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FY2012

- ended March 2013 (For 174th Fiscal Period)

Presentation for FY2012 Q2 Results

For First 6 months and 2nd Quarter ended September, 2012   - October 31, 2012

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.

Key Points of the presentation

Net sales decreased YoY*, mainly due to lower sales in Digital Products and Electronic Devices and the transfer of the LCD business, despite higher sales in Social Infrastructure that reflected healthy performances in Thermal Power Systems, Nuclear Power Systems, Elevators and Medical Systems and positive effect from acquisition of Landis+Gyr.

Net Sales 2,685.9 billion yen (YoY: -226.6 billion yen, - 7.8%)

Operating income decreased YoY, due to lower operating income in Digital Products, Electronic Devices and Home Appliances, despite the highest ever operating income in Social Infrastructure and Memories securing higher operating income in the 2Q than in the 1Q by adjusting production. Net income increased YoY, due to improved currency exchange and positive effects from asset reduction.

Operating income 69.0 billion yen (YoY: -10.0 billion yen)
Income before income taxes and noncontrolling interests 43.0 billion yen (YoY: +4.8 billion yen)
Net income 25.2 billion yen (YoY: +4.9 billion yen)

The interim dividend will be 4 yen per share.

*YoY: year-on-year comparison

Q & A Session

Q1. Could you please explain the main points of the FY2012 first half results (April - September)?
Net sales decreased YoY, mainly due to lower sales in Digital Products and Electronic Devices and the transfer of the LCD business, despite considerably higher sales in Social Infrastructure that reflected healthy performances in thermal and hydro power systems (both in Japan and overseas), the nuclear power systems business in overseas markets, elevators and medical Systems, plus the positive effects from the acquisition of the Swiss company Landis+Gyr, the world's leading Smart Meter company. As for operating income (loss), the Social Infrastructure segment recorded its highest ever operating income. However, Digital Products, Electronic Devices and Home Appliances returned lower income YoY. Memory business saw higher income in Q2 than in Q1, due to production adjustments and advances in process technology. Income (loss) from continuing operations, before income taxes and noncontrolling interests and Net income (loss) attributable to shareholders of the Company both increased YoY due to improved currency exchange and positive effects from measures to reduce assets.
Q2. Please tell us about the overall forecast for the FY2012 business results.
We have revised the FY2012 business forecast as follows. Net sales: 6,100 billion yen; operating income: 260 billion yen; income before tax: 190 billion yen; and Net income: 110 billion yen. The reasons for this are that although the LCD TVs and Semiconductor businesses are expected to see declines in sales and operating income in an uncertain market environment, the Social Infrastructure business looks set to maintain a healthy performance and return stable income. The outlook for NAND flash memories from Q3 has become clearer and the outlook for the B to B business has also become clearer. For your reference, the revised forecasts are still expected to exceed the corresponding results for the previous full-year period, as follows: net sales at almost the same level, a 57.3 billion increase in operating income (loss), an increase in income (loss) from continuing operations, before income taxes and noncontrolling interests of 44.4 billion yen, and Net income (loss) attributable to shareholders of the company up 39.9 billion yen.
Q3. Could you please tell us about the FY2012 Q2 business results in the semiconductor & storage business?
The semiconductor & storage businesses as a whole returned lower net sales due to lower sales for semiconductors. This mainly reflected reduced sales in memories, despite a healthy performance in storage products centered on HDDs. In terms of operating income the segment as a whole recorded lower operating income YoY due to price declines in memories, despite higher sales in storage products and the positive effect of structural reform in system LSI. In addition, Memories returned higher sales and higher income in Q2 against Q1, due to an improved supply and demand balance on production adjustments, as well as advances in process technology.
Q4. Could you please tell us about the FY2012 Q2 business results in the Social Infrastructure segment?
The segment as a whole recorded significantly higher sales supported by a continued healthy performance in thermal and hydro power systems, both in Japan and overseas, and in nuclear power systems overseas. Elevators and medical systems also saw higher sales overseas, and the acquisition of Landis+Gyr also made a positive contribution. In terms of operating income, the segment returned its highest ever operating income thanks to good performances in thermal and hydro power systems, in nuclear power systems overseas, and higher sales and higher income in transmission and distribution, elevators and medical systems.
Q5. How did the Digital Products segment and Home Appliances segment perform?
The Digital Products segment as a whole returned lower net sales due to a significant fall-off in demand for LCD TVs in Japan and lower demand for PCs in the United States. The segment's operating income was lower due to a larger than expected decline in demand for LCD TVs in Japan, despite the PC business benefiting from the effects of continued cost reductions. The Home Appliances segment as a whole returned lower sales due to a reduction in the number of units sold, including washing machines and refrigerators, despite a continued good performance from industrial air-conditioning and LED lighting systems. Operating income for the segment as a whole decreased on reduced income from white goods, despite an increase in income from industrial air-conditioning and LED lighting systems.
Q6. Free cash flow during Q2 has fallen by 169.8 billion yen. Why is that?
Cash flow from operating activities recorded minus 26.7 billion yen on increased working capital, mainly in Digital Products and Social Infrastructure (approx. minus 150 billion yen). Cash flow from investing activities recorded minus 143.1 billion yen, including a strategic investment (approx. minus 33 billion yen) to acquire IBM's retail store solutions (RSS) business. Higher sales and higher income are expected in the 2H, together with an improvement in working capital, and we forecast an overall free cash flow of positive 110 billion yen at the end of FY2012.

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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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