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Presentations & Events

FY2003

- ended March 2004 (For 165th Fiscal Period)

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Q2
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Q4

Presentation for FY2003 Q2 Results

For First 6 months and 2nd Quarter ended September, 2003 - October 24, 2003

PDF [157 KB/15 pages]
Earnings Release

Outline of the presentation

In the first half, consolidated net sales were 2,608.3 billion yen (+26.7 billion yen), the operating loss was 12 billion yen (-14.9), the pretax loss was 17.6 billion yen (+26.2) and the net loss was 32.2 (-5.8). However, as sales of about 90 billion yen were transferred to newly established joint ventures, actual net sales grew over the previous year. The overseas sales ratio was 39% (-3%).
Non-consolidated net sales were 1,459.6 billion yen (-74.0), the recurring loss was 14.0 billion yen (+8.4), and the net loss was 2.5 billion yen (-49.6). With regret, we will suspend the interim dividend.
In Digital Products, net sales were 1,459.6 billion yen (-39.8) and the operating loss was 28.2 billion yen. Price erosion in overseas PC markets and decreased sales of TVs had a major impact. The operating loss in PC & peripherals was 17 billion yen (-22.5).
In Electronic Devices and Components, net sales were 627.5 billion yen (-4.4) and operating income was 26.6 billion yen. Sales of CRTs were moved to a joint venture, but if they were included segment sales grew by 8% in effect. Sales of semiconductors, especially NAND flash memories, were healthy, amounting to 432.5 billion yen, and operating income was 44.0 billion yen (+25.6). In LCDs, mid- and small-sized low-temperature poly silicon TFTs recorded significant growth.
In Social Infrastructure, net sales were 730.0 billion yen (-29.2) and the operating loss was 15.1 billion yen (+5.9). We achieved almost the same sales as in the same period last year, and sales that were transferred to a joint venture were taken into consideration. The nuclear power generation business and the package-type solution business grew.
In Home Appliances, net sales were 313.5 billion yen (-7.0) and the operating loss was 4.7 billion yen (-7.2). A short, cool summer in Japan undermined sales of air-conditioners.
In Others, net sales were 252.8 billion yen (+21.0), and operating income was 9.2 billion yen (+2.8).
Our updated sales forecast for the whole year is 5,650.0 billion yen (unchanged from the September forecast), operating income is 140.0 billion yen (ditto), pre-tax income is 90.0 billion yen (ditto), and net income is 25.0 billion yen (10.0 billion yen lower than in the September forecast).

Q & A Session

Q1. Why is the updated sales forecast for system LSIs lower than the original plan?: Because of seasonal factors in the consumer products areas. Sales of products for telecom applications, including CMOS sensors, remain healthy.
Q2. What is the current utilization rates of semiconductor production facilities?: We have satisfactorily high utilization rates at each factory. Production lines for cutting-edge products have been running at 100%.
Q2. What is the price situation of major materials and components for PCs?: Material costs, especially those of LCDs and HDDs, are not easing so much, due to tight supply conditions.
Q4. How does the current TV business look like?: The operating loss in the first half was about 10 billion yen, but we believe we can manage to reduce it to 4 billion yen in the second half.
Q5. Why did you revise your sales forecast in the Social Infrastructure segment upward?: Thanks to the 01 Action Plan initiated in FY2001, we have built a structure for increased profitability, even if net sales fall.
Q6. Why was your equity in earnings of affiliates worse than the original plan?: Because some affiliate companies, such as a joint venture in the power transmission and distribution area, made a loss.
Q7. What is your most updated forecast for shareholders' equity at the end of FY2003?: Our forecast now is 690-700 billion yen, almost unchanged from our original plan of 700 billion yen .
Q8. What is your expected gain on sales of securities?: In the first half, the gain amounted to 23 billion yen . It is most likely that we will sell more in the second half, but the amount will not be very big.
Q9. What is your updated forecast for the restructuring charges?: In the first half it was about 7 billion yen, and we expect another 10 billion yen in the second half, although we do not have any concrete issues yet.
Q10. Why was your tax payment bigger than originally planned?: It became bigger than expected because the breakdown of pre-tax profit changed significantly from that originally planned.
Q11. Why was your most updated depreciation plan smaller than originally planned?: Depreciation is normally calculated based on the assumption that the operation of the equipment in question starts at the beginning of the fiscal year. But in reality the starts are often delayed.
Q12. What is the impact of foreign currency fluctuation?: In the US dollar, we have almost completed foreign exchange contracts, and the impact of fluctuation was almost zero. It is the almost the same for Euro.
Q13. Why did you lower your profit forecast for the PC business by 13 billion yen from September?: We estimate that overall material cost will be 18 billion yen higher than expected, while we will restore 5 billion yen by sorting out sales of low-profitability products and raising sales prices.
Q14. What is the breakdown of the semiconductor sales in the first half?: About 50% of the total was from system LSIs and 25% each from discrete devices and memories.
Q15. It looks your forecast for memory profitability is too conservative?: The market price of NAND flash memories stays almost unchanged, but we expect price down to some extent in making the sales forecast.
Q16. Do you have any plan to produce more NAND flash memories from now on?: Supply has been very tight and we are now considering increasing production capability.
Q17. Do you have any intention to take any further actions on PCs?: It is a pity that we can not purchase materials at planned costs, but we do not think our strategy announced in September is wrong. We expect to see results from actions we have been taking in the January - March time frame onwards. But at the same time, we have to admit the PC business is still the biggest issue for Toshiba. Other than Digital Products segment including PCs, we are on a right track.
Q18. What is the current PC market conditions?: Toshiba focuses on notebook PCs. This market grew by 13% in the first half compared with the same period one year ago, and we expect it will grow by the same amount in the second half as well. Price erosion has been becoming less severe. Our inventory level is quite normal.
Q19. Why you revised your PC sales volume forecast from 4.7 million units to 4.6 million?: To avoid a further fall in our average sales prices and profitability, we stopped selling low profit products in September. This resulted in a change in our volume forecast.
Q20. What is the current situation of your HDD sales?: Very healthy.
Q21. What do you expect to see in your semiconductor sales in the second half?: We expect sales in the October - December time frame to he slightly higher than in the following quarter.
Q22. Toshiba is not active in system solutions for corporate customers. Without this, it is very difficult to promote PCs to customers. I think Toshiba should concentrate on the consumer market where you can get synergy effects.: Thank you for your valuable comment.

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