During the consolidated fiscal year ended March 31, 2011, the Japanese economy showed some signs of a recovery, such as the flattening out of production that was improving corporate earnings. However, the Great East Japan Earthquake on March 11, 2011 weakened the domestic economy. A restricted electric power supply, delays in rebuilding the supply chain in eastern Japan, crude oil price hikes, and other factors suggest the risk of a downswing in general business activities, indicating that there is no predictable outlook for the economy. Outside Japan, Asian economies continue to grow, mainly led by strong domestic demand in China and surrounding countries. In Europe, there is the underlying tone of economic recovery in general, though the levels of recovery vary significantly from country to country.
Under these circumstances, the Rhythm Group worked on both enhancing its earnings base and growing sales during the fiscal year. The Clock Division recorded reduced sales of products other than clocks. Clock sales increased from the previous fiscal year both in Japan and abroad. As a result, the business segment as a whole reported increased net sales and operating income on a year-on-year basis. The Electronics Division reported lower net sales and operating income than the previous year, reflecting stagnant sales from the information processing equipment business. The Precision Division reported higher net sales and operating income, a reflection of efforts to develop new business customers and to enhance its presence in overseas markets.
Reflecting the above external and internal factors, the Rhythm Group reported consolidated net sales of 27,401 million yen for the fiscal year ended March 31, 2011, down 3.5% from 28,383 million yen for the fiscal year ended March 31, 2010. Consolidated operating income was 1,212 million yen, up 7.3% from 1,129 million yen for the previous fiscal year. Consolidated ordinary income was 1,376 million yen, up 3.3% from 1,333 million yen. The losses due to damage caused by the Great East Japan Earthquake to a part of the operating facilities of the Group, as well as costs recognized through the application of accounting for asset retirement obligations and other related costs and expenses, were recorded as extraordinary loss items for the fiscal year. These factors coupled with an increase in corporate and other taxes resulted in consolidated net income for the fiscal year amounting to 589 million yen, down 41.6% from 1,009 million yen for the previous year.
As of August 31, 2011, Kyoshin Kogyo Co., Ltd. joined into the Group as one of its consolidated subsidiaries, adding a new business segment to the Group: the "Connected Terminal Division."