consolidated subsidiaries in Japan and a 12-month period for overseas consolidated subsidiaries. Due to this method of presentation, year-on-year percentage change data is not provided.

Sales Volume of POS Printers by Region

(Thousands of units)
  2/2018 12/2018*
The Americas 267 292
Europe 170 186
Asia 61 48
Japan 71 55
Total 568 581

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Establishment of Star Marketing Japan Co., Ltd.,
a Sales Subsidiary in Japan

Located in Shimbashi, Minato-ku, Tokyo, Star Micronics established Star Marketing Japan Co., Ltd., a sales subsidiary in its Special Products Segment in Japan in July 2018. This subsidiary was set up to engage in the sale of POS printers and peripheral devices.

Star Marketing Japan Co., Ltd. based in the Star Micronics Group Tokyo Office

Demand for POS printers as well as peripheral devices has continued to increase in recent years in line with the growing use of mPOS systems in Japan. In addition, the market is expected to expand even further going forward. This is largely due to the reduction tax rate measure subsidies associated with the increase in Japan’s consumption tax rate in October 2019, which are projected to trigger extraordinary demand, and the increase in inbound demand in the lead up to the 2020 Tokyo Olympic and Paralympic Games. Under these circumstances, Star Micronics is making every effort to strengthen its sales organization in Japan centered on the newly established subsidiary.

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