[ Financial Results for Fiscal 2009 Performance Briefing ]Capacitors Business

Mr. Shinichi Araya
Senior Vice President
General Manager
Capacitors Business Group

I'm Shinichi Araya and I would like to report on TDK's Capacitors Business Group.

Actions Taken in Fiscal 2009

The past fiscal year ended up seeing an extremely difficult business environment for the capacitors business. I'd like to tell you what actions we took in response to this challenging environment. In fiscal 2009, we launched the new Honjo Plant as initially planned. The Kitakami Plant had been our central production facility for a long time, but we constructed the state-of-the-art Honjo Plant to meet demand, putting in place a system to mass produce capacitors in August 2008. However, due to bad timing, capacity utilization was ultimately low due to a rapid decline in demand for electronic components and production cutbacks, including inventory adjustments. This of course was because of the global economic downturn from the second half of the fiscal year. At its lowest level in the fourth quarter of fiscal 2009, capacity utilization was only 30% of its peak.

Another action we took in fiscal 2009 concerned our core Kitakami Plant, which has manufactured various products. Turning soft demand and declining capacity utilization into an opportunity, we established this plant as a facility for the integrated manufacture of high- and large-capacitance products. As a result, I believe that we now have a system that can more efficiently manufacture these products than before.

Measures Planned for Fiscal 2010

In terms of measures planned for fiscal 2010, we intend to integrate mass production systems in the Akita region. We actually started this process around the end of fiscal 2009, but will continue to integrate mass production systems in the capacitor business. As I mentioned earlier, we have completed measures at the Honjo and Kitakami plants. Now we will streamline production sites by product. We plan to integrate production in four sites in Japan to increase efficiency. This move should also result in shorter lead times.

The second main action planned for fiscal 2010 is to expand our product lineup. Some people have said that we have been slow in bringing out new products. This is something we plan to address. In fact, our lineup of new products has already become quite extensive. In particular, we plan to actively launch compact high- and large-capacitance capacitors, as well as products designed specially for automobiles and PCs.

Benefits

Let me tell you about the benefits we ultimately expect. Site integration targets improved production efficiency. Due to less movement among production sites, we naturally expect production lead times to be shorter. We also expect product quality to improve. Production yields are expected to improve, too, based on this. All of this should help us to reduce costs in fiscal 2010. Increased sales of new products is another benefit we anticipate. As was said before, we plan to increase the share of high- margin products in our sales mix. In fiscal 2010, we are assuming that volumes and demand in the market will not increase year on year. We will therefore develop our capacitor business with an emphasis on improving our internal processes. We intend to improve the profitability of our capacitor business after it ultimately struggled in the past fiscal year and grow products that will be core TDK growth drivers going forward.

That concludes my presentation on TDK's capacitor business.