Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — H1 FY2008 Earnings Presentation
33 slides from Oki Electric Industry's earnings presentation, Oct 30, 2007
Slide 1: OKI Business Strategies
OKI Business Strategies October 30, 2007 Oki Electric Industry Co., Ltd. © Copyright 2007 Oki Electric Industry Co., Ltd. 1
Slide 2: Table of contents
Table of contents 1. In the Beginning 2. 1st half results for the fiscal year ending March 2008 ■ P/L summary ■ Financial results for each segment 3. Projections for the full fiscal year ending March 2008 ■ Revision of full year projections ■ Factors of changes (Reference Material: Cash Flows, B/S O
Slide 3: In the Beginning: OKI shifts the helm towards a V-shape recovery
In the Beginning OKI shifts the helm towards a V-shape recovery z Short-term measures has been executed approximately as planned for the 1st half of the fiscal year - 1H financial results improve YoY and achieve results approximately as planned - Full year projections turn slightly downward because
Slide 4: 1st Half Profit and Loss Summary
1st Half Profit and Loss Summary 1H FY 1H Previous (billion yen) ending ending projections Mar. 07 Mar. 08 (7/27) Net sales increase by 14.8 Net sales 312.8 327.6 330.0 billion yen, a 4.7% increase (Cost of sales ratio) (78.6%) (78.6%) YoY Cost of sales 245.8 257.5 SG&A 78.6 77.2 SG&A is reduced by
Slide 5: 1st Half Segment Information
1st Half Segment Information Net sales 312.8 327.6 330.0 Net sales Increase by 14.8 B yen YoY 18.1 20.0 16.2 Others 87.2 87.0 Info-telecom: Increase by 11.4 B yen 82.4 Printers For financial market: Increase in sales for Japan Post and ATMs in China 71.7 68.4 72.0 Semiconductors For telecom carrier
Slide 6: Table of contents
Table of contents 1. In the Beginning 2. 1st half results for the fiscal year ending March 2008 ■ P/L summary ■ Financial results for each segment 3. Projections for the full fiscal year ending March 2008 ■ Revision of full year projections ■ Factors of changes (Reference Material: Cash Flows, B/S O
Slide 7: Revising Full Year Projections of FY end. March 2008
Revising Full Year Projections of FY end. March 2008 [Summary of revision from previous projections (7/27)] • Sales will decline to 735.0 B yen, a 15.0 B yen decrease due to decline in info-telecom and semiconductors • Though operating income increases from the impact of currency exchange, total amo
Slide 8: Factors of Changes in Net Sales and Operating Income
Factors of Changes in Net Sales and Operating Income [Factors of revision from previous projections on 7/27] [Net sales] • Info-telecom: Decreases by 5.0B yen in total. Sales increases by 10 B yen due to expansion in ATMs in China and increase in systems for Japan Post for the financial business . H
Slide 9: (Reference) Cash Flows for the 1st Half of the FY end. March 2008
(Reference) Cash Flows for the 1st Half of the FY end. March 2008 Free cash flows improve by 25.9 B yen from decrease in working capital, improvement in income, etc. FY end. March 2007 FY end. March 2008 (Billion yen) 1st Half Full year 1st Half Full year (plan) I. Cash flows from operating activiti
Slide 10: (Reference) Balance Sheet [Assets]
(Reference) Balance Sheet [Assets] Inventories improve by 14.2 B yen YoY through improvement activities Total assets decrease by 44.5 B yen YoY due to improvement in inventories and reversal of deferred tax assets at last FY end Variance with (Billion yen) Sept. 30, 2006 635.3 628.4 618.9 590.8 34.6
Slide 11: (Reference) Balance Sheet [Liabilities and shareholders' equity]
(Reference) Balance Sheet [Liabilities and shareholders’ equity] 9.0 B yen of moving strike convertible bond has been converted to stock. This reduced interest-bearing debt and increased shareholders’ equity Shareholders’ equity overall decreased by 34.8 B yen; While shareholders’ equity increase fr
Slide 12: Table of contents
Table of contents 1. In the Beginning 2. 1st half results for the fiscal year ending March 2008 ■ P/L summary ■ Financial results for each segment 3. Projections for the full fiscal year ending March 2008 ■ Revision of full year projections ■ Factors of changes (Reference Material: Cash Flows, B/S O
Slide 13: Positioning of Mid-term Business Plan
Positioning of Mid-term Business Plan z Mid-term Business Plan is based on the basic policies to “Revamp Business Structure” announced on March 2007 Recognize the paradigm shifts in business environment. Set forth OKI’s ideal situation for 2010, present the thinking behind and major initiatives to a
Slide 14: Status of Short-term Measures for FY end. March 08
Status of Short-term Measures for FY end. March 08 OKI expects to achieve full year targets as originally planned Urgent Measures Target 1H Status Consolidate/ reduce number of biz units 10% Implement withdrawal or partial withdrawal of 13% of BUs [Measure 1] To focusing bizes: Implemented additiona
Slide 15: Accelerate Biz. Selection and Concentration
Basic Measure 1 (Urgent Measure) Accelerate Biz. Selection and Concentration 1H of FY end. Mar. 07 FY end. Mar. 07(End) 1H of FY end. Mar. 08 Total number of BUs 129 Î 85 Î 75 (Reduce 42%) [Info-telecom] BU: 109 (1H) Î 71（End） Î 64 [Semiconductors] BU: 20 (1H) Î 14 (End) Î 11 Shift resources Beginni
Slide 16: Accelerate Biz. Selection and Concentration (Mid-long term)
Basic Measure 1 (Mid-long term) Accelerate Biz. Selection and Concentration Redefine business evaluation indicator, accelerate biz. operation speed and improve flexibility. Dynamically shift resources, enforce more pertinent personnel allocation. Consolidate 64 BUs in Info-telecom to 28 product BUs
Slide 17: (Mid-long term) Revamp Towards a More Efficient Management Style
Basic Measure 1 (Mid-long term) Revamp Towards a More Efficient Management Style Establish a management style corresponding with paradigm shift Category Approach Examine group-wide management structure Reorganize organization and Separate legacy and new business (in-house venture) operations ope
Slide 18: Develop strong businesses with strong products
Basic Measure 1 (Mid-long term) Develop strong businesses with strong products Each business will implement strong business operations that correspond with paradigm shift Make concentrated investment on focusing and steady profit businesses Create new businesses and accelerate autonomous operations
Slide 19: Mid-term Business Plan by Segment: Info-telecom
Mid-term Business Plan by Segment: Info-telecom Position NGN network and platform as the core telecom business domain. Strengthen market accessibility, and provide Ubiquitous Service to Financial and Info-system markets Business Group Structure Net sales and operating Mechatronics income ratio techn
Slide 20: Financial Business: Market Environment and Basic Strategy
Financial Business: Market Environment and Basic Strategy [Market Environment] ATM and cash management terminal market expands rapidly in China and other Asian markets. ATM market in Japan remains flat: Though ATMs for retail grows, bank branch offices consolidate. Mechatronics equipment enters stif
Slide 21: Financial Business: Major Initiatives
Financial Business: Major Initiatives z Enhance global deployment of mechatronics biz. and accelerate alliances - Form collaborations to develop next generation ATMs and enhance cost competitiveness - Expand ATM sales through alliance with Hyosung and add Hyosung’s Net sales CD in OKI’s lineup to be
Slide 22: Telecom Carrier Business: Market Environment and Basic Strategy
Telecom Carrier Business: Market Environment and Basic Strategy [Market Environment] NTT’s NGN commercial service starts from March 2008 in Tokyo metropolitan and partial Osaka areas. NGN-based Ubiquitous Service is expected to grow in full-scale from FY end. March 2010. Enterprise market will rise
Slide 23: Telecom Carrier Business: Major Initiatives
Telecom Carrier Business: Major Initiatives z Review low profitability SI-businesses in carrier network business - Shift from focus on sales to focus on profit. Reduce fixed costs. Net Sales z Reallocate technology resources to focusing areas - Consolidate development division for telecom carriers a
Slide 24: Info-sys (Enterprise/Public sector): Market Environment and Basic Strategy
Info-sys (Enterprise/ Public sector): Market Environment and Basic Strategy [Market Environment] Annual growth rate of Japan’s IT investment until 2010 is approx. 2%. (Source: IDC 2006 Japan’s IT market by industry) Stiffer competition as systems shift from exclusive systems to open systems, lowerin
Slide 25: Info-sys (Enterprise/Public sector) Major Initiatives
Info-sys (Enterprise/Public sector) Major Initiatives z Provide how systems combining OKI’s business know- - Enhance sales by concentrating on OKI’s strong domains with proven Enterprising Architecture (EA) as a base Net Sales - Maintain market share by providing value-added systems by 125.0 converg
Slide 26: Mid-term Business Plan by Segment: Semiconductors
Mid-term Business Plan by Segment: Semiconductors [Market Environment] Sales growth ratio: After 2005, growth ratio slows down from previous 15-20% to 10%. In 2007, ratio goes down to 3%. 2008 and after is expected to be 5%. (Source: Gartner, iSupply, WSTS） Though market expands, price competition w
Slide 27: Semiconductor Business: Major Initiatives
Semiconductor Business: Major Initiatives z Increase business sales and profit by creating e-functional module Net sales and operating -Enhance high density packaging technologies through alliances income ratio (with Zycube and SFT) - Establish e-functional Module Promotion Division from Oct. 2007 -
Slide 28: Mid-term Business Plan by Segment: Printers
Mid-term Business Plan by Segment: Printers [Market Environment] Printer market is enormous and continues to grow, where major competitors dominate the market Growth of color single function printer (SFP) is slowing down, while mono SFP market maintains its large market size. Both markets experience
Slide 29: Printer Business: Major Initiatives
Printer Business: Major Initiatives z Enhance suitable product for SMB market - Enhance middle-range OKI products by sharing LED engine Net sales and operating platform. Achieve product supplement through alliances income ratio - Launch new products for the enormous mono NIP market - Enhance color M
Slide 30: OKI Global Strategy: Basic Policy
OKI Global Strategy: Basic Policy Aim Aimto tobe berecognized recognizedas asglobal globalcompany companyby bythe theworld world Target: Target:From Fromthe theChinese ChineseCharacter “Oki(沖)” Character“Oki (沖)”totoaaglobal globalcompany company“OKI” “OKI” Overseas sales ratio 50%, China sales rati
Slide 31: OKI Global Strategy: Growth Target by Region
OKI Global Strategy: Growth Target by Region 2006 2010 [Info-telecom] [Semiconductors] [Printers] 25% 65% 85% Overseas sales ratio: Overseas ratio: 50% Japan China APAC Americas Europe 35% (China: 10%) (China: 3%) APAC: Asia Pacific excluding China and Japan Region Major measures for growth China z
Slide 32: Mid-term business targets
Mid-term business targets Net sales and operating income ratio 3.4 (%) 1.6 0.8 (Billion yen) 750.0 800.0 735.0 35.0 35.0 Others 40.0 210.0 230.0 195.0 Printers 140.0 150.0 155.0 Semiconductors 360.0 355.0 380.0 Info-telecom systems FY end. Mar. FY end. Mar. FY end. Mar. 2008 2009 2011 FY end. Mar. 2
Slide 33: Glossary
Glossary P2 P/L Profit and Loss P20 OEM Information Technology B/S Balance Sheet P21 CD Cash Dispenser P3 YoY Year-on-year LCM Life Cycle Management P4 FY Fiscal Year P22 PBX Private Branch Exchange SG&A Selling, General and Administrative P23 ATCA Advanced Telecom Computing expense Architecture (Ad
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