Continuous Growth with Sustainable Superior Profits

Transcription

1 Continuous Growth with Sustainable Superior Profits Image Size W195 x H530 px Hirokazu Hashimoto President and Group CEO Anritsu Corporation February, 2017 TSE code :

2 Cautionary Statement All information contained in this release which pertains to the current plans, estimates, strategies and beliefs of Anritsu Corporation (hereafter "Anritsu") that is not historical fact shall be considered forward-looking statements of future business results or other forward-looking projections pertinent to the business of Anritsu. Implicit in reliance on these and all future projections is the unavoidable risk, caused by the existence of uncertainties about future events, that any and all suggested projections may not, come to pass. Forward-looking statements include but are not limited to those using words such as "believe", "expect", "plans", "strategy", "prospects", "forecast", "estimate", "project", "anticipate", "may" or "might" and words of similar meaning in connection with a discussion of future operations or financial performance. Actual business results are the outcome of a number of unknown variables and may substantially differ from the figures projected herein. Factors which may affect the actual business results include but are not limited to the economic situation in the geographic areas in which Anritsu conducts business, including but not limited to, Japan, Americas, Asia, and Europe, changes in actual demand for Anritsu products and services, increases or decreases in the competitive nature of markets in which Anritsu sells products or buys supplies, changing aptitudes at providing services, and exchange rates. You also should not place reliance on any obligation of Anritsu to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Anritsu disclaims any such obligation. 2 Copyright ANRITSU

3 Agenda I. Mid-term Business Plan and Business Strategy VISION, Outline of our business segments 2. Middle and long-term management basic strategy 3. Revenue and Op. profit Actual/ Forecast 4. Business opportunities < T&M > 5. Business opportunities < PQA > 6. Financial strategy 7. Shareholder Return Policy 8. Corporate Governance II. Financial Results for the 3rd. Quarter and Forecast for full year of FY Copyright ANRITSU

4 VISION 4 Copyright ANRITSU

5 1-2. Outline of our business segments T&M For development, manufacturing, installation and maintenance Mobile Network Infrastructure Electronics PQA Food Safety X-ray inspection systems Checkweighers Others IP network equipment Opt. devices (Revenue by business segment) 95.5 Billion Yen consolidated revenue in FY2015 Mobile 45% T&M 71% Network Infrastructure 35% Electronics 20% PQA 20% Others 9% (Sales of T&M business by region in FY2015) Japan 15% Asia & Pacific 35% Americas 30% EMEA 20% T&M: Test & Measurement PQA : Products Quality Assurance 5 Copyright ANRITSU

6 1-3. Outline of our business segments <T&M> Core networks Metro networks Mobile Network Infrastructure Mobile networks Mobile Electronics Wireline Communication Wireless Communication General Purpose R&D Manufacturing Network Infrastructure (35%) Mobile (45%) Electronics (20%)* Installation/ Maintenance *Electronics components etc. 6 Copyright ANRITSU

7 2. Middle and long-term management basic strategy Capture growth drivers without fail, and realize continuous profitable growth Market average annual growth rate T&M 3-5% Growth driver Broadband expansion and innovation (1) LTE-Advanced (2) Network Reshaping (3) IoT/5G, Connectivity Sales growth rate Target Operating margin 7% 20% PQA 3-5% Improvement of safety, security and health Solutions with X-ray for quality assurance 7% 12% Consolidated % ROE % 7 Copyright ANRITSU

8 3. Revenue and Op. profit Actual/ Forecast Revenue (B yen) Op. profit (B yen) Revenue Other PQA Op. profit (Consolidated) T&M 0 Actual Actual Actual Actual Forecast 0 Op. Margin FY2012 FY2013 FY2014 FY2015 FY2016 Consoli. 17% 14% 11% 6% 3% T&M 21% 17% 12% 7% 1% ROE Consoli. 25% 13% 10% 5% - (Note) Exchange rate for FY2016 2H(Forecast): 1USD =100 yen 1EURO=110 yen 8 Copyright ANRITSU

9 Anritsu s business areas are expanding toward IoT and 5G Current main business domains Future business domains Cloud Data centers Clouds Big data AI Network Fixed Networks Network SDN/NFV 400G Edge computing LTE Mobile Networks LTE-A V2X 5G NB-IoT Connectivity LOWPAN Smart phones Smart Devices Smart phones Automotive transportation Smart homes Smart cities Smart devices 9 Copyright ANRITSU

10 Contributing to the establishment of 5G network infrastructure Features of 5G : 1/10 Latency 100 Peak Data Rate 100 Capacity Smart Devices Mobile Networks Fixed Networks Cloud 5G New RAT 100G/400G SDH/WDM Data Center 40G/100G C-RAN CPRI LTE-A LTE NB-IoT Small Cell OTN Ethernet SDN/NFV Internet AOC PCI-E R&D and Manufacturing Solution for IoT Device/ Module Support for Mobile Network by Widespread products ranging from RF to optical Support for high-speed 100G/400G communications Continued world leader in bit error rate test IoT Device / Module Measurement Spectrum Analyzer Signal analyzer New HH SPA 40G/100G Analyzer BERT Scope eosight Big Data Analytics BTS Master OTDR Signal Quality Analyzer 10 Copyright ANRITSU

11 Business Opportunities <T&M> Market size Manufacturing for 3G/Smartphone R&D for LTE Mobile Market Now 1LTE-Advanced Now Business Opportunities 3-1 : IoT, Automotive 3-2 : 5G Development Investment for initial development for starting 5G services Investment for development to achieve 1Gbps continued 3-3: 5G Manufacturing Wireline Market 2Network Reshaping Increasing data center speeds and capacities Investment for Small Cells Copyright ANRITSU

12 4-2-1.Latest trends in 5G and test solutions CY Rel.14 Rel.15 Rel.16 Rel.17 NSA-NR (Non-Standalone New Radio) 5G Specification R&D Phase Pre-Standard Standard-based R&D Trial / Service Trial Commercial service Test Solutions Main Competitors Rohde & Schwarz, Keysight Start development of chipsets and devices Korea Winter Olympic Tokyo Olympic Solutions for mass production Solutions for initial stage development 12 Copyright ANRITSU

13 LTE Compatible New RAT (higher performance, wide-area) What is 5G? 5G = LTE Enhancements + Next-Generation Wireless Technologies LTE and 5G coexist. frequency 40GHz LTE Network (LTE Service Area) 5G Network 5G 28GHz 30GHz 20GHz Next-Generation Technologies 10GHz Sub-6GHz 6GHz Roadmap of LTE LTE-Advanced Rel 12 & 13 LTE Enhancement Rel 14 & 15 Continued Progress 3GHz 1GHz 400MHz ~2020 Year 13 Copyright ANRITSU

14 Roadmap of LTE-Advanced < LTE-Advanced> Chipset User Equipment Operator Expected demand for measuring instruments for R&D Now Data speeds on Commercial mobile terminals Carrier Aggregation Rel.13 ~ 300 Mbps Rel.14 Rel.15 ~ 450 Mbps ~ 600 Mbps DL3CA *China Mobile Shift in CY2018 from CY2017 DL4CA DL5CA MIMO DL4 x 2 DL4 x 4 DL8 x 4 Frequency 3~4 GHz 5 GHz (Unlicensed band) 14 Copyright ANRITSU

15 Food chain and players in mobile telecom market < LTE-Advanced > Operators AT&T Verizon T-Mobile Orange China Mobile China Unicom China Telecom NTT DoCoMo KDDI Softbank + Sprint SK Telecom etc. MVNO For R&D Qualcomm, Intel, MediaTek, Leadcore, Hisilicon, Spreadtrum, Broadcom, Marvell, NVIDIA, etc. Test houses SGS, 7 layers, Cetecom, TMC, Canvas M, etc. Chipset vendors Application providers Base stations Smartphone & Tablet vendors Apple, Amazon, Google, Microsoft+Nokia, Samsung, Xiaomi, Huawei, OPPO,VIVO, HTC, LG, ZTE, Lenovo, Coolpad, Micromax, Sony, Fujitsu, etc. Ericsson, Alcatel-Lucent, Huawei, etc. For production Wireless modules /component vendors EMS Foxconn, Asus, BYD, Quanta, HEG etc. Own factories 15 Copyright ANRITSU

16 Mobile R&D business and solutions < LTE-Advanced > Platform(Core) Development Conformance test RF Protocol Operator Acceptance test Smartphone Commercial test Uses Comm. standard development Chipset development Conformance test Interoperability test Comm. Carrier acceptance test Application development UE operation test Main customers Chipset vendor UE vendor Chipset vendor, UE vendor, Communication Carrier Com Carrier, Test house, Vendor, UE vendor Applications developer Main theme FDD / TDD-LTE, LTE-Advanced (Carrier aggregation etc.) VoLTE (Voice over LTE) MIMO (Multi Input Multi Output) Chipset unification of 3G/LTE and SRW (Short Range Wireless) Improve data throughput Battery consumption etc. Market Positioning Keep No.1 position Keep No.1 position Growing market Position improve Growing market Position improve Growing market Position improve Products Main Competitors Rohde & Schwarz Rohde & Schwarz, Keysight(Agilent, Anite), Spirent Rohde & Schwarz, Keysight 16 Copyright ANRITSU

17 Acquisition of Azimuth Systems, Inc. (1/2) Company Name:Azimuth Systems, Inc. Headquarters:Boston, USA Business model: Development and sales of channel emulators, etc. Main customers:operators, chipset vendors, network equipment vendors, UE vendors, etc. in the Americas, EMEA, Asia, and Japan Mobile Devices Protocol Technology Sep, 2016 Network Infra. RF Technology Real-world environment Base station Signal (1) Reflection from obstacles Fading (Fluctuating signal strength) Communication device (2) Movement In the lab (e.g., communication device testing) Base station simulator Channel Emulator Cable Fading (Fluctuating signal strength) Communication device (device under test) Cable 17 Copyright ANRITSU

18 Acquisition of Azimuth Systems, Inc. (2/2) Channel Emulator FTL Channel Emulator for 5G Solutions for the OTA* - 3CA/4CA - 4x4MIMO - Cellular/WiFi Coexistence Automotive solutions - Telematics Drive emulation - Evaluation of onboard reception for an automotive module - Cellular/WiFi Coexistence 5G R&D solutions *OTA : Over The Air - 5G RF conformance testing - 5G protocol conformance testing Short term Medium term Long term Grow revenue through collaboration in the strong markets of Anritsu and Azimuth 1. Offer solutions produced by a fusion of our protocol technologies with Azimuth Systems RF technologies (start-up period for measuring instruments to develop 5G) 2. Roll out drive emulation and others for the automotive market Offer conformance testing for 5G devices 18 Copyright ANRITSU

19 Expand Earnings Opportunities by Supporting the Creation of New Markets and Various Industrial Fields through the Utilization of 5G Profitability: High Utilization of IoT/5G A B Smart Devices Market Smartphones /Tablet devices Profitability: Low Number of connections: Small Main business areas up to 4G Automotive field C Industrial Equipment field Home security field Smart meter field Other IoT fields Business areas to be newly introduced with 5G Number of connections: Large Source: NIKKEI COMMUNICATIONS April issue 2015 (From materials of the Ministry of Internal Affairs and Communications) 19 Copyright ANRITSU

20 Manufacturing solutions for Smart phone Strategy Targeting to China Tier2/3 vendors and India local vendors in Smartphone market and in-vehicle device/module vendors in Automotive market, we ll achieve more market share by communicating with Chipset vendor aggressively and continuously, developing Turn-key solution which hits customer s value clearly, and having more cooperation with sales region closely. Smartphone Shipment Market Share in China by Vendor * 1. Huawei, Vivo, Oppo A The rise of China vendors and intensifying competition 2. The growth of the manufacturing market in India For 2G / 3G / LTE & Connectivity MT8870A Universal Wireless Test Set *Source :Gartner "Market Share: Final PCs, Ultramobiles and Mobile Phones, All Countries, 2Q16" 15 August 2016 Graph created by Anritsu based on Gartner research Main Competitors Rohde & Schwarz, Keysight 20 Copyright ANRITSU

21 R&D solutions for Smart Devices for IoT B -1 Communication distance Wireless systems for achieving IoT >km LPWA Cellular IoT 3G,LTE,5G NB-IoT Cat.M Cat.1 100m 10m 1m SIGFOX LoRaWAN NFC Wi-SUN Zigbee Z-Wave Bluetooth Wi-Fi Mbps Data Transmission rate R&D Solutions for Cellular IoT MT8821C Radio Communication Analyzer Chipset SiP (System in Package) MD8430A Signalling Tester Main Competitors Rohde & Schwarz, Keysight 21 Copyright ANRITSU

22 Manufacturing solutions for Smart Devices for IoT [Billions] The Number of IoT Devices B -2 The growth of Connectivity & Module markets for IoT For Bluetooth / WLAN MT8860C WLAN Test Set MT8870A Universal Wireless Test Set WLAN Bluetooth Main Competitors *Source :World Economic Forum **SiP (System in Package) SiP1 SiP2 Teradyne, National Instruments, Rohde & Schwarz, Keysight 22 Copyright ANRITSU

23 Adoption of new technologies in the automotive market and Anritsu s initiatives C 2015 Advancement of automated driving Level Level 2 Level 3 Spread of 4G telematics Mandatory deployment of ecall Increasing use of 79GHz radar Active verification testing of V2X Telematics/eCall * emergency calling system for vehicles Mobile communication/connectivity Mobile network simulator Wireless communication RF performance test Millimeter wave signal transmitter tester 79GHz high resolution automotive radar V2X communication quality assessment V2X (802.11p) * vehicle-to-vehicle/road-to-vehicle communications 23 Copyright ANRITSU

24 Food chain and players in Automotive market Safety, Emergency, Comfort, Infotainment, Diagnostic Car Vendors Dashboard Vendors Module Vendors Chipset Vendors Autonomous car ADAS (Advanced Driver Assistance System) Telematics (Telecommunication + Informatics) ITS C-ITS (Intelligent Transport Systems) Transceiver module (Cellular + V2X + Connectivity + Antenna +etc. ) Rader module Antenna Satellite receiver Tuner Cellular module, Connectivity module, V2X module, Rader, Antenna, Connector, Cable, etc Semiconductors for communication 24 Copyright ANRITSU

25 Business opportunities and initiatives < Network Reshaping> Further evolution towards IoT/5G RRH BBU BBU Optical Fiber RRH Main Competitors Viavi (formerly known as JDSU) Mobile Fronthaul Mobile Backhaul Macro Cell Small Cell Current LTE Network 5G Network Reshaping the Future of Network Test Solution RRH: Remote Radio Head BBU: Base Band Unit Wireless Integration Optical Transport (CPRI) MT1000/1100 Network Master MT8220T BTS Master Wireless Optimization MT8220T BTS Master [ Cloud Solution ] 25 Copyright ANRITSU

26 Business opportunities and initiatives < Datacom Market> Main Competitors Clouds Big data AI Keysight Data Center WAN Core Leaf Switch Server R&D High speed communication (100Gbps E) Manufacturing BUS Optical Device 26 Copyright ANRITSU

27 5-1. Outline of PQA business segments (Products Quality Assurance) General examples of food production process glass, plastic rubber packing Materials Automatic Combination Weigher 包装機 Metal Detector Check Weigher stone fragment bone, shell Contamination Variation in the amount of contents Breaks and chips Defective packaging (sealing) Printing error/print blur Weighing and filling Packaging Weight inspection Contaminant inspection Package inspection Box packing/packaging machine X-Ray Inspection System Major customers Boxing Rejecter Kraft Foods Group, Unilever, Nippon Ham Group, Glico Group, Nissui Group, etc. 27 Copyright ANRITSU

28 5-2. Strategy and growth opportunities < PQA > Expanding overseas business Revenue (B yen) The growing PQA business Op. profit ratio (%) Revenue Op. profit ratio 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY20 Est (GLP2017) (2020VISION) Market North America Asia Japan Major initiatives Develop market with X-ray inspection systems as a key solution Improve market share through quality assurance solutions with high added value in response to cutting-edge needs Main Competitors Mettler-Toledo, Marel, Ishida 28 Copyright ANRITSU

29 6-1. Financial Strategy D/E ratio (%) IFRS <Target> Ratio of net assets to total assets: 60% D/E ratio : 30% (61, 29) (59, 25) (62, 20) Ratio of net assets (Ratio of net assets to total assets, D/E ratio) to total assets (%) 29 Copyright ANRITSU

30 6-2. Profit structure improvement targets < T&M > 100% 80% 60% 40% 20% 0% 21% 17% 12% 7% 1% 20% 30% 32% 35% 38% 41% 30% 11% 12% 13% 14% 14% 12% 38% 38% 40% 41% 44% 38% FY12 FY13 FY14 FY15 FY16 Operating Forecast Model Operating profit SG&A R&D COGS Cost structure improvement measures Introduction of high value added solutions (professional services, software) Thorough enforcement of development ROI & ROIC management (*1) SG&A expenses: Organizational structure and optimal allocation of human resources in response to changes in customer trends *1:KPI target index for R&D investments is an R&D ROI(gross profit / R&D investment value) of 4.0times or higher. 30 Copyright ANRITSU

31 7-1. Shareholder Return Policy Dividend Policy Distribute profits in accordance with its consolidated performance and by taking into account the total return Take the basic approach of raising dividends on equity (DOE) in accordance with the increase in consolidated profits for the fiscal year Aim at a consolidated dividend payout ratio of 30 percent or more 31 Copyright ANRITSU

32 7-2. Dividend Forecast No change for annual dividend of yen per share (including interim dividend of 7.50 yen, DOE 2.8%) Profit(B.Yen) Dividend(Yen) DOE(%) Profit Dividend DOE 32 Copyright ANRITSU

33 7-3. Dividend payout ratio and Total return Total Dividends/ Purchase of treasury stock (B.Yen) Total return ratio of 3-year (FY2012~FY2014) cumulative: 45.4% including 5.0 billion yen of purchase of treasury stock Payout ratio(%) Total Return 45% /3 14/3 15/3 16/3 17/3 0.0 Total Dividends Purchase of treasury stock Payment ratio 33 Copyright ANRITSU

34 8. Corporate Governance New Structure after transition to a Company with an Audit Committee Shareholders Meeting [Legend] Audit Committee Board of Directors Independent Committee Outside executive Internal executive Chairman Management Audit Department Nominating Committee Compensation Committee 34 Copyright ANRITSU

35 Ⅱ. Financial Results for the 3rd. Quarter and Forecast for full year of FY Copyright ANRITSU

36 Ⅱ-1. Consolidated performance -Financial results- Unit: Billion Yen International Financial Reporting Standards (IFRS) 3Q FY2015 (Apr. to Dec.) 3Q FY2016 (Apr. to Dec.) YoY YoY (%) Order Intake (6.3) -9% Revenue (9.9) -14% Operating profit (loss) (3.5) -68% Profit (loss) before tax (3.9) -76% Profit (loss) (3.2) -82% Comprehensive income (3.3) -80% Note : Numbers are rounded off in each column 36 Copyright ANRITSU

37 Ⅱ-2. Consolidated performance -Results by business segment- Unit: Billion Yen International Financial Reporting Standards (IFRS) 3Q FY2015 (Apr. to Dec.) 3Q FY2016 (Apr. to Dec.) YoY YoY (%) T&M PQA Others Total Revenue (10.1) -19% Op. profit (loss) (4.1) -84% Adjusted operating profit (loss)* (4.2) -80% Revenue % Op. profit (loss) (0.3) -27% Revenue % Op. profit (loss) (0.5) Revenue (9.9) -14% Op. profit (loss) (3.5) -68% Adjusted operating profit (loss) (3.6) -65% Note : Numbers are rounded off in each column * Adjusted operating profit is Anritsu s original profit indicator to measure results of its recurring business by excluding profit and loss items with a transient nature from operating profit. No items were adjusted for PQA and Others segments T&M: Test & Measurement PQA : Products Quality Assurance 37 Copyright ANRITSU

38 Ⅱ-3. Consolidated performance -Revenue and Op. profit by quarters- Consolidated operating margin was 3.8%, operating margin for the T&M was 2.0% for 3Q Bn. Yen Bn. Yen Others PQA T & M FY2015 FY2016 FY2015 FY2016 Note : Numbers are rounded off in each column Revenue Op. profit(loss) 38 Copyright ANRITSU

39 Ⅱ-4. Overview of operations by business segment Segment T&M: Mobile NW FY2016Q3 (April to December, 2016) Restrained investment in the smartphone-related market continued LTE- Advanced IoT, 5G, Connectivity Restraint in capital investment by chip and terminal vendors continued Automotive and IoT/5G development projects are beginning to materialize Capital investment in optical digital related business was strong Asia Americas Restrained investment in LTE-Advanced development continued Competition intensified due to a slowdown in growth of the overall smartphone manufacturing market Capital investment in optical digital related business is on a recovery trend PQA: Strong demand for X-rays both in Japan and overseas T&M: Test & Measurement NW: Network Infrastructure PQA : Products Quality Assurance 39 Copyright ANRITSU

40 Bn. Yen Ⅱ-5. Transition of Orders T&M : Downward trend with continued year-on-year decrease PQA : Upward trend with year-on-year increase, since 2Q Others PQA T & M FY2014 FY2015 FY2016 Note : Numbers are rounded off in each column 40 Copyright ANRITSU

41 Ⅱ-6. Transition of Revenue by region Bn. Yen A downward trend continued overseas with lower revenue year on year Asia & Others EMEA Americas Japan FY2014 Note : Numbers are rounded off in each column FY2015 FY Copyright ANRITSU

42 Ⅱ-7. Cash Flow Operating cash flow margin ratio was 10% Details Unit : Billion Yen Cash Flow (FY2016 Q3 ) Operating CF : Investing CF : Financial CF : 6.4 Bn. Yen (2.9) Bn. Yen (2.7) Bn. Yen Free Cash Flow Op. CF + Inv. CF : 3.5 Bn. Yen Cash at the end of period 38.0 Bn. Yen Interest-bearing debt Bn. Yen Note : Numbers are rounded off in each column * Other main items: Advances received, etc. Op. CF 6.4 Inv. CF (2.9) Fin. CF (2.7) 42 Copyright ANRITSU

43 Ⅲ. Forecast for full year of FY2016 Revenue Operating profit (loss) Profit (loss) before tax Profit (loss) T&M PQA No changes from the previously announced forecast International Financial Reporting Standards (IFRS) Others FY2015 FY2016 Unit: Billion Yen Actual Forecast YoY YoY(%) (8.0) -8% (3.7) -63% (4.0) -74% (2.8) -73% Revenue (9.2) -14% Op. profit (loss) (4.2) -89% Revenue % Op. profit (loss) % Revenue % Op. profit (loss) (0.0) Note 1 : Exchange rate : FY2015 (Actual) 1USD=120 yen, 1EURO=133 yen FY2016 (Initially Forecast) 1USD=110 yen, 1EURO=125 yen FY2016 2H(Forecast) 1USD=100 yen, 1EURO=110 yen Note 2 : Numbers are rounded off in each column 43 Copyright ANRITSU

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