Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — FY2008 Earnings Presentation
31 slides from Oki Electric Industry's earnings presentation, May 28, 2008
Slide 1: OKI Business Strategies
OKI Business Strategies May 28, 2008 Oki Electric Industry Co., Ltd. c©Copyright ○ Copyright 2006 OkiElectric 2008 Oki Electric Industry Industry Co.,Co.,Ltd. Ltd. S OKI CONFIDENTIAL 1
Slide 2: Table of contents
Table of contents I. Financial results for the fiscal year ended March 2008 II. Progress of mid-term plan to revamp business structure III. Plans for the fiscal year ending March 2009 c©Copyright ○ Copyright 2006 OkiElectric 2008 Oki Electric Industry Industry Co.,Co.,Ltd. Ltd. S OKI CONFIDENTIAL 2
Slide 3: FY end. March 2008: Summary of financial results
FY end. March 2008: Summary of financial results FY end. March 2008 was the year to shift the helm for a V-shape recovery Income improved YoY by implementing short term measures to revamp business structure and by improving profitability in color NIP business Total assets decreased by 57.6 billion y
Slide 4: FY end. March 2008: Segment information
FY end. March 2008: Segment information Net Sales Operating income/loss FY end. FY end. Announced FY end. FY end. Announced （Billion yen) March 07 March 08 Jan. 2008 March 07 March 08 Jan. 2008 Info-telecom 352.7 359.0 360.0 (1.5) (1.7) 1.0 Semiconductor 145.5 138.2 140.0 0.7 3.8 3.0 Printer 187.1 1
Slide 5: FY end. March 2008: Changing factors of operating income
FY end. March 2008: Changing factors of operating income Offset price decline and product mix by reducing production and procurement costs Improvement in printer product mix, while telecom product mix worsened Fixed costs declined by implementing short term measures (curtailing personnel costs and i
Slide 6: Analysis of changes in operating income (printer, telecom)
Analysis of changes in operating income (printer, telecom) z Printers Profit increased significantly in the FY end. March 2008 by shifting business to value-added models where consumable sales can be expected ¾ Sales of hardware decreased by reducing low-end models while consumable sales increased Î
Slide 7: Results of short-term measures to revamp business structure
Results of short-term measures to revamp business structure Short-term measures for FY end March 2008 Target Results Consolidate/ reduce Implemented withdrawal or partial number of biz units 10% withdrawal of 12% of BUs [Measure 1] Shift resources To focusing bizes: Accelerate biz 700 personnel Comp
Slide 8: II. Progress of mid-term plan to revamp business structure
I. Financial results for the fiscal year ended March 2008 II. Progress of mid-term plan to revamp business structure III. Plans for the fiscal year ending March 2009 c©Copyright ○ Copyright 2006 OkiElectric 2008 Oki Electric Industry Industry Co.,Co.,Ltd. Ltd. S OKI CONFIDENTIAL 8
Slide 9: Topics: Ubiquitous Service and Telecom Platform
Topics OKI is firmly implementing measures to “revamp business structure” as announced in OKI’s Business Strategies on March 30, 2007 (Towards OKI’s direction in its mid-term plan) Each business group in info-telecom business are implementing the business measures to provide “Ubiquitous Services” (b
Slide 10: Status of revamping business structure: Info-telecom Group
Status of revamping business structure: Info-telecom Group For telecom market Directions in the mid-term business plan Respond to NGN and provide service infrastructure by converging OKI’s technologies for carriers and enterprises - Consolidate carrier business and enterprise business into Telecom B
Slide 11: Status of revamping business structure: Info-telecom Group
Status of revamping business structure: Info-telecom Group For financial market Directions in the mid-term business plan With its mechatronics technology and know-how for financial business as its core competence and utilizing alliances, OKI will expand its business in Japan and overseas focusing on
Slide 12: Status of revamping business structure: Semiconductors and Printers
Status of revamping business structure: Semiconductors and Printers Semiconductor business Directions in the mid-term business plan Enhance profitability by deploying business utilizing OKI’s strengths - Reduce system LSIs, shift attention to differentiating technologies and application specific sta
Slide 13: Challenges and measure to revamp business structure
Challenges and measure to revamp business structure Challenges to revamp business structure - Telecom business: Become more responsive to market changes - Semiconductor business: Enhance profitability Measures to respond to challenges Based on OKI’s “Network-style Company Management” policy, OKI wil
Slide 14: Directions of the new companies
Directions of the new companies Increase flexibility in management and quickly respond to market changes Directions of the new telecom company ¾ Enhance to provide ubiquitous services in the NGN era ¾ Balance stable operation of legacy network business and active business deployment for NGN ¾ Comple
Slide 15: Changes in the telecom business environment
Changes in the telecom business environment Continued restraint in telecom carrier investments for existing network Delay in NGN plan z In FY end. March 2007, NGN was expected to commercialize from FY end. March 2008, bringing stable growth from FY end. March 2008 and after z In the second half of F
Slide 16: Changes in the telecom business environment
Changes in the telecom business environment Market trends in NGN going forward z NTT’s mid-term plan: Reform to a business model focusing on IP-related business, solution business and new businesses z Direction of OKI’s “Ubiquitous Service” and NTT’s “Broadband Ubiquitous Service” match z Necessity
Slide 17: Telecom business
Telecom business (Directions going forward: Achieving ubiquitous service) Announce “Ubiquitous Service” concept in June 2006 Step1 (Oct. 2007) - Established info-telecom converged business structure (telecom, financial, info-systems) - Prepared for FMC: Team-up with Aruba Networks - Consolidated
Slide 18: Semiconductor business
Semiconductor business (Status of revamping business structure) [Achieve mid-term plan] z Revamp business structure for system LSI and logic LSI ¾ Improve profitability by scaling-down low-profit system LSI business ¾ Shift resources to IDM logic products to increase sales in FY end March 2009 and a
Slide 19: OKI Group Business Structure (Outline)
OKI Group Business Structure (Outline) Spinning off telecom and semiconductor businesses is part of OKI’s Network-style Company Management Improve management efficiency in each business and streamline and enhance corporate function OKI’s strengths Enterprise Telecom carrier Financial Info-sys Japan
Slide 20: III. Plans for the fiscal year ending March 2009
I. Financial results for the fiscal year ended March 2008 II. Progress of mid-term plan to revamp business structure III. Plans for the fiscal year ending March 2009 c©Copyright ○ Copyright 2006 OkiElectric 2008 Oki Electric Industry Industry Co.,Co.,Ltd. Ltd. S OKI CONFIDENTIAL 20
Slide 21: [FY end. March 2009] Profit and Loss Projections
[FY end. March 2009] Profit and Loss Projections Achieve 12.0 B yen operating income as targeted in the Mid-term Business Plan Full year First half (Billion yen) FY end FY end. FY end. FY end. March March 2008 March 2009 March 2008 2009 (Results) (Plan) (Results) (Plan) Net sales 719.7 700.0 327.6 3
Slide 22: [FY end. March 2009] Net Sales and Operating Income by Segment
[FY end. March 2009] Net Sales and Operating Income by Segment Net sales Operating Income [Full year] FY end. FY end. March FY end. FY end. March (Billion yen) March 2008 2009 March 2008 2009 (Results) (Plan) (Results) (Plan) Info-telecom system 359.0 337.0 （1.7） 8.0 Semiconductor 138.2 135.0 3.8 4.
Slide 23: [FY end. March 2009] Reason of changes in operating income
[FY end. March 2009] Reason of changes in operating income Net sales Operating income Highlights of changes (billion yen) FY end. FY end. FY end. FY end. (summary of chapter II) Mar. 08 Mar. 09 Mar.08 Mar. 09 (Results). (Plan) (Results) (Plan) Financial: Sales remain flat YoY for private financial i
Slide 24: [FY end. March 2009] Changing factors of operating income
[FY end. March 2009] Changing factors of operating income Though marginal profit decreases due to decline of volume, product mix improves considerably mainly in Info-telecom systems Price decline is expected in semiconductor and printer businesses. However, this will be covered by reduction of produ
Slide 25: [FY end. March 2009] Capital Expenditure & R&D Expenses
[FY end. March 2009] Capital Expenditure & R&D Expenses Moving from a phase to curb investments, mentioned in short-term measures to revamp business structure, to a phase to increase investment to strengthen and grow businesses Property, Plant & Equip. R&D Expenses [Capital Expenditure] 37.7 (Billio
Slide 26: [FY end. March 2009] Cash Flows Projections
[FY end. March 2009] Cash Flows Projections OKI expects to create 10.0B yen free cash flow in the FY ending March 2009 through improvement in working capital (Billion yen) FY end. FY end. March 2008 March 2009 (Actual) (Plan) I. Cash flows from operating activities 42.5 44.0 II. Cash flows from inve
Slide 27: (Reference) [FY end. March 2008] Summary of Profit and Loss
(Reference) [FY end. March 2008] Summary of Profit and Loss Printer: Color NIP greatly contributed to profit by shifting to value-added models Jan.29, (Billion yen) FY end. FY end. 2008 【YoY comparison】 Mar. 2007 Mar. 2008 announcement Cost of sales ratio improved by Net sales 718.8 719.7 735.0 1.0
Slide 28: (Reference) [FY end. March 2008] Balance Sheet [Assets]
(Reference) [FY end. March 2008] Balance Sheet [Assets] Inventories decreased by 28.6 B yen YoY through improvement activities Total assets decreased by 57.6 B yen YoY through improvement in inventories and through decline in investment securities (21.1 B yen) as current value declined (Billion yen)
Slide 29: (Reference) Balance Sheet [Liabilities and shareholders' equity]
(Reference) [FY end. March 2008] Balance Sheet [Liabilities and shareholders’ equity] Interest-bearing debt decreased by 17.4B yen YoY Shareholders’ equity declined by 14.9 B yen YoY, due to decrease in marketable securities valuation difference of 13.7 B yen, etc. (Billion yen) Variance with Mar.31
Slide 30: (Reference) [FY end. March 2008] Cash Flows
(Reference) [FY end. March 2008] Cash Flows Free cash flows improved by 38.4 B yen from decrease in working capital, improvement in income, etc. Mar. end. Mar. end 2007 2008 (Billion yen) （金額単位：億円） I. Cash flows from operating activities 16.1 42.5 Income before income taxes (16.2) 5.0 ＜ Changes Mar.
Slide 31: Glossary
Glossary P3 FY Fiscal Year YoY Year-on-year P4 ATM Automated Teller Machine LSI Large Scale Integration P2ROM Production Programmable Read-Only Memory NIP Non-Impact Printer P6 IP Internet Protocol R&D Research & Development P10 NGN Next Generation Network P12 SMB Small and Medium Business SIDM Seri