FY2017 (Apr. 1, 2016 Mar. 31, 2017) Financial Announcement

Transcription

1 FY217 (Apr. 1, 216 Mar. 31, 217) Financial Announcement April 28, 217 Agenda: FY217 Consolidated Financial Summary Tetsuro Hori, Representative Director, Executive Vice President & General Manager Business Highlights and Financial Estimates Toshiki Kawai, Representative Director, President & CEO

2 FY217 Consolidated Financial Summary FY217: April 1, March 31, 217 April 28, 217 Tetsuro Hori Representative Director, Executive Vice President & General Manager

3 FY217 Highlights Net Sales and Profit Margin Net sales Gross profit margin Operating margin % 4.2% 4.3% 17.6% 14.4% 19.5% Consolidated sales up 2% YoY, highest ever SPE sales Set new record highs for both gross profit margin and operating margin FY215 FY216 FY217 CORP IR / April 28, 217 3

4 FY217 Highlights 12 9 Net Income Attributable to Owners of Parent and ROE Net income attributable to owners of parent ROE % Record high net income % 13.% ROE of 19.1% (+6.1pts YoY) Further increase in capital efficiency FY215 FY216 FY217 ROE = (Net income attributable to owners of parent / Average total equity) x 1(%) CORP IR / April 28, 217 4

5 FY217 Highlights Free Cash Flow (FCF) (Yen) Dividend per Share FY215 FY216 FY217 FY215 FY216 FY217 Free cash flow = (Cash flow from operating activities) + (Cash flow from investing activities excluding term deposits over 3 months) Generated FCF of 118.B, approx. doubled YoY Paid record high DPS for third consecutive year CORP IR / April 28, 217 5

6 Financial Summary FY216 FY217 YoY Change (Reference) FY217 estimates announced on October 28 Net sales % 762. Gross profit Gross profit margin % % +2.6% +.1pts SG&A expenses % 164. Operating income Operating margin Income before income taxes Net income attributable to owners of parent % % +33.3% +1.9pts % % % 1. EPS(Yen) % R&D expenses % 84. Capital expenditures % 25. Depreciation and amortization % 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. CORP IR / April 28, 217 6

7 Financial Performance (Quarterly) % 5% 4% 15 3% % % CORP IR / April 28, 217 4Q 1Q 2Q 3Q 4Q Net sales Operating income Net income attributable to owners of parent Gross profit margin 42.1% 38.7% 39.7% 39.1% 42.5% Operating margin 18.3% 14.9% 18.5% 18.3% 23.6% Record high quarterly operating margin 23.6% 1% 7

8 Segment Information SPE (Semiconductor Production Equipment) 1, 8 Sales Segment income Segment profit margin % 4% 8 FPD (Flat Panel Display Production Equipment) 1 Sales Segment income Segment profit margin 5% 4% 1% Composition of Net Sales Others FPD % 24.4% 3% 2% % 2% 5% SPE % 2 1.6% 9.4% % % 1. Segment income is based on income before income taxes. 2. R&D expenses such as fundamental research and element research are not included in above reportable segments. 3. Composition of net sales figures is based on the sales to customers. CORP IR / April 28, 217 Record high SPE sales and segment profit margin on SAM expansion and higher TEL market share % % 8

9 SPE Sales by Region Japan U.S. Europe Korea Taiwan China S.E. Asia, Others Region Composition % 5% % S.E. Asia, Others China Taiwan Korea Europe U.S. Japan CORP IR / April 28, 217 9

10 Balance Sheet Assets Liabilities & Net Assets Cash & cash equivalents* Liabilities Trade notes, accounts receivables Inventories Other current assets Tangible assets Intangible assets Investment & other assets Net assets *Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities in B/S). CORP IR / April 28, 217 1

11 Inventory Turnover and Accounts Receivable Turnover (Days) Net Sales Inventory Turnover Accounts Receivable turnover Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Turnover days = inventory or accounts receivable at the end of each quarter / last 12 months sales x 365 CORP IR / April 28,

12 Cash Flow Share Repurchase Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY15 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 / April 28,

13 Business Highlights and Financial Estimates April 28, 217 Toshiki Kawai Representative Director, President & CEO

14 FY217 Business Highlights SAM has expanded and account for half of the total WFE * market Higher demand in etching, deposition, and cleaning markets Conducted upfront investment based on market growth Strengthened development of next generation technologies, responded to increased production Raised competitive strength of business and products Grew share in SPE ** focus areas (etching, thermal processing, cleaning) FS *** business sales were 28.B, up 12% YoY Made progress with initiatives for improving profitability in FPD **** business * WFE: Wafer Fab Equipment: The semiconductor production process can be divided into two sequential sub-processes: front-end (wafer fabrication) and back-end (assembly and test) production. WFE is used in the front-end production process. Front-end production equipment includes equipment for wafer level packaging. **SPE: Semiconductor Production Equipment, *** Field Solutions, ****FPD: Flat Panel Display Production Equipment CORP IR / April 28,

15 FY217 Product Highlights Etching system (23% share, +2pts YoY) Sales up 13% YoY on growth in market and of share Further adoption of TEL s products, primarily cutting-edge memory DRAM:combined patterning step etching, interconnect formation, HARC * process NAND:3D NAND wordline isolation (slit) HARC process Thermal processing system (59% share, +5pts YoY) Further adoption of TEL s batch systems in 3D NAND Sales of semi-batch ALD system NT333 TM doubled YoY Cleaning system (2% share +2ptsYoY) Expanded adoption of TEL s single wafer, batch cleaning *HARC(High Aspect Ratio Contact) process: A process for forming holes that requires advanced processing technology CORP IR / April 28, 217 Plasma Etch System Tactras ALD system NT333 Single Wafer Cleaning System CELLESTA -i 15

16 FY217 Product Highlights Coater/Developer (9% share) Maintained overwhelming competitive strength in both advanced logic and memory Planned adoption of TEL products for all EUV * lithography equipment Test system Grew sales for 3D NAND/FOWLP ** (sales tripled YoY) FPD production equipment Large growth in sales of new PICP *** etching system for small/medium panels Introduced PICP etching system for large panels Grew G1.5 business CORP IR / April 28, 217 *EUV: Extreme Ultra-Violet, **FOWLP: New technology for semiconductor packaging, ***PICP: Plasma source for producing extremely uniform high density plasma on substrate Coater/Developer CLEAN TRACK LITHIUS Pro Z Multi-Cell Test System Cellcia FPD Plasma Etch/Ash System Impressio 16

17 FY218 Business Environment and Financial Estimates CORP IR / April 28,

18 WFE Market Outlook Future growth drivers PC, internet, mobile + VR/AR *, IoT, AI **, machine learning, big data, autonomous driving, personalized medicine WFE market has grown to $4B and is continuing to grow Expand investment in both advanced logic and memory Equipment market will move to the next stage amid expanding applications for semiconductors *VR/AR: Virtual reality/augmented reality **AI: Artificial intelligence CORP IR / April 28,

19 Business Environment (Outlook as of Apr. 217) SPE Capex CY217 WFE capex forecast to increase by around 1% YoY driven by investment in next generation 3D NAND and advanced logic FPD Capex CY217 demand for TFT Array Process ** FPD equipment forecast to increase 3% YoY on continued capex for small/medium panels for mobile devices and G1.5 ramp-up Accelerating growth in the equipment market on active investment in IoT and next generation technologies ** TFT Array Process: Process for manufacturing substrate that realizes display images CORP IR / April 28,

20 CY217 Market Growth and Business Opportunities by Application NAND: Market growth of 25-3% YoY forecast Driving force: Demand for SSD for data centers Capex: 6X/7X generations to comprise 8%, expect 7k/month capacity of 3D NAND by end 217 Opportunity: Market growth and share expansion, focus on increasing our position across 9X to 12X DRAM: Increase of 5-1% Driving force: YoY 1GB increase in average mobile device capacity, 3% increase in server capacity Capex: Capex for 1Xnm generation to comprise over 6% Opportunity: Differentiation through combined patterning and our strength in interconnect formation Logic/Foundry: Same level forecast Driving force: Demand for higher performance, lower power consumption Capex: Leading-edge 1/7nm generation to comprise 7% Opportunity: Business expansion in more complex patterning processes CORP IR / April 28, 217 2

21 Quarterly Orders, Order Backlog 35 3 January March 217 SPE 29.4B (+9%) FPD 24.1B (-21%) Total 314.5B (+6%) ( ): change from October-December / / /1-3 SPE Orders FPD Orders SPE Order backlog FPD Order backlog Q/CY217 saw new record high orders for second consecutive quarter CORP IR / April 28,

22 Composition of SPE Orders by Application: Equipment Only 1% 8% 6% 4% 2% % / / /1-3 Logic & others (MPU, AP, Others) Logic Foundry Non-volatile memory DRAM Logic grew in Europe, the US and South Korea CORP IR / April 28,

23 SPE Orders by Region / / /1-3 Japan U.S Europe Korea Taiwan China S.E. Asia, Others In 1Q/CY217 memory grew in Japan and logic in Europe and the US CORP IR / April 28,

24 FY218 Financial Estimates CORP IR / April 28,

25 FY218 Financial Estimates FY217 (Actual) FY218 (Estimates) 1 st half 2 nd half Full year Full year YoY change Net sales % SPE % 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) Expect sales growth to exceed market growth, generating record high profits for second consecutive year CORP IR / April 28, 217 SPE: Semiconductor Production Equipment, FPD: Flat Panel Display Production Equipment 25

26 R&D Expenses, Capex Plan Net sales 98.B (+ 18.2B YoY) Higher demand for advanced logic (1/7nm generation), next generation 3D NAND and DRAM R&D Expenses 94.B (+ 1.1B YoY) Continue investing based on focus areas and sustainable growth Capex 42.B (+ 21.3B YoY) Actively invest in advanced technologies R&D and to meet increasing production R&D expenses Capex Depreciation FY14 FY15 FY18(E) Plan to conduct proactive upfront investment towards a new phase in the equipment market CORP IR / April 28, 217 FY14 FY15 FY18(E) 26

27 FY218 Dividend Forecast (Yen) yen 143 yen Dividend per share 237 yen 352 yen 497 yen Year-end 256 yen Interim 241 yen FY214 FY215 FY216 FY217 FY218(E) 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 Expect to raise DPS more than 4% YoY CORP IR / April 28,

28 Initiatives to Promote Dialogue Over the Medium- to Long-term Review of disclosure items Cease to disclose orders results (from 1Q FY218) Reasons for review To raise emphasis on dialogue about raising TEL s fundamental corporate value, such as medium- to long-term growth strategy To reduce short-term share price volatility and promote appropriate evaluation of corporate value Promote dialogue for sustainable growth and appropriate corporate value creation CORP IR / April 28,

29 Appendix CORP IR / April 28,

30 Financial Summary FY216 FY217 4Q 1Q 2Q 3Q 4Q YoY Change Net sales % SPE % FPD % Others Gross profit Gross profit margin % % % % % +6.1% +.4pts SG&A expenses % Operating income Operating margin % % % % % +15.% +5.3pts 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. CORP IR / April 28, 217 3

31 Segment Information SPE (Semiconductor Production Equipment) 3 25 Sales Segment income Segment profit margin % 5% FPD (Flat Panel Display Production Equipment) 3 25 Sales Segment income Segment profit margin 6% 5% 1% Composition of Net Sales Others FPD % % % % Q 1Q 22.9% 24.2% % 2Q 3Q 4Q % 2% 1% % % 1.7 4Q % 6.4% 7.1% 1Q % 2Q 3Q 4Q 2.3 3% 2% 1% % 5% % Q 1Q Q 3Q 4Q SPE 1. Segment income is based on income before income taxes. 2. R&D expenses such as fundamental research and element research are not included in above reportable segments. 3. Composition of net sales figures is based on the sales to customers. CORP IR / April 28,

32 SPE Sales by Region Japan U.S. Europe Korea Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q 4Q 1Q 2Q 3Q 4Q Taiwan China S.E. Asia, Others Region Composition Q 3.5 1Q CORP IR / April 28, Q 3Q 4Q Q Q Q 3Q 4Q Q 1.3 1Q Q 3Q 4Q 1% 5% % Q 1Q 2Q 3Q 4Q S.E. Asia, Others China Taiwan Korea Europe U.S. Japan 32

33 Balance Sheet Assets Liabilities & Net Assets Q 1Q 2Q 3Q 4Q Cash & cash equivalents* Trade notes, accounts receivables Inventories Other current assets Tangible assets Intangible assets Investment & other assets Q 1Q Q 3Q 4Q Liabilities Net assets *Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities in B/S). CORP IR / April 28,

34 Number of Employees (Person) FY216 FY217 Japan 7,6 7,288 U.S. 1,586 1,655 Europe Asia 1,548 1,85 Total 1,629 11,241 CORP IR / April 28,

35 Adjustment to Share Results due to Product Recategorization (etching system, cleaning system) Before adjustment Market share CY214 CY215 CY216 Etching system 26% 19% 21% Cleaning system (Including dry cleaning systems) 24% 23% 25% After adjustment Market share CY214 CY215 CY216 Etching system (Including dry cleaning systems) 28% 21% 23% Cleaning system 19% 18% 2% From CY216 dry cleaning systems have been recategorized under etching system, and actual shares for etching system and cleaning system for CY214, CY215 and CY216 have been adjusted to reflect this. CORP IR / April 28,

36 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 panel 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 / April 28,