Kokusai Electric Corporation · TSE:6525
Kokusai Electric — Q3 2024 Earnings Presentation
43 slides from Kokusai Electric's earnings presentation, Feb 9, 2024
Slide 1: Financial Briefings for the Third Quarter of the Fiscal Year Ending March 2024
TRANSLATION-FOR REFERENCE ONLY- Financial Briefings for the Third Quarter of the Fiscal Year Ending March 2024 (April to December 2023) February 9, 2024 KOKUSAI ELECTRIC CORPORATION KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights
Slide 2: Disclaimers
Disclaimers This document and the information presented in this document were created for the purpose of disclosing corporate information, etc., and do not constitute a solicitation of an offer to subscribe for shares or other securities of the Company, either domestically or internationally. Forw
Slide 3: 3Q FY24/3 Consolidated Financial Summary
3Q FY24/3 Consolidated Financial Summary KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.
Slide 4: Highlight
Highlight Summary of Consolidated Results for 3Q FY24/3 We recognized the market bottomed out as inventory adjustments of semiconductor devices is progressing, and the unit price of memory devices has begun to rise. In addition to robust investment in mature nodes, DRAM and Logic/Foundry are also
Slide 5: Consolidated Results Summary
Consolidated Results Summary 3Q revenue and profit decreased YoY due to the stagnation in the memory market, but recovered markedly from 1Q to 2Q, and 2Q to 3Q. Gross profit margin remained above 40% despite the impact of changes in the composition of projects. FY23/3 FY24/3 (JPY bn) 1Q 2Q 3Q 1-3Q 1
Slide 6: 3Q FY2024/3 Results: Factors for Changes
3Q FY2024/3 Results: Factors for Changes Revenue decreased by JPY11.3 bn YoY due to restrained investment in NAND. Due to the impact of a sales decrease, adjusted operating profit declined by JPY4.8 bn YoY. Revenue Adjusted Operating Profit （JPY bn） （JPY bn） NAND -13.1 DRAM +5.4 65.2 Logic/Foundry -
Slide 7: Revenues by Business
Revenues by Business 3Q revenue composition by business has returned to normal due to a recovery in equipment revenue, consisting of 70% equipment and 30% service. 64.4 65.2 60.1 56.0 54.0 45.0 （JPY bn） 71% 69% 66% 70% 32.7 70% 58% Equipment Service 57% 34% 29% 31% 30% 42% 43% 30% 7c FY23/3 FY24/3 （
Slide 8: Revenues by Application (Equipment only)
Revenues by Application (Equipment only) 3Q revenue composition by application consists of 14% NAND, 40% DRAM and 46% Logic/Foundry + Others. While investment in NAND continues to be restrained, investment in DRAM and Logic/Foundry, including mature nodes, has recovered. 45.4 45.0 7% 5% 42.3 （JPY bn
Slide 9: Trends in Order Backlog
Trends in Order Backlog Orders received bottomed out in 2Q and have recovered since 3Q as planned. The order backlog level is returning to normal as projects with long delivery times included in the backlog are being shifted to sales. As a result, the order backlog at the end of 3Q was at the same l
Slide 10: Balance Sheet
Balance Sheet Total assets remained at the same level as the end of FY23/3 due to increases in property, plant and equipment, and inventories despite decreases in cash and cash equivalents, and trade and other receivables. Total liabilities decreased by JPY18.5 bn from the end of FY23/3 mainly due t
Slide 11: Equity Ratio / Cash and Cash Equivalents / Interest-bearing Liabilities
Equity Ratio / Cash and Cash Equivalents / Interest-bearing Liabilities The equity ratio increased to 48.6% as of the end of 3Q. Net debt resulted in JPY9.5 bn at the end of 3Q due to a decrease in operating cash flows in FY24/3. Interest-bearing liabilities have been decreasing. Total Asset / Total
Slide 12: Cash Flows
Cash Flows Operating cash flows recovered in 3Q as revenue recovered. The level of cash and cash equivalents remained high at the end of 3Q. 20.5 （JPY bn） 22.1 10.1 13.2 2.4 Cash flows from operating activities -1.0 -1.7 -2.1 -5.3 -3.1 -2.0 0.1 Cash flows from investing activities -0.1 -0.2 -3.2 -7.
Slide 13: R&D Expenses / Capital Expenditure / Depreciation Expense
R&D Expenses / Capital Expenditure / Depreciation Expense The ratio of R&D expenses to revenue increased temporarily due to the continued investment in next-generation equipment development. The ratio will normalize as sales recover. Large-scale capital investments with long-term amortization, such
Slide 14: Consolidated Earnings Forecast for FY24/3 and Outlook for the future
Consolidated Earnings Forecast for FY24/3 and Outlook for the future KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.
Slide 15: Highlight
Highlight Summary of Consolidated Results for 3Q FY24/3 We recognized the market bottomed out as inventory adjustments of semiconductor devices is progressing, and the unit price of memory devices has begun to rise. In addition to robust investment in mature nodes, DRAM and Logic/Foundry are also
Slide 16: FY2024/3 Earnings Forecast
FY2024/3 Earnings Forecast No changes to the previous forecast. Investments in DRAM and Logic/Foundry, including mature nodes, has contributed to our earnings. FY23/3 FY24/3 （JPY bn） 1-3Q Full year 1-3Q Full year (forecast) YoY Revenue 185.6 245.7 131.7 180.0 -26.7% Gross profit 76.9 100.8 55.9 73.7
Slide 17: FY2024/3 Earnings Forecast: Factors for Change
FY2024/3 Earnings Forecast: Factors for Change Equipment revenue is expected to decrease due to the impact of restrained investment in NAND. Adjusted operating profit will also decline due to the impact of a sales decrease. Revenue Adjusted Operating Profit （JPY bn） NAND -56.7 （JPY bn） 245.7 DRAM +9
Slide 18: Revenue Forecast by Business
Revenue Forecast by Business For FY24/3, a decrease in equipment revenue will result in temporary increase in the revenue composition ratio for service business. 245.4 245.7 （JPY bn） 178.0 180.0 69% Equipment business 74% Service business 66% 72% 31% 26% 34% 28% FY21/3 FY22/3 FY23/3 FY24/3E KOKUSAI
Slide 19: Revenue Forecast by Application (Equipment only)
Revenue Forecast by Application (Equipment only) For FY24/3, the revenue composition ratio for DRAM and Logic/Foundry is expected to increase due to a recovery in investment in DRAM and Logic/Foundry, including mature nodes, while restrained investment in NAND will continue. 181.8 （JPY bn） 2% 169.5
Slide 20: Business Environment
Business Environment Outlook for Semiconductor Devices and WFE Markets Semiconductor Device Market From a medium- to long-term viewpoint, significant growth is expected due to the expansion of data centers with the spread of 5G, AI, IoT, and DX, and investment in reducing environmental impact (GX)
Slide 21: Advantages of Batch ALD
Advantages of Batch ALD Batch ALD*1 market expands as devices become more complex. The demand for batch ALD is expected to increase not only in NAND but also in DRAM and Logic, while separating from the single-wafer ALD market. Positioning of Batch ALD Market Features of our Batch ALD process ■ Depo
Slide 22: Our Growth Roadmap
Our Growth Roadmap Short-, medium-, and long-term growth drivers exist in a well-balanced way. Long-term Mid-term Short-term Demand expansion for our technology due Further demand expansion for our Increase of demand for DRAM and to the shift to Logic GAA*2 technology due to the shift towards
Slide 23: Appendix
Appendix KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.
Slide 24: 1-3Q FY2024/3 Results: Factors for Changes
1-3Q FY2024/3 Results: Factors for Changes Revenue decreased by JPY54 bn YoY due to restrained investment in NAND. The impact of a sales decrease was partially offset by an improvement in gross profit margin, and adjusted operating profit decreased by JPY20.9 bn YoY. Revenue Adjusted Operating profi
Slide 25: Income Statement, R&D Expenses, Capex and D&A expenses
Income Statement, R&D Expenses, Capex and D&A expenses FY23/3 FY24/3 （JPY mn） 1Q 2Q 3Q 4Q Full year 1Q 2Q 3Q Revenue 56,035 64,385 65,216 60,085 245,721 32,710 44,995 53,956 Gross profit 23,090 27,489 26,359 23,867 100,805 14,275 19,890 21,741 Gross profit margin 41.2% 42.7% 40.4% 39.7% 41.0% 43.6%
Slide 26: Reconciliation of Adjusted Items
Reconciliation of Adjusted Items FY23/3 FY24/3 （JPY mn） 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q Operating profit 12,984 16,407 15,527 11,146 56,064 3,990 9,383 10,689 Other income -30 -30 -191 -19 -270 -30 -110 -285 Other expenses 23 88 41 1,410 1,562 45 33 19 (Adjustments) Purchase price allocation amortiza
Slide 27: Key Balance Sheet Items
Key Balance Sheet Items FY23/3 FY24/3 FY23/3 FY24/3 （JPYmn） End of 4Q End of 1Q End of 2Q End of 3Q (JPYmn) End of 4Q End of 1Q End of 2Q End of 3Q Assets Current Cash and cash equivalents 106,053 94,493 87,550 86,498 Liabilities Current Loans payable + Lease liability 6,596 6,582 7,298 7,256 Assets
Slide 28: Cash Flow Statement
Cash Flow Statement （JPY mn） FY23/3 FY24/3 1Q 2Q 3Q 4Q 1Q 2Q 3Q CF from operating activities - 1,950 22,120 - 3,351 13,174 - 7,365 - 2,030 2,443 CF from investing activities - 982 - 1,657 - 2,069 - 3,117 - 5,278 - 2,037 - 3,321 Free CF - 2,932 20,463 - 5,420 10,057 - 12,643 - 4,067 - 878 CF from fin
Slide 29: Key Activities for 1-3Q FY2024/3
Key Activities for 1-3Q FY2024/3 Business Activities Exhibited at semiconductor industry exhibitions held in various regions, including: “SEMICON® Japan” (December 2023), “SEMICON® Europa 2023” (November 2023), “SEMICON® Taiwan 2023”(September 2023), “SEMICON® West 2023”(July 2023) and “SEMICON® C
Slide 30: Key Activities for 1-3Q FY2024/3
Key Activities for 1-3Q FY2024/3 ESG Initiatives Formulated KOKUSAI ELECTRIC Group Sustainable Procurement Guidelines, dissemination and explanation to suppliers. (October 2023) Sponsored the “Owara Kaze no Bon” festival in Yatsuo, Toyama City, where the Toyama Technology & Manufacturing Center
Slide 31: About the KOKUSAI ELECTRIC Group
About the KOKUSAI ELECTRIC Group KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.
Slide 32: KOKUSAI ELECTRIC at a Glance
KOKUSAI ELECTRIC at a Glance History Overview of Financials (FY23/3) 1949 Established “Kokusai Electric Co., Ltd.” Adjusted Operating Profit Revenue Gross Profit Margin Margin Kokusai Electric Co., Ltd., Hitachi Denshi and Yagi Antenna JPY 245.7bn 41.0% 26.1% 2000 merged to form “Hitachi Kokusai Ele
Slide 33: Business Sites
Business Sites Owns manufacturing sites in Toyama and South Korea, and business sites in Asia, China, the United States, and Europe. With the start of operations at the new Toyama plant in fall of 2024, production and development capacity will expand significantly. Group Network Capacity*1,2 of Prod
Slide 34: Mid- to Long-Term Management Policy
Mid- to Long-Term Management Policy Based on the “KOKUSAI ELECTRIC Way” (corporate philosophy), pursue economic value and environmental and social value from both aspects of business activities and ESG initiatives, contribute to the achievement of SDGs, and continue to support a future where creatio
Slide 35: Our Business and Major Products
Our Business and Major Products Business Profile and Revenue Breakdown (FY23/3) *1 Major Products Equipment (69%) Large batch deposition “AdvancedAce®-300” Batch Deposition Treatment Achieved high productivity and high quality deposition. Worldwide Market Share Worldwide Market Share No. 1 (CY2022
Slide 36: Batch Deposition Equipment: Accelerating Batch ALD Demand
Batch Deposition Equipment: Accelerating Batch ALD Demand As devices become more complex, productivity challenges have become more apparent and highly difficult film deposition turned critical. Batch ALD※ is the optimal solution combining high productivity with highly difficult film deposition. Depo
Slide 37: Treatment Equipment: Demand Expanding as well
Treatment Equipment: Demand Expanding as well Treatment (film property improvement) in a wide range of temperatures by plasma and heating is possible. A solution that achieves high productivity with excellent isotropy and step coverage. Treatment on NAND/DRAM (Film Property Improvement) 1 in By-prod
Slide 38: Service Business: Rapid Expansion of SiC Power Device Equipment
Service Business: Rapid Expansion of SiC Power Device Equipment Sales of 150/200mm equipment for SiC power devices have increased. We aim to further expand the business by launching new products of high-temp anneal. SiC Power Device Market*1 Our Revenue from SiC Power Devices Equipment (JPY bn) 5,33
Slide 39: Sustainability Management: Materiality
Sustainability Management: Materiality Promoting activates to solve issues based on five materialities. The Sustainability Committee regularly reviews materiality and follows up on progress against activity plans and KPIs for each issue. Materiality / Priority Themes Activity Items Materiality / Pri
Slide 40: Mid- to Long-Term Business Strategy and Objectives
Mid- to Long-Term Business Strategy and Objectives KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.
Slide 41: Mid- to Long-Term Objectives
Mid- to Long-Term Objectives We aim to expand R&D investments and enhance manufacturing and development systems to increase sales growth and profit expansion for the sake of mid- to long-term growth. Mid- to Long-Term FY22/3 FY23/3 Objectives Revenue JPY245.4 bn JPY245.7 bn JPY300-330 bn Equipment (
Slide 42: Shareholder Return Policy
Shareholder Return Policy We aim to provide high shareholder returns, placing top priority on growth investments. Plan to pay dividends with a target of the consolidated dividend payout ratio of 20% to 30% Stable, continuous and proactive return of profits to our shareholders to be an important ma
Slide 43: KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All
KOKUSAI ELECTRIC CORPORATION and its Affiliates Proprietary Copyright © KOKUSAI ELECTRIC Corporation 2024. All rights reserved.