Ferrotec Corporation Results for the fiscal year ended March 31, 2013

Transcription

1 Ferrotec Corporation Results for the fiscal year ended March 31, 2013 May 28, 2013 (JASDAQ 6890) / 1.This fiscal year results cover twelve months period from April to March of Ferrotec, and twelve months period from Jan. to Dec. of consolidated subsidiaries and affiliated companies included in investment profit loss in equity method. 2.This presentation was prepared for the purpose of providing information regarding the company s results of operations for the fiscal year ended March 31, 2013 and is not a solicitation to purchase securities issued by the Company. Please ensure that the decision on whether to make an investment in our Company is made at your own risk. 3.These materials were prepared based on information available as of May 28, All opinions, forecasts and other forward-looking statements are based on management s judgments in accordance with materials available at that time and may be changed without prior notice.

2 FY March 2013 Financial Results

3 Financial Highlights in millions Amount FY3/12 Pct. of sales(%) Amount FY3/13 Pct. of sales(%) Amount YoY Pct. of sales(%) Net sales 60, , , Cost of sales 43, , , Gross income 16, , , SG&A expenses 12, , , Operating income 4, ,608-7,732 - Non-operating income , Non-operating expense 1, , Ordinary income 3, ,465-6,752 - Extraordinary income , , Extraordinary expense , , Net income 1, ,532-8,247 - Capital Investment 7,877-3,706-4, Depreciation 2,825-3, Note: exchange rate FY3/12 FY3/13 : US$ RMB

4 Financial Highlights 4 FY3/13 in millions Amount Pct. of sales(%) Net sales 38, Cost of sales 31, Gross income 6, SG&A expenses 10, Operating income 3,608 - Non-operating income 1, Non-operating expense 1, Ordinary income 3,465 - Extraordinary income 1, Extraordinary expense 4, Income before income tax 6,158 - Corporate tax, etc Net income 6,532 - Cost rate declined mainly because of posting valuation loss of 1,884 million due to lowerof-cost-or-market method Include 853 million in provision of allowance for doubtful accounts Include 871 million in exchange gain 1,548 million in gain on sale of land is included in extraordinary profit 3,657 million in business restructuring expenses is included in extraordinary loss Include 561 million in reversal of deferred tax assets, etc.

5 Segment Sales and Operating Income Net sales FY3/12 FY3/13 YoY ( in millions) Amount Pct. Of Sales(%) Amount Pct. Of Sales(%) Amount Pct. Of Sales(%) Equipment-related 24, , , Electronic device 5, , Photovoltaic-related 27, , , Others 2, , T o t a l 60, , , Operating income FY3/12 FY3/13 YoY ( in millions) Amount Pct. Of Sales(%) Amount Pct. Of Sales(%) Amount Pct. Of Sales(%) Equipment-related 2, , Electronic device Photovoltaic-related ,934-4,709 - Others Corporate & elimination T o t a l 4, , ,732 -

6 Consolidated Balance Sheet ~Assets~ ( in millions) FY3/12 FY3/13 Difference Current assets 41,330 34,271 7,059 Cash & deposits 9,560 7,373 2,187 Note & accounts receivable 13,921 15,235 1,314 Inventory 11,987 9,536 2,451 Current assets:main factor of increase 2,187 million decrease in cash and deposits, 2,451 million decrease in inventories and 2,703 million in others of current assets (mainly due to decrease in advance payments related to long-term purchase agreement) Fixed assets 31,241 32, Tangible fixed assets 25,397 24, Building 5,279 5, Equipment & machinery 7,205 10,165 2,960 Tools, furniture, and fixture 4,813 5,980 1,167 Major factor for decrease in tangible fixed assets Decrease due to sale of land of the previous head office 6 Land 2, ,014 Intangible fixed assets 2,368 1, Goodwill 1, Investments & other assets 3,475 5,473 1,998 T o t a l a s s e t s 72,571 66,343 6,228 Intangible fixed assets Amortization of goodwill: Actual: 456 million (Expected to be 162 million in the 34th period because one company will amortize goodwill in 1H)

7 Consolidated Balance Sheet ~Liabilities and net worth~ ( in millions) FY3/12 FY3/13 Difference Current liabilities 29,592 27,243 2,349 Notes and accounts payable 8,610 8, Major factors for decrease in current liabilities Decreases in short-term debt and accounts payable facilities Shot-term debt 11,834 9,667 2,167 Current portion of longterm borrowings. 3,177 2, Fixed liabilities 8,792 8, CB Interest-being debt Short-term debt +Current portion of long-term borrowings Long-term debt + bond etc. Total 12,534 million (15,011million) 5,836 million ( 6,056 million) 18,370 million ( 21,068 million) Long-term debt 5,856 5, Total liabilities 38,384 35,904 2,480 Net Assets 34,186 30,439 3,747 Shareholder s equity 36,311 29,366 6,945 Total adjustment 2, ,322 Minority interests Net interest-being debt 10,997 million ( 11,508 million) Parenthesis represent the figures at the end of Mar Net assets Shareholders equity: Net income: - 6,532 million Dividends: 612 million Foreign currency translation adjustments: 3,211 million 7 Total liabilities & shareholder s equity 72,571 66,343 6,228 Note: exchange rates for end FY3/13 : / US dollar / RMB ( year-end exchange rate )

8 Consolidated Cash Flow ( in millions) FY3/12 FY3/13 8 Cash flow from operating activities 642 1,584 Income before income taxes 2,814 6,158 Depreciation 2,825 3,321 Exchange gain & loss( :gain) Changes in cost of structural reform ( :decrease) 0 1,579 Changes in notes & accounts receivable ( :increase) Changes in inventories( :increase) 2,960 3,377 Changes in accounts payable( :decrease) 1 1,385 Others 2, Cash flow from investing activities 8, Payments for purchase of tangible fixed assets 7,877 3,706 Proceeds from sales of tangible fixed assets 186 3,480 Payments for purchase of marketable securities 1 1 Proceeds from sales of marketable securities 29 6 Others Cash flow from financing activities 10,098 3,991 Changes in short-term borrowing 4,845 2,848 Proceeds from long-term debt 3,435 3,500 Payments of long-term debt 3,679 3,926 Proceeds from issuance of common stock 6,091 - Payments for dividend Others Changes in cash & cash equivalents 2,249 2,187 Cash and cash equivalents, beginning of year 7,310 9,560 Cash and cash equivalents, end of year 9,560 7,373 Operating cash flow Net income before income taxes + Depreciation - 2,837 million Increase in operating cash flow due to increased allowance for business structural reform: 1,579 million Increase in operating cash flow due to decreased trade receivables: 393 million Increase in operating cash flow due to decreased inventories: 3,377 million Decrease in operating cash flow due to decreased trade payables: - 1,385 million Investing cash flow Payment for acquisition of tangible fixed assets is mainly to invest in upgrading facilities Proceeds from sale of tangible fixed assets is mainly for selling previous head office

9 Business Forecast ( in millions) FY3/13 FY3/14(E) YoY (%) Net sales 38,424 42, Operating income 3,608 1,000 - Ordinary income 3, Net income 6, Capital investment 3,706 1, Depreciation 3,321 3, Note: Exchange rate FY3/13 FY3/14(assumed rate) : / US dollar / RMB Capital investment is based on cash flow considering unprojected large-scale capital investment and accounts payable facilities at the end of previous year.

10 Business Forecast ( in millions) FY3/14 (E) Net sales 42,000 Make investments in miniaturization in the semiconductor market and in panels for mobile phones in the FPD market as well. Material products which are consumables recover. Thermo-module for consumer use expands. Operating income 1,000 Complete the disposal of underperforming business and succeed in reducing costs and cutting selling, general and administrative expenses which will result in turning profitable. Ordinary income 700 Expect reduced interest burden associated with decrease in debt and weak yen. Net income 450 End of posting extraordinary loss and expect to turn profitable. 10

11 Business Forecast (sales by segment) YoY ( in millions) FY3/13 FY3/14(E) (%) Equipment-related 18,867 22, Vacuum Feedthroughs 4,686 5, Quartz 3,420 4, Ceramics 4,108 4, EB-Gun, LED 2,724 3, semiconductor wafer 3,930 4, Electronic device 4,563 5, Thermo-electric module 4,126 4, Ferrofluid, others Photovoltaic-related 12,345 11, Quartz crucibles 2,709 3, Solar silicon 5,509 6, PV manufacturing Epuip. 2, Solar cell, Others 1, Others 2,648 3, total 38,424 42,

12 Status by Segment and Outlook

13 Segment 49% 32% 12% Equipment-related Electronic device Photovoltaic-related Vacuum feedthroughs Quartz Ferrofluid PV manufacturing equip. Single crystal silicon growing furnaces Multi crystal silicon casting furnaces Ceramics Deposition equipment Quartz crucible Consumable Hot zone Thermo-electric module Single crystal ingot PV silicon(ingot) Multi- crystal ingot PV wafer And wafer processing 13 The bar chart represents the pct. of each segment in FY3/13 sales

14 Equipment-related Segment Sales ( in million) 30,000 25,000 20,000 15,000 10,000 5, ,694 24,883 4,641 22,305 4,027 18,867 3, ,507 4,999 4,122 3,930 4,078 4,350 4,108 6,501 3,529 5,509 2,724 3,420 4,087 7,764 6,763 4,686 5,340 FY3/11 FY3/12 FY3/13 FY3/14(e) Semiconductor wafer Ceramics EB-gun, LED,others Quartz Product Vacuum Feedthrough 14 =Semiconductor silicon products have been shifted to semiconductor wafer from FY3/12.

15 Status and Outlook for Vacuum Feedthroughs (m ) 12,000 9,000 6,000 7,764 Transition of sales 6,763 4,686 5, Status of FY3/13 Low motivation to make capital investments in the semiconductor market throughout the year In the LED market, motivation to invest remained low along with drop in prices In the FPD market, almost no investments for mobile phones and TVs Demand for optical equipment in Europe slightly recovered Demand for robot manufacturers slightly decreased 3, Outlook for FY3/14 0 FY3/11 FY3/12 FY3/13 FY3/14(e) Others 36% Sales by category PV 8% FPD 12% Semi-conductor 35% LED 9% In the FPD market, investments in large LCD for TV, small-and-midsized high-definition LCD for mobile phone and organic EL manufacturing equipment in China are expected In the semiconductor market, major companies start making investments again Gradual recovery is expected from the middle of the 1st half to the 2nd half European market remains flat Show signs of gradual recovery in demand for robot manufacturers Measures Start receiving orders for chambers for general industry Boost demand for contracted equipment sub-assembly products Provision of engineering after-sales services 15 Others: Aero, Medical, Science etc

16 Status and Outlook for Quartz Products (m ) 10,000 8,000 6,000 4,000 2, ,501 LED 8% Transition of sales FY3/11 FY3/12 FY3/13 FY3/14(e) PV 5% LCD 0% End user 26% 5,509 Others 5% 3,420 Sales by category OEM 56% 4, Status of FY3/13 End to decreased orders due to customers operating rates (slow moving inventory due to sluggish DRAM) throughout the year Decrease in domestic and major US OEM customers orders led to contraction of production For the LED market, pressure on request for price reduction due to intensifying price competition Orders decreased because Asian companies postponed their reinvestments 2. Outlook for FY3/14 Low until earlier in the first half of the year but then recovers Orders from major OEM customers in the US recover Expect increase in orders due to reinvestments by domestic and Asian companies Expect to remain flat in the LED market Measures Increase production in China to reduce costs Chinese factories of the US and Taiwanese companies are probable customers; aim for increase in sales in collaboration with Ferrotec Cleaning business Speeding up of obtaining approvals for high-purity products Strengthening of marketing in the Taiwanese market, quick delivery, stable product quality, customize 16

17 Status and Outlook for Ceramics Products 17 (m ) 6,000 5,000 4,000 3,000 2,000 1,000 0 FC Export 11% FC Semiconduct or Equipment 28% 3,819 FY3/11 FY3/12 FY3/13 FY3/14(e) FC Others 12% Transition of sales 4,507 Sales by category 4,108 4,350 MC Semiconduct or testing 29% MC Japan MC Export 12% 8% FC(Fine Ceramics) MC(Machinable Ceramics) 1. Status of FY 3/13 Machinable Ceramics (Photoveel) Memory (N/Flash) and non-memory (Logic) were both driven by booming demand for mobile device resulting in substantial increase in the 1st half due mainly to the contributions from Japanese, Korean and Taiwanese manufacturers. Entered into an inventory adjustment phase in the 2nd half. Expanded the new use of general MC for organic EL panel (OELD) manufacturing equipment Fine Ceramics Has been moving toward moderate recovery since the end of 2011 due to investments in miniaturization by major semiconductor manufacturers in the world. However, deep cuts in mobile device production led to slowdown in companies investments. As a result, order situation since summer remained severe. Achieved sales increase as a result of big increase in export share mainly for the US 2.Outlook for FY 3/14 Machinable Ceramics (Photoveel) Although inventory adjustments of mobile devices since last year has been completed, actual demand remains sluggish. Increase in demand for the new mobile hand set model from the 1st half is expected. It is the dawn of the battle among mobile devices and request for price reduction will be even more severe General MC is actively expanding medical equipment-related sales in Japan, the US and Europe. Now working toward the realization of adopting newly developed products in Japan Fine Ceramics Investments in miniaturization mainly in Taiwan started again as well in some factories in Japan this spring. Orders are on a recovery trend since the beginning of the year and further investments in miniaturization are expected. For exports, achieved significant results in expanding sales mainly for the US and now developing European market 3.Continued sales policy Cultivate new customers of wafer circuit inspection tools and expand use Continue with marketing activities to develop new customers and new use in the European market in addition to the US and Asian markets For both the FC and MC, expand sales by developing new materials and strengthen competitiveness of sales

18 Status and Outlook for Semiconductor Wafer and Deposition Equipment (m ) 8,000 6,000 4,000 2,000 0 (m ) 8,000 Transition of sales Semiconductor wafer 4,999 4,641 4,027 3,930 FY3/11 FY3/12 FY3/13 FY3/14(e) EB Deposition Equipment Semiconductor Wafer : 1. Status of FY 3/13 Semiconductor market worsened rapidly from the 2nd half. Struggled in the sluggish market and inventory adjustments but sales remained flat. Own brand: Newly obtained approval in Korea Boosted crystal and CVD to expand own brand 2. Outlook for FY3/14 The market condition recovers in general and own brand in particular is expected to expand The Japanese market is expected to remain sluggish Increase the variety of wafers and expect to increase sales to meet customer needs Measures Establish a system corresponding to the expansion of mass production Upgrade facilities and establish a system for services including technology and quality 6,000 EB Deposition Equipment: 4,000 4,122 4,078 2,724 3, Status of FY 3/13 Remained flat due to the completion of LED investment; there was a demand for transmitter chip for mobile phones 2, Outlook for FY 3/14 Remain flat and demand is expected to recover from the 2nd half 18 0 FY3/11 FY3/12 FY3/13 FY3/14(e) Measures Focus on optical market and start taking orders Announce new models which improved the yield greatly

19 Electronic Device Segment Sales ( in million) 8,000 6,917 others 6, , ,563 5, Ferrofluid,SMT, others 4, ,442 2,000 4,933 4,126 4,764 Thermo-electric module 0 FY3/11 FY3/12 FY3/13 FY3/14(e) 19

20 Status and Outlook for Thermo-electric Module Products (m ) 8,000 6,000 4,000 6,442 Transition of sales 4,933 4,126 4, Status of FY 3/13 Automobile Seat Application Almost as planned Other Application Medical, biotech equipment, semiconductor and optics applications were strong Sales fell short due to the effect of sluggish demand for consumer use Struggled with semiconductor use due to sluggish demand in the 2nd half 20 2,000 0 Science 3% Optical commubicat ion 5% Biochemical 7% Consumer 7% Photology 4% Semiconduc tor 5% FY3/11 FY3/12 FY3/13 FY3/14(e) Sales by category Power device substrates 0% Others 2% Automobile 67% 2. Outlook for FY 3/14 Automobile Seat Application New models will be launched and expect to increase Other Application Consumer equipment, biotech equipment, semiconductor and optics applications are strong Newly adopt electric shaver, water purifier, etc. and expect increase Release power device substrates and quickly obtain approval Measures Focus on expanding share of the US and Chinese optical communications markets Strengthen marketing targeting the US and expand highly functional market Promote automation of production line aiming to cut fixed cost

21 Photovoltaic-related Segment Sales ( in million) 35,000 30,000 27,357 Solar cell & Others 25,000 21,150 2,091 Solar silicon 20,000 15,000 10,000 5, ,510 6,185 7,420 12,345 4,887 11,173 3,654 1, ,509 12,959 6,268 9,801 2,709 3,952 2, FY3/11 FY3/12 FY3/13 FY3/14(e) Quartz crucibles PV manufacturing Equip. 21

22 Status and Outlook for PV Manufacturing Equip. (m ) Transition of sales 1. Status of FY3/13 15,000 12,000 9,801 12,959 The market remained sluggish resulting in sharp decrease in orders for equipment Number of inquiries also decreased except for R&D use 9,000 Excessive production capacity drove the price down and the entire industry suffered damage 6,000 3, , FY3/11 FY3/12 FY3/13 FY3/14(e) 2. Outlook for FY3/14 Orders for PV equipment not expected Shift to equipment for general industry and maintain production facilities Measures Multi crystal silicon casting furnaces Pct. Of sales In the PV segment FY3/13 PV manufacturi ng equip. 18% Horizontal development using core technologies including glass processing machine, general-purpose polishing machine and core drill Order activities eying the relaunch of the original CMS business Further streamline management Single crystal silicon growing furnaces 22 Block Cutting

23 Status and Outlook for Quartz Crucibles (m ) Transition of sales 1. Status of FY3/13 8,000 6,000 4,000 3,654 4,887 2,709 3,952 Crucibles and vessels were weak throughout the year Shifted PV application to Yinchuan factory and secured price competitiveness Customers operating rates decreased by more than half and production adjustment continues Started handling semiconductor use and started obtaining customers approvals 2, Outlook for FY3/14 0 FY3/11 FY3/12 FY3/13 FY3/14(e) Pct. Of sales In the PV segment Pressure on price reduction continues although demand for PV application hits bottom Prices will drop but quantity is expected to increase Expected to gradually raise the ratio of semiconductor use Vessels for multi-crystal are expected to expand due to the withdrawal of competitors Single-crystal quartz crucible FY3/13 Quartz crucibles 22% Measures Differentiate from competitors through the approval of prolonged heat resistant products Reduce costs by recycling raw materials at the Yinchuan factory and through scouring process Quickly receive approval of 8-inch for semiconductor to increase market share 23 Multi-crystal vessel

24 Status and Outlook for Solar Silicon (m ) Transition of sales 1. Status of FY3/13 10,000 7,500 6,185 7,420 5,509 6,268 Further deterioration in market condition resulted in withdrawal from own products Almost completed posting valuation loss due to a drop in raw material poly-silicon price Booming demand in China, US and Japan. Declined in Europe 5, Outlook for FY3/14 2,500 0 FY3/11 FY3/12 FY3/13 FY3/14(e) Pct. Of sales In the PV segment Shift to OEM, demand is expected to be relatively strong. Consumers demand high conversion efficiency and low-cost products Demand stagnated in Europe but demand in emerging countries including India, Eastern Europe, the Middle East and South America emerge; Booming demand in Japan, China and the US. Price is expected to be at the current level FY3/13 Measures Single crystal ingot Multi- crystal ingot Manufacture crystals at the Yinchuan factory and reduce costs Expansion of OEM customers Differentiate through fixed abrasive cutting wafer Secure OEM orders for N-type products 24 PV wafer Solar silicon 45%

25 Reference Materials

26 Corporate Data Corporate Name Ferrotec Corporation Date of Foundation September 27, 1980 A d d r e s s Nihonbashi Plaza Building, 2-3-4, Nihonbashi, Chuo-ku, Tokyo Japan L i s t e d JASDAQ (Listed Code:6890) P r e s i d e n t Akira Yamamura Business Segment Equipment-related business : Vacuum Feedthrough, Quartz, Ceramics, silicon, wafer processing PV-related business : PV manufacturing equip, Quartz crucibles, solar silicon Electronic device business : thermo-electric module, Ferrofluid C a p i t a l 13,101,346 thousand JPY I s s u e d S t o c k 30,903,702 Related Company 24 Consolidated Subsidiary 5 Companies Accounted for by the Equity Method 26 E m p l o y e e s Consolidated 4,920 Non-consolidated 184

27 History 1980~ Started manufacturing and selling products using ferrofluids (computer seals, vacuum feedthroughs) Vacuum Feedthroughs 1990~ 92 Started manufacturing and selling thermomodules and modules in China 98 Started manufacturing and selling quartz products for the semiconductor industry Thermo-electric module Quartz 2000~ 02 Started contract manufacturing service business for silicon wafer processing, machine tool production and other activities (Shanghai factory) 05 Started photovoltaic products business; started manufacturing and selling machinery and crucibles for manufacturing silicon ingots and crystals 08 Started manufacturing and selling ceramic products Ingot Single crystal silicon growing furnaces Machinable Ceramics With a core of ferrofluid expertise ~ Ferrotec s core Technology ~ Establishing operations in other countries 91: Established subsidiary in Massachusetts, USA 92: Established subsidiary in Hangzhou, China 95: Established subsidiary in Shanghai, China 97: Established subsidiary in Singapore 99: Started operations in North America and Europe by acquiring Ferrofluidics Building a new profit structure 02: Started contract manufacturing service (CMS) business at the Shanghai factory, including silicon wafer processing, machine tool production and other activities Expertise in production technologies extending from component processing to final assembly allowed Ferrotec to start the CMS business 05 : Increased manufacturing and sales activities for photovoltaic products in Hangzhou, China 27

28 Sales and Operating Income Trend Sales Trend Operating income Trend ( in millions) ( in millions) Equipment related Electronic device PV Others Equipment related Electronic device PV Others 57,880 2,117 60,088 2,509 6, ,475 4,124 31,541 5,389 10,579 21,151 6,917 27,357 5,337 38,424 2,648 12,345 4, , ,165 3, ,499 3, ,750 11,822 27,693 24,883 18,867 3,934 8 FY3/10 FY3/11 FY3/12 FY3/13 FY3/10 FY3/11 FY3/12 FY3/13 31