We will endeavor to enhance our corporate value, through continuous efforts to further increase sales, share values and the brand value of Yamada Denki, based on good relationships with customers and business partners.
In fiscal 2016, the economy was on a track to moderate recovery, while a certain improvement was observed in corporate earnings and employment conditions. In the home appliance distribution industry, the prolonged market downturn due to reactionary demand decline after the end of the eco-point system and the shift to digital terrestrial broadcasting seems to have bottomed out, and sales as a whole were generally favorable except for some influence of special circumstances regarding PCs, mobile phones and other digital products and certain seasonal factors. Yamada Denki's consolidated sales for fiscal 2016 amounted to 1 trillion 563.0 billion yen, with an operating profi t of 57.8 billion yen and a recurring profit of 66.0 billion yen. Current net profit belonging to the parent company's shareholders was 34.5 billion yen.
Analysis of Financial Status
Assets, Liabilities, and Net Assets
The total assets as of the end of this fi scal year in the Consolidated Financial results increased to 1,159,456 million yen, up by 12,734 million yen compared to the end of the previous consolidated fiscal year (a 1.1% increase from the previous term). This is mainly due to increases in goods and products through strategic purchase of seasonal products and alteration of sales floor composition.
Liabilities decreased to 573,909 million yen, down by 15,091 million yen (a 2.6% decrease from the previous term), mainly due to a decrease in long-term borrowing.
Net assets increased to 585,547 million yen, up by 27,825 million yen (a 5.0% increase from the previous term), due to such reasons as an increase in accumulated earnings. As a result, the capital adequacy ratio increased to 48.4% (up by 1.8 points from the previous term).
Cash and cash equivalents as of the end of this fi scal year in the Consolidated Financial Results increased to 34,981 million yen, up by 4,316 million yen compared to the end of the previous consolidated fi scal year (a 14.1% increase from the previous term).
Cash flows in respective activities during this fiscal year in the Consolidated Financial Results are as follows.
● Net cash used in operating activities
Net cash used in operating activities resulted in income of 43,855 million yen, mainly due to the recording of the net income before income taxes despite the payment of corporate tax, etc.
● Net cash used in investing activities
Net cash used in investing activities resulted in expenditure of 15,279 million yen, mainly due to the acquisition of tangible fixed assets upon refurbishment of stores.
● Net cash used in fi nancing activities
Net cash used in financing activities resulted in expenditure of 24,382 million yen, mainly due to the repayment of long-term borrowings.
Products and Services Provided by Yamada Denki and Sales by Product Category
The Yamada Denki Group sells a variety of electric home appliances and information electronics products to individuals and corporates. Recently, we have been placing stress on the housing business such as the sale of smart houses and renovation of existing houses. We also provide various pre-and after-sales services, including the provision of personal computer lessons and the establishment of counters dedicated to small and medium-sized companies and government agencies. Social needs are changing drastically due to the declining birthrate and the aging of society, population decrease and the development of the Internet society. However, we take advantage of having the largest store network in Japan and will further endeavor to enhance services based on the "customer first" approach with the aim of being a leading company of the IoT age through the daily life support services, smart house services, renovation services, net mall services and environment-related services.
Not Only Provide Products but also Offer Expert Service and Solutions
In order to respond to changing social needs, the Yamada Denki Group is promoting the shift from only providing goods (home appliances and other products) to offering proposals on servicing (miscellaneous support and services). By not only selling goods but also offering proposals on servicing, we are trying to further enhance the value of goods themselves and improve customer convenience.
Development of Smart House & Renovation Businesses for Cultivating New Markets and Linking to the Coming Generations
The Yamada Denki Group has been promoting the initiatives of "energy conservation" through the dissemination of energy-effi cient electric home appliances, "energy creation" by the use of photovoltaic power generation systems, and "energy storage" to store generated power, via its store network and subsidiaries (Yamada SxL Home Co., Ltd. (First Section, Tokyo Stock Exchange; Code: 1919) and Yamada Wood House Co., Ltd.). We offer proposals on smart houses wherein these initiatives are controlled and integrated through the use of the HEMS and communications infrastructure (proposals on newly-built houses and net zero energy houses (ZEH)). We have installed model houses and showrooms with offices at stores' parking lots and mockups within stores to demonstrate our unique business models, which are independent from the conventional ones employed by ordinary home builders, and offer proposals on the entirety of a house in response to the coming aging society with fewer children. In this manner, we are cultivating new markets from the customers' viewpoint and based on a downstream perspective. Furthermore, Housetec Inc., which is a subsidiary household equipment manufacturer, installs showrooms within Yamada Denki's stores and is actively offering proposals on renovation in collaboration with Total Smarnity Life Corner booths (renovation corner booths), while shifting from a business model centered on B-to-B services and expanding new B-to-C demand.
Promotion of Reuse and Recycling Business of Home Appliances and PCs
In collaboration among C.I.C. Corporation, Azuma Metal Co., Ltd., and Inversenet Co., Ltd. within the Yamada Denki Group, the business to reuse and recycle home appliances and PCs has been promoted, with the aim of reducing environmental impact. Home appliances that are no longer used are collected and then renewed and resold as goods for reuse after the processes of cleaning, breakdown, inspections, etc., or are recycled as resources. As of the end of March 2017, the number of outlet/reuse stores operated by Yamada Denki increased to 19. Second-hand clothes and other non-electric/ non-electronics products are also sold in collaboration with C.I.C. Corporation, in addition to home appliances for reuse. In this manner, we are trying hard to satisfy customer needs and are contributing to circulation of limited resources.
Development of SPA Products
Yamada Denki has been developing its original brand, "HERB Relax" series, as the SPA business, integrally covering marketing, planning, development and retailing. Under the basic concept, "Products with Functions Preferred by Customers," instead of seeking so-called "high functionality," new products are being developed from the customers' viewpoint, such as limiting them to only necessary functions or further improving energy efficiency. As of the end of March 2017, there are a total of 380 products mainly in categories of consumable goods and small home appliances.
Opening of New Stores
Having established a national chain covering all 47 prefectures, we have been continuing our efforts to further advance its store network and improve services as a specialist home appliance merchandiser while responding to various social needs. The number of stores as of the end of March 2017 was 956 (directly operated stores: 649; Best Denki stores: 142; and other consolidated subsidiaries: 165) and the total number of stores including FC stores was 12,075.