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Presentations & Events

FY2003

- ended March 2004 (For 165th Fiscal Period)

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Presentation for FY2003 Results

For Fiscal Year ended March, 2004 - April 27, 2004

PDF [224 KB/18 pages]
Earnings Release

Outline of the presentation

1. Results for Fiscal 2003 (consolidated)

Net Sales	5,579.5 billion yen	(-1% YoY)
Operating income	174.6 billion yen	(+59.0 billion yen YoY)
Income before taxes, minority interest and equity in earnings of affiliates	145.0 billion yen	(+91.9 billion yen YoY)
Net income	28.8 billion yen	(+10.3 billion yen YoY)

Note) Transfer of businesses to non-consolidated amounted to 176.0 billion yen.

Electronic Devices enjoyed significant growth in net sales and operating income thanks to semiconductors, but Digital Products suffered a major decline due to deterioration of the PC business.
48.9 billion yen gains from “Daiko Henjo” was included in operating income.

2. Forecast for Fiscal 2004 (consolidated)

Net Sales	5,800 billion yen	(+4% YoY)
Operating income	190 billion yen	(+15.4 billion yen YoY)
Income before taxes, minority interest and equity in earnings of affiliates	110 billion yen	(+35.0 billion yen YoY)
Net income	30 billion yen	(+1.2 billion yen YoY)
Free cash flows	+50 billion yen	(-83.2 billion yen YoY)

Q & A Session

Q1. Why were gains from “Daiko Henjo” included in your operating income?: We discussed this with our accountants auditors and decided to do so. The gain amounted to 48.9 billion yen, 23.9 billion yen bigger than our estimate in January.
Q2. Could you please break down results by segment?: About 22 billion yen was in Social Infrastructure, about 15 billion yen in Electronic Devices and about 7 billion yen in Digital Products.
Q3. What is “Daiko Henjo”'s impact on annual profit from fiscal 2004 onwards?: It should add about 20 billion yen a year.
Q4. How do you compare transactions from pre-tax income to net income in fiscal 2003 and fiscal 2004?: In fiscal 2004, the tax burden will be smaller, but we have to take the risk of possible impairment of marketable securities and increased tax payments into consideration.
Q5. What does your operating loss in the TV business in fiscal 2003 and fiscal 2004 look like?: In fiscal 2003, we saw a big operating loss. In fiscal 2004, the business situation remains tough, but we think now is the time to establish a solid base for the future growth. We expect this business to return to the black in fiscal 2005.
Q6. How big is the impact of “Daiko Henjo” on semiconductors?: It is calculated only on the segment basis that I already discussed.
Q7. How do you foresee your operating income from semiconductors in fiscal 2004?: We expect most profit to come in the first half. That is how we see the market in fiscal 2004.
Q8. Why did the profitability of PC and Peripherals improve in the March quarter?: Because cost reduction of PCs went further than expected. Also, we made the PC business an independent in-house company in January. Thanks to this, we could be more agile and flexible in controlling sales prices.
Q9. How big will your PC restructuring charge be in fiscal 2004?: 35 billion yen is budgeted for all the Group, including the PC business.
Q10. Why was the operating income of PC and Peripherals in March quarter better than planned?: Because of much improved profitability in the PC business, as I explained.
Q11. Is it possible that profitability in the June quarter will be lower than that in the March quarter?: It is possible.
Q12. What do you think about the progress of your improvement measures in the PC business?: Pretty good. We expect big progress in fiscal 2004.
Q13. The annual growth in system LSI revenue in semiconductors looks too small. Are there any specific reasons for that?: We do not think a 5% increase a year is too small.
Q14. Why do you expect operating income to grow in Infrastructure and Power Systems & Service in fiscal 2004?: Because we are trying intensively to penetrate overseas markets, with some success.
Q15. How much will your R&D and depreciation costs for semiconductors increase in fiscal 2004 against fiscal 2003?: R&D costs will rise about 7-billion yen. Unfortunately we do not have detailed data on depreciation in semiconductors, but in Electronic Devices as a whole, it will increase about 20 billion yen over fiscal 2003.
Q16. What do you think about possible market price erosion in NAND flash memories?: Even prices will fall rapidly, we believe we can maintain current profitability.
Q17. What operating income do you expect in the first half of fiscal 2004?: We expect 45 billion yen. In Social Infrastructure, we expect an operating loss, due to usual seasonal fluctuation, but we believe we can make several billion yen in operating income in Digital Products and 60 billion yen in Electronic Devices.
Q18. Do you believe the LCD business can generate a continued profit?: Yes, we believe so, as the business situation is improving very rapidly.
Q19. How many HDDs do you produce now?: In March quarter, we produced 1.8 million units a month (total of 2.5-inch and 1.8-inch drives). In the June quarter, we plan to produce more.
Q20. Why is your projected non-operating loss in fiscal 2004 bigger than that in fiscal 2003 by 50 billion yen?: The biggest reason was gains from sale of securities. We sold many securities in fiscal 2003, but in fiscal 2004, we do not plan to do so for the time being. Normally our non-operating loss is around 50 billion yen. In fiscal 2004, restructuring charges of 35 billion yen are added to this amount. In this sense, the forecast for fiscal 2004 is closer to our average non-operating loss.
Q21. How big were your gains from sale of securities in fiscal 2003?: They were about 32 billion yen.

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