Slide 1: FY16/12 Financial Results
FY16/12 FINANCIAL RESULTS RENESAS ELECTRONICS CORPORATION FEBRUARY 8, 2017 © 2017 Renesas Electronics Corporation. All rights reserved.
Slide 2: FY16/12 Financial Results: Non-GAAP basis and fiscal term note
FY16/12 FINANCIAL RESULTS Since FY16/3, Renesas Electronics Group (hereinafter “the Group”) started to disclose Non-GAAP financial measures (hereinafter “Non-GAAP basis”) used for management’s decision making. The Group defines the Non-GAAP consolidated financial results as financial accounting figu
Slide 3: Change of Fiscal Term
CHANGE OF FISCAL TERM Implemented a change in fiscal term starting from FY2016 in which the fiscal year-end changed from March 31 to December 31 FY2016 comprised the nine months from April 2016 to December 2016 In this presentation, financial results prepared on a calendar year basis (Jan-Dec)
Slide 4: CY16 Financial Snapshot (Non-GAAP Basis)
Non-GAAP CY16 FINANCIAL SNAPSHOT (NON-GAAP BASIS*1) YoY and QoQ results as well as the Change from Nov.2 FCT of the Net Sales and Semiconductor Sales are rounded off to one decimal place CY15 (Jan-Dec) CY16 (Jan-Dec) (B yen) 12 months 12 months Oct-Dec (Jan-Dec) Jul-Sep Oct-Dec (Jan-Dec) YoY Net Sal
Slide 5: CY16 Highlights (Non-GAAP Basis)
Non-GAAP CY16 HIGHLIGHTS (NON-GAAP BASIS) Three factors affecting sales decline Semi. Sales Stronger yen ¥620.4 B Earthquakes YoY: -9.8% Withdrawal from non-focus products Remained flat despite headwinds Gross Margin Sales decrease 43.6% Increase in #s of low margin products YoY: ±0 pts
Slide 6: CY16 Semiconductor Sales (Non-GAAP Basis)
Non-GAAP CY16 SEMICONDUCTOR SALES (NON-GAAP BASIS) YoY -67.1 B yen (-9.8%) (B yen) -33.9 Stronger yen -24.0 Earthquake -33.8 impact*1 +24.6 687.5 Withdrawal from Sales non-focus products increase 620.4 0 0 0 CY15 CY16 FY16/3 Q4 (Jan-Dec) *1: Impact from the earthquake in Kumamoto that occurred in Ap
Slide 7: CY16 Gross Margin (Non-GAAP Basis)
Non-GAAP CY16 GROSS MARGIN (NON-GAAP BASIS) YoY ± 0 pt Stronger yen -0.8 pts Sales -0.8 pts decrease +2.3 pts Earthquake impact -0.2 pts -0.5 pts Low margin products Fixed cost 43.6% reduction, etc 43.6% CY15 CY15/12 CY16 CY16/12 (Jan-Dec) (Jan-Dec) © 2017 Renesas Electronics Corporation. All rights
Slide 8: OPEX Trajectory (Non-GAAP Basis)
Non-GAAP OPEX TRAJECTORY (NON-GAAP BASIS) <R&D Ratio (%)> <SG&A Ratio (%)> 20 20 18.0 18 18 16.7 16.8 16.2 16.1 15.8 15.5 16 16 15.2 15.3 16.9 15.2 15.0 14 14.9 14 14.5 15.0 14.2 14.2 12 13.1 12 11.6 11.5 10 10.7 11.0 10 8 CY16:16.5% 8 CY15:15.8% CY16:14.9% (YoY+3.6 pts) 6 6 (YoY-0.8 pts) 4 CY15:12.
Slide 9: CY16 Operating Margin (Non-GAAP Basis)
Non-GAAP CY16 OPERATING MARGIN (NON-GAAP BASIS) YoY - 2.8 pts -2.4 pts +0.3 pts Stronger yen -1.8 pts R&D, +1.8 pts SG&A Earthquake -0.7 pts 15.0% impact Sales Decrease in decrease manufacturing 12.2% fixed cost, etc CY15 CY15/12 CY16 CY16/12 (Jan-Dec) (Jan-Dec) © 2017 Renesas Electronics Corporatio
Slide 10: Results of the Reform Plan: Gross Margin (Non-GAAP Basis)
Non-GAAP RESULTS OF THE REFORM PLAN: GROSS MARGIN (NON-GAAP BASIS) vs FY13/3 + 12.8 pts -1.9 pts Low margin products +12.7 pts +2.0 pts The Reform Plan Weaker yen 43.6% 30.8% FY13/3 CY15/12 CY16 CY16/12 (Apr 2012 - Mar 2013) (Jan 2016 – Dec 2016) © 2017 Renesas Electronics Corporation. All rights re
Slide 11: FY17 Q1 Financial Forecasts
FY17 Q1 FINANCIAL FORECASTS © 2017 Renesas Electronics Corporation. All rights reserved. Page 11
Slide 12: FY17 Q1 Financial Forecasts (Non-GAAP Basis)
Non-GAAP FY17 Q1 FINANCIAL FORECASTS (NON-GAAP BASIS) FY16/3 FY16/12 FY17/12 (B yen) Q4 Q3 Q1 Forecast YoY QoQ (Jan-Mar) (Oct-Dec) (Jan-Mar) Net Sales 167.8 166.4 171.0 +1.9% +2.7% Semiconductor Sales 163.2 161.4 167.0 +2.3% +3.5% Gross Margin 42.1% 45.6% 43.5% +1.4 pts -2.1 pts 17.8 22.8 23.3 +5.5
Slide 13: Highlights of FY17 Q1 Forecasts (Non-GAAP Basis)
Non-GAAP HIGHLIGHTS OF FY17 Q1 FORECASTS (NON-GAAP BASIS) First step towards sales growth Semi. Sales Continuing strong demand in automotive ¥167.0 B Recovery from the earthquake QoQ: +3.5% Weaker yen Temporary decrease from inventory valuations despite Gross Margin sales increase 43.5% Incr
Slide 14: Secure Resources for Future Growth
SECURE RESOURCES FOR FUTURE GROWTH HIGHER CAPEX*1 IN FY2015-FY2016 WILL HELP SOLIDIFY THE GROWTH AND CONTRIBUTE TO THE MID- TERM GROWTH AND MARGIN IMPROVEMENTS < CAPEX for FY16 (Apr-Dec) > < CAPEX trajectory (B yen) > Wafer Fabrication Assembly & Testing （ ) indicates ratio of CAPEX to sales 15% 30%
Slide 15: FY17 Direction
FY17 DIRECTION © 2017 Renesas Electronics Corporation. All rights reserved. Page 15
Slide 16: 2017 Semiconductor Market
2017 SEMICONDUCTOR MARKET HIGH GROWTH RATES OF THE FOCUS MARKETS WILL HELP OUTPERFORM THE 3.8% SEMICONDUCTOR MARKET GROWTH RATE (US$B) <SAM*1 Market Size and YoY Growth Rate*2> Automotive semiconductor market (SAM) 230 5% Forecast CY17: YoY +5.6%*2 220 4% 3.8% Expect steady growth, driven by 210 2
Slide 17: Autonomous Vehicles Realized by Renesas Solutions
AUTONOMOUS VEHICLES REALIZED BY RENESAS SOLUTIONS SHOWCASED AUTONOMOUS DRIVING DEMOS AT CES 2017 IN COLLABORATION WITH 8 PARTNERS Sensing Cognitive HMI Control Smart Camera Auto-Pilot No.1 HMI (Human No.1 Computing Machine Interface) Electric Motor Radar Fusion Navigate Driving Routing Infotainment
Slide 18: Proven Track Record in Automotive Industry
PROVEN TRACK RECORD IN AUTOMOTIVE INDUSTRY FY16 DESIGN-IN AMOUNT MARKED THE HIGHEST RECORD IN 9 MONTHS AND EXPANDED NEW CUSTOMER BASE Examples of big design-ins over 10B yen Life Time Value (LTV)*2 Mass Customers production BiCDMOS*1 European automotive supplier, Company A 2019 190 participants ADAS
Slide 19: Make the World Smarter
MAKE THE WORLD SMARTER DRIVE PROGRESS TOWARD A SMARTER WORLD WITH CORE TECHNOLOGIES AND ARE LEADING TO INCREASED DEALS SMART HOME SMART FACTORY SMART INFRASTRUCTURE Trusted secure IP-based Industrial Ethernet Smart meter MCU for emerging MCU for IoT controllers and servo motor countries Over
Slide 20: Innovative Embedded Development by New Platforms
INNOVATIVE EMBEDDED DEVELOPMENT BY NEW PLATFORMS QUALIFIED SOFTWARE PACKAGE OFFERINGS EXPAND VALUE PROPOSITION TO CUSTOMERS Benefit to customers Renesas SynergyTM Platform Accelerate development RZ/G Linux Platform*1 Reduce total cost of ownership Multimedia middleware, etc OS Lower barriers M
Slide 21: Peers Revenue Growth Comparison (Oct-Dec 2016)
PEERS REVENUE GROWTH COMPARISON (OCT-DEC 2016) RENESAS’ REVENUE INCREASED BOTH QOQ & YOY AND IS ON GROWTH TRACK QoQ & YoY Growth Comparison in Semiconductor Industry 35% Vertical : YoY (%) 30% Horizontal: QoQ (%) Circle size: Revenue 25% Power Integration Renesas*1 20% 15% Intersil NXP10% ST Maxim T
Slide 22: Ready for Growth
READY FOR GROWTH FY17 IS THE STARTING YEAR FOR THE MID-TERM GROWTH STRATEGY Sales (B yen) 817.9 809.4 Bottomed out in FY16 707.7 638.8 Achieve growth in focus markets CY13 CY14 CY15 CY16 Profit Continue to focus R&D resources on growing markets Keep CAPEX at a high level to meet customer
Slide 23: Appendix
APPENDIX In this section, results for the nine months from April 1 to December 31, 2016 stated on a financial reporting basis are provided as an additional information. © 2017 Renesas Electronics Corporation. All rights reserved. Page 23
Slide 24: GAAP/Non-GAAP Reconciliation
GAAP/NON-GAAP RECONCILIATION FY15/3 FY16/3 FY16/12 FY17/12 (B Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Semiconductor Sales (GAAP) ① 201.2 199.6 177.4 175.1 174.5 177.0 160.9 163.2 147.5 148.3 161.4 167.0 Renesas SP Drivers*1 ② -17.6 -21.0 - - - - - - - - - - Semiconductor Sales (Non-GAAP) ①+② 183.6
Slide 25: FY16/12 Q3 Semiconductor Sales (QoQ)
Non-GAAP FY16/12 Q3 SEMICONDUCTOR SALES (NON-GAAP BASIS) QoQ + 13.1 B yen (+8.8%) (B yen) -1.6 +8.2 +0.5 +6.0 Withdrawal from Others Earthquake non-focus Weaker yen impact*1 products (production recovery) 161.4 148.3 0 0 0 FY16/12 FY16/12 FY16/3 Q2 Q4 *1: Impact from the earthquake in Kumamoto that
Slide 26: FY16/12 Q3 Semiconductor Sales (vs Forecast)
Non-GAAP FY16/12 Q3 SEMICONDUCTOR SALES (NON-GAAP BASIS) vs FCT + 4.2 B yen (+2.7%) (B yen) +0.7 -0.8 +4.3 Weaker yen Others Withdrawal from non-focus 161.4 products 157.2 0 0 0 FY16/12 FY16/12 FY16/3 Q3 Q4 Forecast FY16/12 Q3 ActualQ1 © 2017 Renesas Electronics Corporation. All rights reserved. Pag
Slide 27: Semiconductor Sales by Business
Non-GAAP SEMICONDUCTOR SALES BY BUSINESS (NON-GAAP BASIS) Automotive Business General-Purpose Business Sales (B yen) YoY +4% Sales (B yen) 100 Automotive Control Automotive Information QoQ +9% Industrial OA/ICT Other General-Purpose YoY -6% 1,000 100 QoQ +5% 1,000 94.4 93.6 82.4 79.1 81.7 82.6 78.6
Slide 28: Gross Margin (Non-GAAP Basis)
Non-GAAP GROSS MARGIN (NON-GAAP BASIS) <Quarterly Trends (%)> <QoQ> Sales increase Target Currency (Excl. currency 45.6% 50 impact) 42.5% impact +1.0 pts +3.2 pts -1.1 pts Impact from 45.8 change in production volume 45 45.6 44.3 42.2 44.3 42.1 42.1 42.5 40 41.5 FY16/Q2 FY16/Q3 <YoY> 39.4 45.6% Curr
Slide 29: Operating Margin (Non-GAAP Basis)
Non-GAAP OPERATING MARGIN (NON-GAAP BASIS) Impact from change in Seasonal production increase in R&D, SG&A <Quarterly Trends (%)> Target <QoQ> volume +3.1 pts -2.9 pts 13.7% 20 Currency 17.8 10.8% impact +2.8 pts 18 15.7 -0.2 pts Sales increase 16 15.0 (Excl. currency impact) 13.8 13.7 13.7 14 12 12
Slide 30: EBITDA and Cash Flows
EBITDA AND CASH FLOWS <EBITDA (B yen)> <Cash Flows (B yen)> 50 47.7 50 Cash flows from operating activities 46.3 45.1 Cash flows from investing activities 45 41.0 40 Free cash flows 35.8 40 31.5 32.6 32.6 37.4 30 27.5 35 33.1 33.1 31.2 29.5 20 26.2 17.0 30 23.0 18.9 25 10 15.8 10.5 12.3 20 0 15 -10
Slide 31: Balance Sheets
BALANCE SHEETS As of Mar. 31, As of Jun. 30, As of Sep. 30, As of Dec. 31, (B Yen) 2016 2016 2016 2016 Total Assets 849.4 823.2 758.2 823.1 Cash and Cash Equivalents 398.4 397.3 326.2 354.3 Inventories 108.4 97.0 92.1 97.3 Liabilities 467.6 447.7 376.2 400.7 Interest-Bearing Debt 244.3 237.9 157.9 1
Slide 32: FY16/12 (9 Months) Financial Snapshot
FY16/12 (9 MONTHS) FINANCIAL SNAPSHOT FY16/3 FY16/12 (B yen) 9 months 9 months 9 months Q3 Q3 vs Q3 Q2 (Apr-Dec) (Apr-Dec) YoY (Apr-Dec) Forecast Actual Forecast Forecast Actual Net Sales 164.8 525.5 152.6 161.4 466.0 166.4 471.0 +1.1% -10.4% Semi Sales 160.9 512.4 148.3 157.2 453.0 161.4 457.2 +0.9
Slide 33: FY16/12 Q3 Operating Income
FY16/12 Q3 OPERATING INCOME QoQ + 7.0 B yen (+47.9%) (B yen) -4.7 +5.9 Seasonal increase Impact from in R&D, SG&A +0.2 +5.6 change in production volume Sales increase Weaker yen (Excl. currency impact) 21.6 14.6 Inventory changes: +7.0 - Inventory buildup for structural reforms +0.8 0.0 0.0 (Q2: -2.
Slide 34: FY16/12 Q3 Operating Income (vs Forecast)
FY16/12 Q3 OPERATING INCOME vs FCT + 0.7 B yen (+3.4%) (B yen) +0.5 +4.8 -5.0 +0.4 Impact from change in Weaker yen Sales increase production volume Increase in (Excl. currency R&D, SG&A impact) 21.6 20.9 Inventory changes: +4.1 - Inventory buildup for structural reforms -0.7 0.0 0.0 (Q3 forecast: -
Slide 35: FY16/12 Q3 Net Income
FY16/12 Q3 NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY (B yen) Income taxes, non-controlling interests -0.4 +5.0 Non-operating -1.5 income (loss) Special income (loss) 24.7 21.6 Non-operating income +1.0 ・Foreign exchange gains +0.5 Non-operating expense -1.5 ・Interest expenses -0.4 Sp
Slide 36: FY16/12 Full-Year Operating Income
FY16/12 FULL-YEAR OPERATING INCOME YoY - 33.3 B yen (-37.9%) (B yen) Stronger yen -18.4 Sales Increase (Excl. currency impact) Decrease in +0.6 R&D, SG&A -15.6 -1.1 +1.1 Earthquake impact 88.1 (production decline) Impact from change in production volume, Reduction of manufacturing fixed cost 54.7 0.
Slide 37: FY16/12 Full-Year Net Income
FY16/12 FULL-YEAR NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY Non-operating (B yen) income (loss) Special -4.7 income (loss) Income taxes, -9.0 non-controlling interests +3.1 54.7 Non-operating income +1.5 Non-operating expense -6.2 44.1 ・Interest expenses -1.6 ・Foreign exchange losses
Slide 38: FY17 Q1 Operating Income Forecast
FY17 Q1 OPERATING INCOME FORECAST Impact from QoQ +1.4 B yen (+6.5%) change in (B yen) production volume +2.3 +0.6 -3.6 Weaker yen Sales Increase +2.1 (Excl. currency impact) Decrease in R&D, SG&A 21.6 23.0 Inventory changes: -4.4 - Inventory buildup for structural reforms +0.9 0 0 (FY16/12 Q3: -1.2
Slide 39: FY17 Q1 Forecast of Net Income
FY17 Q1 FORECAST OF NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY FORECAST Non-operating Income taxes, income (loss) non-controlling (B yen) interests -1.0 -3.0 Special Income ０ Special loss ０ 23.0 19.0 Operating Income Net Income attributable to shareholders of parent company © 2017 Ren
Slide 40: Forward-Looking Statements
(FOREWARD-LOOKING STATEMENTS) The statements in this presentation with respect to the plans, strategies and forecasts of Renesas Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. We caution you in advance that actual r