Mid-Range Business Plan (FY2009-FY2011)

Transcription

1 MidRange Business Plan (FY2009FY2011) March 12, 2009 ゥ Copyright Seiko Epson Corporation 2008

2 Disclaimer regarding forwardlooking statements The foregoing statements regarding future results reflect the Company's expectations based on information available at the time of announcement. The information contains certain forwardlooking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, the competitive environment, market trends, general economic conditions, technological changes, exchange rate fluctuations and our ability to continue to timely introduce new products and services. Numerical values presented herein Numbers are rounded to the unit indicated. Percentages are rounded off to one decimal place. 1

3 Agenda 1. The "Creativity and Challenge 1000" MidRange Business Plan (FY2006FY2008) 2. Reforming the Electronic Devices Segment 3. SE15 LongRange Corporate Vision 4. MidRange Business Plan (FY2009FY2011) 5. Areas of Expected Growth 6. Mid to LongRange Goals 7. Financial Impact of Structural Changes and Measures to Improve Profitability 8. FY2008 Business Outlook 9. In Closing 2

4 1. The "Creativity and Challenge 1000" MidRange Business Plan (FY2006FY2008) Summary (1) Epson midrange business policies ( ) 1. Redefine and strengthen the business and product portfolio 2. Reorganize the electronic device businesses 3. Streamline costs 4. Reform the governance system 5. Reform the corporate culture In the informationrelated equipment segment, platform standardization and costreduction initiatives focusing on printers and projectors yielded results, however, business was affected by price erosion caused by model mix changes and the economic downturn in the second half of FY2008. Made inroads into the growth areas of commercial and industrial inkjet printers In the electronic devices segment, both the display and semiconductor businesses returned profits in the first half of fiscal 2008 after we undertook bold product portfolio revisions, reduced fixed costs, consolidated sites, and increased human resources efficiency. Despite these efforts, fierce competition and external factors stemming from the economic downturn triggered by the subprime loan problem mean that we face severe issues in returning these businesses to profitability. 3

5 1. The "Creativity and Challenge 1000" MidRange Business Plan (FY2006FY2008) Summary (2) Address structural issues in the electronic devices segment Comprehensive measures for the display business Structural reform of the semiconductor business Reorganization of Epson Toyocom manufacturer of quartz devices and a core future business as a whollyowned subsidiary Pursue cost reductions Extremely selective capital expenditure Review and consolidation of sites in Japan and overseas Careful analysis and selection of research and development projects Reassignment of human resources, etc. 4

6 2. Reforming the Electronic Devices Segment Small and mediumsized display business Fab capacity utilization rates and profitability have declined as a result of severe market conditions brought about by the economic downturn Continuing measures to improve business efficiency include: Relocation of Epson Imaging Devices head office functions to the Tottori Plant Closure of the Gifu Plant in the first half of FY2009 Acceleration of personnel reassignment to growth areas within the Epson Group Epson faces severe issues in returning its display business to profitability. On March 12, Epson and Sony agreed to begin discussions about an alliance in the field of small and medium sized displays, including the transfer of a part of business assets from Epson to Sony. 5

7 2. Reforming the Electronic Devices Segment Semiconductor business Current issues Realizing sales growth was unlikely, Epson pursued a strategy of maintaining the semiconductor business at an appropriate scale, and strategically sought to exploit its technical strengths. A small business, with the bulk of sales coming from niche markets and silicon foundry solutions The impacts of the global economic slowdown, softening demand, and other factors have been significant, bringing a decline in mobile phone LCD driver and silicon foundry orders, and decreasing fab capacity utilization rates. Key structural changes We will continue to focus on products incorporating our lowpower mixedsignal analog technology. We will, however, be downsizing our operations, and consolidating manufacturing in Japan at our Sakata Plant. We will shift resources to semiconductor technologies that will help bolster the growth areas of other businesses, such as printers and other finished products, and quartz devices. FY2008 Consolidate manufacturing in the midterm, from FY Fujimi Sakata Consolidate manufacturing sites Sakata Reassign personnel and resources to growth areas in the finished products and quartz device businesses

8 2. Reforming the Electronic Devices Segment Quartz Device Business Will become the mainstay of Epson s electronic device businesses Strengthen links with the semiconductor business with a strategy of boosting module sales as we seek to capture the market for input/ output devices with core original microsensing technologies Cement our position as world leader, and strengthen the foundations of the electronic device business Epson Toyocom to become a wholly owned subsidiary through a TOB and share exchange. Create an efficient and agile business structure. Present Epson 66.6% TOB + Share exchange Future Epson 100% 7 Epson Toyocom Epson Toyocom

9 3. SE15 LongRange Corporate Vision SE15 & Midrange business plan (FY2009FY2011) FY2011) Sudden deterioration of the business environment in FY2008 The strong yen and general economic downturn, which assumed serious proportions so suddenly, will continue through to at least FY2010. Falling prices and declining demand are major global trends and are not expected to change even when the economy recovers. Drive restructuring and rebuild the business foundations (three policies) Move ahead by focusing on areas in which we can leverage our strengths Thoroughly reinforce the foundations of our core businesses Use our technological assets and selling power to create new products and establish new businesses SE15 longrange vision A community of robust businesses Midrange business plan (FY2009 FY2011) Rebuild business foundations and restore profitability Shift to a community of robust businesses 8

10 4. MidRange Business Plan (FY2009FY2011) Restructuring and rebuilding strategies Move ahead by focusing on areas in which we can leverage our strengths Thoroughly reinforce the foundations of our core businesses Reduce costs, and provide lowpriced products in the volume zone Expand into new segments Use technological assets and selling power to create new products and establish new businesses Review businesses whose positions are weakened and in which recovery is unlikely Shift resources to businesses with growth potential and priority areas Businesses in which recovery is unlikely Small and mediumsized displays Semiconductors Businesses with growth potential Printers Fortified presence in emerging economies, business markets, and commercial and industrial domains 3LCD Projectors Cement marketleading position Quartz devices Strengthen marketleading products, sensors, and other products 9

11 5. Areas of Expected Growth Printers Micro Piezo technology Areas in which we can leverage this proprietary Epson technology Inkjet printers Promote functionality in developed economies Enhance cost competitiveness in emerging markets Expand efforts in the business segment Commercial and industrial inkjet printers Expand commercial printing segment Continue development of printers for industry Business systems Maintain and enhance strong presence in POSrelated products and SIDM Make use of inkjet technology to expand into new business areas 10

12 5. Areas of Expected Growth 3LCD Projectors 3LCD Projectors Capitalize on the twin strengths of finished products with world leading market share, and the use of HTPS as the key device in our products Maintain top market share for standard price range products Expand market share for high brightness products Quartz devices Quartz devices + semiconductors Enhance collaborations between our marketleading quartz device business and our semiconductor operations Create high valueadded products that fuse crystal and semiconductor technologies Drive our sensor business with products for applications such as modular sensor systems 11

13 6. Mid to LongRange Goals Mid to longrange goals To become a community of robust businesses. The core of our business will be finished products mainly based on inkjet technology, and module and systembased quartz devices. Midrange business plan (FY2009FY2011) Rebuild business foundations Drive initiatives to restore profitability Continue to reconfigure our product portfolios Lay foundations to support robust business growth as we look to drive longterm sales growth 12

14 7. Financial Impact of Structural Changes and Measures to Improve Profitability Electronic devices (Billions of yen) FY2008 Restructuring charges and impairment losses 68.2 Financial impact FY2009 FY FY Overall Efforts to reduce fixed costs Extremely selective capital expenditure Review and consolidation of sites in Japan and abroad Careful analysis and selection of R&D projects Reassignment of human resources, etc. 13

15 8. FY2008 Business Outlook (Billions of yen) FY2007 Actual % Previous outlook (2/25 % FY2008 Current outlook(3/11) % Change (amount, %) Y/Y Vs. 2/25 outlook Net sales 1, , , % Operating income % % % % Ordinary income % % % % Net income Before income taxes % % % Net income % % % EPS Revised forecast yearend dividend Exchange rate USD EUR (fullyear: 26) per share 14

16 9. In Closing Profit and loss Midrange business plan (FY2009FY2011) FY2009: Break even, and restructure and reinforce business foundations as part of strategic longrange vision FY 2010:Firmly establish a profitgenerating corporate structure FY 2011:Set Epson on a new growth path aimed at fulfilling the SE15 LongRange Corporate Vision SE15 LongRange Corporate Vision: FY2015 ROS: 10%, ROE: A sustained 10% or greater 15

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