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Presentations & Events

FY2004

- ended March 2005 (For 166th Fiscal Period)

Presentation for FY2004 Q3 Results

For First 9 months and 3rd Quarter ended December, 2004   - January 31, 2005

Outline of the presentation

1. Consolidated Business Results from the 1st quarter to the 3sd quarter (9 months cumulative) of Fiscal Year to March 2005

Net Sales 4,151.8 billion yen (+6% YoY)
Operating income 51.6 billion yen (+49.6 billion yen YoY)
Income before taxes, minority interest and equity in earnings of affiliates 26.4 billion yen (+34.6 billion yen YoY)
Net income 10.0 billion yen (+51.4 billion yen YoY)
  • Net sales increased year on year in the four key segments of Digital Products, Electronic Devices, Social Infrastructure and Home Appliances.
  • Operating income increased sharply against the same period for FY2003, largely on increased income from Electronic Devices and improved performances in Digital Products and Social Infrastructure. Home Appliances did not meet anticipated growth in operating income.
  • Net income (loss) improved on increased net sales and operating income. A better performance from subsidiaries accounted by the equity method also contributed to the gain.

 

2. Revised Business Forecast for the Full Year of FY2004

Net Sales 5,860.0 billion yen
(-0.2% to the October forecast)
Operating income 160.0 billion yen
(-30.0 billion yen to the October forecast)
Income before taxes, minority interest and equity in earnings of affiliates 110.0 billion yen
(-20.0 billion yen to the October forecast)
Net income 45.0 billion yen
(-5.0 billion yen to the October forecast)

Q & A Session

Q1. Please tell us the full year operating income (loss) forecast of PC, Semiconductor and LCD businesses.
PC: +6.0 billion yen
Semiconductor: +79.0 billion yen
LCD: +13.5 billion yen
Q2. Please tell us the full year sales forecast by segment.
Digital Products: 2,250.0 billion yen
Electronics Devices: 1,300.0 billion yen
Social Infrastructure: 1,780.0 billion yen
Others including Home Appliances: 530.0 billion yen
Total: 5,860.0 billion yen
Q3. Please explain the reason why the full year operating income forecast was revised downward from +100.0 billion yen to +79.0 billion yen.
All Discrete, Memory and System LSI products have been revised down. The performance of System LSI is worsening particularly on inventory adjustment in digital consumer products. We also incorporated the impact of price reduction for NAND Flash Memory.
Q4. Unit production of NAND Flash Memory for the third quarter dropped by 2 million units per month (512Mb equivalent) from 27 million to 25 million compared with the same period of October forecast. Please explain the reason.
The drop in sales of Multi Chip Package sales and the slower sales ramp up of larger capacity NAND Flash Memory, such as 2Gb and 4Gb devices, are the main factors.
Q5. Please give us the March quarter projection for the Semiconductor business.
The sales projection is 228 billion yen. Both sales revenue and operating income will grow compared with the third quarter, assuming sales price of NAND Flash Memory stabilize and unit sales of high capacity 2Gb and 4Gb NAND increase.
Q6. Please tell us the capacity utilization at each semiconductor operation.

Himeji Operations (Discrete):

-Wafer Fabrication: around 90%, except for some products in full operation
-Assembly: 60% for Small Signal Devices and 80% for Power Devices

Kitakyusyu Operations:

around 90% for Bipolar IC

Oita Operations (System LSI):

-150mm lines producing Analogue Devices and MOS Devices: less than 100%
-200mm lines adopting advanced process technology: full operation

Yokkaichi Operations (Memory):

full operation

Q7. Will Toshiba change the investment plan for the FY2004 from the October Forecast?
No change (179 billion yen)
Q8. What is the main reason of the full year downward revision in the forecast for the Social Infrastructure segment from +60.0 billion yen in operating income to +52.0 billion yen?
It's due to extra costs incurred in some overseas plants.
Q9. What is the main reason of the full year downward revision in the forecast for the Home Appliances segment from 5.0 billion yen of operating income to -2.0 billion yen?
It's mainly due to price erosion and reduced sales of refrigerators. We have already taken some countermeasures to improve the business. One is a joint venture establishment with TCL in China, to stimulate the Chinese market and also to pursue cost competitiveness.
Q10. Please explain the characteristics of the PC businesses-market conditions, sales units and sales prices and the like.
The worldwide portable PC market grew 23% in the third quarter. Our average sales price dropped 10% from the same period last year. Our unit sales projection for FY2004 exceeds the October plan of 5.5 million units.
Q11. What are the main reasons for the significant improvement in the PC business compared with last year?
Cuts in fixed expenses and reduced procurement costs have made significant contributions. The marginal profit percentage is improving a lot due to the ODM ratio increase to around 60%, there has been a favorable shift toward our product mix, and concerted efforts to minimize sales price erosion. Our recovery plans are, on the whole, being executed very well.
Q12. Please explain business conditions for HDD and ODD.
HDD business conditions looks as though they will take a turn for the better in the wake of inventory adjustment in the first half of FY2004, but still strong downward price pressure in the third quarter. The profitability of the ODD business was worsened by harsh price erosion and a delay in launching Super Multi Drive products.
Q13. Please explain business conditions for TV.
Last year we delayed in bringing Flat Panel Display (FPD) TVs to market. However this year, with a full line-up, we won a 10% share of the domestic FPD TV market share. But the bottom line is still in the red.
Q14. Toshiba's income tax ratio of last year was very high (70%). How about this year?
The income tax ratio of last year was abnormal, due to overseas dividends, stock sales and so on. The ration this year will be normal.

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