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[ Financial Results for Fiscal 2010 Performance Briefing ]Ceramic Capacitors Business

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

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

Let me talk about the ceramic capacitors business.

Actions Completed in FY2010

Allow me to explain our results and measures that we implemented in fiscal 2010. We have discussed these measures a few times during past quarterly presentations, so I'll be brief.

Sales declined 10% year on year in fiscal 2010. In terms of measures during the past fiscal year, firstly, we amalgamated domestic production sites in Japan, reducing the number of factories from eight to four. This produced an improvement in production efficiency. Secondly, since the latter half of fiscal 2010, when we completed integration of mass production systems, we have optimized production lines and human resources in line with restructuring and mass production system integration. By having another look at how we optimize production lines and human resources, we aim to achieve an approximate 10% increase in production capacity and will implement these measures in the current fiscal year. A third measure was to improve productivity and reform costs. Amid falling sales in fiscal 2010, we concentrated on improving existing processes and increasing production yield. As of March 31, 2010, we had made the progress we expected.

Actions Planned for FY2011

Now let me discuss the actions we have planned for fiscal 2011.

In fiscal 2010, we implemented various measures, as I have just explained. However, we aren't satisfied with our degree of recovery compared with our competitors. Therefore, we want to make fiscal 2011 the year we move onto a growth trajectory based on the operating base we rebuilt in fiscal 2010.

The first measure we have planned is to integrate taping production sites outside Japan. After completing the integration of mass production systems of bases in Japan last year, we began consolidating overseas bases from the latter half of 2009. Our goal is to complete the consolidation by reducing the number of overseas bases from eight to four by the end of the first half of fiscal 2011. This should enable us to reduce fixed expenses and shorten lead times.

Our second planned measure is to improve productivity further as well as costs. As was discussed earlier, in fiscal 2010 we cut costs and reformed existing processes. These actions yielded a considerable improvement in earnings. In fiscal 2011, we will continue these efforts, which will center on increasing productivity and raising production yields. Our efforts will be concentrated on small components that we haven't touched until now and our competitive application products.

Furthermore, we plan to refine our production system and product development to address market change. We expect price-based competition to intensify in high-demand general-purpose products. In fiscal 2010, we concentrated mainly on products where we are strong. But from fiscal 2011 we will focus on high-demand products. That said, we plan to move onto the offensive with cost-competitive new processes in anticipation of price trends several years ahead. We have mentioned this a number of times in the past, but we have finished developing new processes and now plan to introduce them in fiscal 2011.

We will also focus on products that support new applications that are expected to grow in the future such as HEVs in the environment-related and industrial infrastructure fields. TDK is particularly strong in application products for automotive and infrastructure-related applications. We will therefore channel resources into the development of new products for these areas. On top of that, we expect in-house demand for new module products to increase markedly due to the integration with EPCOS, and for this to lead to sales growth. It would be fair to say that TDK hasn't been that strong in the module field up to now.

Through these measures, we aim to continue improving earnings in fiscal 2011. We are still playing catch-up with competitors, but we are determined to develop our business with our eyes fixed on the next few years ahead.

That concludes my presentation of TDK's capacitor business.