Epson Integrated Report 2018

About This Report

This integrated report aims to provide stakeholders with a comprehensive understanding of Epson's management strategy, financial performance, and ESG (Environmental, Social, and Governance) activities. It references guidelines from the Ministry of Economy, Trade and Industry's "Value Co-Creation Guidance" and the International Integrated Reporting Council (IIRC) "International Integrated Reporting Framework."

Management Philosophy and Corporate Action Principles

Epson's management philosophy centers on valuing customers, respecting the environment, fostering individual potential, and leveraging collective strength to become a company that is trusted and indispensable to society. The Corporate Action Principles outline specific commitments, including pursuing customer satisfaction, respecting the natural environment, developing human resources, upholding human rights, ensuring safety and health, promoting good governance and compliance, protecting assets and information security, fostering coexistence and co-prosperity with business partners, contributing to communities, and engaging in sincere dialogue with stakeholders.

History of Value Creation

Epson's journey began in 1942. Key milestones include the development of the world's first compact, lightweight digital printer (EP-101) in 1968, the establishment of the "EPSON" brand in 1975, and its global expansion. The company has consistently pursued innovation, introducing products like quartz watches, impact dot matrix printers, color scanners, robots, inkjet printers, projectors, and smart glasses across various eras.

CSR and SDGs

Epson identifies "CSR Key Themes (Materiality)" based on societal needs and its own business direction, aligning these with the UN's Sustainable Development Goals (SDGs). The company is committed to contributing to the achievement of the SDGs through its business activities, focusing on areas such as new product/service creation, ICT utilization, environmental contribution, and human rights. Epson has identified 13 key SDGs it actively contributes to.

Value Creation Story: "省・小・精" (Efficient, Small, Precise) Technology

Epson's core DNA is its "省・小・精" technology, which drives its "4 Innovations": Inkjet Innovation, Visual Communications Innovation, Wearable Innovation, and Robotics Innovation. This technology enables the company to create value in terms of "Smart," "Environment," and "Performance," aiming to solve societal challenges and achieve sustainable growth. The company's long-term vision, "Epson 25," outlines its strategy to achieve these goals by 2025.

Top Message

The President's message emphasizes Epson's commitment to becoming an indispensable company by creating customer value and contributing to society. It highlights the revision of the management philosophy to include "indispensable company" and the focus on customer needs and societal challenges. The report details progress on the "Epson 25" vision and the company's efforts towards ESG (Environmental, Social, Governance) initiatives.

Financial and Non-Financial Highlights

Key financial figures for FY2017 include revenue of ¥1,102.1 billion, business profit of ¥74.7 billion, and net profit attributable to owners of the parent of ¥41.8 billion. Non-financial highlights cover GHG emissions, water usage, employee numbers, and CSR activities, demonstrating Epson's commitment to sustainability and operational excellence.

Business Segments

Epson operates across several business segments:

• Printing Solutions: This segment, Epson's largest, focuses on inkjet printers for home, SOHO, and business use, as well as commercial and industrial printing solutions like large-format inkjet printers and digital textile printers.
• Visual Communications: This segment offers projectors for business, education, and home use, including laser light source projectors and smart glasses (MOVERIO).
• Wearable/Industrial Products: This segment includes watches (ORIENT STAR, ORIENT), wearable devices (WristableGPS, Smart Canvas), industrial robots (SCARA, 6-axis, dual-arm), and micro devices (timing solutions, sensing solutions, power-saving solutions).

Innovation Strategies

Epson is driving innovation in four key areas:

• Inkjet Innovation: Focusing on high-speed, high-quality printing for office and commercial/industrial markets, emphasizing environmental benefits and cost efficiency.
• Visual Communications Innovation: Enhancing projector technology (laser light sources, high brightness) and expanding the application of smart glasses for business and consumer use.
• Wearable Innovation: Leveraging watchmaking DNA and sensing technology to create unique wearable products that offer both functionality and aesthetic appeal.
• Robotics Innovation: Applying "省・小・精" technology with sensors and AI to develop robots that support human activities in manufacturing and other fields, aiming for ease of use and safety.

Micro devices, including crystal devices and semiconductors, are foundational to these innovations.

Corporate Governance and Risk Management

Epson is committed to robust corporate governance, emphasizing shareholder rights, transparency, and board effectiveness. The company has implemented measures to enhance board composition and functioning, including appointing independent outside directors and establishing advisory committees. Risk management is integrated into business operations, with a framework for identifying, assessing, and mitigating key risks across the company and its subsidiaries.

Supply Chain and Human Resources

Epson extends its CSR commitment to its supply chain, promoting ethical practices, environmental responsibility, and human rights among its suppliers. The company also invests in its employees through talent development programs, diversity and inclusion initiatives, and efforts to create a healthy and safe work environment.

Environmental Vision 2050

Epson's Environmental Vision 2050 outlines its long-term commitment to sustainability, aiming to contribute to a circular economy and become an indispensable company for the world. This vision guides actions in reducing environmental impact across products, services, and manufacturing processes, fostering innovation, and engaging in global environmental conservation activities.

Global Network

Epson maintains a global network of sales, service, production, and development bases to effectively serve customers worldwide and respond to diverse market needs.

Group Overview

Seiko Epson Corporation, founded in 1942, is headquartered in Suwa, Nagano, Japan. The report provides details on its shareholding structure, financial performance trends, and regional sales and employee distribution.