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FY2011

- ended March 2012 (For 173rd Fiscal Period)

Presentation for FY2011 Results

For Fiscal Year ended March, 2012   - May 8, 2012

Key Points of the presentation

Social Infrastructure saw higher sales reflecting positive results from acceleration of business expansion in the global market. Sales of other segments, however, were affected by yen appreciation, sluggish markets in the United States and Europe and the impacts of the earthquake in Japan and flooding in Thailand, resulting in YoY decrease in overall net sales.

Net Sales: 6,100.3 billion yen (YoY: -298.2 billion yen, -4.7%)

Lower operating income YoY in Digital Products, affected by sluggish sales of LCD TV, but Electronic Devices and Social Infrastructure secured higher operating income, at 90.2 billion yen and 134.2 billion yen respectively, despite the impacts of yen appreciation, the earthquake in Japan and flooding in Thailand

Operating Income: 206.6 billion yen (YoY: -33.7 billion yen)
Income before income taxes and noncontrolling interests: 152.4 billion yen (YoY: -43.1 billion yen)
Net Income: 73.7 billion yen (YoY: -64.1 billion yen)

*Compared with the forecast as of January 31, results show a improvement of 6.6 billion yen in operating income,27.4 billion yen in income before income taxes and noncontrolling interest and 8.7 billion yen in net income

D/E ratio is 142%, reflecting strategic investments (150 billion yen) for future business growth. The ratio was 125% in FY2010.

Year-end dividend: 4 yen per share; 8 yen for the year

*YoY: year-on-year comparison

Q & A Session

Q1. Please tell us the key points in the FY2011 business results.
Social Infrastructure saw higher net sales reflecting positive results from acceleration of business expansion in the global market. Sales in other segments, however, were affected by the yen appreciation, sluggish markets in the United States and Europe and the impacts of the earthquake in Japan and flooding in Thailand. This resulted in a year-on-year decrease in overall net sales to 6,100.3 billion yen (YoY: -298.2 billion yen). In respect of operating income, Digital Products recorded lower operating income, affected by sluggish sales of LCD TV, whereas Electronic Devices and Social Infrastructure secured higher operating income, at 90.2 billion yen and 134.2 billion yen respectively, despite the impacts of yen appreciation, the earthquake in Japan and flooding in Thailand. The final result was operating income of 206.6 billion yen.
Q2. Please tell us the key points of the FY2012 forecast.
As the external environment in which we operate remains uncertain we have revised our foreign exchange rate assumptions to $1 = 76 yen and 1 euro = 102 yen, we have also conducted a review of demand trends in the TV and semiconductor businesses, as well as further projecting the effects of structural transformation throughout our business. FY2012 forecasts are as follows: net sales of 6,400.0 billion yen (YoY + 299.7 billion yen), operating income of 300.0 billion yen (YoY + 93.4 billion yen), and net income (loss) attributable to shareholders of the Company of 135.0 billion yen (YoY + 61.3 billion yen). By improving profitability and working capital we aim for a free cash flow of 150.0 billion yen. In addition, by generating a steady stream of cash flow we aim to decrease the debt/equity ratio to below the 108% level.
Q3. How were the results for the semiconductor business? What were reasons for lower sales and operating income on a YoY basis? How do you hope to enhance the business?
Although Memories saw continued demand, mainly for smartphones, net sales were lower due to the impact of yen appreciation. System LSIs and Discretes also saw lower sales on lower demand. Memories secured profit despite the impact of yen appreciation but income was lower. Discretes saw lower income on lower demand. Overall operating income decreased despite improvement in System LSIs as a result of restructuring. Going forward, in addition to NAND flash semiconductor memory, we will provide solutions that go beyond stand-alone products with a wide line-up of storage products, including high-end SSDs and Hard Disk Drives.
Q4. How were results in the Social Infrastructure segment and what is the outlook for the future?
The Social Infrastructure segment saw positive results in net sales from accelerating business expansion in the global market, including the acquisition of Landis+Gyr AG, as well as healthy performances in Thermal Power and Hydro Power Systems. This generated higher sales, despite the impact of yen appreciation. The segment also saw higher operating income, again due to the healthy performance in Thermal Power and Hydro Power Systems, along with increased operating income in IT Solutions and the positive effect of acquiring Landis+Gyr AG. In FY2012 we aim to further accelerate business expansion in the global market and forecast net sales of 2,600.0 billion yen and a record level of operating income, 165.0 billion yen.
Q5. How were results in the Digital Products segment and the Home Appliance segment? What is the outlook for the future?
The Digital Products segment saw lower overall sales, reflecting the impact of a yen appreciation, sluggish sales of PCs in the United States and Europe and price erosion and lower demand for LCD TVs, mainly in Japan. Operating income was higher in PCs, but the impacts of price erosion and lower demand in Japan for LCD TVs, following completion of the transition to digital terrestrial broadcasting, caused the Digital Products segment as a whole to fall into the red. In the LCD TV business, our goal is to promote increased net sales and higher added value and to quickly return to the black. This will be achieved by continuing to introduce "local-fit" products in emerging economies, strengthening advertising and storefront displays, and expanding sales channels
The Home Appliance segment saw lower overall sales. A healthy performance in LED Lighting was stimulated by a rise in demand for energy efficient products, but sales were lower in White Goods, reflecting the impact of the flooding in Thailand and lower demand in Japan following the end of the eco-point system. Despite higher income in LED Lighting and the positive impacts of business restructuring, overall operating income in the Home Appliance segment decreased due to lower income in White Goods, once again reflecting the impact of flooding in Thailand. In the White Goods business we hope to see a big increase in net sales by expanding in overseas markets, especially in emerging economies where we will introduce products that are tailored to each region. In the LED Lighting business we aim to improve our cost competitiveness and expand the business.
Q6. What were the impacts of the Great East Japan Earthquake and the floods in Thailand?
In FY2011 the combined impact of the earthquake and flooding in Thailand was a 90.0 billion yen reduction in operating income. If we break that down, the impact of the earthquake was 47.0 billion yen and the flooding in Thailand 43.0 billion yen. We continue to work hard to recover from both of these disasters and to minimize their impacts on our business. Since January 2012, the home appliance manufacturing facilities that were damaged by the Thai flooding, have resumed production in due course.

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This Web site contains projections of business results, statements regarding business plans and other forward-looking statements. This information is based on certain assumptions, such as the economic environment, business policies and other factors, as of the date when each document was posted. Actual results may differ significantly from the estimates listed here.

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