Slide 1: Q3 FY07/3 Financial Results and Outlook
Q3 FY07/3 Financial Results and Outlook Toshio Nakajima President and CEO January 25, 2007 NEC Electronics Corporation http://www.necel.com/ir/en/ 1
Slide 2: Cautionary Statements
CAUTIONARY STATEMENTS: The statements in this presentation with respect to the plans, strategies and forecasts of NEC Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. We caution you in advance that actual results coul
Slide 3: Executive Summary
Executive Summary I. Q3 FY07/3 Financial Results 9Semiconductor sales were in line with initial expectations but operating losses were greater than expected due to changes in the product mix. II. FY07/3 Financial Forecasts and Measures to Improve Profitability 9Q4 results are expected to worsen from
Slide 4: Agenda
Agenda I. Q3 FY07/3 Financial Results II. FY07/3 Financial Forecasts and Measures to Improve Profitability © NEC Electronics Corporation 4
Slide 5: A Financial Snapshot
A Financial Snapshot JPY Bn FY06/3 FY07/3 9 months Q3 Dec. 31st Cumulative Q3, Dec. 31st 9 months Cumulative YoY YoY Net Sales 162.7 475.6 177.9 ＋15.2 520.9 ＋45.3 Semiconductor Sales 156.8 457.1 171.1 +14.4 498.9 +41.8 Operating Loss -7.0 -19.2 -3.8 +3.2 -10.8 +8.4 EBT -4.4 -18.1 -3.5 +0.9 -9.1 +9.0
Slide 6: Trends in Quarterly Results
Trends in Quarterly Results JPY Bn Net Sales 185.6 191.2 177.8 177.9 Other 166.8 170.3 165.3 165.9 162.7 165.2 169.7 171.1 146.1 181.2 160.0 179.1 156.8 162.0 160.7 158.7 140.3 158.1 Semiconductor Sales 8.2% 8.1% Operating 15.2 15.5 Margin Expensed 0.8% Assets 0.7% 1.3 -2.3 1.2 -1.2 -3.8 1Q 2Q 3Q 4Q
Slide 7: YoY Revenue Growth by Platform
YoY Revenue Growth by Platform JPY Bn 200 Semiconductor Sales ＋9% 171.1 Growth Factors in YoY Revenues 160 156.8 SoC Platform •An increase in sales due to launching shipments of LSIs for a new game console 70.4 •A decrease in sales of LSIs for printers 62.2 +13% •A decrease in sales of system memory
Slide 8: Q2-Q3 Revenue Growth by Platform
Q2-Q3 Revenue Growth by Platform JPY Bn 200 Semiconductor Sales 169.7 +1% 171.1 Growth Factors in Q2-Q3 Revenues 160 SoC Platform •An increase in sales due to volume shipments of LSIs for a new game console 67.5 70.4 •An increase in sales of LSIs for digital +4% baseband LSIs for mobile handsets in
Slide 9: Revenue Growth by Application
Revenue Growth by Application JPY Bn Semiconductor Sales YoY QoQ 171.1 171.1 Communications 169.7 -14％ Communications Decrease in sales of -4％ 156.8 23.6 System memory for mobile 23.6 24.6 Decrease in sales of handsets small LCD driver ICs 27.4 Computing & Peripherals Computing & Peripherals -5% 31.
Slide 10: Changes in Q3 Profits
Changes in Q3 Profits JPY Bn YoY QoQ Net Sales 177.9 177.8 177.9 Flat . +15 .0 Approx 162.7 Gross Profits (GP) •Increase in profits from sales Gross Profits (GP) expansion :Approx. +4.0 •Decreased profits from lower GP margin: •Increased profits from improved GP margin: Approx. -2.5 Approx. +3.0 (29
Slide 11: Balance Sheet
Balance Sheet JPY Bn 05/12 06/9 06/12 Cash and Cash Equivalents 236.9 222.0 212.6 Accounts Receivable 99.6 116.7 105.1 Inventories 77.6 83.1 89.0 PP&E 306.0 305.9 305.7 Other Assets 90.4 49.4 39.3 Total Assets 810.4 777.0 751.7 Accounts Payable 128.3 169.2 150.7 Debt Payable 153.9 146.0 144.7 Other
Slide 12: Cash Flows
Cash Flows FY06/3 FY07/3 JPY Bn 9 months Q3 Cumulative Q2 Q3 9 months Cumulative Cash Flows from 35.8 50.4 26.8 19.5 54.1 Operating Activities Cash Flows from -1.3 -35.5 -8.7 -27.1 -48.2 Investing Activities Free Cash Flows 34.5 15.0 18.1 -7.6 5.8 © NEC Electronics Corporation 12
Slide 13: Agenda
Agenda I. 1H FY07/3 Financial Results II. FY07/3 Financial Forecasts and Measures to Improve Profitability © NEC Electronics Corporation 13
Slide 14: FY07/3 Forecasts
FY07/3 Forecasts • Q4 results are expected to fall below Q3 levels, and the company is considering structural reforms aimed at recovery over the medium term. • Consequently, costs associated with the reforms are still being determined, and NEC Electronics will disclose full-year forecasts when these
Slide 15: Decline in Q4 Profitability
Decline in Q4 Profitability (on operating basis) • Decrease in semiconductor sales Q4 semiconductor sales are expected to be less than Q3 levels • SoC Platform: Decrease in sales due to adjustments of PC peripherals • Display Driver ICs: Decrease in sales due to production adjustments by customers a
Slide 16: Previous Sales Expansion and Investment Strategies
Previous Sales expansion and Investment Strategies Increased Sales and Gross Profits JPY Bn 600 Comparing April-Dec periods Sales of 2005 and 2006 + ¥45.3Bn (+10%) 9Sales and Gross Profits increased 400 9R&D investments and SG&A Expenses increased 200 Gross Profits 9Manufacturing-related fixed cost
Slide 17: Strategies for Growth and Structural Reforms
Strategies for Growth and Structural Reforms Plans will be announced on February 22 1. Expand Sales Re-evaluate the company’s product portfolio and redefine “core” products to focus on, for improved product development 2. Improve Cost Competitiveness, Streamline Expenses Re-evaluate manufacturing, f
Slide 18: Corporate Strategy Meeting
Corporate Strategy Meeting 9 Date : February 22nd 9 Place : TBA 9 Spokesperson : Toshio Nakajima President and CEO © NEC Electronics Corporation 18
Slide 19: © NEC Electronics Corporation
© NEC Electronics Corporation 19