1
* Forward-looking statements made in this document, such as business forecasts, are based on the information available at this time and on certain premises that the Company assumes to be reasonable. Actual performance may differ materially from such forecasts due to a variety of factors.
Fiscal 2015 First HalfBusiness Results
November 11, 2015
2
Overview of Operating Results for the First Half of FY2015
*The decline in net sales was due to the effect of shifting part of transactions of silver power to contracted processing not containing silver metal prices.
■Consolidated Income Statements billion yenFY2014
H1 results(A)
assumption(B)
results(C)
Net Sales 223.6 214.0 208.2 (5.7) -3% (15.3) -7%
Operating Income 16.8 18.5 20.2 1.7 10% 3.4 20%
Ordinery Income 18.4 18.5 20.6 2.1 11% 2.1 11%
Net Income 12.1 11.5 12.0 0.5 5% (0.1) -1%
FY2015 H1 Year on yearchanges（C－A）
changes（C－B）
*
■Key points of operating results Operating income increased 20% year on year in the first half of FY2015.
Segment Details of changeEnvironmental
Management & Recycling0.1 3% - Increase in treatment volume of low-contaminated PCB waste
- Decline in the treatment volume of waste home electrical appliancesNonferrous Metals 3.9 85% - Smelter operations remained steady.
- There was an income leverage effect due to the weaker yen.Electronic Materials 0.2 5% - Firm sales of LEDs and silver powder
Metal Processing (0.3) -10% - Decline in sales of automotive terminals and connector materials affectedby automobile production adjustment in Japan and Asia.
Heat Treatment (0.5) -48% - Decline in sales of industrial furnaces mainly due to delay in projectsoverseas
[Metal prices] Generally, downward trend continued.[Foreign exchange rates] The yen stayed at the 120JPY/USD level.[Investments in prospecting] Los Gatos PJ-related expenses of 1.5 billion yen were recorded in extraordinary loss.
Operating incomechanges (billion yen)
3
（Supplement）Status of Prospecting Projectsbillion Yen
H1 H2 total
Alaska （Palmer）
Operating expenses(prospecting expenses) *1 0.3 0.8 0.2 0.4 0.6 0.7
*1 All expenses are consolidated as the investment ratio is more than 50%.
Mexico （Los Gatos）
Non-operating expenses *2(Equity in losses ofaffiliates)
- - 0.3 1.5 1.8 0.9
Extraordinary loss *3(Loss on valuation ofinvestment securities)
- 1.2 1.5 0.0 1.5 -
*2 Investment ratio 15% or more (2015.2Q～): Equity method applied
*3 Investment ratio less than 15% (～2015.1Q): Treated as shares in general company
■Impact on each profit stage (indicates loss)
Operating Income (0.3) (0.8) (0.2) (0.4) (0.6) (0.7)
Ordinary Income (0.3) (0.8) (0.5) (1.9) (2.4) (1.6)
Net Income (0.3) (2.0) (2.0) (1.9) (3.9) (1.6)
Hundreds of millionyen/year
F/S (incurring a total amount of $50M) (Development/certification and licensing) → (Start of production)
FY2013 FY2014FY2015 assumption FY2016
assumption FY2017 FY2018 On and after FY2019
Prospeting (incurring a total amount of $22M) (F/S)→ (Development/certification and licensing) → (Start of production)
・Prospecting projects make steady progress.
・Expenses are spent as initiallyplanned.
4
Forecasts for FY2015
The revised forecasts operating income is at 38.5 billion, reflecting the generally decline of metal prices and uncertain demand prospects that backed by a slowdown in economy growth in China, Southeast Asia and others.
Billion Yen
Previous Revised Changes(A) (B) (C) (C－B) (C - A)
Net Sales 464.2 445.0 418.0 (27.0) (46.2)
Operating Income 39.0 42.5 38.5 (4.0) (0.5)
Ordinary Income 42.0 42.5 38.5 (4.0) (3.5)
Net Income 26.5 27.0 22.5 (4.5) (4.0)
FY2015 ForecastsChangesFY2014
results
5
*Sensitivity is based on assumptions that the Company assumes to be reasonable at the time of publication. Actual effects may differ materially due to a variety of factors.
FY2015 Assumptions and Sensitivities (H2)
Exchange rate and metal prices(Ref.) Nearest
H1 Full Year Assumptionfor H1 H1 average Assumption
for H2Octoberaverage
Exchange Rate: (¥/$) 103.0 109.9 115.0 121.8 120.0 120.1Copper: ($/t) 6,890 6,554 6,000 5,653 5,000 5,223
Zinc: ($/t) 2,192 2,175 2,200 2,019 1,800 1,728Indium: ($/kg) 692 650 500 369 300 240
FY2014 Average FY2015
Sensitivity (Operating Income / year) Million yenFluctuation Sensitivity
¥/$ 120.0 ¥/$ ±\1/$ 150
Copper 5,000 $/t ±100＄/t 15
Zinc 1,800 $/t ±100＄/t 200
Indium 300 $/kg ±100＄/kg 300
Assumptions
6
FY2015 Forecasts Comparison by SegmentBillion yen
Net Sales OperatingIncome
OrdinaryIncome Net Sales Operating
IncomeOrdinaryIncome Net Sales Operating
IncomeOrdinaryIncome
EnvironmentalManagement &
Recycling106.0 8.2 8.5 100.0 7.0 7.0 (5.3) (1.1) (1.5)
Nonferrous Metals 240.0 13.6 13.5 220.0 14.3 14.1 (19.6) 0.3 0.0
ElectronicMaterials 49.0 8.9 9.6 48.0 8.5 9.0 (0.9) (0.3) (0.6)
Metal Processing 91.0 7.1 7.2 81.0 5.1 5.5 (9.3) (1.9) (1.6)
Heat Treatment 28.5 3.1 3.0 26.0 2.1 2.0 (2.1) (0.9) (0.9)
Other/Elimination (69.5) 1.6 0.7 (57.0) 1.5 0.9 10.4 (0.3) 0.2
Total 445.0 42.5 42.5 418.0 38.5 38.5 (27.0) (4.5) (4.5)
FY2015 Previous Forecasts FY2015 Revised Forecasts Change
7
Year on Year Comparison by SegmentBillion yen
Net Sales OperatingIncome
OrdinaryIncome Net Sales Operating
IncomeOrdinaryIncome Net Sales Operating
IncomeOrdinaryIncome
EnvironmentalManagement &
Recycling103.8 7.3 8.2 100.0 7.0 7.0 (3.8) (0.3) (1.2)
Nonferrous Metals 238.5 13.5 15.4 220.0 14.3 14.1 (18.5) 0.7 (1.3)
ElectronicMaterials 73.6 8.8 9.6 48.0 8.5 9.0 (25.6) (0.3) (0.6)
Metal Processing 87.6 5.8 6.1 81.0 5.1 5.5 (6.6) (0.7) (0.6)
Heat Treatment 27.3 2.3 2.2 26.0 2.1 2.0 (1.3) (0.2) (0.2)
Other/Elimination (66.8) 1.2 0.3 (57.0) 1.5 0.9 9.8 0.2 0.5
Total 464.2 39.0 42.0 418.0 38.5 38.5 (46.2) (0.5) (3.5)
FY2014 results FY2015 Revised Forecasts Change
8
Changes in ordinary income and net incomeOrdinary Income
8
9
10
Challenges in Our Businessand
Focus for the Futures
0
2
4
6
8
10
12
14
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015Forecasts
Ordinary Incom
e
Net Sales
ordinary income in H2ordinary income in H1Net sales・ Waste emissions from domestic manufacturing
remained flat.
・ The volume of e-scrap was weakening in Japanand the United States due to sluggish preciousmetal prices.
・ The volume of oil drilling sludge declined in Indonesia and Thailand affected by fallingoil prices.
Environmental Management & RecyclingNet Sales and Ordinary Income
Billion yenSituation in FY2015
Future actions Waste treatment
Soil remediation
Recycling
Southeast Asia
- Increase in treatment of naturally contaminated soil remediation and promoting on-siteremediation service.
- Increase in treatment of dioxins and other hazardous wastes.- The launch of new incinerator in Akita and increase in treatment of low-contaminated PCB waste.
- Increase collection of e-scraps in Asia.
- Launch of controlled landfill in Myanmar and enhancement of existing bases. 11
Enlarging the Low-contaminated PCB waste Treatment business
■Eco-System Sanyo
■Eco-System Akita
■Eco-System Kosaka
・In FY2015, treatment is expected to increase 40% year on year as a result of larger input and better efficiency due to strengthened prior equipment dismantle.
・Increase in treatment of electrical equipment in thefirst half of FY2016.
・The commencement of new treatment of PCB-containing oil are planned in the first half of FY2016.
・In the second half of FY2015, treatment of paint waste containing low-contaminated PCB began.
・ In August 2015, new incinerator was completed, and certification and licensing procedures have begun.
・In the first half of FY2016, the operation of the new incinerator is scheduled, and the treatment of electrical equipment will become possible.
Treatment volume of low-contaminated PCB waste at Eco-System Sanyo
Low-contaminated PCB waste treatment facility at Eco-System Akita
(H1 FY2014 = 100)
12
0
50
100
150
200
Ｈ1 Ｈ2 Ｈ1 Ｈ2forecast
ＦＹ2014 ＦＹ2015
0
2
4
6
8
10
12
14
16
18
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015Forecasts
Ordinary Incom
e
Net Sales
ordinary income in H2ordinary income in H1Net sales・ Metal prices are in a correction phase, and
the yen remains weak.
・ Domestic demand for copper and zinc for construction and automobiles remains flat.
・ Collection of raw materials for platinum group metals remains flat partly due to the effect of sluggish precious metal prices.
Nonferrous MetalsNet Sales and Ordinary Income
Billion yenSituation in FY2015
Future actions Precious metals and copper
PGM
Zinc
Resources- Promote mine development projects in the United States and Mexico.
- Enhance collection from overseas by increasing sales staff at a base in Europe.
- Strengthen the competitiveness of Akita Zinc by reducing electric power consumption ratesand improving productivity.
- Enhance an ability to treat impurities and improve an ability to collect byproduct metalsat Kosaka Smelting & Refining .
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Electrolysis factory at Akita Zinc
Enhancement of Zinc Business
■Strengthening of the zinc recycling business・Commercial operation commenced in 2011, and zinc is recycled from iron and steel dust, etc. (zinc volume 20,000 tons/year) Strengthen the earnings power by actively collecting raw materials with favorable conditions
and reducing costs, amid the improving environment for raw materials collection.
■Development in Southeast Asia・The zinc processing plant in Thailand commenced operation in 2013, and sales channels are
expanded for products for galvanized steel sheets and automobile die casting. Work to expand sales and capacity in Southeast Asia, while assessing demand trends.
・New establishment and replacement of important facilities such as roasters.
・Gradual expansion of electrolysis capacity.（to 220,000 tons/year in FY2017）
・Improvement in the recovery rate of zinc and indium.
・Reduction of electric power consumption rates.
Continuation of stable operation
Strengthening of cost competitiveness
Improvement of productivity
■Strengthening of competitiveness of Akita Zinc
14
0
2
4
6
8
10
12
14
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015Forecasts
Ordinary Incom
e
Net Sales
ordinary income in H2ordinary income in H1Net sales
・ In electronics parts and semiconductor-related business, sales of products for PCs were sluggish. Sales of products for smartphones remained firm in the first half, the second half is a correction phase.
・ Sales of products for new forms of energy remain solid particularly in the growing North America and Asian markets.
・ In products for data tapes, demand for products used in data backup remains firm, backed by an increase in data volume.
*
Electronics MaterialsNet Sales and Ordinary Income
Billion yenSituation in FY2015
Future actions Semiconductors
Electronics materials
Magnetic materials
New development
- Expand sales of products for proximity and medical sensors and develop applications.
- Expand sales of products for new applications such as touch panels.
- Promote development of the next generation recording materials for data tapes.
- Develop use applications of silver nano paste and facilitate the production of electrode materialsfor fuel cells.
*The decline in net sales was due to the effect of shifting part of transactions of silver power to contracted processing not containing silver metal prices.
15
0
50
100
150
2012 2013 2014 2015forecast
Sales volume of LEDs(FY2012 = 100)
Heat sink
transistor
substrate
Silver nano pasteSilver nano paste
Efforts for Growth Markets
・Continue strong sales of products for smartphones, centered on high-end products.
・Work on the development and sales expansion of products for health care, such as heart rate sensors for which progress is being made in mounting in communication terminals.
・Silver nano paste (semiconductor bonding material）Increase sales of products for power control equipment of hybrid cars, etc. and focus on the expansion of use applications to lighting and high frequency devices.
・Electrode materials for use in fuel cellsAcquired new qualification by a customer andcontinue the sales expansion toward the spread period.
■Sensor LEDs
■Status of new products
[Schematic diagram of power semiconductor]・Excels in radiation performanceand high-temperature endurance
・Alternative material to existing bonding solder
16
0
2
4
6
8
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015Forecasts
Ordinary Incom
e
Net Sales
ordinary income in H2ordinary income in H1Net sales
Future actions ■Copper strip products
■Electroplating
■Metal-ceramic substrates
Metal ProcessingSituation in FY2015 Net Sales and Ordinary Income Billion yen
・ Copper strip products: Sales of products for automobiles declined in the first half due to production adjustment, but will recover moderately in the second half. Sales of products for semiconductors and electronics parts remained flat.
・ Plating: Sales of products for automobiles remained firm.
・ Metal-ceramic substrates: Demand for products for industrial machinery and rail transport applications declined, mainly in those for China.
- Development and sales expansion of high performance copper alloys for hybrid cars and smartphones.
- Launch of press working plant in Taiwan and expansion of slitter facilities in China.
- Production hike and further expansion of plating lines in Thailand.- Production hike of high-hardness plating for high voltage terminals of hybrid cars, etc.
- Sales expansion of new products with higher radiation performance and reliability. 17
Initiatives for Products for Automobiles
■Precious metal electroplating・Improvement in productivity of partial plating and expansion of production capacity in Thailand.
・Development and volume production of new products such as high strength plating for high-voltage terminals.
・Development of new use applications such as fuel-cell vehicles.
・Development of new copper alloy with high conductive property, heat resistance and strength.
・Expansion of sales of connector materials for information communications such as car-mounted cameras.
・Enhance processing business in China, Taiwan and Thailand and acquisition of expanding local demands.
・Growth of production of hybrid cars, etc.
・Increase in connectors and switches・Acceleration of electronics trends in automobiles
・Increase in demand for high-temperature and high-voltage products
■Copper strip products
Precious metal plating products
Processing plant at Thailand
18
0
1
2
3
0
5
10
15
20
25
30
2010 2011 2012 2013 2014 2015Forecasts
Ordinary Incom
e
Net Sales
ordinary income in H2ordinary income in H1Net sales・ For automobiles: Demand for heat treatment
processing and industrial furnace is weak in Japan and Southeast Asia but generally firm in North America and India.
・ For construction machinery: Demand for heat treatment processing remained flat both in Japan and overseas
Heat TreatmentNet Sales and Ordinary Income Billion yenSituation in FY2015
Future actions Overseas business
Domestic business
R&D
- Improvement in the manufacturing productivity of industrial furnaces with the integration ofbases, and the strengthening of the maintenance business.
- Integration of heat treatment processing lines in response to market trends.
- Introduction of small cost-competitive heat treatment furnaces and the introduction of newsurface treatment.
- Expansion of the heat treatment business in overseas growth areas such as India and Mexico.- Expansion of the maintenance business for Central and South Americas using the base in Mexico.
19
0
50
100
150
200
2011 2012 2013 2014 2015Forecasts
India
Mexico
Strengthening of the Heat Treatment Business in Overseas Growth Areas
FY2015: Maintenance business commenced.FY2017: Heat treatment processing plant is planned
to be launched.
Bangalore: Expansion of heat treatment facilities has beencompleted. A new heat treatment processing plant is planned to be constructed.
Ahmedabad:The construction of a heat treatment processing planthas begun. It is planned to operate in FY2017.
Development of Bases in India
Changes in Sales at Indian Bases
Controlling interest acquired(Sept.)
Automobile production is expected to continue to increase as there is large room for the expansion of domestic demand as well as exports.
Automobile production is expected to continue to increase in the future as the advancement of finished auto manufacturers and parts manufacturers is accelerating.
ChennaiNelamangala
Pune
Gurgaon
（FY2011 = 100)
20
