Positioning and navigation firm continues on growth mandate from new CEO
Japan-based Topcon Corporation has posted second quarter net profit of ¥1.7 billion ($17.2 million), a big improvement over the net loss of ¥1.2 billion ($12.3 million) in the same period last year, on sales of ¥52.8 billion (US$534.8 million), a 14.5 percent increase over the last year’s second quarter.
North American sales for the second quarter ended Sept. 30 soared for the parent company of Livermore, Calif.-based Topcon Positioning Systems Inc. (TPS) to ¥20.6 billion ($209 million), a 27 percent increase over the comparable period last year. Operating profit for the North American region was about ¥2 billion ($20.5 million), far exceeding last year’s second quarter operating profit of ¥512 million ($5.2 million).
TPS is the world’s largest manufacturer of precision GPS and GNSS systems, commercial lasers, and optical instruments for the global surveying, civil engineering, asset management, mapping, construction, agriculture and mobile control industries.
Publicly traded Topcon, founded in 1932, trades on the Tokyo Stock Exchange and generates over $1 billion in annual sales. Toshiba Corporation is Topcon’s largest shareholder holding 30 percent of outstanding shares as of Sept. 30.
Ushering in a new era for Topcon, Satoshi Hirano took over as CEO in late June as the company shifts to accelerating growth strategies after a three-year cost-cutting plan was achieved in just 24 months this past March, allowing it to “focus on robust earnings management under the new administration.”
Topcon’s “Mid-Term Business Plan 2015” released in June laid out growth strategies for its three businesses: Positioning (TPS), Smart Infrastructure, and Eye Care.
Q2 financial results by segment
Positioning (TPS) – second quarter net sales totaled ¥22.4 billion ($227 million), an increase of 27.7 percent. Segment operating income amounted to ¥1.8 billion ($18.6 million).
Smart Infrastructure – second quarter net sales were ¥15.9 billion ($161.3 million). Segment operating income stood at ¥2 billion ($4.6 million), an increase of ¥287 million ($20 million).
The strategy for TPS, led by CEO Raymond O’Connor, is to use technology from its core GNSS (global navigation satellite system) business for rapid expansion in IT construction (also referred to as machine control), but will invest “most heavily” in IT, or precision, agriculture.
Topcon also wants to accelerate the OEM business for both construction and agriculture equipment manufacturers. TPS said it is launching affordable models of GPS products for the Asian market, such as a GNSS receiver with advanced tracking technology and machine control products such as the world’s smallest auto steering system.
Smart Infrastructure strategy
The strategy for Smart Infrastructure is to “enhance new business with strong basis of surveying instruments.” Specifically, Topcon plans to:
- promote to its core business, the Survey/Construction/Building sector, with an estimated market size of $1 billion (￥100 billion), the world’s first surveying instruments management system business to use cloud computing and adopt the industry’s first automated manufacturing system
- launch the world’s first non-contact sensor for evaluating deterioration in infrastructure in what it calls the “Disaster Prevention by IT” market, with an estimated size of US$200 million (￥20 billion)
- enter the US$300 million (￥30 billion) Building Information Modeling (BIM) market with the “world’s first BIM-specialized product”
- cultivate new BIM markets, including 3D measurement, through its 2012 collaboration with Autodesk
- introduce the “world’s first specialized products for construction work sites” in the Construction Information Modeling (CIM) market, valued at US$300 million (￥30 billion)
- launch innovative sensors that can cover multiple varieties of agricultural products in the sensor supply business for the Precision Agriculture sector, estimated at US$100 million (￥10 billion)