SEMIANNUAL REPORT 2005

Transcription

1 SEMIANNUAL REPORT For the six months ended

2 Operating Results and Financial Condition The Japanese economy during the first half of fiscal continued to grow steadily, assisted by brisk exports, increasing private capital investment and recovery of consumer spending. Concerning the business environments surrounding Nabtesco Group, the automobile industry s capital spending continued to be strong at home and overseas, and the construction machinery industry in China turned to recovery from the depression caused by the local monetary restraint policy. Domestic markets also continued a steady growth, supported by the production expansion thanks to increase of exports. Under these circumstances, the Company set up the Midterm Business Plan in this May and has promoted development of new technology and new product, improvement of productivity, and enhancement of a profitmaking structure. As a result, consolidated net sales for the 1st half of fiscal were 71.7 billion, up by 7.8% compared with the same period of the preceding year, and consolidated ordinary income accounted for 6.9 billion, an increase by 21.1% from the same period last year. Consolidated net income stood at 3.9 billion, an improvement by 13.5% on a yearonyear basis. With regard to cash flows, cash flow from operating activities ended with a gain of 6.4 billion. Cash flow from investing activities resulted in a minus of 2.7 billion due mainly to expenditure of 2.5 billion for acquisition of fixed assets. As a result, free cash flow was a plus 3.7 billion. On the other hand, cash flow from financing activities saw a deficit of 1.0 billion owing to repayment of borrowings and payment of dividends. Cash and cash equivalents as of the end of the 1st half of fiscal were 16.8 billion. In addition, outstanding amount of borrowings as of the end of was 24.6 billion. Review of Operations [ Precision Equipment Business ] Net sales of the precision equipment business increased 19.7% compared with the same period of the preceding year to 18.0 billion, and operating income climbed by 50.8% from the same period last year to 3.5 billion. Precision reduction gears for industrial robots continued to grow steadily, assisted by the domestic and overseas automobile industry s strong capital investments, and those for machine tools manufacturers also maintained a steady growth due to the industry s prosperous conditions. On the other hand, precision equipment for semiconductor manufacturers declined in sales slightly, affected by the weakened market of semiconductors. However, the overall sales in this business segment hit a recordhigh. [ Transport Equipment Business ] Net sales of the transport equipment business were 17.8 billion, an increase by 3.7% compared with the same period a year ago, and operating income accounted for 1.4 billion, a climb by 66.6%. Sales of railway vehicle products increased on a yearonyear basis, since increased sales of new trains for the existing railways and those of maintenance parts covered a decline of sales for the Shinkansen (bullet train). In the automobilerelated business, brake products for commercial vehicles increased supported by increased demand for replacements in common trucks. However, overall sales in the business of automobiles declined due mainly to the contraction of FSR (Force Sensing Resistors) business.marine propulsion control systems posted recordhigh sales, helped by the marine transportation industry s strong, continuous capital investment for new vessels due to brisk cargo movements mainly in China and North America. [ Aircraft and Oil Hydraulic Equipment Business ] Sales of the aircraft and oil hydraulic equipment business rose to 18.9 billion, up by 8.1% compared with the same period a year earlier, and operating income increased by 43.2% to 0.9 billion. The aircraft equipment increased its sales, thanks to an increase in fuselage production in the civil aviation sector including the B777. This was backed up by a recovery in civil demand despite adverse effects from airliners depression owing to soaring crude oil price. As for hydraulic equipment, hydraulic traveling units and valves continued a constant growth thanks to increase in demand for hydraulic excavators in Japan and abroad. In addition, drive units for wind turbines, a new product, started mass production for overseas markets, which contributed an increase of sales. [ Industrial Equipment Business ] Sales in this business were 16.8 billion, an increase by 0.9% against the same period last year, and operating income recorded 1.4 billion, an advance by 3.6% compared with the same period of. Semiannual Report 1

3 Sales of the automatic doors related business increased, since mainstay generalpurpose automatic doors performed favorably, and sales of platform screen doors for South Korea sharply climbed. In the industrial machinery related business, sales of machine tools increased due to strong capital spending by the domestic automobile manufacturers. On the other hand, automatic packaging machines for food industry saw a decline in sales on a yearonyear basis, due to decreased capital investment in Asian markets such as South Korea. Outlook for the full fiscal year The Japanese economy is forecasted to show steady performance thanks to active capital spending and recovery of consumer spending, both supported by high profitability of corporations. On the other hand, there are undeniable concerns over uncertainties of the world economy including hike of raw material prices including crude oil price, and over the negative effects from natural disasters in various areas such as U.S.A. In these business environments, the whole Company and its Group will continue implementing the principles of management as an effort to accomplish the Midterm Management Plan, that is to say, 1) Creation of new product and new business; 2) Strengthening profitability of the existing business; 3) Aggressive penetration into overseas markets; 4) CSRconscious management; and 5) Reforming organizational climates. In addition, the Company decided the capital spending of which total amount will be 6.0 billion, and duration of three years, to boost the manufacturing capacity of precision reduction gears. With regard to the forecast for the full term of consolidated fiscal, the Company expects the consolidated operating results to be 149 billion for net sales, 13.8 billion for operating income, 13 billion for ordinary income, and 7.1 billion for net income. In addition, the Company also expects that ROA and ROE will be 5.2% and 12.6% respectively. CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited) For the six months ended and For the Year: Net sales Gross profit Operating profit Income before income taxes and minority interests Net income Overseas net sales Composition of overseas net sales (%) At Yearend: Total shareholders' equity Total assets Per Share Data: Net income Notes: 71,739 17,808 7,340 6,889 3,928 16, % 57, , ,538 15,735 5,242 5,475 3,461 16, % 50, , The computation of net income per share is based on the average number of shares outstanding during each period. The average number of shares for the sixmonth periods ended and, were 126,906,984 and 127,059,853, respectively. SEGMENT INFORMATION (Unaudited) For the six months ended and Net sales Precision Equipment Business Transport Equipment Business Aircraft and Oil Hydraulic Equipment Business Industrial Equipment Business Operating profit Precision Equipment Business Transport Equipment Business Aircraft and Oil Hydraulic Equipment Business Industrial Equipment Business 71,739 18,076 17,880 18,961 16,821 7,340 3,501 1, ,431 Yen 66,538 15,099 17,241 17,533 16,664 5,242 2, ,381 COMPOSITION OF NET SALES BY BUSINESS SEGMENT 23.5% 25.2% Precision Equipment Business Transport Equipment Business 18.0 billion yen 17.8 billion yen 26.4% 24.9% Aircraft and Oil Hydraulic Equipment Business 18.9 billion yen Industrial Equipment Business 16.8 billion yen Semiannual Report 2

4 CONSOLIDATED BALANCE SHEETS (Unaudited) As of and March 31, As of and March 31, ASSETS Current assets 79,607 March 31, 75,161 $719,644 LIABILITIES Current liabilities 55,092 March 31, 54,233 $498,029 Cash and time deposits 17,174 14, ,252 Notes and accounts payable trade 27,206 27, ,941 Trade notes and accounts receivable 43,116 43, ,767 Shortterm bank loans 9,138 8,948 82,607 Inventories 15,924 14, ,952 Current portion of longterm debt 5,573 5,662 50,380 Deferred tax assets 2,764 2,526 24,986 Income taxes payable 3,205 1,433 28,973 Other current assets Less allowance for doubtful receivables 1,016 ( 387 ) 1,482 ( 385 ) 9,185 ( 3,498 ) Accrued employees' bonuses Allowance for soil quality improvement loss 2,908 1,160 2,986 1,160 26,288 10,486 Other current liabilities 5,902 6,464 53,354 Investments and other assets 15,696 13, ,891 Investments in Longterm Liabilities 23,194 23, ,673 Unconsolidated subsidiary and affiliates 1,647 2,140 14,889 Longterm debt 9,939 10,428 89,848 Other, securities 12,026 9, ,715 Retirement benefits : Employees 12,330 12, ,463 Other assets Less allowance for doubtful receivables 2,288 ( 265 ) 2,413 ( 254 ) 20,683 ( 2,396 ) Retirement benefits : Management Other longterm liabilities ,419 6,943 Total liabilities 78,286 77, ,702 Property, plant and equipment, net of accumulated depreciation 41,871 41, ,512 MINORITY INTERESTS Land 14,469 14, ,799 Minority interests 3,517 3,372 31,794 Buildings and structures 14,971 15, ,337 Machinery and equipment 11,909 11, ,657 SHAREHOLDERS' EQUITY Construction in progress ,719 Common stock 10,000 10,000 90,400 Capital surplus 17,709 17, ,089 Other assets 2,075 2,875 18,758 Retained earnings 26,581 23, ,291 Deferred tax assets 378 1,083 3,417 Net unrealized holding gains on securities 4,302 2,881 38,889 Intangible assets 1,697 1,792 15,341 Foreign currency translation adjustments ( 924 ) ( 1,128 ) ( 8,353 ) Treasury stock, at cost ( 222 ) ( 163 ) ( 2,007 ) Total shareholders' equity 57,446 52, ,309 Total assets 139, ,602 $1,258,805 Total liabilities and shareholders' equity 139, ,602 $1,258,805 Semiannual Report 3

5 CONSOLIDATED STATEMENTS OF INCOME (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months period ended and Six months period ended and Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit 71,739 53,931 17,808 10,468 7,340 66,538 50,803 15,735 10,493 5,242 $648, , ,983 94,630 66,353 Operating activities: Income before income taxes and minority interests 6,889 Depreciation and amortization 2,168 (Reversal of) provision for allowance for doubtful receivables 9 (Reversal of) provision for retirement benefits 53 Interest and dividend income ( 93 ) 5,475 2,151 ( 41 ) ( 779 ) ( 64 ) $62,276 19, ( 841 ) Other income (expenses) Interest and dividend income 93 Interest expense ( 187 ) Equity in earnings (losses) of affiliates ( 357 ) Foreign exchange gain (loss), net 21 Gain on sales of property, plant and equipment 46 Loss on disposal of property, plant and equipment ( 134 ) Cancellation charges on early termination of facility leasing arrangements Others, net 67 Total ( 451 ) 64 ( 260 ) ( 89 ) ( 335 ) ( 1,690 ) ( 3,227 ) ( 1,211 ) 606 ( 4,077 ) Interest expense Foreign exchange gains Equity in (earnings) losses of affiliates Gain on sales of property, plant and equipment Loss on disposal of property, plant and equipment Cancellation charges on early termination of facility leasing arrangements Bonuses to directors Others, net Change in operating assets and liabilities: Trade notes and accounts receivable Inventories 187 ( 3 ) 357 ( 46 ) 134 ( 81 ) ( 1,472 ) 260 ( 0 ) ( 452 ) ( 158 ) ( 81 ) 16 ( 595 ) ( 2,197 ) 1,690 ( 27 ) 3,227 ( 415 ) 1,211 ( 732 ) 18 3,562 ( 13,307 ) Income before income taxes and minority interests Income taxes current Income taxes deferred Minority interests 6,889 3,233 ( 395 ) 123 5,475 1, ,276 29,226 ( 3,571 ) 1,112 Other assets Notes and accounts payable Consumption tax payable Other liabilities Subtotal Interest and dividends received 592 ( 689 ) ( 148 ) ( 329 ) 7, ( 86 ) 1,609 ( 21 ) 828 6, ,352 ( 6,229 ) ( 1,337 ) ( 2,974 ) 71,633 1,067 Net income 3,928 3,461 $35,509 Interest paid Income taxes paid ( 188 ) ( 1,398 ) ( 272 ) ( 1,738 ) ( 1,700 ) ( 12,638 ) Net cash provided by operating activities 6,456 4,530 58,362 Investing activities Purchases of property, plant and equipment ( 2,534 ) ( 1,857 ) ( 22,907 ) Proceeds from sales of property, plant and equipment 53 1, Purchases of investments in securities ( 302 ) ( 320 ) ( 2,730 ) Proceeds from sales of investments in securities 33 Others, net 68 ( 164 ) 615 Net cash used in investing activities ( 2,715 ) ( 997 ) ( 24,543 ) Financing activities Increase (decrease) in shortterm loans 119 ( 546 ) 1,075 Repayment of longterm loans ( 575 ) ( 1,771 ) ( 5,198 ) Purchases of treasury stock ( 59 ) ( 25 ) ( 533 ) Proceeds from sales of treasury stock 1 9 Cash dividends paid ( 486 ) ( 504 ) ( 4,393 ) Net cash used in financing activities ( 1,000 ) ( 2,846 ) ( 9,040 ) Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents 2, ,104 Cash and cash equivalents at beginning of period 14,035 14, ,876 Increase in cash and cash equivalents due to addition of a consolidated subsidiary Cash and cash equivalents at end of period 16,833 15,984 $152,170 Semiannual Report 4

6 CORPORATE DATA As of Company Name Established Head Office Nabtesco Corporation September 29, , Kaigan 1chome, Minatoku, Tokyo , Japan TEL FAX Capital Employees 10 billion yen Nonconsolidated basis Consolidated basis 2,049 persons 4,143 persons Stock Listing First Section, Tokyo Stock Exchange Board Members Web Site Chairman President & CEO Senior Managing Directors, Directors of the Board Managing Directors, Directors of the Board Directors of the Board Statutory Auditors External Statutory Auditors Makoto Okitsu Kazuyuki Matsumoto Shinichi Akiyama Hitoshi Tanaka Koshiro Yoshida Masami Okamoto Hiroshi Abe Hiroshi Sawa Shigeki Tsubouchi Osamu Takata Shigeaki Hagihara Kosuke Matsuda Kosuke Funai Tetsuya Ishimaru Koichi Shibayama