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Presentations & Events

FY2004

- ended March 2005 (For 166th Fiscal Period)

Presentation for FY2004 Q1 Results

For 1st Quarter ended June, 2004   - July 30, 2004

Outline of the presentation

1. FY2004 First Quarter Consolidated Business Results

Net Sales 1,247.9 billion yen (+12% YoY)
Operating income 14.1 billion yen (+55.4 billion yen YoY)
Income before taxes, minority interest and equity in earnings of affiliates 0.3 billion yen (+51.2 billion yen YoY)
Net income -7.8 billion yen (+29.0 billion yen YoY)
  • Net Sales increased year-on-year in Digital Products, Electronic Devices and Social Infrastructure Segment.
  • Electronic Devices made a robust contribution to the Operating Income.
  • Digital Products and Social Infrastructure business also improved the profitability.

2. Revised Business Forecast for the First Half of FY2004

Net Sales 2,800.0 billion yen
(+5% to the Previous Forecast)
Income before taxes, minority interest and equity in earnings of affiliates 5.0 billion yen
(+25.0 billion yen to the Previous Forecast)
Net income -5.0 billion yen
(+25.0 billion yen to the Previous Forecast)

Q & A Session

Q1. Was the operating income of the 1st quarter of FY2004 better than the original plan? Please explain by segment.
All segments achieved their original operating income targets. The Electronic Devices Segment surpassed its target by 10 billion yen and Social Infrastructure Segment did so by 14 billion yen.
Q2. Toshiba revised the First Half Forecast of FY2004 upward. Please explain in detail which businesses are expected to improve.
The PC business and Industrial and Power Systems & Services are expected to improve by around 5 billion yen each against the original plan. In the Electronic Devices Segment, both the semiconductor and LCD businesses are expected to see significant improvements.
Q3. In the First Half Forecast of FY2004, will the non-operating income (loss) also improve?
Of the 25 billion yen improvement of income before tax, almost half will be improvement of operating income, with the remainder from improved non-operating income. The main reason for non-operating income improvement will be savings in restructuring costs. We plan to concentrate most restructuring costs in the first quarter of FY2004.
Q4. NAND flash memory sales prices are moving downward. Please explain the current business situation and your forecast.
Actually the NAND price starts to soften in May 04. Our original plan already incorporated some price reduction and so far the degree of reduction is in line with our assumption. Though it is difficult to forecast moves in the second half of FY04, at this moment we think we can achieve our original FY04 profit target in the NAND business.
Q5. How much did the NAND sales grow in the 1st quarter of FY2004 compared with the 3rd quarter of FY2003? And also please explain current inventory situation on NAND.
Production capacity increased by around 36% in 512Mb equivalency, which is almost the same for the sales increase. Therefore there was no significant inventory increase.
Q6. Please explain if the 90nm process technology is ramping up well?
Yes, it is going well as we planned.
Q7. Please explain the capacity operation rate for the semiconductor production for both current and the second half projection.
Currently all production sites are operating at full capacity, the small signal post-process, which is around 80%. There is no projection for the second half of FY04.
Q8. Please explain the sale price situation of LCDs.
Our low temperature poly silicon LCDs technology has a competitive advantage. Therefore we are not suffering any severe price reduction at the moment.
Q9. Please explain the worldwide price trend in portable PCs.
Some companies are offering aggressive prices in Europe and Japan. However, overall, there is no steep price erosion like in the 3rd quarter of FY2003.
Q10. I heard that Toshiba ordered 3.5 million units from ODM vendors like Compal Electronics and Inventec. How much cost reduction are you expecting by this production shift to ODM?
We have not confirmed if 3.5 million units is the correct number. Actually we are planning to increase the ODM ratio to 60% of all our shipments by the end of FY2004. We think we can enjoy a certain degree of cost reduction by utilizing ODM.
Q11. What was the result of ODD's JV with Samsung?
It was in the red in the 1st quarter. We have started a cost reduction project to improve profitability.
Q12. What was the result of the visual imaging business?
In the 1st quarter of FY2004 it remained unprofitable. We expect the deficit to be narrowed in the 2nd quarter of FY2004.
Q13. Toshiba explained that the mobile phone business is improving while the competitors are narrowing their profitability. Please explain why Toshiba's mobile business is going well.
We are supplying mobile phones mainly to au, Vodafone and Tuka but not to DoCoMo. The reason of the improvement is because we keep introducing hot-selling products to the market. Our inventory level is also healthy at the moment.

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