Kyocera Corporation Financial Presentation · Kyocera Corporation Financial Presentation ......

Kyocera Corporation Financial Presentation(Six Months Ended September 30, 2005)

November 4, 2005Kyocera Corporation

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including in particular China; changes in exchange rates, particularly between the yen and the U.S. dollar and euro, respectively, in which we make significant sales; our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; and the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers; fluctuations in the value of securities and other assets held by us and changes in accounting principles; business performance of other companies with which we maintain business alliances; laws and regulations relating to the taxation, and to manufacturing and trade; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases; and the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe, and Asia, including in particular China; changes in exchange rates, particularly between the yen and the U.S. dollar and euro, respectively, in which we make significant sales; our ability to launch innovative products and otherwise meet the advancing technical requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; and the extent and pace of future growth or contraction in information technology-related markets around the world, including those for communications and personal computers; fluctuations in the value of securities and other assets held by us and changes in accounting principles; business performance of other companies with which we maintain business alliances; laws and regulations relating to the taxation, and to manufacturing and trade; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of diseases; and the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements included in this document.

Forward-Looking Statements

1

Consolidated Financial Highlights- Six Months Ended September 30, 2005 -

129.15

24,214

46,135

35,349

545,258

Amount

Six months ended September 30, 2004

Six months ended September 30, 2005

－

7.1

11.2

10.3

100.0

% to net sales

226.85

42,549

67,253

62,092

600,562

Amount% to net sales

－－EPS (diluted - yen)

-43.14.4Net income

-31.48.5Pre-tax income-43.16.5Profit from operations-9.2100.0Net sales

Percentage change

81.74.828,6319.552,021Capital expenditures－－6,409－10,447Dividends paid

-10,172

28,082

－

4.5

34,805

27,296

－－Free cash flow

2.95.2Depreciation

29,328 4.627,432 6.95.4R&D expenses

136

109

－

－

133

110

－－Euro (yen)－－U.S. dollar (yen)

(Millions of yen)

2

Implemented structural reforms at KWC and completed outsourcing of production

Concluded sales of consumer cameras in the U.S., Europe and Japan

Structural reform costs in the Structural reform costs in the Telecommunications Equipment and Telecommunications Equipment and Optical Equipment Groups: approx. Optical Equipment Groups: approx. ¥¥5.7 5.7 billionbillion

Promoted business selection and concentration, and tendered entire holding of shares in Taito Corporation, an equity-method affiliate

Gain on sale of investment in Gain on sale of investment in Taito Corporation: Taito Corporation: ¥¥6.9 billion6.9 billion

Component demand bottomed out, but recoveryspeed was slower than initially expected

Component prices dropped 15~20% year-on-year

Results short of initial company targetsResults short of initial company targets

Posted significant sales and profit growth in Posted significant sales and profit growth in the Applied Ceramic Products Groupthe Applied Ceramic Products Group

Dividend policy change: Increased interim dividend from 30 yen per share in the previous fiscal period to 50 yen per share (expected annual dividend of 100 yen per share)

Operational Highlights- Six Months Ended September 30, 2005 -

3Please refer to accompanying note on page 1.

Consolidated Sales by Reporting Segment- Six Months Ended September 30, 2005 -

Optical Equipment Group

Information Equipment Group

Telecommunications Equipment Group

Electronic Device Group

Applied Ceramic Products Group

Semiconductor Parts Group

Fine Ceramic Parts Group

-50.62.816,7161.58,2561.419.4116,80021.7118,433

-31.222.0132,35716.791,084

-4.848.6291,84951.0277,937Total components business

-10.323.3139,79023.0125,38323.97.544,99110.255,752-6.811.368,14811.763,544

-14.56.538,9206.133,258

600,562-13,35356,193

265,873

Amount

Six months endedSeptember 30, 2004

Total equipment business -18.144.239.9217,773

% of net sales% of net salesAmount

Percentage change

Six months endedSeptember 30, 2005Reporting segment

-9.2－

5.1

100.0100.0545,258Net sales

-2.2-1.7-9,486Adjustments and eliminations

9.410.859,034Others

(Millions of yen)

4

Consolidated Operating Profit by Reporting Segment- Six Months Ended September 30, 2005 -








Total equipment business

Total components business

－2.77,148－-160

-30.216.046,64011.732,564

－－-4,899－-9,355

-31.716.619,40411.213,244－－-7,357－-4,049

-22.816.06,22414.44,805-31.715.610,61211.47,25123.516.87,56316.79,337

-49.815.922,2418.911,171

－－582－-236Equity in earnings of affiliates and unconsolidated subsidiaries

132.5－40－93Adjustments and eliminations

-38.110.059,9486.837,108Total operating profit

67,253

6,683

6,160

Amount

Six months endedSeptember 30, 2004

% to net sales% to net salesAmount

Percentage change

Six months endedSeptember 30, 2005Reporting segment

-31.4

37.2

-23.6

11.28.546,135Pre-tax income

－－9,170Corporate and others

11.08.04,704Others

(Millions of yen)

5


Consolidated Financial Forecast- Year Ending March 31, 2006 -

※Although Kyocera changed the assumed average exchange rate in July, the impact on forecasts is minimal, and as a result, full-year financial forecasts remain unchanged from the previous forecast (April 2005).

Previous forecast(April 2005)

Revised forecast(October 2005)

－

6.1

10.4

8.8100.0

% to net sales

389.34

73,000

125,000

105,0001,200,000

Amount

432.00

81,000

135,000

124,0001,240,000

Amount

Year ended March 31, 2005

Year ending March 31, 2006

－

3.9

9.1

8.6100.0

% to net sales

244.81

45,908

107,530

100,9681,180,655

Amount% to net sales

－－EPS (diluted-yen)

59.06.5Net income

16.210.9Pre-tax income

4.010.0Profit from operations

1.6100.0Net sales

Percentage change

4.8

8.0

5.4

57,000

96,000

65,000

53,000

100,000

67,000

4.6

5.4

5.0

54,398

63,176

58,790

4.84.3R&D expenses

52.08.1Capital expenditures

10.65.4Depreciation

－

－

132

108

※129

※106

－

－

135

108

－－Euro (yen)

－－U.S. dollar (yen)

(Millions of yen)

9Up 60-70%－DVD recorders

Up approx. 50%

Up approx. 10%

Up 5-10%

Up approx. 20%

Full-year (forecast) Full-yearJan.-JuneKey electronic equipment

6030※Digital still cameras

12－Digital TVs(Incl. rear-projection TVs)

17090PCs

600340※Mobile phone handsets

Consolidated Financial Forecast Assumptions- Year Ending March 31, 2006 -

CY2005CY2005CY2005

Down 15-20%

Full-year

Down approx. 15%

Full-year (forecast)Interim periodYear-on-year change

Down 15-20%General electronic components

FY3/06FY3/06FY3/06

1. Shipment volume forecast 1. Shipment volume forecast for key electronic for key electronic equipmentequipment

2. Components price forecast 2. Components price forecast

(Kyocera forecast)

(Millions of units)

FY3/05FY3/05FY3/05

CY2004CCYY20042004

(Kyocera forecast)

※Results of mobile phone handsets and digital still cameras are based on production volume


Consolidated Sales Forecast by Reporting Segment- Year Ending March 31, 2006 -



100.0

-1.2

10.6

42.7

1.4

20.9

20.4

47.9

21.5

9.6

11.1

5.7

% of net sales

1,200,000

-14,000

127,000

512,000

16,000

251,000

245,000

575,000

258,000

115,000

134,000

68,000

Amount








-55.33.035,7761.924,000

4.120.4241,14519.6243,000

-2.421.3250,91821.6268,000

2.947.3558,54748.1596,000Total components business

-1.922.3262,99720.8258,000

22.58.093,87910.0124,000

4.710.8127,96011.2139,000

-7.76.273,7116.075,000

1,180,655

-23,771

118,040

527,839

Amount

Year endedMarch 31, 2005

Total equipment business -3.044.743.1535,000

% of net sales

% of net salesAmount

Percentage change


Reporting segment

1.6

－

7.6

100.0100.01,240,000Net sales

-2.0-1.8-22,000Adjustments and eliminations

10.010.6131,000Others


(Millions of yen)

Consolidated Operating Profit Forecast by Reporting Segment- Year Ending March 31, 2006 -

7.48.5100,52010.5130,0009.0108,000Total operating profit



10.4－

9.4

4.7－

12.2

－

12.5

10.3

16.1

12.3

15.4

% to net sales

125,000

17,000

12,000

24,000

-5,500

30,500

-1,000

72,000

26,500

18,500

16,500

10,500

Amount








－－-15,387－-2,000

-15.715.036,18612.330,000

－－-14,9182.67,000

-11.814.681,62013.681,000Total components business

-25.213.535,40612.031,000

8.018.217,12917.321,500

-6.013.717,55012.918,000

-9.015.611,53514.010,500

107,530

7,010

13,019

5,881

Amount

Year ended March 31, 2005

Total equipment business 308.11.16.535,000

% to net sales

% to net salesAmount

Percentage change


Reporting segment

16.2

142.5

-7.8

9.110.9135,000Pre-tax income

－－5,000Corporate and others

11.010.714,000Others


(Millions of yen)

-21.1

-1.5 0.4

-6.2 0.5

2.3-3.4

0.4-1.4

1.8-0.4

38.6

3.3 6.6

-4.5 18.4

-11.1 2.2

Pre-tax Income Forecast by Reporting Segment (1)- Year Ending March 31, 2006 -

Reporting segment Pre-tax income (increase/decrease)

1.7 8.3

2H FY3/06 challenges

Increase orders in key markets

Expand sales and secure profits by strengthening production system

Launch new color/monochrome MFPs and printers

Expand sales by new high-value-added products and boost profitability

Expand sales through new products/ services and strengthen production system

Timely Launch of high-value-added models

Launch new products and expand overseas production

Enhance local production/improve productivity in solar energy products








Others

Corporate and others

Kyocera Group Total Achieve fullAchieve full--year foryear foreecastcast

2H FY3/05 vs 2H FY3/06 forecast1H FY3/05 vs 1H FY3/06


(Billions of yen)

Pre-tax Income Forecast by Reporting Segment (2)- Year Ending March 31, 2006 -

Reporting segment Pre-tax income (increase/decrease) 2H FY3/06 challenges

Increase orders in key markets

Expand sales and secure profits by strengthening production system

Launch new color/monochrome MFPs and printers

Expand sales by new high-value-added products and boost profitability

Expand sales through new products/ services and strengthen production system

Timely Launch of high-value-added models

Launch new products and expand overseas production

Enhance local production/improve productivity in solar energy products








Others

Corporate and others

Kyocera Group Total Achieve fullAchieve full--year foryear foreecastcast


(Billions of yen)

1H FY3/06 vs 2H FY3/06 forecast

-1.1

2.0

0.9

-0.2

4.0

2.6

4.2

2.6

32.7

17.7


Launch new Launch new highhigh--valuevalue--added added

productsproducts

Strengthen production Strengthen production system and maximize system and maximize

positive effects of positive effects of structural reformsstructural reforms

(KWC, Optical Equipment)(KWC, Optical Equipment)

Telecommunications Equipment

57.4%Information Equipment

12.9%

Others8.2%

Semiconductor Parts6.3%

Optical Equipment7.9%

Semiconductor Parts6.1%

Driving Businesses for Achievement of 2H FY3/06 Forecasts- Major Drivers: 2H FY3/06 Forecasts vs 1H FY3/06 Results -


Information Equipment

Others

Electronic Device


Information Equipment

Electronic Device

Optical Equipment

Net SalesNet Sales PrePre--tax Incometax IncomeUp Up ¥¥109.5109.5bn over 1H FY3/06bn over 1H FY3/06 Up Up ¥¥32.732.7bn over 1H FY3/06bn over 1H FY3/06


54.1%

ElectronicDevice

6.6%Information Equipment

12.3%

Electronic Device12.7%

Others7.9%

(consolidated) (consolidated)

Launch new products and expand overseas productionLaunch new products and expand overseas production

Boost competitiveness by expanding China production(capacitors, ceramic resonators, ASMs)

・ Increase proportion of new productsPassive/crystal components

Improve profitability by expanding overseas production

Connectors・ Enhance product lineup

Expand product line-up of connectors for 0.3mm FPCs

・ Increase share at mobile phone handsets makers

・ Strengthen sales/marketing

Bolster design-in activities

Electronic Device Group 2H FY3/06 Strategy (1)

・ Reduce dependence on mobile phone market by entering new markers(power source, MPU, in-vehicle, home appliance etc.)

Improve ceramic capacitor product mix(small, high capacitance, low inductance products)Expand Bluetooth module businessStart mass-production of shock sensors for HDDsPromote devt. of GPS modules for W-LAN



Expand market by increasing applications and strengthen productiExpand market by increasing applications and strengthen production systemon system

Expand China production

Electronic Device Group 2H FY3/06 Strategy (2)- Thin-film products -

LCDs Thermal PrintheadsExpand Business in HighExpand Business in High--ValueValue--Added MarketsAdded Markets

• Medical equipment market

• Measuring equipment market

• Office equipment market

• Medical equipment market

• Card market

0

50

100

150

20004/7 8 9

10

11

12

05/1 2 3 4 5 6 7 8 9

10

11

12

06/1 2 3

Approx. 1.7xThermal Printheads

0

100

200

300

400

500

9

10

11

12

05/1 2 3 4 5 6 7 8 9

10

11

12

06/1 2 3

Approx. 5xLCDsProduction Target at China Factories (Standard: Sept. 05 results＝100)

In-house manufacture of thin-film devices

New production method (photo process)

Enhance productivity through integrated domestic production

Expand sales and secure profits by Expand sales and secure profits by strengthening production systemstrengthening production system

Increase production of Ceramic package for surface - mount devices in ChinaImprove productivity by introducing new production line

Expand production capacity

Ceramic Materials ComponentsOrganic Materials ComponentsMeet demand for ASICs and next-generation game consoles

Continue development for digital consumer equipment market

New factory (Ayabe)

China factory (Shanghai)

・ Expand applications for Ceramic package for surface - mount devices

・ Increase use of CCD/CMOS packages in mobile phone handsets

Semiconductor Parts Group 2H FY3/06 Strategy

Expand market for flip-chip packages by fitting them into next-generation game consoles


Expand sales by launching highExpand sales by launching high--valuevalue--added products and boost profitabilityadded products and boost profitability

0

100

200

300

1Q 2Q 3Q (Forecast) 4Q (Forecast)

FY3/06 Shipment Volume Forecast(Standard: 1Q results = 100)

Release worldRelease world’’s slimmests slimmest** 6.9mm 3.2 6.9mm 3.2 megapixelmegapixel camera modulecamera module

Strengthen sales and marketing activities - Deepen ties with existing customers and develop new customers -

Establish consistent production system in China- High-quality, cost-competitive operations, from component procurement to product shipment -

Realize positive effects of structural reforms - Create highly efficient business structure focused on component business -

Optical Equipment Group 2H FY3/06 Strategy

Newproducts

Existing products

* Forecast by Kyocera based on volume of cameras on mobile phone handsets



40.3 46.1

78.967.3

Challenges to Achieving FY3/06 Forecasts- Aim for Pre-tax Income Ratio of 10% or Above -

(Billions of yen)

FY3/05 FY3/06

+20.1%

+71.1%

11.2%

6.9%8.5%

12.0%

Consolidated net sales

Pre-tax income

Pre-tax income ratio (%)

Quickly achieve pre-tax income

ratio of 15%

580.1545.3

654.7600.6

1H 2H 2H (Forecast)1H

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