BenQ Corporation Q Investor Briefing

Transcription

1 BenQ Corporation Q Investor Briefing BenQ: Bringing Enjoyment N Quality to Life October 28, 2004

2 Meeting Overview Q3 Financial Highlights Business Update Q4 Guidance

3 Safe Harbor Notice We have made forward-looking statements in the presentation. Our forwardlooking statements contain information regarding, among other things, our financial conditions, future expansion plans and business strategies. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties, and assumptions about us. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in the conference might not occur and our actual results could differ materially from those anticipated in these forward-looking statements.

4 Q3 Financial Highlights

5 3Q 2004 Income Statement QoQ Analysis Amount : NT$ Billion Except EPS Data Q Q QoQ Change% Net Sales % % -4% Cost of Goods Sold (37.25) (88.6%) (35.89) (89.0%) -4% Gross Profit % % -8% Operating Expenses (3.73) (8.9%) (3.88) (9.6%) 4% Operating Income % % -48% Net Non-op Items % % -60% Income before Tax % % -56% Income Tax (0.07) (0.2%) % Net Income % % -54% Fully Diluted EPS (NT$) % Optical disc drives grew 28% QoQ; LCD monitor sales down 1%. Overall QoQ sales dropped slightly on phase-out of existing handset models. Gross margin affected by decreasing LCD display ASP s and high panel prices. Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

6 YTD 2004 Performance Comparison Amount : NT$ Billion Except EPS Data 9-Months Months 2004 YoY Change% Net Sales % % 48% Cost of Goods Sold (72.25) (86.0%) (109.98) (88.3%) 52% Gross Profit % % 25% Operating Expenses (7.96) (9.5%) (11.65) (9.3%) 46% Operating Income % % -21% Net Non-op Items % % 181% Income before Tax % % 41% Income Tax (0.30) (0.4%) (0.26) (0.2%) -13% Net Income % % 44% Fully Diluted EPS (NT$) % Sales grew 48% YoY. Non-operating income surged driven by gains associated with BenQ s investments in AUO. Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

7 3Q 2004 Balance Sheet Highlights Amount: NT $ Billion Q Q QoQ Change % Cash & Equivalent % % 7% Accounts Receivable % % 21% Inventories % % -1% L-T Investments % % 0% Total Assets % % 5% Liabilities % % 7% ( Debt ) % % 78% Equities % % 3% Receivables grew on increasing proportion of PC-related sales. Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

8 Key Financial Ratios Q Q Q A/R Turnover 46 days 47 days 50 days Inventory Turnover 44 days 48 days 47 days ROA* 13.7% 12.9% 5.7% ROE* 26.2% 24.9% 11.1% Total Debt / Total Assets 8.7% 6.7% 11.4% * Annualized ROE 11.1% 21.5% 17.3% Days inventory peaked in Q3 and returning to normal. Changing product mix added to AR turnover days. BenQ delivering 20% ROE over the first three quarters of 2004 (annualized). Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

9 Business Update

10 Sales Breakdown by Business Display Imaging & Storage Communications Digital Media 100% 80% 3% 31% 4% 27% 5% 20% 8% 16% 14% 16% 15% 17% 13% 22% 13% 15% 60% 23% 22% 21% 21% 21% 17% 18% 24% 40% 20% 43% 47% 54% 56% 49% 51% 47% 48% 0% 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 3Q'04 Imaging & Storage recorded significant sales growth as BenQ capitalized on timely execution of the company s 16X DVD±RW products. Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

11 Sales Breakdown by Geography America Europe China (a) APAM (b) 100% 80% 20% 22% 22% 23% 25% 27% 27% 22% 60% 40% 23% 27% 26% 22% 18% 21% 22% 20% 16% 24% 17% 26% 15% 28% 14% 31% 20% 30% 30% 39% 35% 35% 30% 30% 33% 0% 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 3Q'04 Sales of BenQ's branded products continuing to grow following the company s UEFA EURO 2004 promotional efforts. (a) Including HK (b) Asia Pacific, Africa, and Middle East Core business, Unaudited, Prepared by BenQ Corp. on a consolidated basis

12 BenQ Business Wins Operating Events Secured contract win with Telecom Italia Mobile (TIM) to supply handsets bearing BenQ logo. BenQ to ship projectors to a Mexican government agency. Began shipping Multifunction Printers to ODM customer. Impact Accelerating growth into a new customer segment offering growth & margin enhancement. BenQ continuing to lead with leading-edge products in projector space; newer products offer ASP growth. Strengthening service delivery, BenQ offering customers multifunction products and customized solutions. Visit BenQ website ( for more details.

13 BenQ Innovation Operating Events BenQ won nine G-Mark Awards (Good Design Awards) in the third quarter. Launched Joybook Innovative designs leading to greater branding awareness and improved service delivery. Positioning BenQ as a worldwide leader in wide-screen notebook computers. Impact Visit BenQ website ( for more details.

14 Branding Revenues Continue to Grow Branding Revenue 24 % 29 % 34 % 2002 Total Revenue: NT$105 bln 2003 Total Revenue: NT$121 bln 2004 First-Nine Months Total Revenue: NT$ bln Branded sales 34% of total sales, up from 31% at end of Q2. ASP s moving up on introduction of higher value-added products. Core business, Unaudited, Prepared by BenQ Corp. on a consolidated methodology

15 New Product Launches S700 Mobile Phone Featuring ultra-smooth video playback, the BenQ S700 mobile phone provides amazingly smooth cinema-quality displays at 30 frames per second P30 Smart Phone It is the slimmest smart phone offering phone, PDA, , web browsing and rich multimedia functions that lets you move easily from business to social life. A500 Mobile Phone The BenQ A500 mobile features multimedia-rich functions such as BenQ s unique Video Caller ID and 3D Face Morph II Facemation technology

16 New Product Launches PB7200 Projector One of the world s first projectors to feature 5 Segment Color Wheel Joybee 200 With Joybee's directly line-in record function, the music played is automatically converted to and stored as an MP3 file on the Joybee.

17 New Product Launches FP785 LCD Monitor The 17-inch FP785 LCD monitor can be hung on a wall or placed on a flat surface like a conventional monitor DW1620 Pro Re-Writer Featuring an even faster 4x Double Layer recording speed in addition to superb writing speed and writing quality DC C62 Digital Camera Offering functions that moves at the speed of life, including fast 1 second start-up, 0.01 second release time lag and 0.1 per second photo playback

18 Q4 Guidance

19 2004 Q4 Guidance Q4 revenue should see single-digit growth. Display: LCD monitor shipment to continue increasing driven by shifts in seasonal demand; unit shipped to exceed 20%. ASP s likely to trend down in the face of lowered panel prices. Imaging & Storage: Volume and total revenues expected to grow slightly QoQ following a strong third quarter. Communications: BenQ accelerating the pace of product introduction; ASP s and margins are expected to continue moving in the right direction. Sales should continue to grow in Q4 while unit shipped flat QoQ. Digital Media: Projectors, Notebooks and MP3 players forecast to post strong QoQ seasonal growth.

20 BenQ Corporation. Unaudited Core Business Consolidated Balance Sheet SEP. 30, 2004 UNIT : NT$K Assets Liabilities & stockholders' equity Current assets : Liabilities Cash & cash equivalent 5,127, % Short term borrowings 6,189, % Short term investment 367, % N/P & A/P 20,780, % Net notes and accounts receivable 22,543, % N/P & A/P to related partie 8,048, % N/R & A/R from related parties 3,153, % Bond payable 1, % Net inventories 21,221, % Acurred exp. & other current liab. 7,440, % Prepaid expenses & other current assets 3,534, % Total current liabilities 42,460, % Total current assets 55,947, % Long term loan 5, % Long term investments 26,787, % Bond payable 4,304, % Fixed assets : 18,278, % Other liabilities 496, % Less : Accumulated depreciation (6,033,535) 6.3% Total liabilities 47,267, % Total fixed assets 12,244, % Stockholder' equities 0 Other assets 1,487, % Common stock 23,150, % Treasury stock (79,192) -0.1% Capital surplus 14,462, % Legal reserve 3,254, % Retained earnings 7,946, % Translation adjustment 465, % Total stockholder' equities 49,199, % Total Assets $ 96,467, % Total Liabilities & stockholders' equity $ 96,467, % BenQ Corporation. Unaudited Core Business Consolidated Income Statement JAN~SEP' 2004 UNIT : NT$K Net sales $ 124,621, % Cost of goods sold (109,984,682) -88.3% Gross profit 14,636, % Operating expense : 0 S & M (7,173,426) -5.8% G & A (1,525,298) -1.2% R & D (2,957,271) -2.4% Total Operating expense (11,655,995) -9.4% Operating income (loss) 2,980, % Non-operating in net income(loss) 4,704, % Earning Before income tax 7,684, % Income tax (263,305) -0.2% Minority interest in net income (loss) 0 0.0% Profit after tax $ 7,421, %

21 BenQ Corporation Reviewed Non-consolidated Balance Sheets (Parent Company Only) September 30, 2004 and 2003 (expressed in thousands of New Taiwan dollars) Assets NT$ % NT$ % Current assets: Cash and cash equivalents 656, ,776 - Short-term investments 268,462-9,492, Notes and accounts receivable 9,172, ,349, Receivables from related parties 26,708, ,606, Other financial assets---current 276,920-64,339 - Inventories 5,334, ,361,420 6 Prepaid expenses and other current assets 237, ,103 - Deferred income tax assets-current 1,189, ,011 1 Total current assets 43,843, ,152, Long-term equity investments: Equity method 31,104, ,412, Cost or lower-of-cost-or-market method 1,594, ,404, ,699, ,816, Property, plant and equipment: Land 2,138, ,265,826 3 Buildings 3,539, ,216,811 6 Machinery and equipment 2,390, ,220,187 3 Furniture and fixtures 143, ,934 - Miscellaneous equipment 69,137-72,809 - Prepayments for Land ,000 - Prepayments for plant and equipment 221, ,024-8,502, ,111, Less: accumulated depreciation (2,382,692) (3) (2,006,565 (3) Net property, plant and equipment ) 6,119, ,105,026 9 Rental assets 1,017, Refundable deposits 7,027-7,979 - Deferred assets 86, ,432 - Deferred income tax assets-noncurrent 49,361-44,369 - Total other assets 1,160, ,780 - Total assets 83,823, ,262,

22 BenQ Corporation Reviewed Non-consolidated Balance Sheets (Parent Company Only) September 30, 2004 and 2003 (expressed in thousands of New Taiwan dollars) Liabilities and Stockholders Equity NT$ % NT$ % Current liabilities: Short-term borrowings 2,962, ,455,372 2 Current portion of long-term debt ,047 - Notes and accounts payable 6,373, ,867,978 6 Payables to related parties 16,021, ,154, Bonds payable 1,400-2,201,700 3 Accrued expenses and other 4,058, ,051,357 6 current liabilities Income tax payable 342,882-63,309 - Deferred inter-company profit 14, ,442 - Total current liabilities 29,775, ,943, Bonds payable 4,304, ,746,813 3 Other liabilities 544, ,695 1 Total liabilities 34,624, ,321, Stockholders equity: Common stock 23,148, ,671, Entitlement Certificate 1, ,000-23,150, ,838, Capital surplus: Additional paid-in capital in excess of the common stock s par value Convertible bonds converted in excess of the common stock s par value Capital surplus from treasury stock transactions Capital surplus from long-term equity investments 5,152, ,238, ,106, ,889, ,812-7,239-2,196, ,450, ,462, ,586, Legal reserve 3,254, ,504,415 3 Retained earnings 7,946, ,575,186 9 Translation adjustment 465, ,645 1 Treasury stock (79,192) - (79,038) - Total stockholders equity 49,199, ,941, Total liabilities and stockholders equity 83,823, ,262,

23 BenQ Corporation Reviewed Non-consolidated Statements of Income (Parent Company Only) Nine-month periods ended September 30, 2004 and 2003 (expressed in thousands of New Taiwan dollars expect net income per share) NT$ % NT$ % Net sales 115,651, ,115, Cost of goods sold (105,784,720) (91) (66,844,363) (90) 9,866, ,271, Change in unrealized inter-company profits 153,411-37,766 - Goss profit 10,020, ,309, Operating expenses: Selling (2,573,508) (2) (2,123,864) (3) Administrative (732,484) (1) (678,006) (1) Research and development (2,807,059) (3) (1,775,868 (2) (6,113,051) (6) (4,557,738 (6) Operating income 3,907, ,751, Non-operating income: Interest income 4,212-7,858 - Investment income recorded under the 3,581, ,220,568 3 equity method, net Dividend income 169, ,876 - Gain on disposal of property, plant and 1,857-1,646 - equipment Gain on disposal of investments, net 332, ,666 - Foreign exchange gain, net 88,472-73,587 - Others 150, ,393-4,328, ,805,594 3 Non-operating expense: Interest expense (140,395) - (140,331) - Impairment loss on long-term equity (350,000) investment Loss on disposal of property, plant and (19,185) - (22,499) - equipment Other (3,204) - (5,124) - (512,784) - (167,954 - Net income before income tax expense 7,722, ,389,130 7 Income tax expense (301,191) - (245,833) - Net income 7,421, ,143,297 7 Earnings per share: Basic earnings per share Diluted earnings per share

24 BenQ Corporation Reviewed Non-Consolidated Statements of Cash Flows Nine-month periods ended September 30, 2004 and 2003 (expressed in thousands of New Taiwan dollars) NT$ NT$ Cash flows from operating activities: Net income 7,421,386 5,143,297 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 420, ,124 Amortization 52,692 73,198 Changes in allowance for doubtful accounts 20,366 (15,592) Changes in provision for inventory obsolescence (3,847) (33,725) Investment income on long-term equity investments, net (3,581,824) (2,220,568) Cash dividends received from investees accounted for by equity method 1,015, ,528 Gain on disposal of short-term equity investments (344,590) (197,816) Gain on disposal of long-term equity investments 11,975 (5,850) Impairment loss on long-term equity investment 350,000 - Loss on disposal of property, plant and equipment 17,328 20,853 Fixed assets shortage per physical count Fixed assets transferred to expenses - 2,400 Unrealized exchange gain on overseas convertible bonds (7,788) (32,290) Reversal for redemption of overseas convertible bonds (8,422) (14,330) Amortization of bond issuance costs 800 4,131 Differences in accounts in the accompanying balance sheets: Notes and accounts receivable (887,267) (1,153,537) Receivables from related parties (6,976,040) (4,307,763) Inventories 134,031 (1,093,016) Other financial assets-current (207,300) (12,070) Prepaid expenses and other current assets 61,918 (16,435) Accounts payable (589,993) (1,185,816) Payables to related parties (105,334) 3,321,997 Deferred inter-company profit (153,411) (37,765) Accrued expenses and other current liabilities (565,548) 86,452 Income tax payable 281,518 (702,675) Deferred income tax assets (233,290) 957 Other liabilities (14,329) (14,329) Net cash used in operating activities (3,891,907) (1,644,775) Cash flows from investing activities: Additions to long-term equity investments (316,130) (440,772) Decrease in short-term investment 3,556, ,979 Additions to property, plant and equipment (296,897) (296,768) Proceeds from disposal of long-term equity investment - 36,788 Proceeds from disposal of property, plant and equipment 50,397 17,210 Increase in refundable deposits and deferred assets (9,959) (81,292) Receipt from investees capital reduction 506,147 80,036 Net cash provided by (used in) investing activities 3,490,207 (190,819) Cash flows from financing activities: Decrease in long-term borrowing - (30,143) Increase in short-term borrowings 2,962, ,643 Redemption of oversea convertible bonds (200,300) (131,625) Acquisition of treasury stock (651,354) - Bonuses for directors and supervisors (67,501) (66,596) Issuance of bond 2,050,000 2,000,000 Distribution for cash dividends (4,123,924) (2,521,577) Bonuses for employees (50,626) (100,000) Net cash provided by (used in) financing activities (80,957) 16,702

25 Net decrease in cash and cash equivalents (482,657) (1,818,892) Cash and cash equivalents at beginning of period 1,139,573 2,025,668 Cash and cash equivalents at end of period 656, ,776 Additional disclosure of cash flow information: Cash paid during the year for: Interest, excluding capitalized interest 141,097 33,961 Income taxes 252, ,552 Supplemental disclosure of non-cash investing and financial activities: Change in capital surplus from long-term equity investment 788,200 (142,063) Change in translation adjustment 11,776 (250,438) Convertible bonds converted to common stock and capital surplus 426, ,355

26