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FY2009

- ended March 2010 (For 171st Fiscal Period)

Presentation for FY2009 Results

For Fiscal Year ended March, 2010   - May 7, 2010

Outline of the presentation

1. Consolidated results for FY2009

(billion yen)

Net Sales 6,381.6 (-272.9 YoY)
Operating income (loss) 117.2 (+367.4 YoY)
Income (loss) from continuing operations, before income taxes and noncontrolling interests 25.0 (+304.3 YoY)
Net income (loss) attributable to shareholders of the Company[1] -19.7 (+323.9 YoY)

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

  • Toshiba’s consolidated net sales for FY2009 were 6,381.6 billion yen, a decrease of 272.9 billion yen from the previous year. This result reflected yen appreciation and the impact of the recession in the first half of FY 2009, though the latter half saw an improvement against the year-earlier period.
  • Consolidated operating income (loss) saw a significant improvement in all business segments apart from Others, and returned to the black to the tune of 117.2 billion yen, a year-on-year advance of 367.4 billion yen. Most notably, operating income in the Semiconductor business returned to the black, driven in particular by the recovery in performance in Memories.
  • Income (loss) from continuing operations before income taxes and noncontrolling interests improved by 304.3 billion yen to 25.0 billion yen, despite the restructuring costs and the net loss attributable to shareholders of the Company improved by 323.9 billion yen to -19.7 billion yen.

2. Financial Position and Cash Flows for FY2009

  • Total assets decreased by 2 billion yen from the end of March 2009 to 5,451.2 billion yen.
  • Shareholders’ equity, or equity attributable to the shareholders of the Company, increased to 797.4 billion yen, an increase of 350.1 billion yen from the end of March 2009, despite a net loss attributable to shareholders of the Company of -19.7 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 53.7 billion yen due to gains on the recovery in stock market prices.
  • Total debt decreased by 592.4 billion yen from the end of March 2009 to 1,218.3 billion yen.
  • As a result of the foregoing, the shareholders’ equity ratio at the end of March 2010 was 14.6%, a 6.4-point improvement from the end of March 2009, and the debt-to-equity ratio at the end of March 2010 was 153%, a 252-point improvement from the end of March 2009.
  • Free cash flow was 198.5 billion yen, a 549.8 billion yen improvement over the previous year. The improvement in net loss attributable to shareholders of the Company turned cash flows from operating activities positive, and payments for acquisition of tangible fixed assets declined against the previous year.

3. Projections for FY2010

(billion yen)

Consolidated forecast
FY2010 Forecast Change from FY2009
Net Sales 7,000.0 +618.4
Operating income (loss) 250.0 +132.8
Income (loss) from continuing operations, before income taxes and noncontrolling interests 150.0 +125.0
Net income (loss) attributable to shareholders of the Company 70.0 +89.7

Q & A Session

Q1. In fiscal year 2009, sales were lower than in the previous period, however operating income returned to profit. What was the reason for this?
Sales were lower in all business segments, but the results of fixed cost reductions including in R&D and personnel were large contributors toward an improved performance, as every business segment except for “Others” increased operating profit. In particular, an improved supply and demand balance and price stability in NAND flash memories helped the Semiconductor business to post a large increase in profit. The Social Infrastructure business also secured a high level of profit.
Q2. Please tell us how business restructuring was implemented in fiscal year 2009.
We implemented measures in line with the Action Programs to Improve Profitability that we announced in January 2009, in order to improve our ability to generate profit. Specific measures we have carried out are the following: in the Mobile Phone business we have moved production facilities overseas; in the Semiconductor business we improved operational efficiency by consolidating front-end processes and by increasing outsourcing; in the LCD Display business we consolidated our production sites and are now intensifying operations in areas of high added value; and in the Home Appliances business domestic production facilities for white goods have been consolidated and reduced, and we have also restructured the industrial lighting systems business. Overall, we recorded a restructuring cost of 57 billion yen.
Q3. Please tell us if there has been any improvement in the financial strength of the company, and if so what are the key points?
In fiscal year 2009, our free cash flow was 198.5 billion yen, a 549.8 billion yen improvement on the previous period. Cash flow from operating activities increased alongside the recovery in our earnings, while cash flow from investing activities was suppressed through tightened investment management, which focused on investment efficiency. As a result, the debt to equity ratio stood at 153% as of March 31, 2010, which represented a 252-point improvement from the level of 405% seen at the end of the pervious period. Further, net interest bearing debt (calculated as interest bearing debt minus cash reserves) has now passed below the one trillion yen level.
Q4. Please tell us key points on your forecast of fiscal year 2010 business results.
With Digital Products and Social Infrastructure businesses in the forefront, we forecast year-on-year sales growth for every segment. However, after taking the fiscal year 2009 results into consideration we decided to downgrade the sales forecast from the last fiscal year’s forecast by 500 billion yen to 7 trillion yen. On the other hand, due to the positive results seen from the business restructuring, we have kept our forecast for operating income at 250 billion yen, the same level reported in the the last fiscal year’s forecasts. With the Electronic Devices business leading the way, we expect to see improved profit in all segments except “Others”, and on this basis we forecast a net income attributable to shareholders of the Company of 70 billion yen for the current period. The fiscal year 2010 exchange rates assumed in these calculations are $1 = ¥90 and €1 = ¥120.
Q5. Please tell us what measures you are taking in order to improve earnings in the PC business.
Although we actually saw an increase in the number of units sold versus the last fiscal year, retail prices of PCs continued to decrease and the proportion of sales of low-priced model increased. At the same time, increases in semiconductor and LCD panel prices, along with a weakened Euro, all combined to reduce profitability. The result of this was that the PC business reported an 8.8 billion yen operating loss in fiscal year 2009.
Going forward we intend to implement measures to improve profitability. These include stable parts procurement by entering into long-term contracts with suppliers, countermeasures to continuing unit price declines, as well as reducing the overall number of parts, and boosting sales in emerging markets.
Q6. What can you tell us about the fiscal year 2010 dividend payment?
This year’s dividend is as yet undecided, but we do want to resume paying a dividend in the near future. Toshiba will carefully examine and decide on the dividend plan for fiscal year 2010, considering factors such as the financial position and strategic investment plans. An announcement will be made regarding the fiscal year 2010 dividend as soon as it is determined.

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