Q1 FY2019 (April 1, 2018 June 30, 2018) Financial Announcement

Transcription

1 Q1 FY219 (April 1, 218 June 3, 218) Financial Announcement July 26, 218 Agenda: Q1 FY219 Consolidated Financial Summary Ken Sasagawa, Vice President, Accounting Dept. Business Environment and Financial Estimates Toshiki Kawai, Representative Director, President & CEO CORP IR / July 26, 218 1

2 Forward Looking Statements Disclaimer regarding forward-looking statement Forecast of TEL s performance and future prospects and other sort of information published are made based on information available at the time of publication. Actual performance and results may differ significantly from the forecast described here due to changes in various external and internal factors, including the economic situation, semiconductor/fpd market conditions, intensification of sales competition, safety and product quality management, and intellectual property-related risks. Processing of numbers For the amount listed, because fractions are rounded down, there may be the cases where the total for certain account titles does not correspond to the sum of the respective figures for account titles. Percentages are calculated using full amounts, before rounding. Exchange risk In principle, export sales of Tokyo Electron s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking. Accordingly, the effect of exchange rates on profits is negligible. FPD: Flat panel display CORP IR / July 26, 218 2

3 Q1 FY219 Consolidated Financial Summary July 26, 218 Ken Sasagawa Vice President, Accounting Dept. CORP IR / July 26, 218 3

4 FY219 Q1 (April June 218) Highlights Q1 financial results showed good progress in line with plan for H1 Shipped more than 6% of SPE and 1% of FPD Q2 new equipment sales targets High level of SPE * sales driven by increase in demand for data centers In FPD **, investment for G1.5 continued * SPE: Semiconductor production equipment, ** FPD: Flat panel display production equipment CORP IR / July 26, 218 4

5 Financial Summary FY218 FY219 Q1 vs. Q4 FY218 Net sales % SPE % FPD % Gross profit Gross profit margin % % % % % -2.2% -1.7pts SG&A expenses % Operating income Operating margin % % CORP IR / July 26, 218 SPE: Semiconductor production equipment, FPD: Flat panel display production equipment % % % (Billion yen) -27.4% -3.5pts Income before income taxes % Net income attributable to owners of parent % R&D expenses % Capital expenditures % Depreciation and amortization % 1. In principle, export sales of Tokyo Electron s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking. 2. Profit ratios are calculated using full amounts, before rounding.

6 Financial Performance (Billion Yen) 5 5% % 4% % % 2% % Q1 FY 18 FY 19 Net sales Operating income Net income attributable to owners of parent Gross profit margin 41.1% 42.1% 41.1% 43.1% 41.4% Operating margin 23.2% 24.4% 22.5% 28.% 24.5% % CORP IR / July 26, 218 6

7 Segment Information SPE (Semiconductor production equipment) (Billion Yen) 35 Sales Segment income Segment profit margin % 5% 4% FPD (Flat panel display production equipment) (Billion Yen) 35 Sales Segment income 29.7 Segment profit margin 28 6% 5% 4% 1% Composition of Net Sales FPD % 29.6% 28.6% 3.9% 66.1 Q1 FY' % 78.3 FY'19 3% 2% 1% % %.4 Q1 FY' % % % % 2.4 FY'19 3% 2% 1% % 5% % Q1 FY'18 FY'19 SPE 1. Segment income is based on income before income taxes. 2. R&D expenses such as fundamental research and element research, etc. and other general and administrative expenses are not included in the above reportable segments. 3. Composition of net sales figures is based on the sales to customers. CORP IR / July 26, 218 7

8 SPE Division: Sales by Region (Billion Yen) Q1 FY 17 FY 18 FY 19 Japan North America Europe South Korea Taiwan China S. E. Asia, Others CORP IR / July 26, 218 8

9 SPE Division: New Equipment Sales by Application (Billion Yen) DRAM Non-volatile memory Logic foundry Logic & others (MPU, AP, Others) % 2% 25% % 31% 23% 3% 27% 32% 25% 21% 19% Q1 FY' % 25% 31% 38% 23% 17% 27% 22% 23% 25% % 16% 18% 17% 31% 22% 32% 23% 19% 24% 32% 34% % 12% 31% 18% 27% 31% 32% 27% 32% 25% 19% 12% % 16% 17% 24% 4% 32% 34% 16% 26% 25% 25% 26% 24% 27% FY' % 16% 25% 27% 24% 35% 27% 34% 8% 32% 24% 26% 22% % 27% 21% 4% 41% 27% 16% 17% 28% 25% 4% 35% 43% 16% 8% % 49% 12% 1% 27% 24% 26% 32% 4% 27% 19% 17% FY'19 CORP IR / July 26, 218 Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included. 9

10 Field Solutions Sales (Billion Yen) Q1 FY 17 FY 18 FY 19 SPE Sales FPD Sales CORP IR / July 26, 218 1

11 Balance Sheet Assets (Billion Yen) Liabilities & Net Assets (Billion Yen) 1,22.7 1,185. 1,22.7 1, , , Cash & cash equivalents* Trade notes, accounts receivables Inventories Other current assets Tangible assets Intangible assets Investment & other assets , , Liabilities Net assets Q1 FY'18 FY'19 Q1 FY'18 FY'19 * Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities in B/S). From the beginning of the FY219 Q1 accounting period the Accounting Standards Board of Japan s Partial Amendments to Accounting Standard for Tax Effect Accounting, etc. (ASBJ Statement No. 28, revision on February 16, 218) has been applied. FY218 results have been restated in the graphs in a ccordance with the revised accounting standards. CORP IR / July 26,

12 Inventory Turnover and Accounts Receivable Turnover (Billion Yen) (Days) 4 3 Net sales Inventory turnover Accounts receivable turnover Q1 FY'17 FY'18 FY'19 Turnover days = inventory or accounts receivable at the end of each quarter / last 12 months sales x 365 CORP IR / July 26,

13 Cash Flow (Billion Yen) Q1 FY 17 FY 18 FY 19 Cash flow from operating activities Cash flow from investing activities* Cash flow from financing activities Free cash flow** Cash on hand*** * Cash flow from investing activities excludes changes in deposits with periods to maturity of over 3 months. ** Free cash flow = cash flow from operating activities + cash flow from investing activities excluding changes in deposits with periods to maturity of over 3 months. *** Cash on hand includes the total of cash + deposits with periods to maturity of over 3 months. CORP IR / July 26,

14 Business Environment and Financial Estimates July 26, 218 Toshiki Kawai Representative Director, President & CEO CORP IR / July 26,

15 Wafer Fab Equipment (WFE) Market Outlook Future growth drivers PC, internet, mobile + VR/AR/MR *, IoT, AI, RPA **, machine learning, big data, autonomous driving, blockchain * VR/AR/MR: Virtual reality/augmented reality/mixed reality ** RPA: Robotic process automation $37B $51B $56B-$58B $61B $62B $63B CY'16 CY'17 CY'18* CY'19* CY'2* CY'21* WFE market growth accelerating. Investment expanding to $6B+ * TEL estimate Equipment market is moving to the next phase amid expanding applications for semiconductors CORP IR / July 26, WLP DRAM Non-volatile memory Logic foundry Logic & others (MPU, AP, others)

16 Business Environment (Outlook as of July 218) WFE * capex CY218 investment driven by buoyant demand for memory, expect YoY growth of approx. 1-15% FPD production equipment capex for TFT array process ** We expect CY218 demand for investment in production equipment to continue at a high level comparable with CY217 despite adjustment in investment in small/medium panels for mobile, and significantly expanded investment in G1.5 Accelerating growth in the equipment market on active investment in IoT and next generation technologies * WFE (Wafer fab equipment): The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and back-end production, in which wafers are cut into chips, assembled and inspected again. Wafer fab equipment refers to the production equipment used in front-end production and in wafer-level packaging production. ** TFT array process: The processes of manufacturing the substrates with the electric circuit functions that drive displays CORP IR / July 26,

17 CY 18 WFE Market Growth and Business Opportunities by Application DRAM: Market growth of 6-65% YoY forecast Capex: 7% of investment amount to be for new factories, and 1X/1Ynm generation to comprise 8% Driving force: Average server capacity up 35% Opportunities: Differentiation through combined patterning and our strength in interconnects Non-volatile memory: Unchanged to 5% increase YoY Capex: 9X generations to comprise 5% Driving force: Growth in SSD demand for data centers and PCs Opportunities: Differentiation through high value-added etch and clean WFE market by application $51B $56B-$58B WLP DRAM Logic/Foundry: 1% decrease to unchanged YoY Capex: 1nm and beyond generation to comprise 5% Driving force: Demand for higher performance, lower power consumption Opportunities: Business expansion in more complex patterning processes CY'17 CY'18* Non-volatile memory Logic foundry Logic & others * TEL estimate CORP IR / July 26,

18 FY219 Business Progress SPE business strategy progress continues as planned Advancing capture of POR * in key fields (etch, deposition, cleaning systems) FS business doing well too due to expansion of IoT applications and increase in installed equipment base Raising profitability of FPD production equipment as planned Expansion of PICP etch system for G8.5 Sales for G1.5 increasing Miyagi Plant (etch system) expansion Began operation of automatic warehouse system at new logistics building (June) Plan to complete new development building in September Plan to begin operation of new production line in November Tokyo Electron Miyagi CORP IR / July 26, 218 * POR (Process of record): Certification of the adoption of equipment in customers' semiconductor production processes 18

19 FY219 Financial Estimates CORP IR / July 26,

20 FY219 Financial Estimates (no change from Apr. 25, 218 announcement) FY218 (Actual) FY219 (Estimates) H1 H2 Full year (Billion yen) Full year YoY change Net sales 1, , % SPE 1, , % FPD % Gross profit Gross profit margin % % % % pts SG&A expenses Operating income Operating margin % % % % pts Income before income taxes Net income attributable to owners of parent Net income per share (Yen) 1, , Expect sales growth to exceed market growth, generating record high profit * for third consecutive year CORP IR / July 26, 218 SPE: Semiconductor production equipment, FPD: Flat panel display production equipment * Net income attributable to owners of parent 2

21 FY219 SPE Division New Equipment Sales Forecast (Billion yen) DRAM Non-volatile memory % % 37% 43% 42% 11% 1% 9% 3% 22% 16% FY'18 H1 (Actual) Sales by application Logic foundry Logic & others FY'18 H2 (Actual) % 33% FY'19 H1 (Estimates) 37% 7% 23% FY'19 H2 (Estimates) Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included. (Billion yen) % 49% % 37% 12% 4% 17% 15% FY'19 Q1 (Actual) FY'19 Q2 (Estimates) Q1 sales were in-line with plan, and more than 6% of Q2 sales target has been shipped. High level of memory investment to continue CORP IR / July 26,

22 FY219 R&D Expenses, Capex Plan (no change from Apr. 25, 218 announcement) R&D Expenses 12.B Continue investing based on focus areas and sustainable growth Capex 51.B Actively invest in advanced technologies R&D and to meet increasing production Depreciation 26.B New production buildings (deposition systems, gas chemical etch systems, test systems) (Billion Yen) (Billion Yen) R&D expenses FY'15 FY'16 FY'17 FY'18 FY'19 (E) Capex Depreciation Nirasaki City, Yamanashi Prefecture: approx. 13.B construction cost (Begin construction in January 219, completion scheduled for April 22) Oshu City, Iwate Prefecture: approx. 13.B construction cost (Begin construction in October 218, completion scheduled for September 219) Maximize business opportunities while equipment market is in a growth phase CORP IR / July 26, FY'15 FY'16 FY'17 FY'18 FY'19 (E)

23 FY219 Dividend Forecast (no change from Apr. 25, 218 announcement) (Yen) 9 Dividend per share 823 yen yen 352 yen 624 yen Year-end 433 yen 237 yen Interim 39 yen TEL shareholder return policy Dividend payout ratio: 5% Annual DPS of not less than 15 yen We will review our dividend policy if the company does not generate net income for two consecutive fiscal years We will flexibly consider share buybacks FY'15 FY'16 FY'17 FY'18 FY'19 (E) Expect to raise DPS 32% YoY CORP IR / July 26,

24 CORP IR / July 26,