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[ Financial Results for Fiscal 2013 Performance Briefing ]Consolidated Full Year Results of FY March, 2013
Consolidated Full Year Projections of FY March, 2014

Mr. Takehiro Kamigama President & CEO

Mr. Takehiro Kamigama
President & CEO

Takehiro Kamigama, President and CEO of TDK Corporation: For the Consolidated Full Year Results of FY March 2013, net sales were 851.6 billion yen, operating income was 21.6 billion yen, income from continuing operations before income taxes was 18.9 billion yen, and net income was 1.2 billion yen. The exchange rates were 83.03 yen to the dollar and 107.05 yen to the euro, the impact on net sales being approximately 32.4 billion yen and operating income increasing about 4.1 billion yen.

In the Review of FY March 2013, in the third quarter for two consecutive fiscal periods there were downward revisions. One factor was the sales of passive components in the communications market being below expectations. The second factor was for “industrial equipment and others,” net sales being down 11.8% on a year-on-year basis because of a weak industrial equipment market and sales of passive components, magnets and power supplies having decreased. The third factor was in regard to rare earth material which dropped dramatically in price so there was a reevaluation of the metal magnet inventory. Furthermore, the HDD market was much lower than our expectations. Because of these reasons, downward revisions had to be made in a drastic manner.

As we head for solid earnings and growth, restructuring has to be carried out so there will be a restructuring of the passive components business and things are going according to plan. For the year-end dividend, it is 30 yen; so including the interim dividend of 40 yen, the planned annual dividend is 70 yen.

For the Full Year Projections of FY March 2014, net sales were 930 billion yen, operating income was 30 billion yen, net income from continuing operations before income taxes was 28 billion yen, and net income was 13 billion. For dividends, 30 yen for the first half and since we are looking to a recovery in performance, we are looking at 40 yen for the second half, so on an annual basis we are looking at 70 yen dividends. For the exchange rate, we are looking at 90 yen to the dollar and 118 yen to the euro as the basis for our calculations.

In regard to the points of business activities in FY March 2014, the three major points are the “road to the target,” “establishment of strong business base for growth,” and “growth scenario.” For the “road to the target,” there were restructuring efforts for FY ending March 2012 and a reduction in headcount. There is going to be further restructuring efforts implemented, including exiting non-core business and plans to further integrate bases worldwide; the specific details will be explained later. As we head to FY March 2015, we want to move towards the target plans. We hope we can realize the medium term plans.

Next, we want to establish a strong business base for growth. For FY ending March 2013, there will be restructuring efforts on the passive components business and this is going according to plans. As we head towards FY ending March 2014, we want to go into the final stage of business portfolio optimization and restructuring. In regard to the business portfolio review, we will be exiting, selling, or transferring the Blu Ray business and we want to be able to carry this out within this fiscal year. Aside from this, we will be looking at business and other product reviews and will continue to implement measures. For the optimization of production bases, we will be looking at our integration of bases worldwide. In this regard, aside from what has already been announced, we would like to target other areas as well, and we want to optimize both direct and indirect costs. By implementing all of this for restructuring expenses, we are looking at a spending of 10 billion yen for FY ending March 2014. As a result of this, in FY ending March 2015, we want to achieve a benefit of 8 billion yen and will have a thorough review of cost structure so that we can concentrate on management resources on growing business and core business areas.

For the “growth scenario,” I would like to explain each segment in detail. For passive components, we want to position this as the center for growth strategy and revitalize this business to become a pillar of profit for the company. It will not just be high frequency components for communication equipment such as smartphones but we want to achieve and pursue growth in other areas as well, including communications and automotive. For capacitors, we want to achieve stable earnings after completion of restructuring.

For magnet application products - especially recording devices - for stable business, we want to utilize our position as an exclusive HDD head specialized manufacturer, to continue to strongly push forward heads for data centers, to accelerate mass production of Thermal Assisted Magnetic Recording Heads, and apply HDD technology to electronic components development.

For film application products - especially rechargeable batteries - we want to move forward with a vertical integration business model to move into the next stage of growth. In terms of materials sales and packaging, vertical integration will be carried out. We have technology from magnetic tape that can be applied for functional film, separator business. We would like to accelerate in-house development of electrode materials, and aside from smartphone and tablet manufacturers, we want to develop new customers and applications. That concludes my explanation, thank you very much.