Investor Relations | IR Events | Performance Briefing
[ A Conference for Consolidated Projections of the Fiscal Year March 2012 ] Q&A
- Q1. My question concerns full-year operating income. Could you tell us how you see operating income trending from quarter to quarter during the year? A breakdown between the first and second halves would suffice though.
- A1. I'm unable to comment about quarterly forecasts because we don't announce them. On a half-yearly basis, we expect earnings to be lower in the first half than the second due to the impact of the Great East Japan Earthquake and the move to a tax-qualified pension plan in the first quarter. However, we expect to generate most of our earnings in the second half of the year.
- Q2. To what extent have your operations recovered in the aftermath of the Great East Japan Earthquake?
- A2. The biggest impact of the earthquake was felt in April. Since then, things have improved to the extent where there was almost no impact in May and June.
- Q3. So, is my understanding correct that while you felt the impact of the Great East Japan Earthquake in April, production returned to normal in May?
- A3. Yes, production returned to normal from May.
- Q4. I have a question about capacity utilization in ceramic capacitors. At the April 27 earnings release conference, you said that capacity utilization was between 65% and 70% in April. How much did capacity utilization improve in May?
- A4. Capacity utilization was between 70% and 75% in April, and around 85% in May. Basically, therefore, since May we have operated without any effects from the Great East Japan Earthquake.
- Q5. How do you see orders trending from summer?
- A5. We expect orders from summer to be around 10% higher than the first quarter. This projection assumes an increase in orders from automobile-related customers.
- Q6. My question concerns shipment volumes of HDD heads. You forecast higher shipments for the first quarter than the fourth quarter of the year ended March 2011. What is your first-quarter projection as of now? Also, what are your projections from the second quarter onward?
- A6. We have not changed our first-quarter projection. We still expect first-quarter shipment volumes to exceed the previous fourth quarter. Shipment volumes will probably also be higher in the second quarter than the first quarter.
- Q7. You also projected that your market share in HDD heads would be slightly higher than in the year ended March 2011. Would I be right in assuming that there has been no change to that forecast either?
- A7. You can assume that there has been no major change in our market share.
- Q8. What are orders for passive components looking like for the second quarter?
- A8. The Japanese automobile-related market has recovered sooner than we expected. A strong European auto market has helped Japanese manufacturers recover, which is a positive factor. However, orders related to flat-screen TVs and large-screen TVs, including PDPs, have been worse than expected. We expected orders to pick up a little more, but orders aren't that strong at present. Orders related to smartphones and mobile devices bottomed out in the first quarter, and we expect them to grow from the second quarter.
- Q9. Your earnings forecast for the year ending March 2012 seems to be heavily dependent on the second half. What businesses do you expect to drive results in the second half?
- A9. We expect the HDD head business to drive earnings somewhat, but passive components should be the main driver. We expect sales of passive components to grow more for use in smart grids and renewable energy-related equipment in particular. We made investments to ramp up production capacity for these fields in fiscal 2011, so we expect to be able to cope with increased orders.
- Q10. What is your annual sales plan for each segment? Also, what is your projection for structural reform expenses? If possible, please break this down by quarter.
- A10. We expect the passive components business to account for around half of total sales for the year. The rest will be generated in the magnetic application products and other segments. I cannot disclose specific figures, however. Regarding structural reform expenses, we are projecting around 5.0 billion yen, about the same as fiscal 2011.
- Q11. I have a question about the HDD heads business. Could you update us on the latest developments in HDD industry restructuring?
- A11. There is no new information to report concerning HDD industry restructuring, because it is in the hands of the regulatory authorities in various countries. From our perspective, we are focusing on sales of 500GB/P products for 2.5-inch drives and 1TB/P products for 3.5-inch drives, and increasing our market share.
- Q12. What will be the growth drivers in fiscal 2012?
- A12. We expect to see considerable growth in sales of film capacitors for smart grid-related equipment. We also expect aluminum electrolytic capacitor sales to grow substantially. Demand for railway-related applications should increase as well. Going forward, we expect smartphone-related products to grow, since we plan to focus development resources on enhancing our product offerings. Automotive-related applications should also grow on the back of the strong European market.
- Q13. What is your strategy for the ceramic capacitors business?
- A13. As we've explained many times to date, we have been strengthening our product lineup at the same time as integrating production bases through fiscal 2011. We believe we have a chance to strengthen this business because our new products are competitive with other companies' products. Furthermore, we plan to continue steadily growing business related to automobiles and infrastructure, which have long been strong suits for TDK.
