Oki Electric Financial Results for the First Quarter of FY Ending March 31, 2005
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Oki Electric Financial Results for the First Quarter of FY ending March 31, 2005 July 28, 2004 Oki Electric Industry Co., Ltd. 1 Table of Contents 1. Financial Result Overview for Q1 of FY ending Mar. 2005 2. Segment Information 3. Full Year Projections for the FY ending Mar. 2005 * The projections and plans on this material are subject to change depending upon the changes of business environments and other conditions. 2 Q1 Financial Result Overview Business Environment Net sales (consolidated) (Billion yen) <Economy> + 30.2 B yen (27.0%) z Stable economy: Favorable business performances led improvement in 142.0 individual consumption and employment 97.0 111.8 situation. <Oki’s Business> Q1, Mar. 03 Q1, Mar. 04 Q1, Mar. 05 z Sales growth thanks to increase of system Operating income (consolidated) investments by financial institutions, growth of color printer demands, expansion (15.0)(13.1) (2.1) of IP networks by telecom carriers, and + 11.0 B yen continuous favorable demands for semiconductors Net income (consolidated) z Operating income and net income improved substantially due to sales growth, (12.4) (11.1) (2.6) business structural reforms, and + 8.5 B yen procurement cost reduction. 3 Q1 Profit and Loss Outline z Despite the yen appreciation, sales Comparison of consolidated P/L (Billion yen) and income increased in all segments. Q1 of FY Q1 of FY Variance Mar.04 Mar.05 Consolidated net sales (Billion yen) Q1, FY Q1, FY Variance Net sales 111.8 142.0 30.2 Mar. 04 Mar. 05 Info sys. 57.6 67.6 10.0 (Cost of sales ratio) (80.2%) (75.4%) (+4.8 %) Telecom 16.6 23.0 6.4 Cost of sales 89.7 107.1 17.4 Devices 27.2 37.6 10.4 SG&A 35.2 37.0 1.8 Others 10.4 13.8 3.4 Operating income (13.1) (2.1) 11.0 Consolidated operating income (Billion yen) Q1, FY Q1, FY Other income (1.0) (1.0) 0 Mar. 04 Mar. 05 Variance Info sys. (2.6) (0.9) 1.7 Recurring income (14.1) (3.1) 11.0 Telecom (2.8) (0.2) 2.6 Extraordinary 0 0.1 0.1 Devices (4.8) 1.2 6.0 income Others (0.3) 0.4 0.7 Extraordinary Corp. & (2.6) (2.6) 0.0 loss 1.5 1.3 (0.2) eliminates Average currency exchange rate Income before taxes (15.6) (4.3) 11.3 Actual rate Plan Q1, FY Q1, FY Income taxes (4.5) (1.7) 2.8 FY Mar. 05 Mar. 04 Mar. 05 Net income (11.1) (2.6) 8.5 USD 118.5 109.8 105 Euro 134.7 132.3 130 4 Q1 Balance Sheet Outline (1) (Times) <Balance Sheet: Assets> Q1, FY Q1, FY Turnover ratio Variance Mar. 04 Mar. 05 z Total assets decreased due to reduction of accounts receivable. Total assets 0.73 0.95 0.22 improvement Notes and accounts z Major turnover ratios improved 3.04 4.19 1.15 improvement receivable substantially. Inventory 2.65 3.90 1.25 improvement 26.2 B yen reduction (Billion yen) Variance with 622.9 606.4 609.6 583.4 Mar. 31, 2004 600 27.9 28.5 55.4 46.6 Cash and deposits -8.8 169.9 124.7 115.7 155.3 Notes and accounts receivable -39.6 400 180.1 157.4 139.0 152.3 Inventories + 13.3 27.7 33.1 33.3 30.1 Other current assets + 3.2 200 136.4 133.7 119.7 120.1 Propety, plant and equipment + 0.4 103.6 106.3 110.1 115.4 0 Investments and other assets + 5.3 Mar. 31, 03 Jun. 30, 03 Mar. 31, 04 Jun. 30, 04 5 Q1 Balance Sheet Outline (2) <Balance Sheet: Liabilities and Shareholders’ Equity> (%) z Interest bearing debt decreased by 8.0 B Jun. 03 Jun. 04 Variance yen from Mar. 04, due to improvement in Interest-bearing 56.2 48.6 7.6 improvement cash flows. debt ratio Shareholders’ equity ratio 15.2 18.9 3.7 improvement (Billion yen) Variance with 622.9 606.4 609.6 Mar. 31, 2004 600 583.4 116.1 99.9 Notes and accounts payable - 17.7 135.8 118.1 126.0 141.9 Short-term borrowings + 1.8 400 129.8 131.6 25.6 27.1 31.1 30.6 Other current liabilities -0.5 209.4 198.8 161.7 151.8 Long-term debt -9.9 200 44.5 46.2 40.7 40.8 Other fixed liabilities and minority + 0.1 interests 101.3 92.5 110.5 110.5 0 Shareholders' equity + 0 Mar. 31, 03 Jun. 30, 03 Mar. 31, 04 Jun. 30, 04 Bonds due within a year and commercial paper are included in long-term debt and short-term borrowings respectively. 6 Conditions of Cash Flows z Reduction of net loss and working capital improved free cash flow by 5.4 B yen. z Continue reduction of interest-bearing debt Q1, FY Q1, FY Variance Notes (Billion yen) Mar. 04 Mar. 05 I. Cash flows from operating activities (1.0) 10.4 11.4 Income (loss) before income taxes (15.6) (4.3) 11.3 <Operating assets & liabilities details> (Q1/FY 04) (Q1/FY 05) Depreciation & amortization 7.8 7.3 (0.5) Receivables 46.0 40.3 Inventories (21.9) (13.2) Changes in operating assets & liabilities 13.9 17.2 3.3 Payables (10.2) ( 9.9) Others (7.1) (9.8) (2.7) Total 13.9 17.2 II. Cash flows from investing activities (3.0) (9.0) (6.0) Purchases of property, plant & equipment (3.1) (6.7) (3.6) Others 0.1 (2.3) (2.4) Free cash flows (I+II) (4.0) 1.4 5.4 III. Cash flows from financing activities 4.8 (8.4) (13.2) Redemption of bonds (7.7) 0 7.7 Changes in other interest bearing debts, etc. 12.5 (8.4) (20.9) Net cash flow (I+II+III) 0.8 (7.0) (7.8) IV. Cash and cash equivalents at the period end 30.3 51.4 21.1 7 Q1 Results & 1st Half Projections z Both sales and profits for the 1st half are expected to increase from the previous projections. <Results for Q1, FY ending Mar. 05 > <Projections for the 1st Half, FY Mar. 05> Net sales Net sales (Billion yen) (Billion yen) 142.0 310.0 281.3 290.0 13.8 Others 27.0 Others 111.8 Electronic devices 25.2 27.0 75.0 Electronic 10.4 37.6 60.0 68.0 devices 27.2 23.0 Telecom systems 44.5 45.0 50.0 Telecom 16.6 systems Information 158.0 Information 57.6 67.6 systems 151.6 150.0 systems 1H, FY Apr. 27 July 28 Q1, FY Mar. Q1, FY Mar. Mar. 04 04 05 1H, FY Mar. 05 projections Operating & net incomes Operating & net incomes (Billion yen) (Billion yen) Operating 0.0 Operating (2.1) (2.0) (2.6) income (3.9) income (6.0) (6.0) Net income Net income (13.1)(11.1) (10.5) 8 Info Systems: Q1 Results & 1st Half Projections z Sales is expected to increase from the previous projection. z Operating income is unchanged from the previous projection due to development cost increase. <Results for Q1, FY ending Mar. 05 > <Projections for the 1st Half, FY Mar. 05> Net sales (Billion yen) Net sales (Billion yen) 158.0 67.6 151.6 150.0 57.6 Financial system solutions Financial 28.0 • Sales increase in branch terminals 61.5 57.5 64.5 system solutions for financial institutions and 23.7 ATMs for convenience stores 10.1 Information Information solutions 30.6 30.5 30.5 8.2 • Sales increase in systems for solutions governments 29.5 25.7 Printers 59.5 62.0 63.0 Printers • Favorable sales in color NIP printers Q1, FY Mar. Q1, FY Mar. 1H, FY Apr. 27 July 28 04 05 Mar. 04 1H, FY Mar. 05 projections Operating income Operating income (Billion yen) (Billion yen) • Operating income • Increase in investment for increased by 1.7 B yen development and free (0.9) due to sales growth charge maintenance 5.1 related to new banknote (2.6) 2.0 2.0 9 Financial System Solutions Demand related to new banknote finishes in Sales transition st the 1 half of FY Mar. 05, followed by (Billion yen) increasing investment for retail channel 87.5 ATM Financial IT solutions enhancement and back office operation 70.3 efficiency. 61.5 64.5 62.5 60.0 Focus on sales expansion of solutions for 40.5 29.0 42.0 43.0 bank branches and back office operation concentrations, and solutions for information 29.8 33.5 19.5 27.5 21.5 and telecommunication convergence ¾Solutions for bank branches and back office 2H, FY 1H, FY 2H, FY 1H, FY 2H, FY Mar 03 Mar 04 Mar 04 Mar 05 Mar 05 operation concentrations: (Projection) (Projection) “ConsulStation”, individual identification, and sales support systems “NokiNavigation” ATM remodeling and replacement units ¾Solutions for info and telecom convergence: (Thousand units) 33.4 IP network, call center “CTstage 4i,” and IP Replace telephony transfer solutions Remodeling Favorable sales in ATMs for convenience 8.5 11.6 9.2 stores, unattended response system for 1.1 financial institutions “RT21,” and unified cash 2H, FY 1H, FY 2H, FY 1H, FY 2H, FY Mar 03 Mar 04 Mar 04 Mar 05 Mar 05 management system “CM21” (Projection) (Projection) 10 Printer Business 1st half projections Sales by segment and color NIP ratio ¾ Sales of color NIP increases by 22% on year-on-year basis.