Result Briefing of Fiscal Year Ended March Jun 1, 2012 ARRK CORPORATION

Transcription

1 1 Result Briefing of Fiscal Year Ended March 2012 Jun 1, 2012 ARRK CORPORATION

2 Progress of ARRK Business Revitalization Plan 2

3 (1) Progress in FY 2011 As of now 3 Fin ancial sup pport Ref ormation of ma anagement g Business restructurin Financial support First half Coordination with creditors Jun 23: Qualified to receive financial support from ETIC (Purchasing the debt from ARRK and providing capital to ARRK) Jun21: General shareholders mtg FY ended Mar 2012 FY ending Mar 2013 Constant reduction of interest-bearing debt Aug 25: Completion of financial support Aug 25: More than 2/3 of voting rights acquired by ETIC Aug 31: Inauguration of new management (Extraordinary shareholders mtg) Promotion of ARRK Revival Plan under the new management Reduction of fixed costs (Domestic tooling and molding business) Downsizing the number of employees and concentrating business domains Disposal of non-core business Reducing the number of subsidiaries from 67 Business unit system (Departure from Rempo Keiei ) Turning profitable to approx

4 (2) Improvement of balance sheet 4 Financial support significantly reduced interest-bearing debts and resolved excessive debt. Further reduction of interest-bearing debts is needed (Debt-equity ratio < 1.0). (1) Interest-bearing debt (2) Net assets (Interest bearing debt: billion JPY ) (Interest bearing debt/ebitda: times) (Net asset: billion JPY) (Equity ratio: %) % 34.5% % % 20% % % % 3.4% 20 10% % /3 08/3 09/3 10/3 11/3 12/3 13/ /3 08/3 09/3 10/3 11/3 12/3 13/3 Balance of interest-bearing debt Interest-bearing debt/ebitda *1 Interest bearing debt = Bank loan + bonds + lease payable *2 EBITDA = Operating profit + depreciation expense Net assets (3) Debt-equity ratio % 10% Equity ratio (Debt equity ratio: times) /3 08/3 09/3 10/3 11/3 12/3 13/3 Debt-equity ratio

5 (3) Business restructuring 1Reduction of fixed costs 5 Reduction of headcount and personnel expense especially for tooling business in Japan => Reduced fixed costs by 1.2 billion JPY for the fiscal year Actions in FY 2011 (1) Cutting headcount and personnel expense for tooling and molding business in Japan Headcount reduction by approx. 20% for tooling business in Japan Review of pay scale for directors and employees and cut back on salaries Review of rules and regulations of commuting allowance, travel expense, etc. (2) Cutting personnel expense for overseas product development and tooling business (3) Reducing fixed costs through streamlining business (shut-down or aggregation g of factories) (eg. Sale and disposal of fixed assets and reduction of depreciation expense) (4) Other cost cut activities

6 (3) Business restructuring 2Sale of non-core business 6 The number of consolidated subsidiaries has been steadily decreased to 53. We will review capital relationship especially with non-core business aiming for an adequate business scale with affiliates by March Consolidated subsidiaries Newly consolidated subsidiaries Deconsolidated subsidiaries /3 08/3 09/3 10/3 11/3 12/3

7 (3) Business Restructuring 3Condition of Expenses related Business Restructuring 7 Declare Business Restructuring Expenses and Stock Sales of Subsidiary Company as Extraordinary Loss Promote Structural Reform steadily based on Business Restructuring Plan The Situation of Extraordinary Loss on Business Restructuring for the Fiscal Year Billion 1.6 Yen for 1 Additional Fee for Retirement Fee on solicit voluntary retirement Expenses of Business Restructuring Plan of 2 Consulting Fee on Business Restructuring Structural Reform on Domestic Tooling and Molding Businesses 3 Expenses on Factory Closure, Relocation, Asset Sale etc 4 Loss from subsidiary liquidation 4.5 Billion Yen of loss on sales of Subsidiary Companies for reasonable company down sizing 5 - ARRK DISON (Beijing) - ANAH Loss on Sales on Subsidiary Stock Transfer - Showpla Hong Kong Ltd. - Satosen Co., Ltd - Clover Electronics Co., Ltd - Element Plastic Mold - Plust Concept - ARRK Okayama - Toho Systems

8 (3) Business Restructuring 4New Departure by Business Headquarters System Comprehension of Total Optimization with the Business Operation by adhering Technology, Production, Sales 8 President Vice President Product Development Business Headquarters Mass Production Business Headquarters Tooling Business Headquarters International Business Headquarters Administration Headquarters Corporate Planning Division Automotive Dept. Consumer Dept. Fujiyoshida Factory Mass Production Business Dept. ASEAN Dept. Asia Europe North America General Affairs Dept. Finance Dept. Affiliate Administration Dept. Planning Group IT System Group

9 9 Financial Highlights for fiscal year ending March 2012

10 (1) Outline of Consolidated Business Results for the Fiscal Year 2011 The Increase Revenue, Increase Profit, Net Sales and Operating Income achieved the Forecast and the Current Net Income before taxes excluded moved into the black for the first time in last 6 terms. The Income has been improved well by market recovery as well as Business Restructuring and then Operating Income Ratio achieved drastically against the Structural Reform. Unit: Billion JPY FY2010 FY2011 Rise & Fall FY2011 Forecast (Mar 1, 2012) Difference Net Sales % % Operating Income % % Ordinary Income % % Current Net Income before taxes excluded % - - Current Net Income % % 10 Sales (Billion JPY) Increase Revenue 98 FY FY2011 Achieved 100 FY2011 Forecast Operating Income (Billion JPY) Increase Profit % FY % 5.8% FY2011 Achieved 8.0% % 6.0% 5.0% FY2011 Forecast (Mar 1, 2012) (Mar 1, 2012) 4.0% 2.0% 0.0%

11 (2) The Overview of Each Business for the Fiscal Year Product Development Business Mainly, producing and then distributing products such as design, design model, engineering, working model to automotive and electronics makers. Tooling Business Mainly, producing and then distributing products such as tool design, tool production, injection molding to automotive and electronics makers. Sales Composition Ratio Sales Composition Ratio 34% 66% (Billion JPY) Sales Operating Income (Billion JPY) (Billion JPY) Sales Operating Income (Billion JPY) (7.7%) FY (10.2%) FY (4.6%) 3.8 (1.5%) 1.0 FY FY

12 (3) Breakdown of Increase and decrease in operating income 12 Increase of Profit +3.1 Achieved +0.9 (Unit: Billion JPY) FY10 FY11 USD EUR FOREX Volume COGS SG&A Others 2011 rate <VS Previous Fiscal Year> 1Due to the market rally, volume and profit was increased (1.11 Billion JPY). 2Due to the structural reform, there are effect of decreasing the fixed cost (over 1 Billion JPY). SG&A Volume 2011 Forecast (Mar 1, 2012) <VS Forecast> was better than forecast; 1Sales volumes made to customers was increased(0,7 Billion JPY). 2Reduction of fixed costs was achieved(0,2 Billion JPY).

13 (4) Sales and Operating income by region 13 1.Sales by region (based on customer locations) ( Billion JPY) ( Billion JPY) 20.0 (4.8%) +3.7% Japan Asia Europe N America 981 1, (2.4%) (30.5%) 61.4% (28.5%) (2.8%) (32.3%) (30.0%) 65.1% 2.Operating income by region(based on company locations) (4.9%) 14.6 (44%) (4.4%) 13.7 (1.5%) 4.4 (3.1%) (40.8%) 355 FY2010 FY2011 (34.9%) <overall> Overseas sales ratio increased by 3.7%, mainly due to steady growth in Europe <by region > 1Japan Billion JPY(4%) in substance the significant recovery of the major automotive manufacturers, strong amusement production 2Asia + 6 Billion JPY(4 (21%) in substance the steady growth of the major automotive manufacturers despite of floods in Thailand. 3Europe Billion JPY(4(16%) in substance the steady growth of the major automotive manufacturers 4North America Billion JPY(24%) in substance developing new customers in automotive manufacturers in substance: not included the impact of exclusion of subsidiaries from consolidation and foreign currency exchange 0.0 Japan Asia Europe N America 2.0 FY ( 0.5%) FY2010 ( 5.7%) ( 6.7%) < overall> + 3 Billion JPY(110.2%), mainly due to contribution of Japan and Europe < by region > 1Japan Billion JPY recovery of the market, expanding sales and increase of revenue JPY0.3 billion, cutting down fixed cost JPY 1.7 billion 2Asia Billion JPY expanding sales and increase of revenue for major automotive manufacturers 0.53 Billion JPY higher manufacturing costs due to rising of materials costs 0.8 Billion JPY cutting down fixed cost 0.2Billion JPY. 3Europe Billion JPY expanding sales and increase of revenue for major automotive manufacturers 0.8Billion,JPY higher h manufacturing costs due to rising i materials costs 0.2 Billion JPY 4North America remain at the same level In the end of period main office was relocated to cut down the fixed cost. The effect is carried over to the next fiscal year.

14 Forecast and Approach at the

15 (1) Management Policy (The Four Backbones) 15 Develop Globally at World Four Footholds (Japan, Asia, Europe, North America) and Achieve Sustainable Business Growth. 1 Maximize Corporate Value 2 Dissolve Negative Aspects of Rempo-Keiei Peaks Stand Alone Management 3 Corporate Governance System, So As Never to Extend Any Risks Aim to be an industry leader in profitability and financial strength. Build management system conscious of Market Capitalization. Pull out of non-interference management Push through consolidated management with departmentalization by division.(business Headquarter System) Create corporate governance system. Thorough Compliance. 4 Development of Human Resources Create company-wide educational plans. Rebuild employee performance evaluation.

16 Forecast and Approach at the

17 (1) Prospect Net Sales (Billion JPY) Practically revenue is increased expect exchange loss by rising yen Increase revenue Improving revenue by productivity improvement and reducing fixed cost Operating Income (Billion JPY) 5.8% 5.8% Increase profit 7.0% 2.9% FY11 FY12 Forecast USD EUR Increase Profit +1,7 Billion JPY 1 0,8 2 0,7 7,1 5,9 0,5 5,4 0,3, 0,5 2011Q4 Effect of eliminated subsidiaries 2011Q4 (w/o effect of eliminated subsidiaries) FOREX Volume COGS Ratio SG&A 2012Q4Forecast 1 Improving price cost due to both productivity growth and enhancement of competitiveness by low cost country. 2 Effect of reducing fixed cost by previous year's structural reform is remarkable.

18 (2) Trend in Performance Start New Business Strategy by developing new structure for realization of our business growth! Sales [Billion JPY] Hands-off Management approach Business operation was individual optimization by relegating to much on each department / consolidate subsidiaries' autonomy. 6.9% % Sales Operating Income Ratio Hands-on Management approach Resolution Restructuring of negative of new legacy for business restart model 58% 5.8% 7.0% 18 Operating Income Rti Ratio [%] 1.8% 1.5% % 2.8% Number of Consolidated subsidiaries 142 Net Income [Billion JPY] (Forecast) %

19 19 Taken on the 25th of October, 2011 Taken on the 29th of May, 2012 The restoration situation from a flood in Thailand Note on the forecast This forecast has been prepared based on information available at the time of this writing. This is also subject to various factors and is therefore subject to change. Plan, strategy, opinion and others, without historical fact, are future perspective. Those are at risk for uncertainty. There is possibility not to be realized. ARRK Corporation Investor Relation Department TEL: +81(0) FAX: +81(0)

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