sumida corporation · inverter 2,069 2,651 582 28.1% ... notebook pc lcd monitor lcd tv a n n u a l...

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SUMIDA CORPORATIONSUMIDA CORPORATION

1st Half Year Results - 2005

10th August 2005

CFOCFOSABURO MATSUDASABURO MATSUDA

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1. Consolidated Results of Operations for Q2

△50.7%△327318645Net income

△44.1%△404513917Ordinary income

7.3%10.7%Operating profit ratio

△28.1%△275704979Operating profit

5.7%5219,7009,179Net Sales

%ChangeChange05 Q205 Q1

(million yen,%)

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2. Net Sales

12.0%9689,0318,0635 Companies

38.8%5451,9491,404Automotive

28.1%5822,6512,069Inverter

△3.5%△1594,4314,590Legacy

5.7%5219,7009,179Total

△ 40.1%△4476691,116PMC

12.0%9689,0318,0635 Companies

%ChangeChange05 Q204 Q2(million yen,%)

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3. Operating Income

△28.1%△275704979Operating profit

3.6%82△2,361△2,279Elimination

△10.5%△15128143PMC

△5.7%△1782,9373,115Subtotal

29.7%119520401Automotive

△17.4%△77365442Inverter

△9.7%△2202,0522,272Legacy

%ChangeChange05 Q204 Q2(million yen,%)

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4. 2005 Q2 Consolidated Results Of Operations

31.9%31.6%Margin ratio

59.4%△4817041,185Operating profit

△82,3932,385SGA

86.8%△4733,0973,570Margin

85.9%△1,5909,70011,290Net Sales

AchievementFavor (UF)ActualCommitment

(million yen,%)

6

△77△ 82△ 5Others

48.4%△5475131,060Recurring profit

11△ 109△ 120Equity method

59.4%△4817041,185Operating profit

AchievementFavor (UF)ActualCommitment

4. 2005 Q2 Consolidated Results Of Operations

(million yen,%)

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Q2Q2’’04 Actual Results04 Actual Results△△Yen Yen １１..１１billionbillion

Sales Price

Quantity

15% decrease

35% increase

5. Analysis of Q2 Sales Results

14% increase1 billion Yen

Ｘ1.6 billionYen unachieved

Legacy Business

⇒Strategy to increase Market Share: lower selling price by 15%, increase quantity by 35%

⇒Result of Strategy：Sales price down by 15％, only achieved 14% increase in quantity

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6. Profit Structure Analysis

Sales Margin Margin Fixed Operating Operating (Actual ・Forecast）（Theoretical） Costs profit profit ratio

05 Q1 9,424 30.9% 30.9% 2,200 712 7.6%

05 Q2 9,700 31.9% 31.4% 2,393 701 7.2%

05 Q3 10,200 31.5% 32.3% 2,385 828 8.1%

05 Target 1 11,000 31.5% 33.6% 2,385 1,080 9.8%

05 Target 2 11,100 31.5% 33.8% 2,385 1,112 10.0%

05 Target 3 11,700 31.5% 34.6% 2,385 1,301 11.1%

(million yen,%)

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7. 2005 – 1st Half Year Consolidated Results

△38.2%△4286921,120Net income

△27.2%△4191,1231,542Recurring profit

7.4%10.0%Operating profit ratio

△19.0%△3311,4121,743Operating profit

10.1%1,75819,12417,366Sales

%ChangeChangeCurrentPrevious

(million yen,%)

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8. 2005 – 1st Half Year Results Comparison (Year on Year) - Sales

18.2%2,75517,87715,1225 Companies

39.4%1,0783,8162,738Automotive

44.8%1,6935,4703,777Inverter

△0.2%△168,5918,607Legacy

10.1%1,75719,12417,367Total

△ 44.4%△9981,2472,245PMC

18.2%2,75517,87715,1225 Companies

%ChangeChange20052004

(million yen,%)

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△19.0%△3311,4121,743Operating Profit

6.0%263△4,618△4,355Elimination

△12.7%△36247283PMC

△0.6%△325,7835,815Subtotal

21.0%1801,038858Automotive

13.2%90772682Inverter

△7.1%△3023,9734,275Legacy

%ChangeChange20052004

(million yen,%)

9. 2005 – 1st Half Year Results Comparison (Year on Year) – Operating Profit

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10. Others

・Balance SheetBalance SheetAddressing our funding needs for TOB and others through

・issue of Convertible Bonds (in Q1)・increase of commitment line facility by financial institutions

Sale of unutilized assets

Implementation of asset impairment accounting

・ Cash FlowCash FlowPurchase of M.Lab (Sendai) land for 500 million yen1,100 million yen investment for facilities and equipment for Automotive and Legacy

No extraordinary large investment planned for Q3

Investment plan for Q4, 500 million yen for Automotive and 200 million yen for power inductor and others (for equipment and facilities)

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10. Others

・RenminbiRenminbi RevaluationRevaluationOur China factories – only 20 million RMB worth of transactionspossible exposure of 50~60 million yen to our profit (only 1% of total profit)To offset profit and costs by increasing RMB sales transactions

・ Tax IssueTax IssueReceived Notice of Tax Assessment based on the Tax Haven Adjustment. Plan to file appeal to the Tax Tribunal.

Considering the establishment of a China entity to address tax issue

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11. Consolidated Forecast for 2005 Q3

2005（Q3） 2004 (Q3) 2005 (Q2)

Sales 10,200 7.2% up 5.2% up

Operating Profit 820 20.8% down 16.5% up

Recurring Profit 720 22.9% down 40.4% up

Net Income 460 27.1% down 44.7% up

Flash Report (million yen)Sales Forecast Actual

Jul 2005 3,300 100%Aug 2005 3,400Sept 2005 3,500

Total 10,200

(million yen,%)

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1st Half Year Results 1st Half Year Results -- 20052005

1010thth August 2005August 2005

GROUP PRESIDENTGROUP PRESIDENTCHIU KA SHEUNGCHIU KA SHEUNG

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Review of Market Environment for Q2Review of Market Environment for Q2

Increased demand for new model replacement sales in western markets and growing demand in new, rising markets

Mobile Phone

Continued growth in Q2 with PC production of 49million – an increase of 14.8% compared to same period last year

Personal Computer

Automotive

Audio / Visual

Electronic Goods

High sales for new cars in developed countries

Growth in the Asia Pacific and other markets

More growth as digitalization of cars continue

Growth of the domestic LCD TV market

Bearish trend in digital consumer product market

Adjustment of production schedule due to inventory

The positive effect of last year’s Olympic Games on the electronic goods market was temporary causing manufacturers to adjust their inventory

Trend of manufacturers delaying the launch of new products.

Inventory adjustment over, continued consumer demand of high tech products, recovery of market expected later half of the year

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Adverse Market ConditionsAdverse Market Conditions

受動部品の品目別グローバル出荷額の前年同期比推移

90.0

95.0

100.0

105.0

110.0

115.0

120.0

2004年4-6月 7-9月 10-12月 2005年1-3月 4-6月 7-9月 10-12月

コンデンサ抵　抗　器コ　イ　ル

（％）

（Source：ＪＥＩＴＡ）

Trend (by quarter) of Global sales of passive components by category

Condenser Resistors Coils

Q2 Q3 Q4 Q1 Q2 Q3 Q4

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Trend : Continue to Maintain GrowthTrend : Continue to Maintain Growth

4,0174,590 4,745 4,282 4,160 4,431 4,650

1,708

2,0692,551

2,716 2,819 2,6512,850

1,334

1,404

1,558 1,795 1,867 1,9492,150

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

04.1Q 04.2Q 04.3Q 04.4Q 05.1Q 05.2Q 05.3Q(E)

Legacy Inverter Automotive

（Units : million yen）

Compared to 04 Q2 38.8% increase

Compared to 04 Q2 3.5% decrease

1.6% increase

Compared to 04 Q2 28.1% increase

7.5% increase

10.3% increase

Sales Trend Of Our 3 Main Businesses

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Increase in Competition

•Entrance of Low Priced Products(China & Taiwan)

•Entrance of Material Manufacturers

Price Erosion

• DSC/DVC market⇒decrease production plans

⇒delay launch of new products

Q2 Sales ResultsYen 4.431 billion

Compared to 04 Q2 96.5%Compared to 05 Q1 106.5%

3,600

3,800

4,000

4,200

4,400

4,600

4,800

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

Legacy Business Legacy Business -- Q2 results analysisQ2 results analysis

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Q3 Sales ForecastYen 4.65 billion


3,600

3,800

4,000

4,200

4,400

4,600

4,800

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

2005

3Q

Increase New ProductDevelopment

• 240 new development items in 2005(a 50% from 2004)

Increase Market Share

• Outsourcing Strategy to improve efficiencies

• Enter new markets

Legacy Business Legacy Business -- Course of ActionCourse of Action

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RF ID

Automotive Related

FA (Factory Automation)

Anticipating 50% increase in Q3&Q4

Increasing antenna related production by 30%

Medical Equipment

Industrial MarketIndustrial Market

Automotive Related

LEGACYLEGACY

Key WordKey Word⇒⇒ Growing MarketsGrowing MarketsSSIIGGNNAALL

Legacy Business Legacy Business -- Course of ActionCourse of Action

PPOOWWEERR

SSOOLLUUTTIIOONN

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Growth as anticipated

• Q2 Sales increased 28% compared to same period last year

Price Erosion

• Drop in LCD prices



0

500

1,000

1,500

2,000

2,500

3,000

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

Inverter Business Inverter Business -- Q2 Results AnalysisQ2 Results Analysis

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0

500

1,000

1,500

2,000

2,500

3,000

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

2005

3Q

Improve Technological Competitiveness

• Increase IC Technology through alliances

Increase Market Share

• Improve Price Competitiveness（cost reduction through

improvements in R&D, investmentin automation, vertical integration)• Outsource expensive items

Inverter Business Inverter Business -- Course of ActionCourse of Action

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0

50

100

150

200

250

300

350

400

（Unit: US Million Dollar）

2003 2004 2005 2006 2007

Inverter Market Size Estimate (Dollar Value)

Notebook PC

LCD Monitor

LCD TV

Annual Growth of 35~40%

Key WordKey Word⇒⇒ Growing MarketsGrowing Markets

Inverter Business Inverter Business -- Course of ActionCourse of Action

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Automotive Business Automotive Business -- Q2 Results AnalysisQ2 Results Analysis

Growth exceedingexpectations

• Keyless entry (domestic)• Car air conditioning related

(China) (especially high priced products)

Marketing Strategy

• Get new customers• Achieved 38% growth against

market growth of 2%



0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

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0

500

1,000

1,500

2,000

2,500

2004

1Q

2004

2Q

2004

3Q

2004

4Q

2005

1Q

2005

2Q

2005

3Q

Improve Competitiveness

• Strengthen Quality Assurance & Control

• Improve price competitiveness to compete in global market by

strengthening procurement

Increase market share

• More accurate of short & mid term forecast of major

customers’ demand• Preparation of shift of customers’

production to China

Automotive Business Automotive Business -- Course of ActionCourse of Action

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1st Half Year Results - 2005

10th August 2005

CEOCEOSHIGEYUKI YAWATA SHIGEYUKI YAWATA

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Working towards integration with Saia-Burgess

1. Saia-Burgess

Headquartered in Murten, SwitzerlandSales of approximately 50billion yen, mainly car related productsNet income of 2billion yen and EBITDA of 6 billion yenGrowth rate of 15%, listed Swiss Company

2. Through this merger of Sumida & Saia-Burgess

Hope to deliver maximum results to all stakeholders throughthe synergies of both companies.

Currently processing TOB （8th August – 2nd September）

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The Road to 1B7

0

500

1000

（＄１M）

②M&A・Alliances

２００３２００４２００５２００６２００７

③Post 1B7

① Current Business(Organic Growth)

Results of evaluation of3-4 companies in Europeand 2-3 companies Japan

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Consumer Electronics

ＯＥＭProfit Margin 3-5%

more than10% Leading Manufacturers

5-10% Parts ManufacturerCurrent SUMIDA

below 5%

Sumida’s Target (Consumer Electronics)

Operating Profit Ratio

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Operating Profit Ratio

Automotive Business

ＯＥＭProfit margin 20%

Tier 2 manufacturersProfit margin 2-3%

Tier １manufacturersProfit margin15%

Sumida’s Target (Automotive Business)

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Automotive BusinessConsumer Electronics

ＯＥＭProfit Margin 3-5%

More than 10%

ＯＥＭProfit Margin 20%

Tier １manufacturers

15%

Tier 2manufacturers

2-3%

Leading Manufacturers

Parts Manufacturers5-10%

Below 5%

SUMIDA

Electronic PartsManufacturers

Alliances

Specialist Components Supplier For Automotive

Sumida’s Target

Operating Profit Margin

To take on the challenge of breaking tradition

Saia-Burgess

SolutionProvider

(10% Profit ratio)

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SUMIDA

Electronic PartsManufacturer

Alliances

SignalPower Solution

Saia Burgess

SignalPower SolutionMechatronics

Module solutions

for automotive

OEM

Solution

Module

Core Competence

Core Competence

Mechatronics

Sumida’s Target

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DisclaimerDisclaimer

This material is provided to investors and business clients only for the purpose of evaluation of our company. Final decision must be made by each investor. The company shall not take any responsibility for any damage arising in connection with the information provided herein that investors may suffer. The forecasts of future performance contained in this report represent estimates based on factors the company considers relevant at this present time. Actual performance may vary. Consequently, no express or implied warranty can be made regarding future performance.

10th Aug.,2005

sumida corporation · inverter 2,069 2,651 582 28.1% ... notebook pc lcd monitor lcd tv a n n u a l...

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