Oki Electric Industry Company, Limited · TSE:6703
Oki Electric Industry — FY2006 Earnings Presentation
39 slides from Oki Electric Industry's earnings presentation, Apr 27, 2006
Slide 1: Financial Results for the Fiscal Year ended March 31, 2006
Financial Results for the Fiscal Year ended March 31, 2006 April 27, 2006 Oki Electric Industry Co., Ltd. 1
Slide 2: Table of Contents
Table of Contents 1. Financial results for the FY March 2006 3. Oki’s Approach to the “Era of Change” 1) Financial Results 1) Recognizing the Environment 2) Profit and Loss 2) Revamping the Business Structure 3) Segment Information - Objective 4) Balance Sheet - Strategy 5) Cash Flows 3) Business Ta
Slide 3: Consolidated Financial Results
Consolidated Financial Results Net sales: 680.5 billion yen, 8.0 billion yen (1.2%) decrease on a year-on-year basis. While printers increased, sales from financial institutions and telecom carriers decreased. Operating income: 10.6 billion yen, a 16.6 billion yen decrease on a year-on-year basis du
Slide 4: Profit and Loss
Profit and Loss Other income (Billion yen) (Billion yen) FY Mar. 05 FY Mar. 06 Variance Mar. Mar. Net sales 688.5 680.5 (8.0) 05 06 (worsened by Interest & dividends received 1.3 1.8 (Cost of sales ratio) (73.2%) (75.6%) 2.4%) Gain on currency exchange 0.6 1.4 Cost of sales 504.3 514.5 10.2 Others 0
Slide 5: Segment Information
Segment Information 688.5 680.5 690.0 (Billion yen) Net sales <Year-on-year comparison> 27.0 31.3 29.0 For financial market: decreased by 21.1 B yen. 137.7 163.0 Others Sales decline in bank branch terminals, and delay 160.5 in security-enhanced ATMs (high gear in FY Mar. Printers 07) 150.7 148.0 15
Slide 6: Balance Sheet (1)
Balance Sheet (1) <Balance Sheet: Assets> Inventories increased by 17.6 B yen, due to Turnover ratio Mar. 05 Mar. 06 Variance increase in color printer shipment and foreign Total assets 1.13 1.11 0.02 worsened currency conversion Notes and accounts 4.57 4.59 0.02 improved Investments and other asset
Slide 7: Balance Sheet (2)
Balance Sheet (2) <Balance Sheet: Liabilities and Mar. 05 Mar. 06 Variance Shareholders’ Equity> Amount of interest- bearing debt (B yen) 265.2 268.3 3.1 increased Shareholders’ equity ratio was 21.6%, improved by 1.1 points due to gain of 9.1 Interest-bearing debt ratio (%) 43.6 43.4 0.2 improved b
Slide 8: Cash Flows
Cash Flows Increase in working capital worsened free cash flows by 31.4 billion yen on a year- on-year basis (Billion yen) Mar. 05 Mar. 06 Variance I. Cash flows from operating activities 59.3 15.0 (44.3) Income before income taxes 18.5 10.6 (7.9) <Changes in working capital> Depreciation & amortiza
Slide 9: Table of Contents
1. Financial results for the FY March 2006 3. Oki’s Approach to the “Era of Change” 1) Financial Results 1) Recognizing the Environment 2) Profit and Loss 2) Revamping the Business Structure 3) Segment Information - Objective 4) Balance Sheet - Strategy 5) Cash Flows 3) Business Target and Strategie
Slide 10: Assumptions for FY Mar. 07 Projections
Assumptions for FY Mar. 07 Projections <Overall Economy Outlook> Recovery in Japan’s economy, including return in corporate performance and expansion of consumer spending Concerning factors continue with rise in oil price, and price decline in IT industry The affect of the opaque political situation
Slide 11: Profit and Loss
Profit and Loss (Billion yen) Full year First half FY Mar. 06 FY Mar. FY Mar. 06 FY Mar. Variance Variance Results 07 plan Results 07 plan Net sales 680.5 720.0 39.5 319.1 300.0 (19.1) Operating income 10.6 15.0 4.4 (4.2) (12.0) (7.8) Other income (3.4) (7.0) (3.6) (1.5) (3.5) (2.0) Recurring income
Slide 12: Fluctuation Factors in Operating Income
Fluctuation Factors in Operating Income Operating income for FY ending Mar. 07 will be 15.0 billion yen, a 4.4 billion yen increase on a year-on-year basis While pricing pressure for main products continue and fixed cost increases, operating income will increase with the sales increase and procureme
Slide 13: Info-Telecom Systems Segment
Info-Telecom Systems Segment (Billion yen) Full year First half FY Mar. 06 FY Mar. 07 FY Mar. 06 FY Mar. 07 Variance Factors (results) (plan) (results) (plan) Sales increase of security-enhanced Financial 100.1 121.0 20.9 and overseas ATMs. Increase in 51.1 49.0 market sales due to recovery in banks
Slide 14: Semiconductor Business Segment
Semiconductor Business Segment Full year First half (Billion yen) FY Mar. 06 FY Mar. 07 FY Mar. 06 FY Mar. 07 Variance Factors (results) (plan) (results) (plan) Increasing driver demand and sales increase for telecom LSIs, Logic 92.5 91.0 (1.5) 49.2 41.0 though sales decrease in ASIC and price down
Slide 15: Printer Business Segment
Printer Business Segment (Billion yen) Full year First half FY Mar. 06 FY Mar. 07 FY Mar. 06 FY Mar. 07 Variance Factors (results) (plan) (results) (plan) Increase in shipment, shift from low Color 83.8 102.0 18.2 end model to middle/high-end 36.0 44.0 NIP market Though SIDM market shrinks, Mono, 76
Slide 16: Capital Expenditure and R&D Expenses
Capital Expenditure and R&D Expenses Invest to develop new products and expand production, mainly on info-telecom systems Capital Expenditure R&D Expenses [Acquisitions of property, plant and equip.] (%) 3.3 40.5 (Billion yen) 3.2 2.9 37.8 33.5 3.5 Others 3.6 Ratio to net sales 3.1 7.0 6.0 Printers
Slide 17: Cash Flows
Cash Flows Free cash flow improves by 13.6 billion yen due to working capital reduction, including inventory reduction March 06 March 07 (Billion yen) Variance (Results) (Projections) I. Cash flows from operating activities 15.0 54.2 39.2 Income (loss) before income taxes 10.6 4.0 (6.6) <Changes in
Slide 18: Table of Contents
1. Financial results for the FY March 2006 3. Oki’s Approach to the “Era of Change” 1) Financial Results 1) Recognizing the Environment 2) Profit and Loss 2) Revamping the Business Structure 3) Segment Information - Objective 4) Balance Sheet - Strategy 5) Cash Flows 3) Business Target and Strategie
Slide 19: Transformation of Form of Services
[Recognizing the Environment] Transformation of Form of Services Services provisioned through face-to-face shifts to ubiquitous service via broadband ubiquitous network Network infrastructure becomes broadband as digitalization and open standard progress Customers can obtain their desired inform
Slide 20: Era of Changes: Shift to New Business Structure
[Recognizing the Environment] Era of Changes: Shift to New Business Structure Changes in users, significantly change our customers’ business environment Conventional New business Volume business structure structure Shift to a new business model and new competition Info-telecom structure Software/ SI
Slide 21: Oki's Approach to the "Era of Change"
[Recognizing the Environment] Oki’s Approach to the “Era of Change” Oki aims to achieve “e-Society,” where ubiquitous service is offered via ubiquitous network 1 2 [Oki’s approach] To become a key player in the “e-Society” by revamping the business structure as “Oki, Networks Solutions for a Global
Slide 22: Aim to Revamp the Business Structure
Aim to Revamp the Business Structure The new trend is the shift from face-to-face service to ubiquitous service This trend will progress faster than Oki’s previous reform business plan Oki revamps business structure as the finish of Phoenix 21 Sky-high to become a company with stable profitability 1
Slide 23: Strategies to Revamp the Business Structure
Strategies to Revamp the Business Structure Establish a strong business structure, responding speedily and flexibly to customers’ business environment changes Aim to become a key player in the e-society (ubiquitous network + ubiquitous service) Flexible and speedy business operation ¾ Enhance networ
Slide 24: Flexible and Speedy Business Operation
Flexible and Speedy Business Operation Enhance network-based company management (In-house full/venture companies+ partners) ¾ Flexible and speedy company-oriented business operations based on corporate strategies ¾ Accelerate synergy effect among in-house companies and affiliated companies ¾ Acceler
Slide 25: Changes in Base Business Structure
Changes in Base Business Structure Establish a strong business structure unique to Oki ¾ Clarify focusing areas 9 Select businesses and concentrate resources 9 Review business process (Clarify strengths and enhance partnerships) ¾ Enhance skills on planning and development for technologies and produ
Slide 26: Expand Service and Software Businesses
[Expand New Businesses] Expand Service and Software Businesses Expand service and software businesses by offering Oki’s technologies, knowledge, know-how and assets to enable customers to concentrate on their main business ¾ Software and its related services: Expand as the new focusing business ¾ Op
Slide 27: Expand Business in China and other Overseas Business
[Expand New Businesses] Expand Business in China and other Overseas Business Target overseas sales ratio of 50% by FY end. 2011 Shift from a Japan-controlled overseas business to a locally controlled business, particularly in China Deploy business with strong products and technologies as core compet
Slide 28: Info-telecom: Business Target
Info-telecom: Business Target Basic Direction Deploy business in the ubiquitous network and ubiquitous service area Create and enhance sales with AP@PLAT-based info-telecom converged solutions for different industries Create world-class products to expand sales in Japan and overseas, such products a
Slide 29: Financial Systems: Market Trend and Business Strategy
[Financial Systems] Market Trend and Business Strategy [Market trend] Recovery in city banks, course of recovery in local and cooperative banks, increase in IT investment from privatization of postal offices and rising banks Expanding needs for systems for diversifying channels, new products, CRM, a
Slide 30: Telecom Carrier: Market Trend and Business Strategy
[Telecom Carrier] Market Trend and Business Strategy [Market trends] Investments for broadband IP completes first stage. Investments shift to new services including optical phones Full-scale rise of next generation networks and fixed mobile convergence (FMC) begins in FY Mar. 2008 Fiercer competitio
Slide 31: Enterprise Business: Market Trends and Business Strategy
[Enterprise Business] Market Trends and Business Strategy [Market trends] Japan’s PBX and key telephone systems market (including IP replacement) remains flat, being a mature market IP-PBX shifts to a growth stage supported by demands for mobile phone extensions Signs of changes in working style wit
Slide 32: Semiconductors: Management Target
Semiconductors: Management Target Basic Direction Deploy high value-added business such as system LSIs focusing on personal and mobile markets Enhance creation of world-class products, developing speed and manufacturing flexibility through fab-free (combining fabless and vertical integration) and pa
Slide 33: Semiconductor Business Strategy
Semiconductor Business Strategy Shift Shiftto toaastructure structurewith withstable stableprofits profits by byenhancing enhancingdifferentiated differentiatedtechnologies technologiesandandproduct productplanning planningcapabilities capabilities 1998-: Withdraw from DRAM (shift to system LSI/ log
Slide 34: Strong Areas, Focusing Products and Differentiating Technologies
Strong Areas, Focusing Products and Differentiating Technologies System LSI differentiated by “wireless” technology including “mixed signals” “modulating/demodulating technologies” and “RF” Products differentiated by “processing and circuit” technologies including high voltage processing, low power
Slide 35: Printers: Management Target
Printers: Management Target Basic Direction Continued growth in color NIP business ¾ Expand color NIP business as the market continues to grow Enhance SIDM and mono NIP markets as the base of profit ¾ SIDM: Enhance profitability by launching low-end products to emerging BRIC markets ¾ Mono NIP: Impr
Slide 36: Strategy for Products and Consumables
Strategy for Products and Consumables [Market trend] Color NIP market: While market expands by 30% annually, price for low-end models decline over 20% Mono NIP market: While market expands by 3% annually with increasing low-end models, prices decline by 16% SIDM market: Though market shrinks by 5%,
Slide 37: Table of Contents
1. Financial results for the FY March 2006 3. Oki’s Approach to the “Era of Change” 1) Financial Results 1) Recognizing the Environment 2) Profit and Loss 2) Revamping the Business Structure 3) Segment Information - Objective 4) Balance Sheet - Strategy 5) Cash Flows 3) Business Target and Strategie
Slide 38: Mid-term Business Target
Mid-term Business Target <Sales and operating income ratio> 4.0 3.9 (%) 2.1 1.6 (billion yen) 760.0 720.0 or more 688.5 680.5 30.0 Others 27.0 31.3 34.0 137.7 172.0 190.0 160.5 Printers 150.7 154.0 160.0 150.7 Semiconductors 373.1 338.0 360.0 380.0 Info-telecom systems FY Mar. 05 FY Mar. 06 FY Mar.
Slide 39: Glossary
Glossary P4 SG&A Selling, General and Administrative expense P20 SI System Integration P5 ATM Automated Teller Machine CD Cash Dispenser FY Fiscal Year P24 HR Human Resources IP Internet Protocol P27 OEM Original Equipment Manufacturer LSI Large Scale Integration PBX Private Branch Exchange LCD Liqu