Nidec Corporation. Fiscal First-Half 2016 Financial Results. Six Months Ended September 30, 2016 <IFRS>

Transcription

1 TSE: 6594 OTC US: NJDCY Nidec Corporation Fiscal First-Half 216 Financial Results Six Months Ended September 3, 216 <IFRS> Ocber 25, 216 Disclaimer Regarding Forward-looking Statements These presentation materials and the related discussions contain forward-looking statements including expectations, estimates, projections, plans and strategies. Such forward-looking statements are based on management s targets, assumptions and beliefs in light of the information currently available. Certain risks, uncertainties and other facrs could cause actual results differ materially from those discussed in the forward-looking statements. Such risks and uncertainties include, but are not limited, changes in cusmer circumstances and demand, exchange rate fluctuations, and the Nidec Group s ability design, develop, mass produce and win acceptance of its products and acquire and successfully integrate companies with complementary technologies and product lines. Please see other disclosure documents filed or published by the Nidec Group companies, including the Japanese securities report, for additional information regarding such risks and uncertainties. Nidec undertakes no obligation update the forward-looking statements unless required by law. The first slide shows a picture of Nidec s Fluid Dynamic Bearing mors incorporated in Laser Position Sensor for VR (Virtual Reality) system. 2

2 Consolidated Profit/Loss (IFRS-based)* Millions of Yen, except for EPS, dividends and FX rate 1H/FY215 1H/FY216 Change FY216 Forecast Net sales 587, ,3-4.% 1,2, Operating profit 59,63 69, % 135, Operating profit ratio 1.1% 12.2% % Profit before income taxes 62,147 66, % 133, Profit attributable owners of the parent 46,857 5, % 1, EPS (Yen) % Dividends (Yen) FX rate (Yen/US$) Average: % 1. (Assumed for 3Q Term end: % onward) Note: Based on the current forecast of sales volume, every one yen appreciation or depreciation against the U.S. dollar and the euro for FY216 is estimated have an annualized impact of 7. billion yen and 1.1 billion yen on net sales, respectively, and 1.1 billion yen and.3 billion yen on operating profit, respectively. *From FY216 onward, our financial statements are prepared under International Financial Reporting Standards (IFRS). 3 Summary of 1H/FY216 Record-high first half operating profit, profit before income taxes and profit attributable owners of the parent Record-high quarterly operating gp profit,,profit before income taxes and profit attributable owners of the parent Continued improvement in operating profit ratio of Aumotive, Appliance, Commercial and Industrial Products, which are key drivers of the company s business portfolio transformation Upward revision FY 216 profit forecasts Dividend projections raised 4

3 1H/FY15 vs. 1H/FY16 (IFRS-based) <Net Sales> H/FY15 (Actual) Exchange rate Small precision mors <Operating Profit> products +3.9 Aumotive, Electronic appliance, Machinery and optical commercial components and industrial and others products H/FY16 (Actual) H/FY15 (Actual) Exchange rate Small precision mors Aumotive, appliance, commercial and industrial products Machinery Electronic and optical components and others Eliminations/ corporate 1H/FY16 (Actual) 5 1Q/FY16 vs. 2Q/FY16 (IFRS-based) <Net Sales> Q/FY16 (Actual) <Operating Profit> Exchange rate Small precision mors +6.8 Aumotive, appliance, commercial and industrial products Machinery +.7 Electronic and optical components and others -1. 2Q/FY16 (Actual) Q/FY16 (Actual) Exchange rate Small precision mors Aumotive, appliance, commercial and industrial products Machinery Electronic and optical components and others Eliminations/ corporate 2Q/FY16 (Actual) 6

4 Consolidated Quarterly Sales and Operating Profit (Sales in Billions of Yen) 4 Sales (LHS) Operating Profit (RHS) (Operating Profit in Billions of Yen) 4 All time quarterly high Lehman Crisis Japan Earthquake Thai Floods Structural Reform Record-high operating profit for two consecutive quarters despite drastic appreciation of yen 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY U.S. GAAP IFRS 7 HDD Market Short-Term Trend Previous FY216 Forecast (July 22, 216) HDD Shipments Nidec Mor Shipments (Millions of Units) 2Q/FY16 results Revised FY216 Forecast (Ocber 25, 216) surpassed 112 initial forecast Annual A lforecast revised upward <Previous FY216 Forecast (July 22, 216)> HDD shipments: 4 mil. units/year Nidec mor shipments: 34 mil. units/year FY16/1Q 2Q 3Q 4Q (Actual) (Forecast) FY16/1Q 2Q 3Q 4Q (Forecast) (Forecast) (Actual) (Actual) (Forecast) (Forecast) <Revised FY216 Forecast (Ocber 25, 216)> HDD shipments: 41 mil. units/year Nidec mor shipments: 353 mil. units/year Nidec estimates based on various sources. 8

5 Quarterly Results of Aumotive, Appliance, Commercial and Industrial Products 15 Key Growth Areas Appliance, Commercial and Industrial Aumotive Sales 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY12 FY13 FY14 FY15 FY16 U.S. GAAP 2Q Sales: billion yen Key Growth Areas on a stable growth trajecry Operating Profit 2Q operating profit: 15 Key Growth Areas 14.2 billion yen Appliance, Commercial and Industrial Aumotive (operating profit ratio: 11%) IFRS 15 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY12 FY13 FY14 FY15 FY16 U.S. GAAP IFRS 9 Cash Flow Operating CF Investment CF Free CF H/212 1H/213 1H/214 1H/215 1H/216 Continued improvements in CCC* creates healthy cash flow that underpins strategic growth U.S. GAAP IFRS *CCC: Cash Conversion Cycle 1

6 CAPEX, Depreciation, R&D (IFRS-based) CAPEX Depreciation R&D (Full-Year Forecast) (4Q) (Full-Year Forecast) 55. (Full-Year Forecast) 52. (3Q) (1H Actual) (1H Actual) 25.6 (1H Actual) FY15 FY16 FY15 FY16 FY15 FY16 Continuing aggressive investments that support organic growth 11 Revision FY216 Guidance (IFRS-based) Millions of Yen, except for percentages, EPS, dividends and FX rates <Previous Guidance (July 22, 216)> percentages, EPS, dividends 1H/216 Full-Year <Revised Guidance> 1H/216 Full-Year Results Net Sales 6, 1,25, 564,3 1,2, Operating Profit 63,5 13, 69,4 135, Operating Profit Ratio 1.6% 1.4% Profit before income taxes Profit attributable owners of the parent 12.2% 11.3% 63,5 13, 66, , 48, 98, EPS (Yen) Dividends (Yen) ,11 1, FX Rate (Yen/US$) FX Rate (Yen/ ) (Assumed for 2Q onward) (Assumed for (Average) 2Q onward) (Assumed for 3Q onward) 12

7 Mid-Term Strategic Goal Vision22 i This section includes forward-looking statements. See Disclaimer on Page Vision22: Mid-Term Strategic Goal Continuous pursuit of profit & strong growth 1. Target for consolidated net sales: 2 trillion yen (including sales attributable b new M&A of approx. 5 billion yen) 2. Sales target for aumotive: 7 billion 1 trillion yen 3. Target for consolidated operating profit ratio: 15% 4. Target for ROE: 18% (Assuming shareholders equity ratio of 6%) 5Fi 5. Five regional lhq management units 14

8 Continuing Growth Strategy with a Focus on Key Growth Areas FY21 Net sales: 676 billion yen FY215 Net sales: trillion yen FY22 Net sales: 2 trillion yen (target) (Sales: Billions of Yen) 7. Small precision mors Aumotive Appliance, commercial and industrial products Other product groups 1 T New M&A Key Growth Areas Key Growth Areas Key Growth Areas Key Growth Areas Speed Up Its Growth Small precision mors (Sales: Billions of Yen) 4 6 FY22 Net Sales: 2 trillion yen (Target) Aumotive Appliance, commercial and industrial products T 1 T New M&A Other product groups New M&A billion-yen organic sales growth coming in view for both Aumotive and Appliance, Commercial and Industrial Products Better visibility of achieving sales target of 2 trillion yen in FY22 Key Growth Areas Key Growth Areas 16

9 Organic Growth Outlook (Aumotive) (Operating Profit in (Sales in Billions of Yen) Billions of Yen) 1, New M&A (LHS) Operating Profit (RHS) 12 6 Other aumotive components (LHS) ECU & Sensor (LHS) Mor (LHS) Sales of 6 billion yen for FY2 in sight 5 6 Aumotive ti business expanding at a faster pace than originally expected FY14 FY15 FY16 FY17 FY18 FY19 FY2 (Forecast) (Target) (Target) (Target) (Target) 17 Organic Growth Outlook (Appliance, Commercial and Industrial) (Operating Profit in (Sales in Billions of Yen) Billions of Yen) Sales of 6 billion yen for FY2 in sight 6 12 Emerson Businesses Operating profit (RHS) Industrial (LHS) Commercial (LHS) Appliance (LHS) Mors, drives and electric power generation businesses be acquired from Emerson, which Nidec announced on August 2, 216. Appliance, Commercial and Industrial growing faster ahead of plan FY14 FY15 FY16 (Forecast) FY17 (Target) FY18 (Target) FY19 (Target) FY2 (Target) 18

10 Small Precision Mors: HDD Market Mid-Term Trend (Millions of Units) Server Application 6 PC External Consumer Electronics Data Center Enterprise 564 (Near Line Drive) CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY2 Nidec estimates based on various sources. Revised slightly upward from previous estimate (Millions of Units) <Previous> <Revised> CY CY CY CY CY Small Precision Mors: Opportunities in VR Related Businesses Winning 1% share in its first deal for FDB mors used in VR system (Lighthouse) opens the gateway No.1 status <Sales target (VR related businesses) (Total of mors and modularized products) <Gaming device> Lighthouse Lighthouse <Spreading in other usage> Head mounted display Lighthouse Also aiming expand in tactile devices and robotic businesses using VR related products as an entry point Service Controller Medical Gaming Entertainment device FY15 FY16 FY17 FY18 FY19 FY2 (Forecast) (Target) (Target) (Target) (Target) Today Future Industrial 2

11 Small Precision Mors: Tactile Devices Team Tactile poised build up strong, cross-application product lineup by binding the group s technologies (gram) 4 Weight of vibration 3 2 <Nidec s product line> Delicate uch Smartphones, tablets and wearable devices Touch panel for aumotive Stronger feedback Control panels of home appliances and others <Main applications> PCs and tablets Smartphones Wearable devices object 1 Controller for VR and gaming devices Thickness of load space for tactile device (millimeter) Interface for home appliances VR and gaming devices Aumotive 21 Aumotive: EPS* Mor Uptrend of EPS* picks up as aunomous vehicles grow in use and popularity Power packs and redundant type mors in our new innovative product lineup helps us achieve stronger position in the market (Million of Units) rd generation mor <Shipment target (EPS* mor)> 4 th generation mor Power pack Smaller and lighter compared rivals Price competitive brushless mor Cheaper than or equally priced brushed mor Mor and ECU in same space of brushed mor Mor and ECU FY13 FY14 FY15 FY16 FY18 FY2 *EPS: Electric Power Steering As ISO gains wider acceptance and aunomous technology takes hold, cars equipped with the redundant system is likely grow in numbers. Redundant System is a fail-safe system designed ensure correct vehicle functionality by switching control the secondary unit in the event that part of the primary control system fails respond. Conventional products One drive system and one coiling system New innovative products are expected be launched Redundant type products Two drive systems and two coiling systems Global market share: 駆動回路モータ第 1 駆動回路モータ第駆動回路 over 5% Drive circuit Mor 1 st drive circuit Mor 2 nd drive circuit (Target) In case of malfunction In case of malfunction Two new When circuit shuts down One of the circuits is shut major Tier When a coil is cut down, and the other circuit 1 cusmers supports Double coiling structure No power assist Assist continues (Forecast) (Target) (Target) 22

12 Aumotive: Mors for Next-Generation Braking Systems Successful migration of Nidec s market-leading EPS mor technology next-gen braking system Aiming for 6% global share / 18 million annual production in FY22 <Shipment target (Next-generation system mor)> (Million of Units) 2 15 Using the mor as core components, next-generation braking system enables high redundancy, quick response, lightness, and compactness. (New integrated braking system realized by electrification) Drive for brushless mors accelerated Innovative products be launched here 1 EPS mor Next-generation braking system mor 5 FY15 FY16 FY17 FY18 FY19 FY2 (Forecast) (Target) (Target) (Target) (Target) Power: approx.1w Torque: 4-8 Nm Diameter: φ85mm Almost identical specifications as left 23 Aumotive: Powertrain System Identifying powertrain components as a strategic area Short term target: electric actuars / Mid-term target: traction mors <Global green vehicle production (EV/PHV/HV/FCVs)> (Million of Cars) Strategy for traction mor market penetration Step 1 Step 2 Step 3 Target: OEMs in emerging countries Target: MegaTier1 Target: OEMs Mor only or Mor only or Mor drive with inverter with inverter unit & inverter Traction (rear) Transfer case (electric actuar) 5 CY15 CY16 CY17 CY18 CY19 CY2 CY21 CY22 CY23 Differential Transmission (electric actuar) (electric actuar) Traction (front) Nidec estimates based on various sources. 24

13 Appliance, Commercial and Industrial (ACI): Appliance Strategy Evolving from a mor-alone supplier a module provider Aiming for significant growth in air conditioners, freezer refrigerars, washers, etc. <Global market size for Nidec s products (TAM*)> <FY215> <Mor-alone market > <Module market> 1. Air conditioner Unit: 13 million Fan DC ratio: 25% Inverter ratio: 45% Fan mor 24 billion yen Fan blade Compressor Fan mor Heat exchanger, etc. Control 2 trillion yen 2. Refrigerar Unit: 13 million Inverter ratio 15% Compressor mor 1 billion yen Compressor Compressor mor Control 1.5 trillion yen 3. Washer Unit: 11 million Mor DC ratio: 15% Drive mor 16 billion yen Gear unit Drive mor Control.5 trillion yen *TAM: Total Addressable Market Global market 5 billion yen 4 trillion yen Nidec estimates based on various sources. 25 ACI: Acquisition of Emerson s Mors & Drives and Electric Power Generation Businesses <Transaction profile> Businesses be acquired Major acquirees and locations Business description Largest acquisition in the hisry of Nidec / Aiming aggressively expand the businesses identified as one of the key growth areas in Vision22 Mors, drives and electric power generation businesses of Emerson Electric Co. Leroy-Somer Holding (France) Control Techniques Limited (UK) Emerson Industrial Aumation USA LLC (USA) Ka Engineering Inc. (USA) Leroy Somer Electro-Technique (Fuzhou) Co., Ltd. (China) Emerson Industrial Aumation Electric Power Generation Private Ltd. (India) Development, manufacture and sale of mors, drives and alternars Employees 9,73 (as of Ocber 1, 215) Purchase price Financial results Schedule US$1,2 million in cash Fiscal year Sep. 213 Sep. 214 Sep. 215 Sales $1,984 million $1,989 million $1,674 million EBITDA $273 million $26 million $175 million Signing: August 2, 216 (completed) Closing: expected in Q3/FY216 <Major products and cusmers> Leroy-Somer (Alternars) Leroy-Somer (Mors and drives) Control Techniques Industrial range (low/medium voltage) Cusmized range (low/high h voltage) Induction mors, gears DC mors Permanent magnet mors Servo mors, rque mors, gears, drives Industrial drives AC drives DC drives Servo drives AC mor control 26

14 ACI: Acquisition of Emerson s Mors & Drives and Electric Power Generation Businesses PMI* and future strategy <FY216> Completion of PMI* <FY22> Phase 1 Phase 2 Phase 3 OPM 1% (target) 1. Full lineup in industrial products and geographical fit Cross-selling opportunities (IEC**/NEMA***-compliant mors) Gaining i strong brand and product lineup from low- and medium-voltage (below 1 megawatts) OPM 15% (target) 2. Enhancement of solution sales capabilities by combining acquired drives with Nidec s mors *PMI: Post Merger Integration **IEC: International Electrotechnical Commission ***NEMA: National Electrical Manufacturers Association Building extensive lineup from existing medium-voltage drives acquired low-voltage drives Nidec mors combined with newly acquired drive products expand Nidec s addressable market, from FA and mor controls HVAC and pumps 3. Full-fledged penetration in the robotics market, etc. through full lineup in servo mors and gears Aiming develop new businesses for newly acquired cusmer base synergized with Nidec s technologies in service robots and FA 27 ACI: Large Project Nidec ASI wins its first order in Japan / An increase in opportunities use renewable energy sources leads accelerated investment in energy srage system for stable power supply Container The first order for power conversion at 6 megawatts and energy srage system has come in from Advantec Co., Ltd., a solar power generation system installer and provider. Nidec ASI is shipping the system for use in a solar power plant in Japan Advatec in April 217, which is expected operate in Ocber 217. Full view of phovoltaic (PV) power plant including energy srage system 28

15 IoT: IoT in Facries / Nidec s Strategy for Smart Facries Turning Nidec s own facries in smart facries as the first step ward IoT related business Higher productivity, better quality and practicing fundamental reforms in cost structures already contributing higher profitability Group-wide adoption of IoT-driven manufacturing aumation brings revolutionary changes productivity, quality and costs. <Examples> Trend moniring and warning detection efforts in the welding process -Nidec Aumobile Mor (Zhejiang) Corporation Visualizing the operating status of machines -Nidec Copal Corporation (Niigata Facry) IoT in aluminum die-casting process -Nidec Component Technology Co., Ltd. Remote moniring system using wireless technology in press machines -Nidec India Private Limited (Neemrana Facry) The introduction of traceability system by wireless infrastructure -Nidec Shibaura (Zhejiang) Co., Ltd. IoT-connected smart facries with integrated MES* maximizes investment efficiency *MES: Manufacturing Execution System 29 Nidec IR Contacts Japan Tel: ir@nidec.com U.K. Tel: iwai.yuji@nidec.com U.S. Tel: nagase.kiyoshi@nidec.com *Note: Pursuant IFRS 3 Business Combinations, during the three months ended September 3, 216, Nidec Corporation completed its valuation of the assets acquired and the liabilities assumed upon the acquisition of KB Electronics, Inc. merged in Nidec Mor Corporation in March 216. Consolidated financial statements for the previous fiscal year have been retrospectively adjusted reflect Nidec s valuation of the fair values of the assets and liabilities of KB Electronics, Inc. Nidec logo is a registered trademark or a trademark of Nidec Corporation in Japan, the United States and/or certain other countries. All for dreams logo is a registered trademark of Nidec Corporation in Japan, and a trademark in the United States and/or certain other countries. 3

16 Appendix Performance Trends & Product Group Overview 31 Sales by Product Group (Apr-Sep FY216) (IFRS-based) Electronic & Optical Components Others Parenthetic percentages represent FY215 mix.3% (.3%) Services, music box products Camera shutters, switches, trimmer potentiometers, processing, precision plastic mold products 5.5% (5.5%) Small Precision Mors Machinery 9.6% (9.3%) HDD Mors 16.% (18.2%) 37.5% (37.9%) Industrial robots, circuit board testers, high-speed pressing machines, chip mounters, measuring equipment, power transmission equipment, facry aumation system, card readers Aumotive, Appliance, Commercial and Industrial Products 47.1% (47.%) Appliance Commercial Industrial 25.1% (23.8%) 21.5% Other Small Mors 564. B (19.7%) Optical disk drive mors, OA equipment mors, polygon scanners mors, MPU cooling fans, game machine fans, Au PC/communications equipment 22.% fans, home appliance fans, (23.2%) aumobile fans, vibration mors, brushed mors, stepping mors, actuar units 32

17 Financial Highlights (IFRS-based) <Consolidated d Net Sales & Operating Profit> <Consolidated Profit Before Tax & Profit> Net Sales Operating Profit Operating Profit Ratio (%) % % % % % % Profit Before Income Taxes Profit attributable owners of the parent Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q 1Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q 33 <Dividends and EPS> (Yen/share) Year-end Interim Consolidated EPS (Target) (Target) <Consolidated Cash Flow> Operating Activities Investment Activities Free Cash Flow FY15 FY16 *Please refer Note on Page 3 for details. 1Q/FY16 2Q/FY16 33 Product Group Overview (IFRS-based) <Small llprecision i Mors> <Aumotive, Appliance, Commercial &Industrial lproducts> Sales Operating Profit Sales Operating Profit Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q 1Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q <Machinery > <Electronic and Optical Components> Sales Operating Profit Sales Operating Profit Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q *Please refer Note on Page 3 for details. 1Q/FY15 2Q 3Q 4Q 1Q/FY16 2Q 34

18 Vision 22: Targets for Net Sales and Operating Profit Ratio Aiming for both sales growth (organic + M&A) and profitability enhancement (Net Sales in 15% (Operating Profit Trillions of Yen) Rti Ratio, %) % 13.7% 1.7% 1.8% 1.% 9.7% Net Sales Net Sales 1.18T Net Sales 1.3T 79.3B Net Sales Net Sales 875.1B Net Sales 676.B Net Sales 682.3B 571.6B 2.5% 11.3% Net Sales 1.2T Net Sales 2T New M&A 1 5 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY2 (Forecast) (Target) U.S. GAAP IFRS *Please refer Note on Page 3 for details. 35 Vision 22: Pursuing Both Strong Growth with Profit and Financial Soundness Targeting operating profit ratio of 15% and ROE of 18% while sustaining i and improving i financial i soundness Shareholders Equity (LHS) ROE (RHS) (%) Shareholders Equity Ratio (RHS) Operating Profit Ratio (RHS) 1,5 65% 55.4% 6% The three elements for 54.9% ROE improvement 1,2 55% Net profit on sales 49.1% Total asset turnover 47.5% 46.2% 5% Financial leverage 44.4% 42.3% % 45% Shareholders Equity Ratio % 6 ROE 3 Operating Profit Ratio 16.3% 18% 15.% % 11.2% % 12.% 11.9% 15% 9.2% 15% 13.9% 13.7% 1% % 1.8% 8.9% 2.5% 9.7% 1.% % 2.% % FY8 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY2 (Target) U.S. GAAP IFRS *Please refer Note on Page 3 for details. 36