Mr. Takehiro Kamigama
President & CEO
Good afternoon. I'm Takehiro Kamigama, President & CEO of TDK. Thank you for taking the time to attend today's presentation. Today, I would like to present our consolidated forecasts for the fiscal year ending March 31, 2012.
We are forecasting consolidated net sales of 890.0 billion yen, 1.6% higher than the year ended March 2011. In terms of earnings, we are projecting operating income of 67.0 billion yen, a 5% year-on-year increase, income before income taxes of 65.0 billion yen, an 8.2% increase, and net income attributable to TDK of 50.0 billion yen, a 10.4% increase. Our earnings per share forecast is 387.61 yen. Our projections assume a U.S. dollar to yen rate of 80 yen, and a euro to yen rate of 110 yen. Our forecasts also assume a one-time charge of approximately 3.0 billion yen associated with the move to a tax-qualified pension plan.
Let me explain the background to our fiscal 2012 forecasts.
First, we expect the electronic products market to see a continued increase in production of smartphones and tablet devices. Furthermore, we expect the industrial equipment market to post stable growth in production. Another assumption we have made is that the notebook PC, flat-screen TV and HDD sectors will continue to see production cutbacks. However, HDD volumes are expected to rise around 4% year on year. In the second half of fiscal 2012, we expect to see increased demand particularly from data centers for HDDs. The Japanese automobile market contracted temporarily due to the impact of the Great East Japan Earthquake. However, it should rebound from around July. Other markets particularly in Europe should see steady growth.
Turning to the Great East Japan Earthquake, this natural disaster impacted our operating results in April and May this year. In particular, we lost approximately 10.0 billion yen in sales due to power outages across the whole of the Tohoku region on April 7. There has been much debate about how to respond to limited power supplies this summer. Well, as of today, we had completed most countermeasures, which include introducing an in-house power-saving program and increasing our capacity to generate power ourselves. Therefore, we don't expect power outages to have much effect on our production activities going forward.
Next, let me discuss the key themes for TDK for fiscal 2012.
In the passive components business, we intend to improve our contact with customers and strengthen our product offerings to capture demand in growth fields. With smartphones in particular, we hope that better consultation with customers will lead to higher sales. We will also bolster our product lineup for smart grids.
In the magnetic application products business, we aim to maintain our competitive edge in HDD heads in the recording devices business in terms of technology to capture business opportunities. Mass production of 500GB/P products for 2.5-inch drives has begun very smoothly indeed. We now plan to step up efforts to sell these HDD heads.
In terms of capital investment in fiscal 2012, we are projecting 85.0 billion yen, an 8.1% year-on-year increase. Our forecast for depreciation and amortization is 85.0 billion yen, a 9.5% increase. So we are planning to keep capital investment within the scope of depreciation and amortization. R&D expenses are projected at 53.0 billion yen, the same as fiscal 2011.
Finally, let me explain our dividend forecast for fiscal 2012. We are projecting an interim dividend of 40 yen per share. We also plan to pay a year-end dividend of 50 yen, which is an expression of management's determination to improve TDK's results in the second half of fiscal 2012. So that means we plan to pay an annual dividend applicable to fiscal 2012 of 90 yen per share. That's all from me. Thank you for your attention.