Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — Investor Presentation (February 2006)
48 slides from Oki Electric Industry's investor presentation, Feb 17, 2006
Slide 1: Oki Management Strategies
Oki Management Strategies Feb. 17, 2006 Oki Electric Industry Co., Ltd.
Slide 2: Table of Contents
Table of Contents 1. Full Year Projections for FY ending Mar. 2006 1) Revision of Full Year Projections 2) P/L Projections 3) Projections by Segment 4) Cash Flow Projections 2. Revamp Business Structure 1) Status of Business and Reforms 2) Revamp Business Structures 2-1) Review and Enhancement of Co
Slide 3: Full Year Projections for FY Mar. 2006
Full Year Projections for FY Mar. 2006 Net sales is projected to be 690.0 B yen, decreased by 20.0 B yen due to reduction in sales for telecom carriers and sales of semiconductors (Accelerated digital deflation, delay in responding to customers’ business environment changes) Operating income is proj
Slide 4: P/L Projections for FY Mar. 2006
P/L Projections for FY Mar. 2006 (Billion yen) Projections (FY Mar. 2006) (Ref.) FY Mar. 05 Feb. 17 Oct. 27 Variance Results *1: - Gain in currency exchange: 1.0 Net sales 690.0 710.0 (20.0) 688.5 *2: Operating income 10.5 19.0 (8.5) 27.2 - Gain on sale of marketable securities: 7.5 Other income (4.
Slide 5: Analysis of Changes in Operating Income
Analysis of Changes in Operating Income Operating income expected to be 10.5 B yen, decreases by 8.5 B yen from Oct. 27 projections, due to decline in marginal profit caused by decrease in volume, and continuous price drop in semiconductors and printers Operating (Billion yen) income Decrease in sal
Slide 6: Full Year Projections: Info-Telecom
Full Year Projections: Info-Telecom <Net sales> Net sales (Billion yen) 350.0 B yen, decreases by 20.0 B yen from Oct. 27 projections 373.1 370.0 350.0 Sales for the financial market decreases by 4.0 B yen due to: 21.5 20.0 Others 20.0 - expected demands for security-enhanced 67.6 73.0 73.0 Enterpri
Slide 7: Full Year Projections: Semiconductors
Full Year Projections: Semiconductors Profitable with effects of fab-free strategy, despite business environment worsens Net sales (Billion yen) <Net sales> 150.7 158.0 148.0 148.0 B yen, decreases by 10.0 B yen from Oct. 27 Optical 3.0 2.3 3.0 component projections 45.0 System 48.1 40.0 System LSI:
Slide 8: Full Year Projections: Printers
Full Year Projections: Printers Though competition becomes fiercer, shipment volume for color NIP is expected Net sales (Billion yen) to grow 50% on a year-on-year basis 137.7 157.0 163.0 <Net sales> 163.0 B yen, increases by 6.0 B yen from Oct. 27 projections 73.0 Others 68.0 Slight increase in uni
Slide 9: Cash Flow Projections for FY Mar. 2006
Cash Flow Projections for FY Mar. 2006 Increase in working capital worsens free cash flow by 31.8 B yen on year-on-year basis (Billion yen) Reduce interest-bearing debts by 2.0 B yen Oct. 27 Mar. 05 Mar. 06 Variance Notes projections I. Cash flows from operating activities 59.3 29.3 (30.0) 52.0 Inco
Slide 10: Table of Contents
Table of Contents 1. Full Year Projections for FY ending Mar. 2006 1) Revision of Full Year Projections 2) P/L Projections 3) Projections by Segment 4) Cash Flow Projections 2. Revamp Business Structure 1) Status of Business and Reforms 2) Revamp Business Structures 2-1) Review and Enhancement of Co
Slide 11: Status of Businesses and Reforms
Status of Businesses and Reforms 1998 1999-2001 2002-2005 2006 Phoenix 21 Phoenix 21 Sky-High Sept. ’98 Aug. ‘01 Oct. ‘02 1st reform 2nd reform 3rd reform (Urgent measure) (Sky-high preparation) (Shift & enhance quality) Biz. reforms First phase Second phase <Status of Each Business> Steady achievem
Slide 12: In-house Venture Companies' Performances
In-house Venture Companies’ Performances Steady growth in sales of in-house venture companies Enterprise Solution Company (ESC) grew to a business division, and IPnet merged with two companies and grew to an integrated network SI company Both graduated from venture company status (Billion yen) 40 IP
Slide 13: Current Issues and Measures
Current Issues and Measures Issues: - Enhancement in product competitiveness (cost reduction, new product creation) - Strengthen sales capability - Respond to customers’ business environment changes Measures: Revamp Business Structures Innovate conventional-type businesses and expand new businesses
Slide 14: Changes in Customers' Business Environments
Changes in Customers’ Business Environments Changes in society Return to core business Expansion of (diversification, Biz opportunities and outsource customer-centric services to professionals speeding-up) Ubiquitous -Environment Era of borderless services -Depopulation personal and -Aging company a
Slide 15: Revamp Business Structures
Revamp Business Structures 1998 1999-2001 2002-2005 2006 2007 2008 Phoenix 21 Phoenix 21 Sky-High Sept. ’98 Aug. ‘01 Oct. ‘02 stable profitability 1st reform 2nd reform 3rd reform Company with (Urgent measure) (Sky-high preparation)(Shift & enhance quality) Revamp Business Structures Biz structure r
Slide 16: Policy to Revamp Conventional Businesses: Info-Telecom
Policy to Revamp Conventional Businesses Clarify focusing business area, enhance product planning and development capabilities, and strengthen indirect sales by looking ahead to the market trend, including customers’ business environment changes Enhance product planning and Strengthen indirect Clari
Slide 17: Enhance Indirect Sales in Info-Telecom
Enhance Indirect Sales in Info-Telecom Indirect sales ratio: 17% in FY Mar. 2006 Î 25% in FY Mar. 2011 (target) <Status in FY Mar. 2006> Increasing indirect sales for enterprise network products (increase by 40% on a year-on-year basis) ¾ Expand IP-PBX products: SS9100 (large-scale PBX), IPstageEX
Slide 18: Financial Systems: Business Status and Market Trend
Financial Systems: Business Status and Market Trend <Status in FY Mar. 06> Inaccurate estimation of customers’ investment timing (Investment grows after initial evaluation) ¾ Delay in full-scale investment on security-enhancement, including personal information protection and biometrics ¾ Delay in r
Slide 19: Financial Systems: Measures
Financial Systems: Measures Enhance existing products and sales capability ¾ New organization clarifying market and product responsibilities (Jan. 06). Shift resources ¾ Enhance product capabilities of ATMs, bank-branch systems, and back office operation concentration systems, and gain market shares
Slide 20: Financial Systems: Strengthen Mechatronic Business
Financial Systems: Strengthen Mechatronic Business Japanese Market: Enhance cash management business in addition to ATMs ATM for banks: Increase in replacement demand for security enhanced functions (i.e. IC card, biometrics) ¾Increase sales of security-enhanced ATM BankIT and expand No.1 market sh
Slide 21: Financial Systems: Enhance Service Business
Financial Systems: Enhance Service Business Ubiquitous service expands with the increase of net business Key for ubiquitous service is business infrastructure service (payment, security, outsourcing) Expand business infrastructure service area, based on products and services which Oki is plann
Slide 22: Telecom Carriers: Business Status and Market Trend
Telecom Carriers: Business Status and Market Trend <Status in FY Mar. 06> Broadband Home Router: ¾ Steady growth all year with the expansion of . Expand sales (Maintain top share) ¾ However, does not offset the sales decrease of broadband IP network equipment Broadband IP Network Equipment: ¾ Enjoye
Slide 23: Telecom Carriers: Measures
Telecom Carriers: Measures Concentrate resources on planning and development of Oki products Enhance development structure Continue to strengthen products for optical access and optical IP phones ¾ Increase market share with higher value added broadband home routers, ahead of other companies Acceler
Slide 24: Telecom Carriers: Accelerate Creation for Focus Products
Telecom Carriers: Accelerate Creation for Focus Products Changes in focusing area in the NGN market (Shift resources to increase profitability) Enhance product development structure to accelerate in developing products for: Edge node area, broadband applications/ new service control, FMC area Co
Slide 25: Telecom Carriers: Oki Target Area
Telecom Carriers: Oki Target Area Fixed Network Mobile Network Broadband applications Application New service control Service platform Core Core network Edge Edge node Access Optical Metal FMC Optical NW Mobile Wireless access migration (WiMAX, etc) Broadband home router Current focus areas: Fixed c
Slide 26: Telecom Carriers: Global Deployment of BB Home Routers
Telecom Carriers: Global Deployment of BB Home Routers Oki will deploy business in the digital home network market, with its strong market share in Japan, known as the world-leading broadband country Create strong products based on Oki and non-Oki core competence ¾ Expand core products including B
Slide 27: Semiconductors: Business Status and Market Trend
Semiconductors: Business Status and Market Trend <Status of FY Mar. 06> Expect to be profitable with effects of Fab-free strategy, despite business environment worsens ¾ Market: Overall recovery trend. Strong demand in flat screen TV, digital audio, laptops raise the level, though Oki’s strong areas
Slide 28: Semiconductors: Measures
Semiconductors: Measures Re-establish a business structure less subject to market Concentrate resources to strong businesses Businesses where Oki can exert its strengths, and where steady sales and profit is expected Focus on SOS products. ¾ Establish a strong business based on manufacturing - Techn
Slide 29: Semiconductors: Manufacturing-based Business Strategies for Major Products
Semiconductors: Manufacturing-based Business Strategies for Major Products TFT Driver Large TFT driver production ¾ Policy: Expand market share by driving the market with 500 differentiating products (Volume in FY Mar. 04 = 100) ¾New products: 400 - Focus on developing differentiating products tha
Slide 30: Semiconductors: Strategies based on Core System Technologies
Semiconductors: Strategies based on Core System Technologies Telecom LSIs ¾ Policy: Provide attractive products that lead the personal and mobile industry by converging telecom system technologies and low power consumption semiconductor technologies ¾ New products - Short distance: Provide main wi
Slide 31: Printers: Business Status and Market Trend
Printers: Business Status and Market Trend <Status of FY Mar. 06> Though shipment volume for color NIP increases, profit decreases due to price fall, growth in ratio for low price models, and decline in consumable ratio ¾ Sales for SIDM decrease with the shrinking market ¾ Though shipment volume inc
Slide 32: Printers: Measures
Printers: Measures <Measures to Expand Profit> Enhance profitability for the color NIP business ¾ Improve sales ratio for high value added products 9 Enhance product lineup focusing on high function models. Reduce sales for low price models 9 Strengthen Oki unique products and create solutions to ma
Slide 33: Printers: Strategies for Products and Consumables
Printers: Strategies for Products and Consumables Product strategy ¾ Focus on mid/high-end models ¾ Increase sales ratio of high value-added products by improving MFP lineup ¾ Differentiate with first-class printing quality utilizing characteristics of LED heads <Plans of Improving Sales Ratio> 10
Slide 34: Printers: Strategies for BRICs
Printers: Strategies for BRICs Russia ¾ Redeveloping the market by launching SIDM low-end and mono NIP low-end models ¾ Sales target for FY Mar. 2011: £90M (Current: £30M) China ¾Plan to establish sales office in Beijing ¾Expand SIDM share with launch of low-end models ¾Develop software based on
Slide 35: Expand Service and Software Businesses
Expand Service and Software Businesses Currently, 62% of Info-telecom Business sales come from hardware – a hardware dependent business model in sales and profit Shift to a business structure to generate income from service and software in addition to hardware profit Double the sales of service and
Slide 36: Expand China Business
Expand China Business FY Mar. 2011 target: Overseas sales ratio 50%, China sales ratio 10% Shift Oki’s business in China from a Japan-controlled style to a locally controlled business ¾ Deploy business with strong products/technologies as core competence ¾ Enhance new business cultivation, product p
Slide 37: Table of Contents
Table of Contents 1. Full Year Projections for FY ending Mar. 2006 1) Revision of Full Year Projections 2) P/L Projections 3) Projections by Segment 4) Cash Flow Projections 2. Revamp Business Structure 1) Status of Business and Reforms 2) Revamp Business Structures 2-1) Review and Enhancement of Co
Slide 38: Outline of Q3 Results
Outline of Q3 Results Sales decreased by 13.1 B yen on a year-on-year basis, due to reaction of ATM demands related to new-banknote issuance, and decline in price of semiconductors Operating income decreased by 12.3 B yen, impacted by price decline in semiconductors and printers Total assets increas
Slide 39: Q3 P/L (Nine Months)
Q3 P/L (Nine Months) Consolidated P/L comparison Net sales (Billion yen) Dec. 04 Dec. 05 Variance Info-Telecom 246.8 218.8 (28.0) Dec. 04 Dec. 05 Variance Semiconductors 113.8 112.0 (1.8) Net sales 478.4 465.3 (13.1) Printers 97.9 111.4 13.5 (Cost of sales ratio) Others 19.9 23.1 3.2 (74.1%) (76.9%)
Slide 40: Segment Information: Info-Telecom
Segment Information: Info-Telecom <Nine months results> Sales for the financial market decreased by 20.8 B yen on year-on-year basis, due to reaction to ATM demand related to new-banknote issuance Sales for telecom carriers increased by 4.2 B yen, due to increase in systems for broadband IP network,
Slide 41: Segment Information: Semiconductors
Segment Information: Semiconductors <Nine months results> Sales in logic LSI increased, including effect of acquiring Japan TI’s driver business Sales in system LSI decreased due to volume decrease mainly in PHS base-band LSI Sales in system memory decreased due to decline of volume and price in P2R
Slide 42: Segment Information: Printers
Segment Information: Printers <Nine months results> Sales increased due to expansion in shipment units of color NIP and MFP Steady sales in SIDM and mono NIP While net sales increased, operating income decreased due to impact of price decline (Billion yen) Net sales Operating income 111.4 97.9 3.7 5
Slide 43: Balance Sheet (1)
Balance Sheet (1) <Assets> Inventory increased by 24.0 B yen from Dec. 04, due to preparation for increasing units of printers and depreciation in yen, etc. (Billion yen) 609.6 608.0 619.5 Variance with 589.1 Dec. 31, 2004 600 55.4 46.6 35.5 38.7 Cash and deposits - 3.2 121.9 155.3 119.7 146.0 Notes
Slide 44: Balance Sheet (2)
Balance Sheet (2) <Liabilities and Shareholders’ Equity> Interest-bearing debt increased by 7.8 B yen from Dec. 04 Shareholders’ equity ratio was 20.5%, 1.6 point improvement, due to increase in evaluation of marketable securities by 11.3 B yen (Billion yen) 609.6 608.0 619.5 Variance with 589.1 Dec
Slide 45: Cash Flows
Cash Flows Free cash flow worsened by 30.3 B yen, mainly due to increase in working capital by 32.7 B yen (Billion yen) Nine months Dec. 04 Dec. 05 Variance Notes I. Cash flows from operating activities 24.8 (18.6) (43.4) Income before income taxes (0.9) (8.6) (7.7) <Working capital> Mar.05 Mar.06 D
Slide 46: Glossary
Glossary P6 ATM Automated Teller Machine P27 PHS Personal Handy-phone System P7 LSI Large Scale Integration DSC Digital Still Camera P2ROM Production Programmed Read Only TFT Thin Film Transistor Memory ITS Intelligent Transport System P8 NIP Non-Impact Printer P28 SOI Silicon on Insulator SIDM Seri
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Slide 48: Printed by Oki's color LED printer
Printed by Oki’s color LED printer 48
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