Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — FY2004 Earnings Presentation
34 slides from Oki Electric Industry's earnings presentation, Apr 28, 2005
Slide 1: Financial Results for the Fiscal Year ended March 31, 2005
Financial Results for the Fiscal Year ended March 31, 2005 April 28, 2005 Oki Electric Industry Co., Ltd. 1
Slide 2: Table of Contents
Table of Contents 1. Financial results for FY ended Mar. 2005 1) Overview 4) Cash Flow Condition 2) Profit & Loss Outline 5) Segment Information (previous segments) 3) Balance Sheet Outline 6) Projections for FY ending Mar. 2006 2. Mid Term Business Strategies (FY ending Mar. 2006 & 2007) 1) Reorgan
Slide 3: Overview of FY ended Mar. 05
Overview of FY ended Mar. 05 Net sales achieved 688.5 B yen, increased by 34.3 B yen (5.2%) on a year-on-year basis Net income reached to 11.2 B yen, 9.9 B yen increase on a year-on-year basis Resume 3 yen dividend Operating income and recurring income increased by 5.6 B yen (2.6%) and 8.7 B y
Slide 4: Profit & Loss Outline for FY ended Mar. 05
Profit & Loss Outline for FY ended Mar. 05 < Comparison of consolidated P/L> (Billion yen) (Billion yen) Consolidated net sales Mar. 04 Mar. 05 Variance Mar.04 Mar. 05 Variance Info sys 360.3 335.8 (24.5) Net sales 654.2 688.5 34.3 Telecom 104.6 135.3 30.7 (Cost of sales ratio) (74.1%) (73.2%) (+0.9
Slide 5: Balance Sheet Outline for FY ended Mar. 05 (1)
Balance Sheet Outline for FY ended Mar. 05 (1) <Balance Sheet: Assets> Turnover ratio Mar. 04 Mar. 05 Variance Major turnover ratios improved through Total assets 1.06 1.13 0.07 improved measures to improve asset efficiency by FCF as a management indicator Notes and accounts 4.02 4.57 0.55 improve
Slide 6: Balance Sheet Outline for FY ended Mar. 05 (2)
Balance Sheet Outline for FY ended Mar. 05 (2) <Balance Sheet: Liabilities and Mar. 04 Mar. 05 Variance Shareholders’ Equity> Amount of interest- 291.4 265.2 26.2 decreased bearing debt (B yen) Interest-bearing debt ratio improved by 4.2% and outstanding balance decreased by 26.2 B yen Interest-be
Slide 7: Cash Flow Outline
Cash Flow Outline While issued 20.0 billion yen Euro CB in Nov. 2004, interest-bearing debt became 265.2 B yen, decreased by 26.2 B yen through reduction of debt (Billion yen) Oct. 28 Mar.03 Mar. 04 Mar. 05 Variance announced I. Cash flows from operating activities 0.2 92.3 59.3 (33.0) 65.0 Income
Slide 8: Segment Information for FY ended Mar. 05
Segment Information for FY ended Mar. 05 Net sales Net sales z Info systems: 24.5 B yen decrease on a YoY basis (Billion yen) • Financial solutions systems (-27.8 B): Decrease of new 710.0 banknote related demand 654.2 688.5 70.0 • Information solutions (-9.6 B): Public investments delay 57.1 66.7 O
Slide 9: Premises of FY ending Mar. 06 Projections
Premises of FY ending Mar. 06 Projections <Economy forecast> While enterprise production partly recovers due to inventory adjustment completion and demand recovery, overall economy recovery is at a standstill due to stagnation in IT investments. Expected recovery in the second half Concerns incl
Slide 10: Profit & Loss Outline for FY ending Mar. 06
Profit & Loss Outline for FY ending Mar. 06 < Comparison of consolidated P/L> (Billion yen) Consolidated net sales (Billion yen) Mar. 05 Mar. 06 Variance Mar. 05 Mar. 06 Variance Results Projections Info-Telecom 373.1 380.0 6.9 Net sales 688.5 720.0 31.5 Semiconductor 150.7 165.0 14.3 Printer 137.7
Slide 11: Analysis of Changes in Operating Income
Analysis of Changes in Operating Income <Analysis of 1.3 B yen increase in operating income from the previous year> 31.0 B yen income increase from sales growth and procurement cost reduction Procurement cost reduction is expected to be severer Increase of 1.3 billion yen in total, due to price
Slide 12: Reorganization of Business Segments
Reorganization of Business Segments Reorganize Oki group’s business segments to three pillars 1st pillar: Info-Telecom System Business Focus on info-telecom converged solutions 2nd pillar: Semiconductor Business Focus on system LSIs and deploy fab-free model 3rd pillar: Printer Business Focu
Slide 13: Business Groups & Companies
Business Groups & Companies Target of Business Group System Main structure of Business Groups - Establish strong business flexible to market changes - Form autonomic management for each group (Chairman/ GOO) Chairman, GOO* - Promote agile business operation HQ, administration, shared functions -
Slide 14: From "Oki Electric" to a more global "OKI"
Mid Term Business Plan Info-telecom system, semiconductor, and printer businesses will increase profitability to become an Excellent Growing Company by clarifying its focus, strengthening its product and sales skills, making appropriate investments, and utilizing business strengths. 1998 1999 2000 2
Slide 15: Info-Telecom System Business: Business Target
Info-Telecom System Business: Business Target Basic Policy Deploy business from infrastructures to applications in the broadband ubiquitous network era Create info-telecom converged solutions by market based on AP@PLAT and enhance these solutions sales Create world-class products and expand gl
Slide 16: Financial Market (1)
Financial Market (1) Market Trends Business Strategies Diversifying retail service channel Enhance info-telecom converged solutions Increase product lineups due to based on CTI, Web linkage, and mobile deregulations Strengthen e-financial systems (e-payment, Security supporting Personal In
Slide 17: Financial Market (2)
Financial Market (2) Oki’s financial IT solutions provide “satisfaction” in the e-society Info-Telecom converged solutions Back office operation concentration systems based on Japan No. 1 share in call center with excellent image processing technologies systems and broadband IP technologies and trac
Slide 18: Telecom Carrier Market (1)
Telecom Carrier Market (1) Internet contracted lines Market Trends (Million lines) Source: Fuji Chimera 40 Expansion of broadband access market 30 - Saturated ADSL, rapid growth of FTTH Transition to optical IP telephony service 20 Concretizing all-IP 10 - NTT-G: Plans of 30 million optical su
Slide 19: Telecom Carrier Market (2)
Telecom Carrier Market (2) Oki’s Strengths Focus Area Hold core technologies and know-how - Optical access: System & optical Application servers component technologies for GE-PON etc. Platforms - CPE: Platform technologies (video, optical, VoIP) Backbone - Network migration: Existing network techn
Slide 20: Public Sector
Public Sector Market Trends Business Strategies Full scale deployment of e-Japan II Initiative e-government e-government solutions solutions Central Government Introduction of EA with e-government establishment plans Deploy e-government solutions with Reexamine system upgrade with administrative
Slide 21: Enterprise Market
Enterprise Market Cultivate customers by cross-providing products to system and telecom based customers Market Trends Business Strategies Manufacturing industry Payment Payment & & security security solutions solutions Automobile-related and machinery companies Support linkage between customers’ c
Slide 22: Semiconductor Business: Business Target
Semiconductor Business: Business Target Basic Strategy Deploy value added business with system LSI for the personal & mobile markets Enhance the creation of top-class products, development speed and production flexibility through partnership strategy and fab-free strategy (vertical integration w
Slide 23: Semiconductor Business Strategy
Semiconductor Business Strategy Deploy marketing and product development activities for personal and mobile market, focusing on 3 areas: telecom, information appliances, and in-vehicle markets Expect 9% business expansion in CAGR by providing competitive products to the following active and stea
Slide 24: Product Segment
Product Segment Balanced business with 3 areas for 3 product segments based on differentiated technologies (system, circuits, software, process, etc.) - System LSI Create high market added value, cooperating with partners and customers - Logic LSI Expand sales and profitability, particularly drive
Slide 25: Printer Business: Business Target
Printer Business: Business Target Basic Strategy Global business deployment by clarifying strategy for each market and with OKI unique products Target to hold No.2 market share by strengthening compact and high-speed color NIP product competitiveness (development TAT, product timing, quality, co
Slide 26: Printer Market Trend
Printer Market Trend 18% annual growth in color NIP/ MFP Billion $ Printer Market (hardware shipment amount base) 50 CAGR = -8% SIDM Color NIP penetration reached over 16% in CY 40 CAGR = 1% 2004, with continued expectations of growth Inkjet 30 (The 16% Diffusion of Innovation Theory, E.M. Rogers)
Slide 27: Color NIP Business Strategy
Color NIP Business Strategy Target - Provide top-of-the-line value to worldwide customers with semiconductor- based LED tandem single pass technology - Target to hold 20% of the shipment units in FY Mar. 07 Measures - Prioritize in improving customer satisfaction - Provide superior cost performa
Slide 28: Mid-term Business Target
Mid-term Business Target <Sales/ Operating income ratio> 5.3 (%) 4.0 4.0 (Billion yen) 3.3 760.0 688.5 720.0 654.2 25.0 25.0 Others 21.4 27.0 165.0 137.7 150.0 124.8 Printers 132.2 150.7 165.0 180.0 Semiconductors 375.8 373.1 380.0 390.0 Info-telecom systems Mar. 04 Mar. 05 Mar. 06 (Projections) Mar
Slide 29: Oki Mid-term Business Plan Perspective
Oki Mid-term Business Plan Perspective To achieve mid-term target for the FY Mar. 07, steadily implement following measures during the FY Mar. 06: Commit to autonomy operation for the three business groups Enhance Corporate’s group management function and review functions of affiliated companies
Slide 30: Financial Indicators
Financial Indicators Main business challenge is to maximize cash flows and decrease interest- bearing debt ⁃ Decrease interest-bearing debt to 40% or lower in the FY Mar. 07 Mar. 04 Mar. 05 Mar. 06 Mar. 07 Cash flows from operating activities 92.3 59.3 68.0 72.0 Cash flows from investing activitie
Slide 31: Capital Expenditure
Capital Expenditure (Billion yen) Acquisitions of property, plant Main items for capital 50 and equip. expenditure (FY March 06) 37.8 38.0 38.0 <Info-telecom systems> 3.6 3.5 - Development equipment for next Others 6.0 generation financial terminals 8.5 Printers - Production equipment for GE-PON 25
Slide 32: R&D Expenses
R&D Expenses Main items for R&D expenses R&D Expenses (FY March 06) (Billion yen) <Info-telecom systems> 30 - Develop next generation financial 25.0 systems - Develop integrated recognition process 22.0 22.5 Others technology 3.2 - Develop new info-telecom converged 3.1 Printers products 4.0 Semicon
Slide 33: Personnel Plans
Personnel Plans <Major personnel measures> Maintain number of domestic employees until the end of FY Mar. 07 Flexibly change overseas staff number responding to business deployment (enhance design, development, software & marketing) Improve marketing and technical skills by recruiting mid-care
Slide 34: Glossary
Glossary P4 SG&A Selling, General and Administrative expense P20 EA Enterprise Architecture P5 FCF Free Cash Flow ITS Intelligent Transport System P8 IP Internet Protocol PM Project Management LCD Liquid Crystal Display ETC Electronic Toll Collection LSI Large Scale Integration VICS Vehicle Informat