Business Report for FY2006

Transcription

1 Business Report for FY2006 -From Apr.2006 to Mar SMK Corporation April,2007 1

2 Full fiscal term performance 2/43 Sales amount: Million yen +10.0% Profit: Million yen 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,074 71,860 5,512 4, % 6,190 5,166 3,473 3,693 FY2005 FY ,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

3 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Sales expenses FY2005 FY ,570 73,908 (94.0%) (93.5%) 54.1% 8.1% 17.7% 9.5% 4.6% 54.0% 7.5% 17.9% 9.6% 4.5% Operating profit 4,290 5,166 ( ): Ratio to total sales Material costs Expenses for external manufacturing processing Labor costs Expenses Depreciation allowance 3/43 (Unit : million yen) [ ( Material costs + Expenses for external manufacturing processing) improved by 0.7%] 62.2% 61.5% About 492 million yen [Labor costs increased by 0.2%] Average number of work force of overseas Works 05/4-06/3 8,715 people 06/4-07/3 10,665 people Main Works reporting increase Huanan, China 1,500 people Mexico 450 people Increased by 1,950 people

4 3,500 2,500 1, Analysis of sales expenses Analysis of factors for increase/decrease of consolidated operating profits [FY 2005 vs. FY 2006] 2,778 A. Factors for profit increase Total 3, Increase in depreciation allowance B. Factors for profit decrease Increase in expenses 4/43 (Unit : million yen) Net Total 876 Total -2,394 Increase in labor costs ,500-2,500 Increased sales amount (after price reduction) Dropped material costs ,443

5 Non-operating profit and loss 5/43 (Unit : million yen) 1,300 1, FY2005 FY2006 ( ): Ratio to total sales 1,222 1,024 (1.7%) (1.3%) Comparison to last fiscal term -198 million yen [Decline in currency exchange profit by 336 million yen] Yen lower by yen last fiscal term At the end of Mar. 06 [107.39(Mar. 05) (Mar.06) ] Yen lower by 0.58 yen in the current fiscal term At the end of Mar. 07 [117.47(Mar.06) (Mar.07) ] Ordinary profit 5,512 6,190

6 Extraordinary profit/loss 6/43 (Unit : million yen) 700 FY FY Gain on sale of fixed assets Gain on sale of investments in securities Loss of disposed fixed assets, etc. Transfer to allowance for bad debt Depletion loss Others -700 Pre-tax profit 5,058 6,224 Taxes (after application of tax effect accounting) Net profit for the current fiscal term -1,585-2,531 3,473 3,693

7 (Unit : million yen) 90,000 80,000 70,000 Sales amount, operating and ordinary profits, and profit for the current fiscal term FY2005 FY2007FY , % When compared to last year s corresponding period 77,300 79, % 82,500 7/43 (Unit : million yen) 10,000 9,000 8,000 Net sales 60,000 50,000 40,000 30,000 4,290 5,512 3,473 5,500 6,400 3,900 5,166 6,190 6,200 3,693 5,500 4,000 7,000 6,000 5,000 4,000 3,000 Profit 20,000 2,000 10,000 1,000 0 FY2005 Result FY2006 Forecast(revised) FY2006 Result FY2007 Plan 0

8 Market-specific sales amount FY2005 ~FY2007 8/43 Unit: million yen 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,860 1,520 4,866 11,679 23, % -17.3% +31.2% 1,571 5,437 9,661 1,790 5,553 9,898 30,325 31,593 6,589 6,815 7, % +6.9% 24,086 25,262 26, % +4.4% FY2005 Result FY2006 Result FY2007 Plan 79, % +2.5% +4.2% 82,500

9 Reference: Division-specific sales (consolidated) FY2005 ~ FY2007 Unit: million yen 80,000 70,000 71,860 4, % 79,074 4, % 82,500 5,631 9/43 % : Constituent ratio 6.8% 60,000 50,000 33, % 33, % 34, % 40,000 30,000 20,000 33, % 51.6% 40,809 42, % 10,000 0 FY2005 Result FY2006 Result FY2007 Plan CS FC TP

10 Reference: Division-specific operating profit (consolidated) 10/43 Unit: million yen FY2005 FY2007FY2007 6,000 5,000 4,000 4, ,166 5, ,000 2,000 1, ,000 3,657 4,495 4, FY2005Result FY2006Result FY2007Plan (Connector,Jack) (Switch,Remote CS FC TP Control,Unit,Module) (Touch panel)

11 Trends of major markets Flat Panel TV LCD (10 inches and over) and PDP TVs 11/43 90,000 80,000 70,000 60,000 50,000 (thousand of sets) W/W production quantities CAGR 71% 51,442 76,682 63,112 LCD TV PDP TV SMK's action Intensification and expansion of remote control business Optimization of product line-up of and intensified marketing activity for FPC and HDMI connectors 40,000 30,000 26,086 41,750 20,000 20,184 13,570 9,692 5,902 0 CY2005 CY2006E CY2007FCT Source JEITA 10,000 Solid follow-up on the central and eastern European markets where production is expanding Business expansion with Taiwanese and Chinese manufacturers

12 Trends of major markets Car Navigation Systems 12/43 10,000 9,000 (thousand of sets) W/W production quantities CAGR 9.4% SMK's action 8,000 7,000 Sustainment and expansion of touch panel business 6,000 5,000 4,000 7,690 8,610 9,200 Expansion of connector sales Sales expansion of connectors for in-vehicle cameras Development and expanded sales of connectors for reception of terrestrial digital broadcasting 3,000 2,000 Entry into the overseas market for portable and in-vehicle navigation equipment 1,000 0 CY2005 CY2006 E CY2007FCT Source JEITA

13 Trends of major markets Cellular Phones 13/43 1,200,000 1,000,000 (thousand of sets) W/W production quantities CAGR 16.8% SMK's action 800,000 Expanded entry of orders received from major overseas manufacturers 600, ,340 1,079,870 Development of interface connectors, internal connectors and RF parts for ever thinner and more functional terminal equipment 400, , ,700 Intensified proposal making of Bluetooth products, earphone cables and power circuit parts 0 CY2005 CY2006E CY2007FCT Source JEITA

14 Trends of major markets Personal Computer (Desktop & Notebook PCs) 14/43 250, , ,000 (thousand of sets) 194,333 58, CAGR 9.5% 214,919 73,995 W/W production quantities 232,878 87,274 Notebook Desktop SMK's action Marketing of Windows Vista-compatible remote controls and light receivers 100,000 50, , , ,604 Increased sales of Express card slot-compatible remote controls and development of small light receivers Enhanced marketing of coaxial connectors and power connectors for notebook PCs 0 Source JEITA CY2005 CY2006E CY2007FCT

15 Major risks for SMK for company management 15/43 1. Competition and pricing trends (prices and costs) 2. Risk (economic, political and social) on spreading into overseas countries 3. Fluctuation of US$ exchange rate (SMK's budget rate: 115 yen/$) 4. Movement of major markets and customers (cellular phones, A/V equipment and automobiles) 5. Product development capability, speed and intellectual properties 6. Occurrence of major quality and environmental issues 7. Natural and human-originating calamities

16 SMK's management challenges 16/43 1. Three challenges *Enhancement of SMK's brand recognition *Quality improvement by TN (transnational) ZD activities *Another try for creation of better quality products, Only conscientious parts can build good equipment 2. Turn-around of red-ink business into black earliest possible 3. Efforts for achievement of our middle term business plan *Annual dividend of 25% to 30% dividend payout ratio 4. Environmental corporate management *RoHS Directive and Chinese regulation in respect to its own RoHS *Publication of environmental reports 5. CSR management *Compliance with the Japanese version of the SOX Act

17 The 7th middle-term business plan 17/43 Slogan Creating an exciting future Vision 1. Realization of sales growth accompanying reasonable profits 2. Build-up of value creation models sustaining growth 3. Fostering company culture leading to proactive action Corporate target figures FY2006 Result FY2009 Target Net sales 791 million yen 1,000million yen Ratio of operating income to net sales 6.5% 10% ROA 9.8% 13% ROE 11.0% 15%

18 <Consolidated> Division-specific target amounts of sales and profit Realization by each Division of growth accompanying reasonable profits Operating profit rate FY2006 Result CS The core of growth based on our 7th Middle Term Business Plan FY2009 Target 18/43 FY2009 Target TP FY2006 Result FC FY2006 Result FY2009 Target Net sales (million yen) Capital investment : 13.3 billion yen during FY04 FY06 to 18 billion yen during FY07 FY09 CS FC TP Expansion of connector production lines, lay-out of a factory integrated for connector production (from components through assembly) and new product development Expansion of switch business, establishment of a new factory in China or expansion of the Philippines factory, and new product development Construction of a new facility in the Philippines, renovation and buildup of production lines/improvement of clean-room environment, and new product development

19 <Consolidated> Market-specific sales targets Million yen 79, ,500 19/43 Middle term strategic markets => Digital AV, IT and automotive electronics products CS Div. Cellular phones, digital AV and automotive products FC Div. Cellular phones, digital AV products, PCs and automotive products TP Div. TP Div. Vehicular navigation equipment, SmartPhone, and POS equipment/atms/ticket vending machines

20 <Consolidated> Sales by market region (with FY2006, actual performance and with FY2009, targets) 20/43 Ratio of overseas sales - from 67% 73% Japan Europe area 2,958 3,200 China area 36,889 41,000 17,040 30,000 Asia area 10,300 6,272 America area 15,915 18,000 Unit:million yen

21 Strategies for achievement of plans 21/43 Strengthening of marketing power Finding new drivers with potential for growth Strengthening basic supporting technology - concentration in marketing of our standard products -

22 Number of announcements of new products (of part manufacturers, annual bases) 22/43 35 Number FY2004 FY2005 FY2006 Source: New product information on respective companies' home pages (from Apr. to Mar.)

23 SMK supports the "Beijing-Paris Rally". 23/43 *Supports "SMK Special" making entry in the 3rd "Beijing Paris-Rally" (the 1st race conducted in 1907) (Our entry is a 1916 Lancia Theta. All 134 entries being antique cars) *Starting on May 27, 2007 from Beijing to arrive in Paris on June 30, for total travel of 12,200 km *For uplift of SMK brand image

24 Division 24/43

25 CS Division 25/43 CS= Connection System Major productsconnectors Jacks Connectors Jacks FPC connectors Card connectors I/O connectors Speaker terminals Power jacks and headphone jacks

26 CS Division Amounts of sales and profit (consolidated) 26/43 Net sales Unit: 100M yen Profit

27 27/43 CS Division Transition of market-specific sales (consolidated) 6% 4% 4% Industrial applications 58% 66% 65% Information technology applications 5% 31% 6% 6% 24% 25% Vehicular applications Audio/visual applications Result Result Plan

28 Card connectors and semiconductor sockets 28/43 ales transition FY2005 as 100% Small card connectors for cellular phones microsd/transflash(tm) card connectors Memory Stick Micro(TM) card connectors Optimization of product variations Result Result Forecast Camera connectors Thinner Smaller Higher functional SIM card connector, thinner type

29 PB connector 29/43 Sales transition FY2005 as 100% 412 PB-4A(h=0.8mm type) PB-4B(h=1.2mm type) Result Result Forecast Low in profile /space effective Shielding technology Target Most small portable equipment Proposals for versatile applications

30 2007 strategic markets 30/43 Car electronics In-vehicle camera connectors Growing market Telecom 0.4 mm spacing FPC connector, h=0.75 mm type Unit: million sets Coaxial connectors Target: Vehicular radios and nav. equipment Target:ETC TC-15 High speed transmission Shielding technology VC connectors Twin/flange type Coaxial connectors TS-9 Small and low in profile Micro USB connectors

31 CS Division 2007 Policy 31/43 1. Promotion of development of designing technologies, products, and production technologies Timeliness and speeding up Patents and quality Implementation of business unit- and product model-specific strategies More effective investment (general or diverted equipment) Promotion of support to overseas Works Enhancement of overall capability Implementation of business units and product modelspecific strategy Dynamic start [the 7th Middle Term Business Plan]

32 Division 32/43

33 FC Division 33/43 [Major products]switches, keyboards, control panels, earphone/microphone combinations, cradles, microphones, remote controls and camera modules SW (Switch) FC=Functional Components UN (Unit) Various types of switches Earphone/microphon e combinations RC (Remote Control) Cradles Electret condenser microphones (ECMs) MD (Module) Remote controls Color intelligent remote controls Camera modules

34 FC Division Amounts of sales and profit (consolidated) 34/43 Unit:100 million yen Net sales Operating income

35 FC Division Transition of market-specific sales (consolidated) 35/43 16% 17% 15% Industrial applications Living and intermediate components 25% 3% 21% 4% 23% 4% Information technology applications Vehicular applications 56% 58% 58% Audio/visual applications Result Result Plan

36 FC Division Strategic markets 36/43 Vehicular application market Cellular phone market Thin slide switches 2-done switches Small horizontal switches Rubber key switches AV market In-vehicle remote controls (for vehicular nav. and audio equipment) Detector switches (DSI and DSJ series) Bluetooth earphones Worldwide AC adapters PC market Multi-function switches Remote controls for large flat screen TVs 1-seg. broadcast antennas Remote controls for Window Vista

37 FC Division Policy for /43 Cost reduction Product development Human resources

38 Division 38/43

39 Major products SMK Touch panels TP Division Touch Panel Resistance sensitive system Film/glass structure Standard type Contamination resistant type Antibacterial type Reinforced glass type High transparency type Low reflectance type Glass/glass structure Linear polarization type Circular polarization type Ultra low reflectance type Polarized sunglass type Film/film structure Standard type Linear polarization type Circular polarization type 39/43 Optical system Force-feedback Glass panel Acrylic panel

40 TP Division Amounts of sales and profit (consolidated) 40/43 Unit:100 million yen

41 TP Division Transition of market-specific sales (consolidated) 41/43 Industrial applications 22% 3% 23% 4% 26% 5% Living and intermediate components Information technology applications 75% 73% 67% Vehicular applications 2% Result Result Plan Audio/visual applications

42 TP Division 2007 strategic markets 42/43 Unit: K set/year 50,000 45,000 10,000 Mobile Portable Navi Game Smart phone :Business achieved :Target 5,000 MFP PPC 4,000 3,000 DVC Car Navi PC 2,000 1,000 Interphone POS Arcade game Handy terminal FA ATM KIOSK 200 Medical 100 <Qty> <Size> Small Medium Large

43 TP Division 2007 Policy 43/43 FY2007 strategic activity points Sales increase 1 Intensified marketing of differentiated products Glass/glass, and high transparency low reflectance film/glass for in-vehicle applications, force-feedback, and integrated type optical touch panels 2 Marketing in the overseas market Glass/glass: Europe and USA Film/glass: USA and China Optical type: USA and China Expansion of overseas production 3 Philippines (SMK-PH) - Labor saving China (SMK-DG) - Production of integrated type optical touch panels