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FY2009

- ended March 2010 (For 171st Fiscal Period)

Presentation for FY2009 Q3 Results

For First 9 months and 3rd Quarter ended December, 2010   - January 29, 2010

Disclaimer: The contents of these presentation materials, key points of presentation and QA and audio data of presentation have not reflected on the restatement publicly announced in September 2015. As a result, because these information therefore contains inappropriate information to be used for investment decision, please do not rely on this information if you actually intended to trade stock. Toshiba Corporation assumes no responsibility for problems resulting from or in connection with use of the information.

Outline of the presentation

1. Consolidated results for FY2009

(billion yen)

Net Sales 4,534.1 (-448.9 YoY)
Operating income (loss) 12.9 (+189.1 YoY)
Income (loss) from continuing operations, before income taxes and noncontrolling interests -45.8 (+137.4 YoY)
Net income (loss) attributable to shareholders of the Company[1] -68.3 (+91.3 YoY)

[1] “The Company” refers to Toshiba Corporation.

  • Toshiba’s consolidated net sales for the first nine months of FY2009 were 4,534.1 billion yen, a decrease of 448.9 billion yen from the same period of the previous year, a result reflecting the yen’s appreciation and the recession.
  • Despite this, consolidated operating income (loss) returned to the black to the tune of 12.9 billion yen, an improvement of 189.1 billion yen against the same period of the previous year. Electronic Devices recorded a substantial improvement, and Digital Products and Social Infrastructure achieved higher profit.
  • The loss from continuing operations before income taxes and noncontrolling interests improved by 137.4 billion yen to -45.8 billion yen. The net loss attributable to shareholders of the Company improved by 91.3 billion yen to -68.3 billion yen.

2. Financial Position and Cash Flows for FY2009

  • Total assets increased by 139.0 billion yen from the end of March 2009 to 5,592.2 billion yen.
  • Shareholders’ equity, or equity attributable to the shareholders of the Company, increased to 737.9 billion yen, an increase of 290.6 billion yen from the end of March 2009, despite a net loss attributable to shareholders of the Company of -68.3 billion yen. This reflects the capital increase from a June 2009 public offering, as well as an improvement in accumulated other comprehensive income (loss) of 46.2 billion yen due to gains on recovery in the stock market prices.
  • Total debt decreased by 419.7 billion yen from the end of March 2009 to 1,391.0 billion yen.
  • As a result of the foregoing, the shareholders’ equity ratio at the end of December 2009 was 13.2%, a 5.0-point improvement from the end of March 2009, and the debt-to-equity ratio at the end of December 2009 was 189%, a 216-point improvement from the end of March 2009.
  • Free cash flow was 96.9 billion yen, a 491.4 billion yen improvement over the same period of the previous year. The improvement in net loss attributable to shareholders of the Company and working capital turned cash flows from operating activities positive, and payments for acquisition of tangible fixed assets declined against the same period of the previous year.

3. Projections for FY2009

Projections for Toshiba’s overall consolidated sales have been influenced by the global recession, which has proved to be more persistent than expected, and they are projected to fall short of the forecast announced in May 8, 2009. The Company has revised its business forecast for FY 2009, ending March 31, 2010 as follows. The forecast for overall consolidated operating income (loss) remain unchanged from that announced on May 8, 2009. Although Electronic Devices is seen as substantially improving on the forecast, due to increased demand and price stability in NAND Flash memories, the continuing global recession is projected to cause a decrease in operating income in segments other than Electronic Devices. In light of this, Toshiba has revised its forecasts by industry segment for FY2009, as below.

(1) Consolidated forecast

(billion yen)

FY2009 (April 1, 2009 - March 31, 2010)
(A) Revised Forecast
(Jan. 29, 2010)
(B) Previous Forecast
(May 8, 2009)
(A)−(B) (A)/(B) FY2008
Net Sales 6,400.0 6,800.0 -400.0 94.1% 6,654.5
Operating income (loss) 100.0 100.0 - - -250.2
Income (loss) from continuing operations, before income taxes and noncontrolling interests 0.0 0.0 - - -279.3
Net income (loss) attributable to shareholders of the Company[1] -50.0 -50.0 - - -343.6

[1] “The Company” refers to Toshiba Corporation.

(billion yen)

FY2009 (April 1, 2009 - March 31, 2010) by Industry Segment
Net Sales Operating Income (Loss)
(A) Revised Forecast
(Jan. 29, 2010) (A-B)
(B) Previous Forecast
(May 8, 2009)
(A) Revised Forecast
(Jan. 29, 2010) (A-B)
(B) Previous Forecast
(May 8, 2009)
Digital Products 2,380.0
(-70.0)
2,450.0 5.0
(-20.0)
25.0
Electronic Devices 1,300.0
(-50.0)
1,350.0 -30.0
(+30.0)
-60.0
Social Infrastructure 2,330.0
(-240.0)
2,570.0 140.0
(-10.0)
150.0
Home Appliances 580.0
(-100.0)
680.0 -10.0
(-10.0)
0.0
Others 300.0
(-20.0)
320.0 -5.0
(+10.0)
-15.0
Elimination -490.0 -570.0 0.0 0.0
Total 6,400.0
(-400.0)
6,800.0 100.0
(-)
100.0

Q & A Session

Q1. Comparing the results for April-December 2009 against the same period in 2008, we see that the company has generated an operating profit despite large decreases in sales. What are the reasons for that?
We have seen lower sales figures in all business segments, however positive effects from cuts in fixed costs, particularly through reductions in R&D and personnel costs, have helped to improve operating profit of the Digital Products and Social Infrastructure segments. The Semiconductor business also recorded a substantial improvement, mainly due to improvement in the NAND flash memories. As a result, overall operating income (loss) improved, returning us to a positive result.
Q2. Can you explain the reasoning behind the revision of your full year estimates for FY2009?
We took into consideration the global recession, which has proved to be more persistent than expected, and the results for the first nine months, and have downgraded our sales estimates from the original forecasts.
Despite decreases in sales we have managed to maintain our company-wide forecast of 100 billion yen in operating profit, largely by further reducing fixed costs. However, we have revised the forecast for each segment based on the results for the first nine months and our 4Q quarter estimates. Comparing the updated forecasts with the original figures, we expect an improved performance from the Electronic Devices segment, mainly due to improvement in NAND flash memories, while forecasts for other segments have been revised down due to decreased sales.
Q3. Can you update us on the progress in fixed cost cutting and the expected figures for the year?
The original plan for FY2009 was to reduce company-wide fixed costs by 300 billion yen against FY2008. However, due to the global recession, which has proved to be more persistent than expected and is undermining our sales figures, we decided to cut fixed costs further in a bid to attain our overall profit target for the year.
By the end of the 3Q we have already recorded cost reductions of 310 billion yen and we are making every effort to raise the total reductions to 420 billion yen by the end of FY2009. Achieving this will surpass our original reduction target by as much as 120 billion yen.
Q4. Can you tell us the reasons for upgrading the forecast for the Semiconductor Business?
Progress in fixed cost cutting and an improved situation in the supply and demand balance for NAND flash memories have resulted in recording consecutive operating profit figures in Q2 and Q3. As a result, the 50 billion yen operating loss that we anticipated in the original forecast for the full year has been revised upwards, and we are now aiming to break even for the full fiscal year 2009.
Q5. Can you tell us the reasons for the downgrade in forecast earnings for the PC business?
Although we have actually increased the number of units sold against the same period last year, sales prices moved lower than expected and the proportion of sales of low priced models has increased. At the same time, increases in semiconductor and LCD panel prices and a weaker euro have reduced profitability. As a result of this, our original forecast of 15 billion yen in profit for the PC business has been revised down, and we now expect to record an operating loss of 10 billion yen for the full year.
Going forward we aim to return to operating profit in the near future by providing more products that match needs in the market, and by achieving further improvements in operating efficiency, such as reductions in procurement costs.
Q6. Can you tell us about a year-end dividend for FY2009?
Toshiba aims to resume dividend payments in the near future, however we should now focus on driving the company forward by establishing an adequate balance between future growth and financial stability.
Our forecasts for FY2009 indicate that net income (loss) will fall into the red. In responding to this, the Toshiba board regretfully decided to forego payment of the dividend. We look forward to the understanding and continued support of our shareholders during these severe times.

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