FY2014 1Q Financial Results and FY2014 Forecasts

Transcription

1 FY2014 1Q Financial Results and FY2014 Forecasts DISCO CORPORATION DISCLAIMER Statements in this PowerPoint with respect to DISCO's current strategies, plans, estimates, and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of DISCO. These statements are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them. DISCO cautions you that a number of important factors could cause actual results to differ materially from those discussed in the forward-looking statements, and you should not make decision on your investment thoroughly based on these statements. Such factors include, but not limited to, (i) general economic conditions and levels of demand in DISCO's markets; (ii) developments in technology and resulting changes in semiconductor and/or electronic component manufacturing process; (iii) levels of capital investment for manufacturing semiconductors and/or electronic components; (iv) expansions of the area for products and technologies using semiconductors and/or electronic components and its expanding speed; (v) DISCO's ability to continue to offer products and services corresponding to developments of new semiconductors and/or electronic components and new technologies for manufacturing them; (vi) exchange rates, particularly between the yen, the U.S. dollar, and the euro, and other currencies.

2 FY2014 1Q Earnings Results 2 FY2014 FY2013 QoQ FY2013 YoY Millions of Yen 1Q Amount (%) 1Q Amount (%) Net Sales 31,081 27,111 3, % 27,405 3, % Gross Profit 15,337 14,106 1, % 13,836 1, % Gross Profit Margin 49.3% 52.0% -2.7p % -1.2p - SG&A 9,735 9, % 8, % Operating Income 5,601 4,217 1, % 4, % Ordinary Income 5,774 4,530 1, % 4, % Ordinary Income Margin 18.6% 16.7% 1.9p % 1.0p - Income before income taxes and minority interests 5,788 4,503 1, % 4, % Net Income 4,052 3, % 3, % Sales in the first quarter of FY14 marked all-time high record for a quarter (Second highest: FY10 : 29,300 million) The negative impact on the GP ratio both YoY and QoQ was due to price pressure and cost increases caused by the disposal of in-process inventory. SG&A greatly increased YoY due to the increase of labor costs and active R&D activities. Although the GP ratio declined due to the reasons stated above, the QoQ net income marked a record high due to a decrease in tax liability. (Second highest: FY00 : 3.9 billion)

3 Quarterly Consolidated Financial Results million yen (Oku yen) Net Sales Operating Income Ordinary Income Margin 50% 40% % % % 100 0% 50-10% 0-20% % % FY2005 1Q FY2006 1Q FY2007 1Q FY2008 1Q FY2009 1Q FY2010 1Q FY2011 1Q FY2012 1Q FY2013 1Q FY2014 1Q Sales in FY14 1Q reached a very high level, exceeding 30,000 million. However, the ordinary income margin did not reach the 20% level seen prior to the sub-prime mortgage crisis (FY05 - FY07) although it continued to show a pattern of improvement.

4 Quarterly Sales/Orders million yen (Oku yen) Order Backlog Net Sales Order FY2000 1Q FY2001 1Q FY2002 1Q FY2003 1Q FY2004 1Q FY2005 1Q FY2006 1Q FY2007 1Q FY2008 1Q FY2009 1Q FY2010 1Q FY2011 1Q FY2012 1Q FY2013 1Q FY2014 1Q FY Q saw a resurgence in capital investment by OSATs in the Asia region. This lead to the amount of orders greatly exceeding the amount of sales. The order backlog is 12,200 million as of the end of June.

5 Consolidated Quarterly Sales Breakdown by Product million yen (Oku yen) Precision Parts (Tecnisco) Industrial Products Others 150 Maintenance Parts 100 Consumables 50 Precision Processing Equipment 0 FY10 1Q FY11 1Q FY12 1Q FY13 1Q FY14 1Q The sales composition ratio for precision equipment was 57%, which is a 7% increase QoQ due to increasing demand in capital investment for semiconductor and electronic components used in mobile devices such as smartphones.

6 Product and Equipment Sales Breakdown 6

7 Equipment, Non-consolidated Cutting and Dicing Saws* Sales Breakdown by Application *Cutting and dicing saws include blade dicers and laser saws 7 Nonsemiconductors 14% 6% 23% 11% Other semiconductors Optical Semiconductors Package 45% IC FY10_1Q FY11_1Q FY12_1Q FY13_1Q FY14_1Q Overall sales of dicers were at a high level approaching the previous quarterly peak (FY10 ) due to firm sales of both blade dicers and laser saws. Memory and logic markets, which are the primary markets for ICs and packages showed strong performance. In addition, sales for optical semiconductor devices showed a large increase in sales.

8 Equipment, Non-consolidated Grinders and Polishers* Sales Breakdown by Application 8 *Grinders and polishers also include surface planers and grinder/polishers Nonsemiconductors Wafer manufacturing 14% 0% 16% 5% 64% Other semiconductors Optical Semiconductors IC Semiconductor FY10_1Q FY11_1Q FY12_1Q FY13_1Q FY14_1Q * Starting from FY14 1Q, the sales categories have been amended as follows: Semiconductors: IC + optical semiconductors + other semiconductors Electronic components: Non-semiconductors Shipments of ICs for mobile devices including NAND memory maintained a healthy level. In other semiconductor markets, sales of discrete devices showed a firm sales transition. Sales trends of non-semiconductors (electronic components) remained firm and the sales makeup is mostly unchanged from the previous quarter

9 Consolidated Consumables* Sales *Consumables include dicing blades, grinding wheels, and dry polishing wheels, etc. 9 FY10_1Q FY11_1Q FY12_1Q FY13_1Q FY14_1Q Corresponding to the high capacity utilization at semiconductor manufacturers, the level of consumable shipments in FY14 1Q showed strong growth and an 8% increase YoY.

10 Sales Breakdown by Region 100% million yen (Oku yen) % 500 1Q 10 60% Japan 400 North America % Europe % 0% FY13_1Q FY14_1Q Asia FY13 FY14 FY13 FY14 FY13 FY14 FY13 FY14 Asia Japan Europe North America Sales in China showed a YoY 20% increase, contributing to over 70% of total sales. Although shipments for Europe fell sharply in this quarter, domestic sales recovered due to the increasing demand for electronic components, marking a 20% YoY sales increase.

11 Balance Sheet (Summary) 11 FY2014 FY2013 Millions of Yen 1Q Amount Cash and deposits 34,964 31,577 3,387 Notes and account receivable 35,406 32,390 3,016 Inventories 27,710 26, Total current assets 102,814 96,809 6,005 Property, plant and equipment 63,115 63, Total noncurrent assets 73,129 73, Total assets 175, ,161 5,785 Current liabilities 38,985 35,235 3,749 Noncurrent liabilities 10,119 11,469-1,349 Total liabilities 49,104 46,704 2,400 Total net assets 126, ,456 3,385 Total liabilities and net assets 175, ,161 5,785 Equity Ratio 70.9% 71.4% -0.5p [Comparison with the end of March 2014] Assets: Total assets increased by 5,800 million due to an increase of cash equivalents and accounts receivable. Liabilities: Total liabilities increased by 2,400 million due to an increase of accounts payable. Total assets: Shareholders equity ratio decreased by 0.5 points to 70.9%.

12 Cash Flow (Summary) FY2014 FY2013 Millions of Yen 1Q 1Q Amount Net cash provided by (used in) operating activities 5,679 3,298 2,381 Income before income taxes and minority interests 5,788 4, Depreciation and amortization 1,399 1, Decrease (increase) in notes and accounts receivable- Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade -2,942-4,977 2,035-1, ,395 5,408 2,717 2,691 Income taxes (paid) refund -2,903-1, Net cash provided by (used in) investing activities Purchase of property, plant and equipment -1,200-1, , Free cash flow 4,479 1,476 3,003 Net cash provided by (used in) financing activities -1, Cash dividends paid -1, Net change in of cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 3,387 1,226 2,161 21,552 21, ,939 22,771 2,168 Cash flows from operating activities: Increased by 5,700 million. Income before income tax increased compared to the first quarter of FY13. Although there was a net cash decrease due to an increase of account receivables and inventory assets, cash flow largely increased due to an increase in account payables. Cash flows from investment activities Decreased by 1,200 million. Net cash is expended mainly for the acquisition of tangible fixed assets. Cash flows from financing activities Decreased by 1,400 million. This consisted mainly of the payments of dividends For free cash flow, there was a net inflow of about 4,400 million. The balance of cash and cash equivalents as of June 30th, 2014 was 24,900 million. 12

13 FY2014 Full-Year Earning Forecast 13 Earning Forecast 100 million yen (Oku yen) 1H 2H Full Year Reference Previous forecast (Full Year) Amount Net Sales ,139 1, Operating Income Ordinary Income Net Income Operating Income Margin 19.0% 14.0% 16.8% 17.5% Ordinary Income Margin 19.9% 14.4% 17.5% 17.7% Net Income Margin 13.6% 10.5% 12.2% 12.6% Expected exchange rates are unchanged : US$1 / 100, 1Euro / 135 Effect per 1 fluctuation in exchange rates (consolidated, whole year) US$: about 400 million, Euro: about 20 million

14 FY2014 Full-Year Sales Forecast 14 Year on year increases (decreases) in FY2013 results Year on year increases (decreases) in FY2014 previous forecasts Year on year increases (decreases) in FY2014 forecasts Total +12% +3% +8% Systems +3% Approx.+10% Approx.+30% Dicers Approx.-5% Approx.+20% Approx.+40% Laser Approx.±0% Approx.+50% Approx.+40% Non-laser Approx.-10% Approx.+10% Approx.+40% Grinders Approx.+30% Approx.-5% Approx.-5% DGP ( for thin wafers ) Approx.+20% Approx.-20% Approx.-10% Normal Grinders Approx.+60% Approx.+20% +10% Precision blades and wheels +18% Approx.+10% Approx.+10% Other products, subsidiaries +25% Decrease Decrease

15 Consolidated R&D/CAPEX Forecast million yen (Oku yen) CAPEX Depreciation R&D Expenses FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FCT R&D and capital spending are unchanged since the forecast released in May. R&D expenses remain at a high level (unchanged from approximately 10,000 million) Depreciation expenses are expected to be less than 6,500 million.

16 Dividend Policy and Dividend Payment Dividend Policy (Yen) Intermediate dividend Year-end dividend Annual dividend Previous forecast FY2014 (Reference) FY2013 Forecast Δ Actual Decisions concerning the distribution of surpluses are made by the general meeting of shareholders, in the case of the final dividend, and by the Board of Directors, in the case of the interim dividend. 1.Adopting a performance linked dividend policy and aiming at giving clearer priority to shareholder returns, our target dividend payout ratio is 25% of the consolidated half-yearly net income. There will be interim and final dividends, each of which will be equivalent to 25% of the half-yearly consolidated net income. 2.Irrespective of the level of income, we will maintain a reliable dividend of 10 per half-year. This means that the minimum yearly dividend will be Except when there is a loss, if the year-end balance of cash and deposits after payment of dividends and income taxes is greater than projected funding requirements for the acquisition of technology resources, such as through patent purchases and investment in venture businesses, facility expansion, the retirement of interest-bearing debt and other purposes, one-third of that surplus will be added to dividends. [Remarks] The 20 payout stipulated in our stable dividend policy may be reviewed if there are consolidated net losses in three consecutive years. 16

17 17