Tdk Corp S/Adr

So if the time has come, we would like to start the TDK's performance briefing for the third quarter fiscal year, March 2021. So we have today Executive Vice President, Mr. Tetsuji Yamanishi. Thank you very much for attending despite your busy schedule towards TDK's performance briefing of the third quarter fiscal year 2021. So from my side, I would like to talk about the consolidated results for the third quarter. First of all, this is the key point of a performance. The third wave of COVID-19 has been hitting countries around the world, and the impact continues on society. Against this backdrop, in areas of social and economic and production activities has already recovered. the recovery trend of electronics demand has become clearer from the second quarter and going into the third quarter. In the ICT market, the X-related demand, such as the mobile devices, continue to be robust, as so in the automotive market as electrification accelerating XEV and ADAS. An expansion in overall demand has been seen. In the industrial equipment market, grew as demand for renewable energy is increasing, and the recovery of demand in energy transformation EX has become clear. Under this environment for demand, sales increased 11.3% against the previous year, and operating income went up by 11.6% against the previous year. This is a record high level for a quarter, both for sales and operating income. So orders for the auto market recovered sharply from the second quarter, and this momentum continued into the third quarter. Sales of passive components and sensors increased. Demand for DX-related products for the ICT market was robust, leading to an increased sales of rechargeable batteries and passive components, contributing largely to the overall earnings. Recent orders for DX-EX-related products continue to be steady. So based on the favorable results up to the third quarter, we have decided to make an upward vision of the full year outlook. This is the second, again, against the previous quarter. We should not relax because demand has recovered. At the beginning of the year, we have compiled additional earnings improvement measures such as rationalization and enhancing efficiency to be prepared against the spread of COVID-19. We will continue to implement these measures. At the same time, based on the demand trend of DX and EX, we'll promote asset efficiency measures, including business site restructuring, aiming to lead the acceleration of improvement over profitability. Next, I would like to talk about the outline of consolidated results. The yen has been stronger against the dollar. This has impacted our sales negatively by 7 billion yen, and operating income has declined by 4.3 billion due to this impact. Including this, sales was 395.7 billion, that is 40.1 billion increase year-over-year, 11.3% increase of sales. Operating income was 45.1 billion yen year-over-year, plus 4.7 billion yen, 11.6% increase. Income before income tax was 46.2 billion yen. Net income was 30.9 billion yen. EPS was 244.22 yen. In terms of forex sensitivity, it has changed. Operating income level against the yen against the dollar with 1 yen fluctuation. This was 1.2 billion yen for the full year. The end year impact will be 200 million for the year. Next slide. going to the third quarter buy segment status. Peso component sales was 109.5 billion yen. Year over year, this is 11.4% increase. Operating income was 13.4 billion yen, 26.4% of increase. Operating income margin was 12.2%. It has gone up. The demand for the underwater market has recovered sharply for the second quarter. In the ICT market, mainly in the 5G-related area, the demand has been very robust. And industrial equipment market demand, because the demand for the renewable energy has increased, in all the businesses we saw increased sales and profit. For the ceramic capacitors, sales to 5G-based stations increased. has declined, but on the other hand, sales for automotive market and distributors has increased. For aluminum electrolytic capacitors and film capacitors, on top of the automotive market, for the industrial equipment, for the renewable energy, sales has increased. For the inductive device, the demand for the automotive market has increased. On top of that, the ICT market sales has increased due to the startup of the new smartphone products. In high-frequency devices, the 5G-related demand was strong. And for the piezoelectric material products and circuit protection components, sales is increasing in auto, ICT, and industrial equipment overall. Going to the sensor application business, sales was 23 billion yen. Against the previous year, it has been an increase of 13.3%, offering a loss has improved from the previous year. As we read the passive component segment, because the demand in the automotive market has recovered and sales increased towards substantially in the ICT market, mainly for smartphones, so all the three businesses have seen the increase of sales and profit. Sales of temperature facial sensors increased towards the auto and home appliances, recovering to a level so that it can contribute to our earnings. As for whole sensors, the supply chain for the automotive market is long. There was a delay in order recovery. However, sales started to recover at last. Furthermore, the TMI sensor with the magnetic sensors, the sales increased sharply as the peak for new smartphones has arrived. Sales and operating profit has increased sharply. For memory sensor, The expansion of the customer base for the motion sensor has increased, so sales for that safety market has increased. At the same time, expense was rationalized through the review of the resources. This led to a decline in loss from the previous year. Next, going to the magnetic application business. Sales was 55.9 billion yen year over year. This was a decline of 3.5%. Operating income was 4.2 billion yen. a decline of 19.2% year over year. For HDD heads, due to the demand increase of PCs, the HDD assembly sales increased. However, on the other hand, the total demand of HDD has gone down, and the shipment volume of HDD heads has declined in line with this. So overall, we saw a decline in sales and profit for the head business. On the other hand, for the HDD suspensions, The NLHCD for the data centers for the major clients has been robust. The two linear line HCDs, the shipment volume has increased. The suspension business overall saw an increase in sales and profit. For magnets, the demand recovered for the automotive market and the sales towards the industrial equipment such as renewable energy has increased. So we saw an increase in sales and the loss has improved against the previous year. Going to the energy application products. Sales was 195.4 billion yen. Operating income was 42.8 billion yen. Year over year, we saw a sales increase of 21.2%, profit increased by 5.7%. Sales and profit increased for the rechargeable batteries due to the increase of smartphone units and the The smartphone sales has increased slightly against the previous year, but PCs and tablets continued at a high level. So many sales for small-sized products such as wireless earphones has been robust. Sales of power cell products for the home energy storage systems and electric motorcycles has continued to grow from the first quarter and continued into this quarter. In the power supply business, demand recovered in the industrial equipment business such as in the semiconductor production equipment and has seen an increase in both sales and profit.

Next, let me talk about the quarterly results of sales and operating income by segment from Q2 to Q3, quote-on-quote basis. I start with the passive component segment, the sales segment. was up by 10.1 billion yen, or 10.2% from Q2. Operating income was up by 13.4 billion yen, or 38.1%. The sales of, first of all, the automotive market, as well as the industrial equipment markets, increased. And also in ICT markets, due to the peak season of the smartphone market, it's also increased. But on the other hand, that's the sales to the 5G base station have declined and have been almost a flood from Q2. As a result, high-frequency component products were almost a flood, but on the other hand, in other business areas which have more business on the automotive markets or industrial equipment markets have recognized the increase in both sales and income. Next, let me talk about sensor application products. sales was up by 3.2 billion yen or 16.2%. And operating loss reduced by 1 billion yen. With the recovery of the demand in automotive markets, temperature and the pressure sensor as well as whole sensor increased the sales and also TMR sensor have substantially increased the sales and due to the peak season of smartphone and also for the MEMS sensor, it also has been favorable for the smartphone in China or the drone applications, and we can recognize an increase in the sales in all of these areas. As for operating income, temperature and pressure sensor and magnet sensor can be profitable, and the memory sensor can improve its income, and also with our efforts to make that development efficient, and we could reduce that margin of loss from Q2. Next, let me talk about magnetic application product segment. Sales was up by 5.5 billion yen, or 10.9%, operating income is up by 2.8 billion yen. When it comes to sales, from the HDD head, sales volumes have declined by 2% from Q2, but still we have, that's the increase it, average selling price or that's with the boosted demand for the PC and 3.5 inch HDD assembly sales have increased it and now HDD head business as a whole we have increase in the sales and also the HDD suspensions was favorable and the sales to the near line HDD for data center substantially and also the application product for the smartphone also made the contributions to push up the sales further. Also for the magnets and for the automotives or industrial equipment market have recovered its demand so that it contributes to the further increase of the sales. When it comes to operating income, HDD head suspensions have recognized an increase in the sales, and for the magnets, it could reduce the margin of loss due to that increase in the sales. Now, just for information, and we recognize the gains on the sales of the health care products precision process component business. It was a non-core business for us. So we recognize the gain of this business sales in Q3. Next, let me talk about the energy application product segment. Sales was 195.4 billion yen. That means that 2.6% and the decrease and increase in Q1 and Q2 basis operating income was 42.8 billion yen, 11.4% decrease from the previous quarter. And for the second of the batteries, and that our business and part of our business for the smartphone has had to carry forward from Q3 to Q4 due to that inventory adjustment by our customer. So that's why, and the sales was, and the substantial lower down were expected, so that, and the sales have dropped from Q2. And also for that per supplies for the supply for industrial use will slightly increase When it comes to operating income and the power supply for industrial use and reduces revenues, that is secure, that's a profit. And for the secondary, by the way, it will have recognized a decrease in both in the sales and also for that profit. But we have needed to enhance that in our own development and the e-bike or that kind of applications. That's why that other father pushed down the profits. Next, let me talk about... a breakdown of the operating income of 4.7 billion yen. Secondary batteries or the passive component business pushed up its sales, so that have made a positive impact of 18.5 billion yen due to these sales. But on the other hand, sales price reductions have negative impact of 7.3 billion yen. But on the other hand, now the cost reduction by rationalizations have a positive effect of 5 billion yen as well as another 500 million yen also for the benefit from the restructuring from the input loss last year. And that will offset this negative impact of the sales price reductions. And the late expenses reduced by 400 million yen. And also when it comes to SCGNA and for the expansion of the business of secondary batteries and we need to spend for the power cell developments and the other businesses, and the end of the field to fee. That all amounts to that 8.1 billion yen of increase of SEG&A. That would be negative impact. So including that 4.3 billion yen of negative impacts of foreign exchange fluctuations, and all in all, we have 4.7 billion yen of increase in operating income. Next, let me talk about the overview of the consolidated business results up to that Q3. Sales is 1,286.8 billion yen, 2.3% increase year-on-year. Operating income is 107.5 billion yen, 1.7 billion yen less than last year, and 1.6%. And income before tax was 109.4 billion yen. Net income is 73.1 billion yen, the minus 1.7% year-on-year. Now, when it comes to the sales, now, we have that's a record high sales of the community for the nine months of the fiscal year. Last of all, let me talk about that full year consolidated business forecast. Based on our business performance into the Q3 and also as well as taking into consideration the orders in Q4, we revised our forecast from the one we announced last time in October. And full-year sales is 1.45 trillion yen and the income before the tax is 116 billion yen. This is the upward revisions and also 110 billion yen of the operating income and 76 billion yen of net income. It stayed the same from the previous forecast. When it comes to sales, we take into consideration that the demand in the automotive and industrial equipment market, and based on the assumption that the momentum will continue in the Q4. So that's why we upwardly revised the forecast of sales. And when it comes to the income before tax, we increased the increase of non-operating profits. The reason why we stayed at operating income stayed the same from the previous forecast is that now under the COVID-19 pandemic, now all the structure on the demand of the DX and EX have substantially changed. And based on these changes, and also in order to enhance the competitiveness, we need to promote that structural reforms, including optimization of assets, enhancement of competitiveness, so that's why. And now we think that we need to spend this 12 billion yen for the one-time cost for this restructuring. Then when it comes to that year-end dividends, the capex, depreciation, as well as R&D, and there was not any change from the previous forecast. That's all my presentation. Thank you very much. Thank you.