November 15, 1999
|Toshiba Announces Consolidated Results |
for First Half of Fiscal Year to March 2000
Tokyo--Toshiba Corporation today announced its consolidated results for April 1 to September 30, 1999,
the first half of the current fiscal year to March 31, 2000.
The economic environment in which Toshiba and its consolidated group companies operate remained tough throughout the period, despite signs of recovery in the domestic economy. The group continued to put into effect extensive restructuring programs and maximized efforts to secure profitability.
Compared with the same period a year ago, net sales increased five percent to 2,622,464 million yen (approximately US$24,509 million). Gains were recorded in semiconductors, LCDs, the domestic market for personal computers and cellular phones. The results reported below reflect the inclusion of Toshiba TEC Corporation and its subsidiaries in consolidated reporting for the first time.
Net income decreased to minus 48,323 million yen (minus US$452 million), the result of significantly lower than expected prices for 128-megabit DRAM and other memories, declines in profitability in logic and system LSIs, and restructuring costs for semiconductor operations, including realignment of production facilities and decommissioning of aging assets.
2) Breakdown by Industry Segments for First Half of FY1999
Following the introduction of an in-house company system in April 1999, Toshiba Corporation revised its segment information from five segments to six: Information & Communications and Industrial Systems; Digital Media; Power Systems; Electronic Devices & Components; Home Appliances; and Others. All comparisons below refer to the relevant results of sales and operating income for the same period a year ago.
In Power Systems, sales remained flat at 253,303 million yen (US$2,367 million), as an increase in domestic sales and in exports of thermal power generating equipment offset a decline in nuclear power related equipment and other systems. Electronic Devices & Components marked an eight percent gain in sales to 684,299 million yen (US$6,396 million) as memories and LCD devices enjoyed considerable sales growth and sales of discrete products increased.
In Home Appliances, sales declined six percent to 340,183 million yen (US$3,179 million) and Others declined two percent to 208,000 million yen (US$1,944 million).
Power Systems declined 59 percent to 2,426 million yen (US$23 million), reflecting a tough overall business environment and worsened results at Toshiba Plant Kensetsu Co., Ltd. Electronic Devices & Components saw a major decline of 35,592 million yen (US$333 million) to minus 64,933 million yen (minus US$607 million), despite improvement in the LCD business. This result reflects lower than expected prices for memories, declines in profitability in system LSIs, and the cost of decommissioning of aging assets.
Home Appliances improved its operating income as extensive restructuring efforts strengthened profitability, allowing the segment to record a profit for the first time in eight years. Operating income rose 19,129 million yen (US$179 million) to 1,471 million yen (US$14 million). Others also increased by 33 percent to 15,594 million yen (US$146 million).
3) Projection for FY1999
The Japanese market is expected to continue a gradual recovery, despite such concerns as exchange rate fluctuations. Toshiba Corporation forecasts an increase in total sales, as semiconductors will see improved volumes and price stabilization. Sales of information and communications systems will also make positive contributions.
Annual sales for the fiscal year ended March 2000 are forecast at 5,650,000 million yen (US$52,804 million).
The company anticipates a substantial recovery in profitability in the second half of FY1999, as the semiconductor business returns to the black. However, the large losses incurred in the first half will not be covered by profit generated in the second half.
In addition, Toshiba Corp. will reflect a 110,000 million yen (US$1,000 million) expense in its financial results for fiscal year 1999 in connection with the settlement in a class-action lawsuit in the U.S. concerning the floppy disk controller that had been incorporated in the company's portable PCs. A profit of 50,000 million yen (US$467 million) from selling securities will be also reflected in the results for the year. As a result, the company forecasts income before income taxes and minority interests of minus 70,000 million yen (minus US$654 million) and net income of minus 50,000 million yen (minus US$467 million).
4) FY1999 Projection by Industry Segments
Projections for FY1999 are shown below, compared against actual results for FY1998.
For fiscal year 1999 as a whole, Information & Communications and Industrial Systems will see an increase in sales due to positive second half contributions from systems projects in information and communications systems. Sales of Digital Media will be spurred by continued growth in personal computers and cellular phones. Power Systems will see a decline in sales, as its business environment remains severe. Sales of Electronic Devices & Components will rise, led by growth in semiconductors and LCDs. The Home Appliances segment will decline, mainly as a result of a fall in sales of lighting equipment and air-conditioners. Others will see a slight decline.
The company assumed an exchange rate of 110 yen to the US$1 for its second-half projection.
N.B. The U.S. dollar is valued at 107 yen for the first half results for convenience only.
Consolidated Interim Financial Statements (Unaudited)
For 1st Half of Fiscal Year 1999
(April 1, 1999 to September 30, 1999)
Consolidated Segment Information
Comparative Consolidated Statements of Income
Comparative Consolidated Balance Sheet
Year 2000 Readiness Disclosure (Toshiba Corporation's Response to Y2K)