Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — H1 FY2005 Earnings Presentation
32 slides from Oki Electric Industry's earnings presentation, Oct 27, 2005
Slide 1: Financial Results for the First Half of FY ending March 31, 2006
Financial Results for the First Half of FY ending March 31, 2006 Oct. 27, 2005 Oki Electric Industry Co., Ltd. 1
Slide 2: Table of Contents
Table of Contents 1. Financial Results for the First Half of FY ending Mar. 2006 1-1 Overview 1-3 Segment Information 1-2 Profit and Loss 2. Full Year Projections for the FY ending Mar. 2006 2-1 Assumptions 2-3 Segment Information 2-2 Revision of Projections 3. Measures to Improve Profitability 3-1
Slide 3: First Half Overview
First Half Overview While sales remained at the same level on a year-on-year basis, income decreased due to price drop in major products. No major changes from the previous projections on July 28 (Billion yen) Previous Sept. 04 Sept. 05 Variance projections Net sales 319.7 319.1 (0.6) 320.0 Operatin
Slide 4: First Half Profit and Loss
First Half Profit and Loss (Billion yen) Price drop made cost of sales Sept. 05 Sept. 04 Previous Variance ratio worse by 2.5 points projections Results Semiconductor segment Net sales 319.7 320.0 3,19.1 (0.6) retained positive in operating (Cost of sales ratio) (74.7%) (77.2%) (+2.5 %) income Cost
Slide 5: First Half Segment Information
First Half Segment Information (Billion yen) <Year-on-year comparison> Net sales Net sales <Info-Telecom Systems> - 9.1 319.7 319.1 320.0 13.5 15.2 15.0 ⁃ Sales decrease by 9.1 B yen. While sales for the Others financial and public sector markets decrease, sales 65.2 71.0 72.0 for the telecom carrie
Slide 6: Assumptions Underlying Full Year Projections
Assumptions Underlying Full Year Projections <Economy outlook> - Overall economy shows recovery - Several concerning factors are weak public investments and continued rise in oil price <Oki’s operating environment> - Price drop due to digital deflation in the overall IT market - Info-Telecom: Full r
Slide 7: Revision of Full Year Projections
Revision of Full Year Projections Net sales projected to be 710.0 B yen, a 10.0 B yen decrease from previous announcement. While broadband IP systems for telecom carriers and color NIP unit shipment grow, sales for financial institutions decreases and price for semiconductors drops, etc. Operating i
Slide 8: Analysis of Changes in Operating Income
Analysis of Changes in Operating Income Decline in price will enlarge by 11.0 B yen from the previous July 28 projections (For ATMs, semiconductors, printers, etc.) Deploy additional measures to reduce variable costs and fixed costs. Operating income will decrease by 9.5 B yen from previous projecti
Slide 9: Full Year Projections: Info-Telecom Systems
Full Year Projections: Info-Telecom Systems <Comparison from previous projections (July 28)> Sales of back office operation concentration systems and backyard systems for financial institutions falls below the previous projections Telecom carriers’ investments on broadband IP network systems remain
Slide 10: Full Year Projections: Semiconductors
Full Year Projections: Semiconductors <Comparison from previous projections (July 28)> Sales for logic LSIs increases due to the effect of the acquisition of Japan TI’s driver business - Achieved world No. 1 share (13.4%) in large-scale TFT drivers Sales for system LSIs decreases due to decline in v
Slide 11: Full Year Projections: Printers
Full Year Projections: Printers <Comparison from previous projections (July 28)> Sales increases due to expansion in shipment volume for color NIP and MFP Sales for SIDM and mono NIP remains steady Due to the impact of price drops, operating income decreases against the sales increase Net sales Oper
Slide 12: Targeting FY Mar. 2007
Targeting FY Mar. 2007 FY Mar. 2006: Digital deflation impacts Oki’s major products, which decreases sales by 11.0 B yen from the previous projections <Issues> <Measures to resolve issues> 1. Enhance product competitiveness and Cost control ahead of price drops expand businesses Improve business val
Slide 13: Financial System Business 1
Financial System Business 1 <Enhance profitability and accelerate business model shift> <Situation in the FY Mar. 2006> Price drop in ATM units, ATM maintenance, and back office operation concentration systems (5% in total) Misread timing of investments by financial institutions (expand proposal act
Slide 14: Financial System Business 2
Financial System Business 2 ATM Business <Domestic market> Market trend: Recovery trend in the second half of the FY Mar. 2006 Full recovery from the FY Mar. 2007 Launch new products ¾ Begin sales of security-enhanced “ATM-BankIT” according to the market recovery Expect large increase in shipment vo
Slide 15: Financial System Business: e-finance solution business
Financial System Business 3 e-finance solution business Opportunity to expand the business Expansion of bank business caused by deregulations Expansion of customer bases with net business companies entering financial business Linkage between net payment service and real channels, such as ATM Expansi
Slide 16: Financial System Business 4
Financial System Business 4 Service business (expansion of outsourcing business and fee business) Expand outsourcing business Expand net payment service business <Situation> <Situation> - Began electronic money charging service, and - Expand in number of ATMs that Oki delivered to city banks and con
Slide 17: Business for Telecom Carriers 1
Business for Telecom Carriers 1 <Situation in the FY Mar. 2006> Market trend: Steady needs in broadband IP-related systems, particularly optical access Rapid increase of IP telephony according to optical access diffusion Æ Significant increase in number of broadband home routers (top share) Growth i
Slide 18: Business for Telecom Carriers 2
Business for Telecom Carriers 2 <Measures for the FY Mar. 2007> Appropriate and prioritized response to the changes in market Capture continuous expansion of investments on broadband IP network ¾ Expand sales of products with Oki’s strengths in the triple-play market ¾ Broadband home router, set-top
Slide 19: Semiconductor Business 1
Semiconductor Business 1 <Situation in the FY Mar. 2006> <Measures for the FY Mar. 2007> Recover competitiveness of large-volume Decline of product competitiveness products (price, product model change) ¾ Cost reduction did not catch up with ¾ Cost reduction price drops P2ROM, TFT driver ¾ Delay in
Slide 20: Semiconductor Business 2
Semiconductor Business 2 Cost reduction of large-volume products: TFT driver (World No.1 share) Steadily expand business through acquisition of Japan TI’s driver business 9 Ensure industry top technologies through integration of Japan TI’s design capability and Oki’s highly reliable process technolo
Slide 21: Semiconductor Business 3
Semiconductor Business 3 Accelerate development of new products <Products expected to change models and expand <Sales by product segments> business> (Billion yen) <<System LSIs>> (exclude P2ROM, TFT driver) 175 [Wireless] 158.0 ZigBee Expand existing 1-chip LSI, develop LSI with embedded 150.7 appli
Slide 22: Printer Business 1
Printer Business 1 <Situation in the FY Mar. 2006> <Measures for the FY Mar. 2007> Increase in sales Aggressive expansion of business ¾Increase in color NIP sales unit Develop new competitive products Decline in operating income Enhance sales force ¾Price drop in color NIP due to fiercer ¾ Strengthe
Slide 23: Printer Business 2
Printer Business 2 Develop new competitive products Enhance cost competitiveness of color NIP, and maximize advantageous characteristics of LED tandem method Develop major products ¾ Further improve compactness, high-speed and high-resolution of color NIP with LED tandem method ¾ Short product devel
Slide 24: Printer Business 3
Printer Business 3 Enhance sales capability By penetrating OKI Printing Solutions, increase share and enhance added-values <Domestic market> Integrated printer sales divisions of Oki Data and Oki 30% Customer Adtech (Oct. 2005) A4 A3 ¾ Double in sales staff and sales bases Enhance domestic sales str
Slide 25: Proactive Deployment of Info-Telecom Converged Business 1
Proactive Deployment of Info-Telecom Converged Business 1 Year 2010: A time when networks and services are converged to enable users to take advantage of various services without being aware of networks. Service Expansion of triple-play (integration of Integration of networks and services voice, vid
Slide 26: Proactive Deployment of Info-Telecom Converged Business 2
Proactive Deployment of Info-Telecom Converged Business 2 Create new products for broadband IP services SS9100-TypeM SS9100 Launch “SS9100 Type M” as a small SS9100 Existing PBX market New all-in-one model of SS9100 (began sales in Oct. 2005) communication Voice switch SIP-AP style realized by EX300
Slide 27: Corporate Social Responsibility Activities
Corporate Social Responsibility Activities Enhance corporate governance system ¾ Introduction of executive officer system FY Mar. 01) ¾ Set external directors, management advisory committee, and compensation committee (FY Mar. 02) ¾ Established disclosure committee (FY Mar. 05) Contribute to enable
Slide 28: <Reference> First Half Balance Sheet (1)
<Reference> First Half Balance Sheet (1) <Assets> Inventory increased by 14.6 B yen on a year-on-year basis due to expected increase in shipment volume for semiconductors and printers, and effect of yen depreciation (Billion yen) Variance with 609.6 584.6 608.0 601.6 Sept. 30, 2004 600 46.6 31.3 55.
Slide 29: <Reference> First Half Balance Sheet (2)
<Reference> First Half Balance Sheet (2) <Liabilities and Shareholders’ Equity> Interest-bearing debt decreased by 4.4 billion yen on a year-on-year basis Both interest-bearing debt ratio and shareholders’ equity ratio improved (Billion yen) Variance with 609.6 608.0 601.6 Sept. 30, 2004 600 584.6 1
Slide 30: <Reference> First Half Cash Flows
<Reference> First Half Cash Flows Increase in working capital, including notes and accounts receivable and inventory, worsened free cash flows by 23.6 billion yen on a year-on-year basis (Billion yen) Sept. 04 Sept. 05 Variance Notes I. Cash flows from operating activities 30.8 (4.3) (35.1) <Changes
Slide 31: <Reference> Full Year Cash Flows Projection
<Reference> Full Year Cash Flows Projection Increase in working capital worsens free cash flows by 14.8 billion yen on a year-on-year basis (Billion yen) Mar. 05 Mar. 06 Variance Notes I. Cash flows from operating activities 59.3 52.0 (7.3) <Changes in working capital> Income before income taxes 18.
Slide 32: Glossary
Glossary P4 SG&A Selling, General and Administrative expense P21 SOS Silicon on Sapphire P5 PHS Personal Handy-phone System RF Radio Frequency LSI Large Scale Integration RF-IC Radio Frequency Integrated Circuit NIP Non-Impact Printer HDD Hard Disk Drive P6 IP Internet Protocol MCU Microcontroller P
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