Slide 1: FY10/3 Q2 Financial Results
FY10/3 Q2 Financial Results Junshi Yamaguchi President and CEO October 28, 2009 NEC Electronics Corporation http://www.necel.com/ir/en/ 1
Slide 2: Executive Summary
Executive Summary I. FY10/3 Q2 Financial Results ¾ Regained positive free cash ¾ Semiconductor sales were higher than estimated ¾ Operating loss improved but were still worse than the company’s expectation due to the decrease in the production at the 300mm wafer line II. FY10/3 Forecasts ¾ Lowered s
Slide 3: FY10/3 Q2 Financial Results / Forecasts
I. FY10/3 Q2 Financial Results II. FY10/3 Forecasts 3
Slide 4: Financial Snapshot
Financial Snapshot FY10/3 (B Yen) Q1, 6/30 Q2, 9/30 1H, 9/30 Actual Actual Actual YoY HoH Net Sales 102.0 118.5 220.5 -113.1 +7.6 Semiconductor Sales 98.0 113.8 211.8 -106.5 +8.4 Operating Income (Loss) -20.9 -15.5 -36.4 -37.6 +33.2 Income (Loss) Before Income Taxes -20.8 -16.7 -37.5 -37.5 +51.8 Net
Slide 5: Trends in Quarterly Results
Trends in Quarterly Results 200 FY09/3 FY10/3 166.3 167.3 (B yen) 159.2 159.2 127.3 118.5 Net Sales 122.7 102.0 100 85.5 113.8 Semicon. 98.0 Sales 80.7 1Q 2Q 3Q 4Q 1Q 2Q 1.7 -1% 1% -13% -0.5 -21% -13% -10 OP. Income -16.2 -15.5 (Loss) -20 -20.9 OP. -30 -62% Margin -40 -50 -53.3 Note: Operating Incom
Slide 6: Cash Flows
Cash Flows Achieved Positive Free Cash Flows in Q2 FY09/3 FY10/3 (B yen) 1H Q1 Q2 1H Cash Flows from Operating Activities 18.8 -24.7 10.7 -14.0 Cash Flows from -23.4 -17.4 -6.9 -24.2 Investing Activities Free Cash Flows -4.5 -42.1 3.8 -38.2 Cash Flows from -2.3 +19.4 +7.2 +26.6 Financial Activities
Slide 7: Balance Sheets
Balance Sheets As of As of As of (B yen) Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2009 Cash and Cash Equivalents 158.0 79.5 89.5 Accounts Receivable 95.3 66.0 67.1 Inventories 82.0 58.4 54.5 PP&E 257.0 241.7 230.4 Other Assets 29.7 26.2 24.1 Total Assets 622.0 471.8 465.5 Accounts Payable 111.9 72.0 78.
Slide 8: Q2 Semiconductor Sales by Platform
Q2 Semiconductor Sales by Platform • Decrease in the (B Yen) SoC +2% 300mm products 41.8 40.8 Lower than QoQ +16% expected Currency impact Approx. -1.2 FY10/3 Q1 FY10/3 Q2 113.8 • Robust growth in sales of automotive 98.0 MCU +28％ products and multi- purpose ICs 35.9 28.0 Higher than expected FY10/3
Slide 9: FY10/3 Q2 Factors in Operating Income (Loss)
FY10/3 Q2 Factors in Operating Income (Loss) Higher than (B Yen) QoQ 113.8 expected 98.0 +15.8 Semicon. Sales +)Higher GP due to increased sales (including forex impact) Operating Increased R&D Income -4.5 (Loss) Increased GP +10.2 -15.5 -20.9 -）Seasonality factor (Note 2) Worsened than expected -）I
Slide 10: Progress on GP Ratio and Fab Utilization Rates
Progress on GP Ratio and Fab Utilization Rates By reducing fixed-cost, GP ratio recovered more than the factory utilization rates, but did not reach the initial target due to decreased inventories and lower production at the 300mm line 100 35 Initial Forecast 90 30 Fab Utilization Rates Gross Profit
Slide 11: Trends in Quarter-End Inventories
Trends in Quarter-End Inventories (B Yen) Reduced inventories by 8.7B Yen in the first-half led to increased cash flow while causing GP to decline due to decreased production 90 82.0 82.1 80 Significant drop 70 from initial forecast 63.2 60 58.4 54.5 50 40 30 20 10 0 FY08 Jul-Sep Oct-Dec FY09 Jan-Ma
Slide 12: II. FY10/3 Forecasts
I．FY10/3 Q2 Financial Results II．FY10/3 Forecasts 12
Slide 13: FY10/3 Financial Forecasts
FY10/3 Financial Forecasts Lowered Lowered second-half second-half and and full-year full-year FY10/3 FY10/3 forecast forecast FY09/3 FY10/3 (B Yen) Full-Year 1H 2H Full Year Difference Difference Difference Forecasts as of From the From the initial From the initial Forecasts as of Actual Actual For
Slide 14: Trends in Amount of Orders
Trends in Amount of Orders Amount of Orders (3-month moving average) FY10/3 Q2 Order Trends FY09/3 1H Average Increase in amount of orders on general purpose products and automotive products. Weaker demand for the SoC products. FY09/3 FY10/3 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Ju
Slide 15: FY10/3 2H Semiconductor Sales Forecast
FY10/3 2H Semiconductor Sales Forecast (B Yen) SoC Approx. -5％ • Decrease in sales of consumer electronic products 82.7 HoH +10% Currency Impact Approx. -6.0 FY10/3 1H FY10/3 2H e 232.0 211.8 MCU Approx. +20％ •Increase in sales of automotive products and multi-purpose MCUs 63.9 FY10/3 1H FY10/3 2H e
Slide 16: Progress on 90 B Yen Fixed Cost Reduction
Progress on 90 B Yen Fixed Cost Reduction Reduced Reduced Fixed Fixed Costs Costs by by Approx. Approx. 50 50 BB Yen Yen in in FY10/3 FY10/3 1H, 1H, YoY YoY Aim to further reduce 8.0 B Yen in 2H, HoH 40.0 B Yen decrease YoY Reduced Approx. 90B Yen Reduce Approx. Q4 as of FY09/3 8.0 B Yen HoH Breakdo
Slide 17: Factors Affecting 2H Operating Income (Loss)
Factors Affecting 2H Operating Income (Loss) HoH 232.0 211.8 (B yen) + Approx. 20.0 Semicon. Sales +)Higher GP due to sales increase +）Higher GP due to increase in production exceeding sales increase +）Cost reduction of manufacturing-related fixed costs Operating Lower R&D and SG&A Income Approx. +7
Slide 18: 2H Business Highlights
2H Business Highlights Continue to attain improvement of free cash flows in 2H – Aim to attain profitability through sales increase and downhold of cash flows from investing activities despite the expected increase of inventories, Aim to further expand sales – Achieve sales increase beyond the forec
Slide 19: Business Topics: Expanding Sales with Leading Products
Business Topics ~To Expand Sales with leading products Expand Sales with Advanced Processes TM Ｅｎｅｒｇｙ Ｃｏｎｓｃｉｏｕｓ ＝ Ｕｌｔｉｍａｔｅ Ｌｏｗ Ｐｏｗｅｒ 40nm product group LSIs for digital cameras, DTVs, printers eDRAM-ASIC LSIs for image-processing Expand Sales in Eco-Business Market Smart Grid MCUs for electrical met
Slide 20: Improving Business Performance
Improving Business Performance se t h er increa Fu r of new (B Yen) sales areas h growt 232.0 203.4 211.8 e to sal es du nd ase a Incre ery in dem recov Semicon. Sales Operating Profit ratio s r o v e GP ed sale m p e as I i n cr u gh thro -10.0 Operating Income (Loss) -36.4 ed u e t o increas ratio
Slide 21: Summary
Summary ■ Demand for MCU and general-purpose products continue to show strong growth. Fixed-cost reduction measures are on track. ■ However, financial forecasts for 2H and full year were lowered, due to stagnant SoC sales from R&D cyclical factors and low utilization rates at fabrication lines for S
Slide 22: 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 could
Slide 23: Reference: Schedule of Business Integration with Renesas
Reference: Schedule of Business Integration with Renesas Signing of Definitive Agreement ▲ ▲ Sep 16 Sep 30 Establishment of project team Present ▲ Mid-Jan Signing of Merger Agreement ▲ Early Feb Calling of Extraordinary Shareholders’ meeting ▲ End of Feb Extraordinary Shareholders’ meeting for ▲ app
Slide 24: Appendix: Semiconductor Sales by Application
Appendix： Semiconductor Sales by Application (B Yen) 159.2 159.2 16.4 16.3 30.0 30.6 122.7 15.4 113.8 13.4 Communications 98.0 32.1 31.9 17.0 Computing & 14.6 16.8 Peripherals 80.7 12.1 13.5 Consumer 31.9 22.6 Electronics 29.8 28.8 9.7 22.8 Auto & 20.3 23.4 23.0 Industrial 21.0 23.1 15.7 Multi-Marke
Slide 25: Major Operating Expenses and CAPEX
Major Operating Expenses and CAPEX 100 R&D Expenses 100 SG&A Expenses (B yen) FY10/3 Approx. FY10/3 Approx. 90.0 B yen (B yen) 67.0 B yen (-20.0 B yen YoY) (-12.0 B yen YoY) 56.7 53.7 48.4 42.0 41.7 36.8 33.6 33.0 0 0 FY09/1H FY09/2H FY10/1H FY10/2H FY09/1H FY09/2H FY10/1H FY10/2H 100 CAPEX FY10/3 A