Presentations & Events


- ended March 2006 (For 167th Fiscal Period)

Presentation for FY2005 Q2 Results

For First 6 months and 2nd Quarter ended September, 2005   - October 28, 2005

Outline of the presentation

1. Consolidated Business Results for First Half of FY2005

Net Sales 2,900.1 billion yen (+4% billion yen YoY)
Operating income (loss) +51.4 billion yen (+0.7 billion yen YoY)
Income (loss) before income taxes and minority interest +42.1 billion yen (+20.5 billion yen YoY)
Net income (loss) +14.6 billion yen (+6.2 billion yen YoY)

Note) For the fiscal year ended March 31, 2006, equity in earnings of affiliates has been included in income (loss) before income taxes and minority interest.

  • Toshiba's overall consolidated sales were 2,900.1 billion yen (US$25,664.6 million), an increase of 118.3 billion yen from the same period of the previous year.
  • Consolidated operating income improved by 0.7 billion yen from the same period a year ago to 51.4 billion yen (US$454.6 million). Electronic Devices continued to secure high profitability while it saw lower operating income than the year-earlier period. Digital Products and Social Infrastructure saw improvement in operating income (loss) compared to the same period a year ago, while Home Appliances widened its operating loss.
  • Income before income taxes and minority interest rose by 20.5 billion yen from the year-earlier period to 42.1 billion yen (US$372.6 million), on reduced restructuring costs and increased equity in earnings of affiliates from the year-earlier period. Net income increased by 6.2 billion yen from the same period of the previous year to 14.6 billion yen (US$129.6 million).

2. Projection for FY2005

In the first half of FY2005, Toshiba showed better business results than originally anticipated mainly in the Semiconductor business. However several factors, including increased crude oil prices, render the economic outlook uncertain, making it difficult to predict demand and supply and price trends in electronic devices and digital products. Given this, it is difficult to offer specific full-year projections for FY2005 at this stage.

Toshiba has decided to leave its consolidated and non-consolidated projections for FY2005 unchanged from the forecast issued on April 28, 2005, as below.

Net Sales 6,000.0 billion yen (+3% YoY)
Operating income (loss) 170.0 billion yen (+15.2 billion yen YoY)
Income (loss) before income taxes and minority interest 130.0 billion yen (+18.8 billion yen YoY)
Net income (loss) 55.0 billion yen (+9.0 billion yen YoY)

Q & A Session

Q1. Please tell us about the bit growth rate, market price, supply and demand ratio, and production volume of NAND flash memory.
We estimate an annual growth rate of over 230% for FY 2005, and we anticipate a 3Q (Oct.-Dec.) supply capability of around 75%. Production volume (512Mbit equivalent) was 45 million units a month in the 1Q (April-June) and rose to 70 million units a month in the 2Q (July-Sep.)
Q2. What capacity is each factory operating at?
At Himeji, the wafer fabrication is running at full capacity and the assembly processes is at almost full operation. Kitakyushu is operating at full capacity with the exception of certain products that are at around 95% of capacity. Both Oita operations and Yokkaichi are at 100% capacity.
Q3. How much will you have in free cash flow at the end of FY2005? What is the impact of the additional investment for the current term?
Our target is 100 billion yen. Our accounting rule for capital expenditure is order base. As a result, there is no impact on free cash flow this year, because disbursement is next year.
Q4. Apart from yen depreciation, didn't material prices impact on your PC business in the 2Q? How do you see your estimate of full-year operating income?
We made more progress in cost reduction than planned, but, unfortunately, it will be difficult to achieve the operating income budget of 14-billion yen.
Q5. Do you still believe that TMD, your LCD business subsidiary, can achieve its FY2005 operating income target of 10 billion yen?
I must admit, I think that will be difficult.
Q6. Please tell us about the situation in the storage business, both HDD and ODD.
We can't disclose details other than to say that HDD is in the black and that ODD recorded a slight loss.
Q7. How about the profit and loss situation in the TV business?
Our TV business improved against the previous year, but it's still in deficit.
Q8. Your full year forecast of operating income for the Digital Products segment is 28-billion yen. Can you achieve this?
We expect to see the operating income of Digital Media Network Company improve against the first half result on the strength of restructuring in overseas operations. Against this, it will be tough for the PC business to achieve its forecast operating income of 14-billion yen. However, we remain confident that the segment as a whole will meet its operating income target.
Q9. Your FY2005 first half actual operating income was 31.4 billion yen more than in your July forecast. Could you please break down the results by segment?
Half of the total comes from electronic devices, the rest from social infrastructure and digital products.
Q10. You said that you expect to see the Home Appliances business move into the black. Please give us a more detailed explanation.
We have taken steps to restructure refrigerator manufacturing. We are also trying to win customer support by enhancing the features and attractiveness of commodity products. The washing machine business is already favorable, and with rising seasonal demand in the second half, and further moves to reduce manufacturing costs, we expect the overall Home Appliances segment to move into the black.
Q11. You said you expected to see the LCD business improve in the second half. What are the product application areas where you expect to see expansion?
The main applications are cell phone displays and monitors for automotive use. Even though competition in increasing, we retain a relatively large share in both those markets.
Q12. Why haven't you revised your full-year forecast?
The main reason is difficulty in forecasting demand and price trends in electronic devices and digital products.
Q13. NAND flash memory prices aside, what are the primary risk factors for your business?
Within the year, our main concerns include market price trends and shrinkage in the DVD recorder market.

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