Kyocera Corporation Financial Presentation (Six Months Ended September 30, 2005) November 4, 2005 Kyocera Corporation

Transcription

1 Kyocera Corporation Financial Presentation (Six Months Ended September 30, 2005) November 4, 2005 Kyocera Corporation

2 ForwardLooking Statements Certain Certain of of the the statements statements made made in in this this document document are are forwardlooking forwardlooking statements statements (within (within the the meaning meaning of of Section Section 21E 21E of of the the U.S. U.S. Securities Securities and and Exchange Exchange Act Act of of 1934), 1934), which which are are based based on on our our current current assumptions assumptions and and beliefs beliefs in in light light of of the the information information currently currently available available to to us. us. These These forwardlooking forwardlooking statements statements involve involve known known and and unknown unknown risks, risks, uncertainties uncertainties and and other other factors. factors. Such Such risks, risks, uncertainties uncertainties and and other other factors factors include, include, but but are are not not limited limited to: to: general general economic economic conditions conditions in in our our markets, markets, which which are are primarily primarily Japan, Japan, North North America, America, Europe, Europe, and and Asia, Asia, including including in in particular particular China; China; changes changes in in exchange exchange rates, rates, particularly particularly between between the the yen yen and and the the U.S. U.S. dollar dollar and and euro, euro, respectively, respectively, in in which which we we make make significant significant sales; sales; our our ability ability to to launch launch innovative innovative products products and and otherwise otherwise meet meet the the advancing advancing technical technical requirements requirements of of our our customers, customers, particularly particularly in in the the highly highly competitive competitive markets markets for for ceramics, ceramics, semiconductor semiconductor parts parts and and electronic electronic components; components; and and the the extent extent and and pace pace of of future future growth growth or or contraction contraction in in information information technologyrelated technologyrelated markets markets around around the the world, world, including including those those for for communications communications and and personal personal computers; computers; fluctuations fluctuations in in the the value value of of securities securities and and other other assets assets held held by by us us and and changes changes in in accounting accounting principles; principles; business business performance performance of of other other companies companies with with which which we we maintain maintain business business alliances; alliances; laws laws and and regulations regulations relating relating to to the the taxation, taxation, and and to to manufacturing manufacturing and and trade; trade; events events that that may may impact impact negatively negatively on on our our markets markets or or supply supply chain, chain, including including terrorist terrorist acts acts and and outbreaks outbreaks of of diseases; diseases; and and the the occurrence occurrence of of natural natural disasters, disasters, such such as as earthquakes, earthquakes, in in locations locations where where our our manufacturing manufacturing and and other other key key business business facilities facilities are are located. located. Such Such risks, risks, uncertainties uncertainties and and other other factors factors may may cause cause our our actual actual results, results, performance, performance, achievements achievements or or financial financial position position to to be be materially materiallydifferent from from any any future future results, results, performance, performance, achievements achievements or or financial financial position position expressed expressed or or implied implied by by these these forwardlooking forwardlooking statements. statements. We We undertake undertake no no obligation obligation to to publicly publicly update update any any forwardlooking forwardlooking statements statements included included in in this this document. document. 1

3 Net sales Profit from operations Pretax income Net income EPS (diluted yen) Consolidated Financial Highlights Six Months Ended September 30, 2005 Six months ended September 30, ,258 35,349 46,135 24, % to net sales Six months ended September 30, ,562 62,092 67,253 42, % to net sales (Millions of yen) Percentage change Depreciation 28, , Capital expenditures 52, , Dividends paid 10,447 6,409 Free cash flow 10,172 34,805 R&D expenses 29, , U.S. dollar (yen) Euro (yen)

4 Operational Highlights Six Months Ended September 30, 2005 Component demand bottomed out, but recovery speed was slower than initially expected Component prices dropped 15~20% yearonyear Results short of initial company targets Posted significant sales and profit growth in the Applied Ceramic Products Group Implemented structural reforms at KWC and completed outsourcing of production Concluded sales of consumer cameras in the U.S., Europe and Japan Structural reform costs in the Telecommunications Equipment and Optical Equipment Groups: approx. 5.7 billion Promoted business selection and concentration, and tendered entire holding of shares in Taito Corporation, an equitymethod affiliate Gain on sale of investment in Taito Corporation: 6.9 billion Dividend policy change: Increased interim dividend from 30 yen per share in the previous fiscal period to 50 yen per share (expected annual dividend of 100 yen per share) 3

5 Reporting segment Consolidated Sales by Reporting Segment Fine Ceramic Parts Group Semiconductor Parts Group Applied Ceramic Products Group Electronic Device Group Total components business Telecommunications Equipment Group Information Equipment Group Optical Equipment Group Total equipment business Others Adjustments and eliminations Net sales Six Months Ended September 30, 2005 Six months ended September 30, ,258 63,544 55, , ,937 91, ,433 8, ,773 59,034 9, ,258 % of net sales Six months ended September 30, ,920 68,148 44, , , , ,800 16, ,873 56,193 13, ,562 % of net sales (Millions of yen) Percentage change

6 Consolidated Operating Profit by Reporting Segment Reporting segment Fine Ceramic Parts Group Semiconductor Parts Group Applied Ceramic Products Group Electronic Device Group Total components business Telecommunications Equipment Group Information Equipment Group Optical Equipment Group Total equipment business Others Total operating profit Corporate and others Equity in earnings of affiliates and unconsolidated subsidiaries Adjustments and eliminations Pretax income Six Months Ended September 30, 2005 Six months ended September 30, ,805 7,251 9,337 11,171 32,564 9,355 13,244 4, ,704 37,108 9, ,135 % to net sales Six months ended September 30, ,224 10,612 7,563 22,241 46,640 4,899 19,404 7,357 7,148 6,160 59,948 6, ,253 % to net sales (Millions of yen) Percentage change

7 Consolidated Financial Forecast Year Ending March 31, 2006 (Millions of yen) Revised forecast (October 2005) Year ending March 31, 2006 Previous forecast (April 2005) Year ended March 31, 2005 Percentage change Net sales 1,200,000 % to net sales 1,240,000 % to net sales 1,180,655 % to net sales 1.6 Profit from operations 105, , , Pretax income 125, , , Net income 73, , , EPS (dilutedyen) Depreciation 65, , , Capital expenditures 96, , , R&D expenses 57, , , U.S. dollar (yen) Euro (yen) Although Kyocera changed the assumed average exchange rate in July, the impact on forecasts is minimal, and as a result, fullyear financial forecasts remain unchanged from the previous forecast (April 2005). 6

8 Consolidated Financial Forecast Assumptions 1. Shipment volume forecast for key electronic equipment Key electronic equipment Mobile phone handsets PCs Digital still cameras DVD recorders Digital TVs (Incl. rearprojection TVs) Year Ending March 31, 2006 Jan.June CY2005 Results of mobile phone handsets and digital still cameras are based on production volume 2. Components price forecast Yearonyear change General electronic components Interim period Down 1520% FY3/06 Fullyear (forecast) Up approx. 20% Up 510% Up approx. 10% Up 6070% Up approx. 50% Fullyear (forecast) Down approx. 15% (Millions of units) CY2004 Fullyear (Kyocera forecast) FY3/05 Fullyear Down 1520% (Kyocera forecast) 7

9 Consolidated Sales Forecast by Reporting Segment Reporting segment Fine Ceramic Parts Group Semiconductor Parts Group Applied Ceramic Products Group Electronic Device Group Total components business Telecommunications Equipment Group Information Equipment Group Optical Equipment Group Total equipment business Others Adjustments and eliminations Net sales Year Ending March 31, 2006 Revised forecast (October 2005) % of net sales 68, , , , , , ,000 16, , ,000 14,000 1,200,000 Year ending March 31, Previous forecast (April 2005) % of net sales 75, , , , , , ,000 24, , ,000 22,000 1,240, Year ended March 31, , ,960 93, , , , ,145 35, , ,040 23,771 1,180,655 % of net sales (Millions of yen) Percentage change

10 Consolidated Operating Profit Forecast by Reporting Segment Reporting segment Fine Ceramic Parts Group Semiconductor Parts Group Applied Ceramic Products Group Electronic Device Group Total components business Telecommunications Equipment Group Information Equipment Group Optical Equipment Group Total operating profit Year Ending March 31, 2006 Revised forecast (October 2005) % to net sales 10,500 16,500 18,500 26,500 72,000 1,000 30,500 5, , Previous forecast (April 2005) % to net sales Total equipment business 24, , , Others Corporate and others Pretax income 12,000 17, ,000 Year ending March 31, ,500 18,000 21,500 31,000 81,000 7,000 30,000 2,000 14, ,000 5, , Year ended March 31, ,535 17,550 17,129 35,406 81,620 14,918 36,186 15,387 13, ,520 7, ,530 % to net sales (Millions of yen) Percentage change

11 Pretax Income Forecast by Reporting Segment (1) Year Ending March 31, 2006 Reporting segment Pretax income (increase/decrease) 2H FY3/06 challenges (Billions of yen) 1H FY3/05 vs 1H FY3/06 2H FY3/05 vs 2H FY3/06 forecast Fine Ceramic Parts Group Increase orders in key markets Semiconductor Parts Group Expand sales and secure profits by strengthening production system Applied Ceramic Products Group Enhance local production/improve productivity in solar energy products Electronic Device Group Launch new products and expand overseas production Telecommunications Equipment Group Timely Launch of highvalueadded models Information Equipment Group Optical Equipment Group Others Corporate and others Launch new color/monochrome MFPs and printers Expand sales by new highvalueadded products and boost profitability Expand sales through new products/ services and strengthen production system Kyocera Group Total Achieve fullyear forecast 10

12 Pretax Income Forecast by Reporting Segment (2) Year Ending March 31, 2006 Reporting segment Pretax income (increase/decrease) 2H FY3/06 challenges 1H FY3/06 vs 2H FY3/06 forecast (Billions of yen) Fine Ceramic Parts Group Semiconductor Parts Group Increase orders in key markets Expand sales and secure profits by strengthening production system Applied Ceramic Products Group 0.2 Enhance local production/improve productivity in solar energy products Electronic Device Group 4.2 Launch new products and expand overseas production Telecommunications Equipment Group 17.7 Timely Launch of highvalueadded models Information Equipment Group 4.0 Launch new color/monochrome MFPs and printers Optical Equipment Group Others Expand sales by new highvalueadded products and boost profitability Expand sales through new products/ services and strengthen production system Corporate and others 1.1 Kyocera Group Total 32.7 Achieve fullyear forecast 11

13 Driving Businesses for Achievement of 2H FY3/06 Forecasts Major Drivers: 2H FY3/06 Forecasts vs 1H FY3/06 Results Semiconductor Parts 6.3% Electronic Device 6.6% Others 8.2% Information Equipment 12.9% Net Sales Up 109.5bn over 1H FY3/06 Telecommunications Equipment 57.4% Semiconductor Parts 6.1% Others 7.9% Optical Equipment 7.9% Pretax Income Information Equipment 12.3% Up 32.7bn over 1H FY3/06 Electronic Device 12.7% Telecommunications Equipment 54.1% Telecommunications Equipment Information Equipment Others (consolidated) Launch new highvalue valueadded added products Telecommunications Equipment Electronic Device Information Equipment (consolidated) Strengthen production system and maximize positive effects of structural reforms (KWC, Optical Equipment) Electronic Device Optical Equipment 12

14 Electronic Device Group 2H FY3/06 Strategy (1) Launch new products and expand overseas production Passive/crystal components Increase proportion of new products Improve ceramic capacitor product mix (small, high capacitance, low inductance products) Expand Bluetooth module business Start massproduction of shock sensors for HDDs Promote devt. of GPS modules for WLAN Connectors Enhance product lineup Expand product lineup of connectors for 0.3mm FPCs Increase share at mobile phone handsets makers Strengthen sales/marketing Reduce dependence on mobile phone market by entering new markers (power source, MPU, invehicle, home appliance etc.) Bolster designin activities Boost competitiveness by expanding China production (capacitors, ceramic resonators, ASMs) Improve profitability by expanding overseas production 13

15 Electronic Device Group 2H FY3/06 Strategy (2) Thinfilm products Expand market by increasing applications and strengthen production on system Expand Business in HighValue ValueAdded Markets LCDs Thermal Printheads Medical equipment market Measuring equipment market Office equipment market Medical equipment market Card market Expand China production /1 LCDs Inhouse manufacture of thinfilm devices Approx. 5x / Thermal Printheads Enhance productivity through integrated domestic production Production Target at China Factories (Standard: Sept. 05 results=100) Approx. 1.7x 04/ / /1 2 3 New production method (photo process) 14

16 Semiconductor Parts Group 2H FY3/06 Strategy Expand sales and secure profits by strengthening production system Organic Materials Components Meet demand for ASICs and nextgeneration game consoles Expand market for flipchip packages by fitting them into nextgeneration game consoles Ceramic Materials Components Continue development for digital consumer equipment market Expand applications for Ceramic package for surface mount devices Increase use of CCD/CMOS packages in mobile phone handsets Expand production capacity New factory (Ayabe) Increase production of Ceramic package for surface mount devices in China Improve productivity by introducing new production line China factory (Shanghai) 15

17 Optical Equipment Group 2H FY3/06 Strategy Expand sales by launching highvalue valueadded added products and boost profitability Release world s s slimmest* 6.9mm 3.2 megapixel camera module FY3/06 Shipment Volume Forecast (Standard: 1Q results = 100) 100 New products 0 1Q 2Q 3Q (Forecast) 4Q (Forecast) Existing products Strengthen sales and marketing activities Deepen ties with existing customers and develop new customers Establish consistent production system in China Highquality, costcompetitive operations, from component procurement to product shipment Realize positive effects of structural reforms Create highly efficient business structure focused on component business * Forecast by Kyocera based on volume of cameras on mobile phone handsets 16

18 Challenges to Achieving FY3/06 Forecasts Aim for Pretax Income Ratio of 10% or Above Consolidated net sales (Billions of yen) Pretax income Pretax income ratio (%) % Quickly achieve pretax income ratio of 15% % % % +71.1% % FY3/05 FY3/06 1H 2H 1H 2H (Forecast) 17

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