Investor Relations | IR Events | Performance Briefing

[ 2nd Quarter of fiscal 2011 Performance Briefing ]Consolidated Results of the 1st Half FY March 2011 & Projections for FY March 2011

Mr. Takehiro Kamigama President & CEO

Mr. Takehiro Kamigama
President & CEO

Good afternoon. I'm Takehiro Kamigama, President & CEO of TDK. Thank you for braving the rain to attend today's presentation in large numbers. I would like to summarize our consolidated performance for the first half of fiscal 2011, the year ending March 31, 2011, and provide forecasts for the full fiscal year.

Consolidated Results for 1H FY March 2011

Let me start by summarizing our first-half results. TDK posted consolidated net sales of ¥442,234 million, operating income of ¥37,188 million, income before income taxes of ¥34,644 million, and net income attributable to TDK Corp. of ¥26,116 million. Basic per common share net income attributable to TDK Corp. was ¥202.46. The average first-half yen exchange rate for the U.S. dollar was ¥88.89 and for the euro was ¥113.80. These exchange rates lowered net sales by approximately ¥28.2 billion and operating income by approximately ¥8.4 billion.

Features of 1H FY March 2011 Results

Let me now look at the features of our first-half performance. We expected the electronics market to continue its first-quarter upswing in the second quarter. In fact, the market is increasingly losing momentum. The degree of recovery differs by finished product. Products for smartphones, tablet PCs, automobiles and industrial equipment remain strong. On the other hand, manufacturers have adjusted production of flat-screen TVs and LCD panels, notebook PCs, and HDDs. As a result of these industry trends, rather than HDD heads, sales of passive components led the way, rising 23.3% year on year. Sales of capacitors and inductive devices rose for use in a wide range of products. We also saw increased sales of high-frequency components for mobile phones that stemmed from synergies captured with EPCOS. Sales remain strong even now. Sales of magnetic application products edged up 5.1% year on year. This small rise was the result of slowing sales growth of recording devices due to production adjustments in the HDD market and the yen's appreciation.

Projections for FY March 2011

Now let's look at our projections for the full year ending March 31, 2011. The electronics market is increasingly losing steam. Demand for consumer electronics in particular is softening. We also expect the yen to remain strong. Assuming average yen exchange rates of ¥80 and ¥115 for the U.S. dollar and euro, respectively, we are projecting consolidated net sales of ¥880.0 billion, operating income of ¥62.0 billion, income before income taxes of ¥60.0 billion, and net income attributable to TDK Corp. of ¥45.0 billion, as we initially forecast. So we have left our forecasts unchanged.

Forecast for Dividends for FY March 2011

Regarding dividends, we plan to pay an annual dividend of ¥80 per share. This is made up of an interim dividend of ¥40 per share and a planned year-end dividend of ¥40 per share.

Actions for FY2011

Finally, let me discuss our strategy for the second half onwards. As I said before, the electronics market is slowing, suggesting we cannot count too much on the Christmas shopping season. Furthermore, the yen is expected to continue appreciating. In this sort of market environment, the only thing we can do is to aggressively target fields where growth is expected. We plan to focus on the following three fields. First is the communications market. We will target finished products such as high-end 3G phones and smartphones. Here, we aim to raise sales further by launching new products. The second area of focus is expanding sales of components for electric vehicles (EVs), hybrid EVs and plug-in hybrid EVs. Third is the infrastructure field of environmental and renewable energy equipment field. Our plan is to lift sales with new components and devices. While most companies will no doubt target the same fields, we believe that we can grow sales with a stream of distinctive TDK products. Another area we are focusing on is our many production bases in China. Here, we aim to double production efficiency over the next two years to counter the RMB's expected revaluation and rising wage costs in the country. That is basically what we have planned for the second half of the fiscal year going forward.

That concludes my presentation. Thank you for your attention.