Tdk Corp S/Adr

Thank you very much. I'm Yamanishi. Thank you very much for joining us today for this performance briefing on FY March 2021. Thank you very much. First of all, I'd like to talk about the consolidated results for FY March 2021. First of all, that's the key point. The global economy this year, the last year, was that due to the COVID-19 pandemic and also that the conflict between the U.S. and China has adversely affected the economy. But after the Q2, each country has started and restarted the economy and the production. activities gradually and now the demand for electronics continues to recover particularly for the diesel transformation DX and the energy transformation EX we have created the demand more than we have expected initially and also by dealing with this demand Now, we could grow by net sales by 8.5% year-on-year, and operating income have grown by 13.9% year-on-year, and the votes that net sales and operating income could recognize the record high performance. recovery of from the Q2 of the automotive market, the automotive market have just contributed, so now also for that with acceleration of the next certification of the automobiles like the ADAS EV have a push up sales world of passive component products and also in the ICT market. Now, DX-related demand have been very steady from the initial of the year, and the secondary battery, the passive components, and then also sensor products have been expanded, particularly for the PC, tablet, and the 5G smartphone markets. Also, in the industrial equipment markets, we have the boosted demand for the renewable energies, and the DX-related demand have clearly recovered. Now, the market environment around electronics have been in the big disruptive changes, so that we think that this trend for DX and EX will further accelerate it after this onwards in order to take this opportunity for sure, and so that in order to operate that business competitively in the market, so that's why we have implemented that strategy. business sector restructuring and also for the structure reforms including the assets and disposals and Q4. Next, let me talk about consolidated full-year results. Now, the currency fluctuations pushed down by 21.7 billion yen and 8.1 billion yen in navigative impact on operating income, still taking all this into considerations. And the sales were 1.479 billion yen and 116 billion yen or 8.5% growth year-on-year. And also operating income including 17.6 billion yen of this one-time structure reform expenses to see we have 111.5 billion yen or 13.6 billion yen or 13.9% of growth year-on-year. And Income before income tax was 121.9 billion yen. Net income was 79.3 billion yen. Earnings per share was 628.08 yen. Currency sensitivity, there was no any change and then 1 yen change to the dollar have about 1.2 billion yen operating income and for your basis and 200 million yen for 1 yen to the euro change. Next, let me talk about three-year segment-wise performance. Passive components, for passive components products, sales was 407.1 billion yen, 2.9% and increase from the year earlier. The demand in the automotive market have rapidly recovered from Q2 and also in the ICT market. Now, and demand have been very steady. They're based on the mainly for the 5G and industrial equipment markets have also the booming with particularly for the renewable energy. And I guess in all of the markets, and it has been boosted, and now the operating income was 40.2 billion yen, 2.8% growth from a year earlier. And Q4, we have spent a one-time expense for the restructuring. That was 3.7 billion yen. So that's why that operating income, operating profit margin was on par with last year of the 9.9%. And business-wise, salami capacitors have increased in sales. Perhaps now... The profits have slightly declined due to that negative impact of lockdown in the Q1 and the automotive markets. Aluminum, the family capacitors now have been dramatically increased in the sales and also the profits have increased due to the renewable energy markets and the industrial equipment market. Industrial devices have been increased in both sales and the profits due to that favorable automotive market and the smartphone and ICT markets also pushed up. and high frequency markets have also increased in both sales and profits due to 5G later markets and the piezoelectric components and the circuit protection components market has been also increased in the sales and the profits because of the renewable energy as well as the stay-at-home demand for the industrial equipment like gaming consoles. Next, the sensor application products. Sales was 81.3 billion yen, 4.4% of gross from a year earlier. And now, we have the same level of operating loss. In the first half, the sales in automotive market have dramatically declined. But in getting into second half, the market of automotive have been recovered and also the customer base for the strategic products and application have been expanded. And now, it make a major... to make it to come back and the recovery. And we have the regular high, the sales and the quarterly basis in Q4. We have spent about 4.1 billion yen for that asset disposal and the business-based consultations as a restructuring cost, but that's the improvements of the developments and also the cost reductions, although we still have the loss, but all in all, we can see that we observed the improvements and the profitability. TMS sensor have been expanded, and particularly in the sales and in the ICT market sales, and it has been growing its profits. TMS sensor When you got MEMS sensor, then the expansion of the customer-based motion sensor and also the start up the new business for the MEMS microphone, we could expand the sales. Next, let me talk about magnetic application products. The sales was 199.3 billion yen. It was the 9.3% to minus or 2.4 billion yen of the operating losses recognized. When it comes to HDD head, Since due to that closure of the plant operations by one of the major customers in Q1 have pushed it down dramatically that the sales volumes and also we did not have any launch of new products in this year. That's why that will lead to declining the price of the conventional products, and it will de-galerate that profit. On the other hand, the HDD suspensions, now we have the airline HDD, for that some major customers have been really booming, and micro DSA products have been expanded, that contributed to that increase in both sales and profits. When it comes to magnets, now industrial equipment, the market, particularly for the renewable energy, have increased. But on the other hand, the decline in the demand in automotive markets in the first half are more than offset. And with a decrease in sales and also with the shrinking of the impairment assets and reorganization in the first half, well, they reduce the marginal loss. Next, energy application products. Sales was 740.2 billion yen. Operating income was 147.4 billion yen. 23.8% increase in a year and 18.8% increase also for operating income. The new Power Cell product, startup of, so we made an upfront investment for this new product for Power Cell for the secondary butler. So that's why now, and the margin of the gross of open income to the sales have just a little bit lower. When it comes to the second, the battery, smartphone, tablet, the Note PC, these are for the application for mobiles. And on this mobile, the device-related market has been favorable, and particularly for tablet and Note PC business has been growing due to this demand increase for this, the stay-at-home demand. And also the gaming console and the main set of products have expanded in sales. And the other, for example, that's a residential power solar systems or the electric motorcycle products. That would be for that. It's in the next generation. The promising products that have been expanded and from the last years. That's to push up the power supply products. When it comes to power supply. So now the demand has recovered, and that's industrial equipment, including the semiconductor manufacturing equipment, and we have secured the increase in both the sales and the profits. Then comes the EV product supply. Now, although the DC-DC converter has been steadily increasing in the sales, but on the other hand, that's a decline of the sales and the embedded products, so that in all in all, we have the decline in sales. Next, I'm going to talk about breakdown of operating income changes of 13.6 billion yen, with change in sales volumes mainly for the secondary battery have pushed up profit by 49.3 billion yen. Sales price reductions have negative impact of 28.7 billion yen, but it was offset by the rationalization cost reduction of 26.4 billion yen and 1.9 billion yen of benefits from restructuring. M1A-related cost-for-invencence declined by 1.1 billion yen, and with the expansion of business of secondary battery and the enhancement of power cell development, and also the end of a fair-to-fair receipt last year, all pushed up the Exigen A by 29 billion yen. Impairment to loss. have declined by 11 billion yen from 18.3 billion yen last year to 7.3 billion yen. One-time expenses including restructuring such as business site consolidation and asset disposal was 10.3 billion yen and including 8.1 billion yen of exchange fluctuation in total 13.6 billion yen of the operating income changes.

Next, I want to explain about the quarter-on-quarter changes of sales and operating profit of each segment from the third quarter to the fourth quarter. First, for the passive component, sales increased by 4.4 billion yen, 4% against the third quarter, but operating income decreased by 3.9 billion yen, 29.1%. Sales for the automotive and industrial equipment market increased, while sales for the ICT market decreased due to the seasonality of smartphone sales, which the third quarter is the peak. As a result, sales for inductive devices and high-frequency components were flat, while other businesses which have a high proportion for sales for the automotive and industrial equipment markets saw an increase of sales. For operating income, 3.7 billion of one of expense was booked in the fourth quarter for restructuring the site. However, excluding this item, the operating income was basically flat quarter over quarter. Going to the sensor application products, sales increased by 900 million, or 3.9%, while operating loss increased by 4.4 billion. However, In the fourth quarter, $4.1 billion of structural reform expenses was booked for site restructuring and asset disposal. With the demand recovering in the amount of a sector, sales of temperature pressure sensors and hole sensors increased. In MEMS sensors, sales of motion sensors grew due to increased demand for Chinese smartphones. Microphone sales increased with the start of new projects as well. However, sales of TMR sensors have gone down as third quarter is a demand peak for smartphones. Comparing the operating income on an actual basis, excluding the impact of structural reform costs, temperature and pressure sensors' profit grew, led by the increase of sales, while for the magnetic sensors, sales in the EMR sensor category went down due to the decline in sales. Under MEMS sensor, although operating loss of shrunk motion sensors cost increased due to the new product development for microphones. For the MEMS sensor business overall, operating loss increased slightly. Going to the magnetic application products, sales went down by $1.3 billion, or 2.3%, and operating income declined by $8.3 billion. Impairment losses and cost for site restructuring of $5 billion was booked in the fourth quarter. In the third quarter, $2.4 billion of gain was booked due to the sales of the medical precision component businesses under the HGD suspicion business. This means that net 7.4 billion of one-off expenses was generated in reality. So the actual operating income decline was approximately 900 million yen. So, HDD head sales volume increased 8% from the third quarter, but due to the decline in the sales prices and decreased sales in the HDD assembly business, sales in this business was more or less flat from the third quarter. In the HDD suspension business, sales for near-line hard disk drive decreased slightly. Sales of applied products for smartphones declined as well, leading to an overall decline in sales for this business. Sales of magnets were basically flat from the previous quarter. As for operating income, on an actual basis excluding the impact of one-off costs, as development costs increased for new technology development for hard disk drives, overall operating income decreased slightly. Next is the energy application business. Sales went down by $8.1 billion or 4.1%, while operating income decreased by $17.8 billion or 41.6%. Sales of rechargeable batteries for smartphones declined due to seasonality. While sales of industrial power supply went up due to increased demand, EV power supply saw an increase as well. Operating income declined sharply due to the volume decline of rechargeable batteries, costs increased caused by factories in China continuing operation during the Chinese New Year, and materials cost inflation. Profit increased slightly for the industrial power supply and loss for the EV power supply shrunk. As for microactuators for smartphone camera modules in the other business, sales with a major Chinese customer decreased substantially, so this business is continuing to generate loss. Due to the situation, impairment loss of the dedicated production line was booked in the fourth quarter. This led to an increase of loss by 5.3 billion yen. That has been the full year result. From my side, thank you. Next, in terms of the consolidated financial year outlook, Mr. Ishiguro is going to speak. This is Ishiguro speaking. Thank you very much for participating in this call. So for the fiscal year March 2022, I'm going to explain about the outlook. First, let me explain about the market forecast that we'll be using for the assumption of our projections. The global economy suffered negative growth due to COVID-19 in fiscal year 2021. But for fiscal year 2022, our assumption is that the growth will be plus 6%. There's still geopolitical and COVID-related risks in the market. But we are assuming that the production of automobiles and smartphones will grow year over year, while production of PCs and tablets is going to be at the same level last year due to the trend for working from home to continue. Furthermore, we are assuming demand will be growing in passive components and rechargeable batteries as energy transformation is going to be promoted further through the spread of electric mobility and a shift to renewable energy. For this fiscal year, we acknowledge that we should accelerate our activities to enhance our contribution to the society by firmly grasping these trends in DX and EX. Based on this understanding, we will actively make investments in our core business to accelerate our growth. In the rechargeable batteries business, which is our core business, we will realize full-scale launch of the Paracel business and ramp up our Indian production site as it will serve as a key foothold towards markets outside of China. For a path of components where we can expect demand growing for 5C and automotive, we will invest for capacity expansion. In the heads business, technological conversion to microwave-assisted recording and thermal-assisted recording heads will be an opportunity. We will invest in this technology and production. We have started to see results in the sensor business as we have strived to expand our customer base and product lineup. We will work to improve profitability substantially this year in this business. We will reform and build our organization and systems so that we can realize growth. We will strive to become an organization that will deliver more value to the society by shortening our time to market and time to volume. More specifically, we are going to establish a new corporate marketing function, operate a manufacturing and sales integrated business company, and aim for enhanced manufacturing capability by utilizing digital technologies. Sustainable business management and enhancement of governance continues to be a top priority for us to contribute to resolving social issues and secure transparency. We are projecting to increase our dividends by 10 yen to 190 yen per year in line with our earnings growth. Next. I will explain about the demand assumptions for the major devices where we are involved. For automotive sector, our projected market size, including commercial vehicles in fiscal year 2022, is 83 million units, which is a 5% increase year over year. Since the second quarter in the previous year, demand started to recover sharply and is currently at the pre-COVID levels. However, production adjustments are occurring due to the lack of semiconductors for automobiles, so it is important to keep an eye for the future demand trend. Auto companies around the world are accelerating their focus on environmentally friendly cars, and an assumption for the XEV market against the previous year is a 21% growth. As for smartphones, which represents the ICT market, we assume that it will grow by 1% year-over-year to 1.37 billion units. Although Chinese smartphone makers' production levels will be high, we feel that we should decide about our order-taking level by carefully observing the sales trend in the Chinese market. The volume of 5G phones will continue to grow and reach 470 million units. Although the overall HDD market will continue to shrink, one bright spot will be the near-line drives that are used in data centers. We also assume that the PCs and tablets will continue to show robust demand as they will be widely used for remote work and remote education. Overall, we are anticipating a stable recovery, but there are still uncertainties about the impact of COVID-19 and the actual demand. We feel it necessary to decide about a production plan while closely observing the sales trend of finished products. Based on these assumptions, the outlook for the overall sales compared to the previous year will be 1.6 trillion yen and 8% growth. For passive components, based on the increased demand for the automotive market, more specifically for XEV and 5G-related markets, the range of increase will be between 4% to 7% against the previous year. In the sensor application products, we project a 22% to 25% increase due to the increased demand for the automotive market and enhanced customer base for the TMRMM sensor and a more comprehensive product lineup. of the whole sensors with automotive applications and existing temperature and pressure sensor cells should increase, benefiting from demand recovery for the automotive sector. At the same time, we expect high growth in TMR magnetic sensors, MEMS microphones, and we are anticipating a high demand. We have been able to secure a very high level of sales in the fourth quarter. And based on this level, we think that we'll be able to realize strong sales growth through increased sales of new products and sales increase by stronger demand. Going to the magnetic application products, total demand for hard disk drive is going to shrink by 3% as the market for 2.5 inches and 3.5 inches is going to shrink further. With this, constant production of HDD heads and 3.5 inch drives for PCs is going to decline. However, cells are projected to grow in volume due to the growing demand for the near-line HDDs. So we are anticipating increased sales for the magnetic products due to the expansion of the new XEV-related projects. Overall, sales increase is projected to be between 9% to 12%. In the energy application products, rechargeable batteries will show a steady growth in the smartphone and PC tablet market. Further sales growth is anticipated by the doubling sales of power cells, increased demand for the power supply business for semiconductor equipment market and for the infrastructure market as well, and the start of mass production for the already approved new project for EV power supply. In this business, we project sales to increase between 8% to 11%. As I have explained, based on the global economic outlook and the projected demand for the main finished goods, the projection for the fiscal year is shown in this slide. Exchange rate assumptions are 105 yen to the dollar and 124 yen to the euro. Based on these assumptions, our sales outlook will be 1.6 trillion yen, which is an 8% increase from last year. Operating income and income before income tax forecast is 150 billion, respectively, while net profit is 100 billion, and EPS, 791.62 yen. Dividends for the second half of fiscal year 2021 is 90 yen, as already announced, bringing the annual dividend payment to 180 yen. For fiscal 2022, the planned dividend is 95 yen for both the first and second half and will be 190 yen for the full year. Cap is projections for 300 billion, depreciation and promotization 160 billion, and R&D 140 billion yen. That is all from me. Thank you very much for your attention.