Financial Results For FY2014 (Ending December 31, 2014)

Transcription

1 Financial Results For FY2014 (Ending December 31, 2014) Investor Meeting February 9, 2015 Copyright 2015 Nippon Electric Glass Co., Ltd. 1

2 Financial Results For FY2014 Copyright 2015 Nippon Electric Glass Co., Ltd. 2

3 Change of fiscal year end Fiscal 2014 (year ending December 31, 2014) is a transitional period due to the change of the fiscal year end. In this document, year on year changes of consolidated operating results are not presented. FY2013 (Ended Mar, 2014) Domestic Companies *1 Jan Mar 2013 Apr Jun Q Jul Sep Q Oct Dec Q Jan Mar Q Overseas Companies *2 1Q 2Q 3Q 4Q Fy2014 (Ending Dec, 2014) Domestic Companies Jan Mar 2014 Apr Jun 2014 Jul Sep 2014 Oct Dec 2014 Overseas Companies 1Q 1Q 2Q 3Q 1Q 2Q Profit and loss for the Overseas Companies in the three months from January 1, 2014 to March 31, 2014 are directly add or deducted in retained earnings under shareholders equity on the consolidated balance sheet. 3Q FY2015 (Ending Dec, 2015) Jan Mar 2015 Apr Jun 2015 Jul Sep 2015 Oct Dec 2015 Domestic Companies 1Q 2Q 3Q 4Q Overseas Companies 1Q 2Q 3Q 4Q *1 Nippon Electric Glass ( Company ) and domestic consolidated subsidiaries of the Company *2 Overseas consolidated subsidiaries of the Company Copyright 2015 Nippon Electric Glass Co., Ltd. 3

4 Summary of Financial Results Economy trend (Global) Europe: Modest recovery, but there were geopolitical risks and effects of the low price of crude oil U.S.: Recovered by strong employment and personal consumption China: The speed of growth slowed down (Japan) Modest recovery was partially offset by a backlash from last minute demand before the rise in the consumption taxes. Business performance Net sales: The forecasted results announced on Oct. 31 were achieved. WeaksalesofLCDsandcoverglasseswereoffsetbysalesofglassfibers and optical products, etc. Profit: Forecasted operating income was not achieved due to price declines and increased costs, including hikes in raw materials and fuel costs, start up of new facilities, and development costs. Copyright 2015 Nippon Electric Glass Co., Ltd. 4

5 Summary of Financial Results 3Q accum (9 months) FY2013 Full year (12 months) FY2014 Full year (9 months) Net sales Operating income (Operating margin) 16.1 (8%) 16.1 (6%) (Billions of yen) 5.2 (3%) Ordinary income Extraordinary income/loss Income before income tax Net income Net income per share (Yen) Net assets Equity ratio 71.1% 71.2% 70.2% Dividend per share (Yen) Copyright 2015 Nippon Electric Glass Co., Ltd. 5

6 Quarterly Trends (Billions of yen) 90.0 Net sales Operating income Operating margin 30% % % 9% 5% 4% % 2% 2% Q 2Q 3Q 4Q 1Q 2Q 3Q 10% 0% FY2013 FY2014 Copyright 2015 Nippon Electric Glass Co., Ltd. 6

7 Information by Business & Region (Billions of yen) FY2013 FY2014 Glass Business Glass for electronic and information devices 3Q accum (9 months) Full year (12 months) Full year (9 months) Glass for others Trend of sales by business For electronic & information For others 100% Total FY2013 FY2014 (9 months) 50% Progress of change in Business structure Others 10% Japan 22% Asia 68% Others 11% Japan 21% Asia 68% % 11/3 12/3 13/3 14/3 14/12 Copyright 2015 Nippon Electric Glass Co., Ltd. 7

8 Information by Business (1) Glass for LCDs: 3Q Volume: Remained flat from 2Q Price: Declined by a low single digit % from 2Q Full year of 2014(from Jan to Dec) Volume: Increased by a little under 10% from the previous year Price: Decreased by a little under 10% from the previous year Cover glass for mobile devices <Dinorex >: (Specialty glass for chemical strengthening) Demand for high end models decreased (significant decrease in 2Q while demand was strong in 1Q). 3Q Volume: Slightly increased from 2Q Price: Stable Increase in the number of models adopted (Oct, 2014) 14 brands/65 models (Jan, 2015) 15 brands/89 models Copyright 2015 Nippon Electric Glass Co., Ltd. 8

9 Information by Business (2) Glass for optical and electronic devices: For image sensors: Weak sales due to weak sales in the digital camera market For optical devices: Strong sales due to increased demand in telecommunications infrastructure For others: Steady sales Glass for solar cells: Strong sales supported by continued high operating ratios of customer Glass fibers: Net sales: Achieved 50 billion yen on a 12 month converted basis Operating margin: 10% For high function plastics: Strong sales supported by expansion of the automobile market For reinforced cement: Increased orders mainly in overseas markets Copyright 2015 Nippon Electric Glass Co., Ltd. 9

10 Information by Business (3) Glass for medical use and building materials, heat resistant glass: Glass tubes for pharmaceutical: Steady sales mainly in overseas markets Building materials: Increased sales mainly for overseas structures Heat resistant: Sales recovered, supported by the economic recovery Copyright 2015 Nippon Electric Glass Co., Ltd. 10

11 Consolidated Balance Sheets Mar 31, 2014 Dec 31, 2014 Change Current assets Cash and deposits Notes and accounts receivable trade Inventories (1.2) Others (1.5) Non current assets Property, plant and equipment Intangible assets Investments and other assets Total assets Current assets (+) Cash and deposits: Issue of new straight bond (+) Notes and accounts receivables trade: Sales recovery Non current assets (+) Property, plant and equipment: Acquisition of assets of Electric Glass (Korea) (+) Investments and other assets: Recovery in the stock market Mar 31, 2014 Dec 31, 2014 (Billions of yen) Change Liabilities Notes and accounts payable trade Interest bearing debts Accrued income taxes (0.5) Reserve for special repairs (3.0) Others Net assets Shareholders equity Accumulated other comprehensive income Minority interests Total liabilities and net assets Liabilities (+) Interest bearing debts: ( ) Redemption of straight bond (+) issue of new straight bond ( ) Reserve for special repairs: Withdrawal accompanying a suspension of production facilities Net assets (+) Shareholders equity: (+) Retained earning, ( ) Dividend (+) Accumulated other comprehensive income: (+) Recovery in the stock market, (+) Increase in foreign currency translation adjustment Copyright 2015 Nippon Electric Glass Co., Ltd. 11

12 Consolidated Statements of Cash Flows FY2013 FY2014 Cash flows from operating activities Income before income taxes and minority interests Depreciation Increase (decrease) in provision for special repairs 0.9 (3.0) Decrease (increase) in notes and accounts receivabletrade Decrease (increase) in inventories (1.6) (0.4) Increase (decrease) in notes and accounts payable trade (8.9) 2.4 Other, net (0.9) 2.0 Cash flows from investing activities (33.8) (29.2) Purchase of non current assets (45.3) (25.6) Other, net 11.5 (3.6) Cash flows from financing activities (11.1) 1.6 Net increase (decrease) in interest bearing debts (3.1) 9.4 Cash dividends paid (7.9) (7.9) Other, net (0) 0.2 Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Decrease in cash and cash equivalents due to changes in accounting period (*) (6.3) Cash and cash equivalents at end of period (Billions of yen) <From operating activities> Income: Low profit at 9 month closing Depreciation: High level due to recent investments in facilities Notes and accounts payable trade: The 2 nd phase of operation of Electric Glass (Korea) <From investing activities> Non current assets: Purchase of equipment of Electric Glass (Korea) <From financing activities> Interest bearing debts: Redemption of straight bond, issue of new straight bond * Decrease in cash and cash equivalents during three months (from Jan to Mar, 2014) in foreign subsidiaries. Copyright 2015 Nippon Electric Glass Co., Ltd. 12

13 CAPEX / Depreciation CAPEX Extending LCD glass business overseas and other(including capital investments in overseas subsidiaries in January to March) FY2013: 45.2 billion yen (Billions of yen) CAPEX 35.8 Depreciation 45.2 * 28.4 Depreciation Increase from 1Q to 3Q FY2014: 28.4 billion yen (9 months) /3 14/12 (9 months) *including capital investments in overseas subsidiaries in January to March Copyright 2015 Nippon Electric Glass Co., Ltd. 13

14 Forecasts of FY2015 Copyright 2015 Nippon Electric Glass Co., Ltd. 14

15 Consolidated earnings forecasts (1) FY2015 (Billions of yen) Sales Operating Income Ordinary Income Net Income 1Q 60.0~ ~2.0 0~2.0 0~1.0 Full year 257.0~ ~ ~ ~10.0 (Outlook) Summary Raw materials and fuels Foreign exchange rate Europe: The modest recovery will continue with some remaining uncertainties. U.S.: The economic recovery will continue. China: There are concerns of a downturn due to the slowdown of economic growth. Japan: Modest recovery Despite concerns that procurement cost may rise due to yen depreciation, costs are expected to drop in and after 2Q due to decreased crude oil price. Assumption: 1USD=113JPY, 1EUR=140JPY Copyright 2015 Nippon Electric Glass Co., Ltd. 15

16 Consolidated earnings forecasts (2) (Outlook) For display Cover glass <Dinorex > For optical and electronic devices For solar cells Glass fibers Glass tubes, building materials and heat resistant LCD 1Q Volume: Expected to decrease from 3Q slightly Price: Expected to decline by a low single digit % from 3Q We estimate our glass shipments in 2015 will grow by about the same percentage* as in the market. (* a mid single digit % to a high single digit %) Sales will increase, supported by expansion of adopted models and sales channels. Optical devices: Strong sales will continue. Others: Sales will recover in the spring. Stable shipments will continue. Sales will be strong mainly for products for automotive parts. Production volume will increase by the addition of a new facility (will start operation in April 2015). Sales promotion will be actively expanded in overseas markets. Copyright 2015 Nippon Electric Glass Co., Ltd. 16

17 CAPEX / Depreciation CAPEX Increase the production capacity of the glass fiber business (Malaysia), expand the LCD glass business to overseas (Xiamen, China), R&D About 50.0 billion yen Depreciation About 40.0 billion yen (as expected) (Billions of yen) CAPEX Depreciation /3 11/3 12/3 13/3 14/3 14/12 15/12F (9 months) *FY2014: including capital investments in overseas subsidiaries in January to March Copyright 2015 Nippon Electric Glass Co., Ltd. 17

18 Interest bearing debts / Equity ratio / Free cash flow Interest bearing debts (Billions of yen) Equity ratio billion yen (+9.6 billion yen vs. Mar 31, 2014) 70% ( 1 point vs. Mar 31, 2014) 超薄板ガラスロール Interest bearing debts Ratio of interest bearing debts to consolidated net sales * Equity ratio カバーガラス <CX-01> 曲げ加工品 蛍光体ガラス (%) (Billions of yen) (Billions of yen) Trend of cash flows (96.8) (79.8) From operating From investing /3 12/3 13/3 14/3 14/12 (46.5) (33.8) (29.2) Trend of free cash flows (9months) 0.0 高輝度照明用蛍光体ガラス * Consolidated interest bearing debts/consolidated net sales (9 months) /3 12/3 13/3 14/3 14/12 Copyright 2015 Nippon Electric Glass Co., Ltd. 18

19 Cash Dividend Profit allocation policy FY2015 (Forecast) Long term and stable return Internal reserves (R&D for sustainable growth, funds for financial strength) Interim: 8 per share Year end: 8 per share (Annual dividends: 16 per share) (Billions of yen) Total amount Dividend per share The same ( 16) as FY2013 on a 12 months basis (yen) /3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 14/12 15/12F * Amounts of dividends per share are retroactively adjusted for stock splits. (9 months) 0 Copyright 2015 Nippon Electric Glass Co., Ltd. 19

20 Issues to be addressed from FY2015 Medium and Long Term Business Strategy Establish well balanced, robust business structure Achieve sustainable growth Action Policy Strengthening Display Business Expanding Non Display Business Copyright 2015 Nippon Electric Glass Co., Ltd. 20

21 Display (1) (Substrate glass for Flat panel displays) Electric Glass (Korea) Paju Electric Glass Nippon Electric Glass (Korea) Electric Glass (Xiamen) (From the end of 2015) : After processing : Melting & Forming Electric Glass (Guangzhou) Electric Glass (Shanghai) Electric Glass (Nanjing) Nippon Electric Glass Taiwan Nippon Electric Glass (From 2Q FY2016) Transfer to overseas & Profitability Electric Glass (Xiamen): Scheduled to start at the end of FY2015 Electric Glass (Nanjing): Strengthen the production/supply structure in the Chinese market. Scheduled to start in 2Q FY % 0% Melting & Forming capacity by region Japan China Korea '13 '14 '15Est '16Est *year end basis Expanding of quantity per facility Overseas: Highly efficient production in full scale Japan: Handling of new products and highspec products, development of production technologies Glass for High definition displays Development of new products featuring extreme smoothness and low thermal shrinkage Copyright 2015 Nippon Electric Glass Co., Ltd. 21

22 Display (2) (Cover glass for mobile devices ) ) Specialty glass for chemical strengthening Expansion of models and new customers High smoothness achieved by the overflow process Shorter time for chemical strengthening High transmittance Adopted 15 brands/89 models (LG, SAMSUNG, TCL, etc.) Trends of adoption (Models) (Brands) 150 Models Brands /4 14/10 15/1 15/12F 0 (Index) FY2013=100 Trends of volume (From January to December) '13 '14 '15F Sales in full scale in 2 nd half of the year Copyright 2015 Nippon Electric Glass Co., Ltd. 22

23 Non Display (1) (Glass fibers) FY2015 Net sales : over 60 billion OP margin: over 10% (Billions of yen) 80.0 For high function plastics: Respond to increased demand resulting from market growth, weight reduction, and improvement in fuel efficiency in the automotive industry. For reinforced cement: Respond to social infrastructure related demand, such as repairing of outer walls of buildings and tunnel ceilings Trends of glass fibers sales Trends of Global share in Chopped strand (1000 tons) (Share) 1200 Chopped strand Intake manifold (Company analysis) NEG Share 50% % (9 months) 400 NEG Volume 30% 0.0 '12 '13 '14 '15F '16F '17F 0 '12 '13 '14 '15F '16F '17F 20% Copyright 2015 Nippon Electric Glass Co., Ltd. 23

24 Non Display (2) (Glass tubing for pharmaceutical use) Sales expansion mainly in overseas Sales expansion (increase by 30% from 2014, with triple or higher increase in China) Increase in production capacity (Malaysia) New product development (further improvement of chemical resistance) (Global share*) B Others NEG 15% A (Radiation shielding glass) Share expansion Respond to increasing demand for advanced medical facilities Sales expansion in overseas Explore demand for customized products in Japan (Global share*) Others Y NEG 40% X Glass Tubing Application: Keio University Hospital Hybrid operation room Glass shielded both electromagnetic waves *Company analysis and radiation <MR LITE> Copyright 2015 Nippon Electric Glass Co., Ltd. 24

25 Non Display (3) (For optical and electronic devices) Respond to expansion of telecommunications infrastructure Develop more than 30 items in FY2015 (such as IR absorbing filter and glass for supporting semiconductor wafers) Respond to technological evolutions in the telecommunications, automotive, and home appliance fields (For lighting) Develop and expand sales of glass for next generation lighting Phosphor glass composite <Lumiphous > Ultra thin glass <G-Leaf > High refractive index glass <HX-1> IEL substrate for OLED lighting (JV with the Saint Gobain group) <Lumiphous > (For heat resistance, building materials) Glass for top plates in cookers: sales expansion in overseas Fire-rated glass: Sales to educational facilities in Japan, and sales expansion in overseas Explore applications of ultra thin glass laminated on resin <Lamion > (such as display covers, platform doors at stations, and automatic doors) Glass for optical devices <G Leaf > <HX 1> Application of fire rated glass for elementary school Copyright 2015 Nippon Electric Glass Co., Ltd. 25

26 Strengthening of R&D Development of new glass compositions, acceleration of commercialization, and stronger added values of products Promote R&D collaboration with external organizations Strengthen collaboration/cooperation with other companies. Social infrastru cture Mobility (Billions of yen) 10.0 Trends of R&D expense R&D expense Ratio of R&D expense to consolidated net sales (%) 3 Energy Display IT 2.5 Lighting Medical care Development to business Applied Technologies Precision processing Ultra thin Ultra large Compound Crystallization Environmental Core glass technologies Material design Process (melting, forming, processing) Evaluation /3 13/3 14/3 14/12 15/12F (9 months) Copyright 2015 Nippon Electric Glass Co., Ltd. 26 0

27 Corporate Information Glass for electronic and information devices Glass for others FPD CRT Cover Glass Optical Electronic Devices Solar Cells Glass Fiber Building Materials Heat Resistance Medical Care Others Main Business Glass for liquid crystal displays Glass for Organic light emitting diode displays Glass for Cathode Ray Tubes Dinorex Specialty Glass for Chemical Strengthening Capillary and Ferrule for Optical Communication Devices Lens for Optical Communication DevicesLens Micro Preform Glass Materials for Aspherical Lenses Functional Powdered Glass Sheet Glass for Image Sensors Glass Tube for Small Electronic Products Lumiphous Phosphor Glass Glass for Solar Cells Chopped Strands for Function Plastic Roving Glass for Reinforced Plastics Chopped Strand Mats for Automobiles Alkali Resistant Glass Fiber for cement reinforcement Glass Blocks Neoparies Glass Ceramics Building Materials FireLite Fire Rated Glass Lamion Composite Material Made of Glass and Resin Invisible Glass Super Anti reflective Glass Neoceram Super Heat Resistant Glass Ceramic Neorex Heat Resistant Glass Glass Tubing for Pharmaceutical Use LX Premium Radiation Shielding Glass Glass for Lighting Use Glass for Thermos Flasks Glass Making Machinery Name: Nippon Electric Glass Co., Ltd. Head Office: 7 1, Seiran 2 chome, Otsu, Shiga , Japan Founded: Dec 1, 1949 Representative: Capital: Yuzo Izutsu, Chairman of the Board Masayuki Arioka, President 32.1 billion yen Employees: 5,084(Group total as of Dec 31, 2014) Business: Plants: Sales Office: Consolidated Companies: Corporate Information Production and sale of special glass products, and manufacture and sale of glass making machinery Otsu, Fujisawa, Shiga Takatsuki, Notogawa, Wakasa Kaminaka, and Precision Glass Center Osaka and Tokyo 12 in Japan 11 overseas (Malaysia, Korea, China, Taiwan, etc.) Copyright 2015 Nippon Electric Glass Co., Ltd. 27

28 Note regarding earnings forecasts The forward looking statements, including earnings forecasts, contained in these materials are based on certain assumptions deemed to be reasonable by the Company at the present moment and include risks and contingencies. Actual business results may differ substantially from the earnings forecasts due to a number of factors. Copyright 2015 Nippon Electric Glass Co., Ltd. 28