©TAIYO YUDEN 2017
Consolidated Financial ResultsYear ended March 31, 2020
Shinji Masuyama
Chief of Management Planning Headquarters
May 12, 2020
©TAIYO YUDEN 2017
FYE March 2020
Net sales increased 3% Y/Y to ¥282.3 billion, and operating income increased 6% to ¥37.2 billion, resulting in revenue and profit growth.
Net sales and net income recorded all-time highs.
Sales of capacitors increased 3% Y/Y. This growth was led by expansion of sales for automobiles where use of electronic components is advancing.
Earnings Forecast for FYE March 2021
Net sales in 1Q are projected to decrease 12% Q/Q to ¥60.0 billion, and operating income is projected to decrease 59% to ¥3.0 billion.
The full-year earnings forecast is yet to be determined as it is difficult to make reasonable calculations of the impact from novel coronavirus disease (COVID-19).
2
Financial Summary
Financial Summary for FYE March 2020
Net sales increased 3%Y/Y to 282.3 billion yen, and operating income increased 6% Y/Y to 37.2 billion yen, resulting in revenue and profit growth.Both net sales and operating income recorded all-time highs.
Sales of capacitors increased 3% Y/Y, led by growth in sales for use in automobiles in which the number of capacitors used per vehicle is increasing in conjunction with advancing use of electronic components.
Financial Results Forecasts for FYE March 2021At the present stage, it is difficult to determine the impact of COVID-19. Therefore, the announcement of the full-year earnings forecast for FYE March 2021 will be postponed. We will announce the forecast once the outlook has become clearer.
In 1Q, net sales are projected to fall 12% Q/Q to 60.0 billion yen, and operating income is projected to fall 59% Q/Q to 3.0 billion yen.
The prospects for a return to normal from the emergency caused by COVID-19 are still not clear. However we will continue contributing to social infrastructure and maintaining and enhancing people’s lifestyles by steadily doing what it should as an electronic components manufacturer. This includes developing the cutting-edge electronic components that underpin technological development, such as 5G and advancing use of electric vehicles and electronic components in automobiles, and supplying them in a stable manner, improving productivity, and upgrading manufacturing capabilities.
©TAIYO YUDEN 2017
¥ in million FYE Mar 31, 2019(01 Apr 2018 – 31 Mar 2019)
FYE Mar 31, 2020(01 Apr 2019 – 31 Mar 2020)
Change Y/Y
Net sales 274,349 100.0% 282,329 100.0% 7,980 2.9%
Operating income 35,237 12.8% 37,176 13.2% 1,938 5.5%
Ordinary income 34,351 12.5% 35,165 12.5% 813 2.4%
Net income attributable to owners of parent company
23,687 8.6% 18,022 6.4% (5,664) (23.9)%
3
Yen to USD average exchange rate 110.49 yen 109.06 yen 1.43 yen
appreciated
Impact of exchange rate fluctuation
Net sales (3.9) billion yen, Operating income (0.9) billion yen※Including the impact of currencies other than US dollars
R&D expenses 13,039 12,921 (117) (0.9)%
Capital investment 38,570 39,365 794 2.1%
Depreciation expenses 26,547 27,022 475 1.8%
Summary of Consolidated Financial Results (Y/Y)
The financial results for FYE March 2020 recorded net sales of 282.3 billion yen, operating income of 37.2 billion yen, and ordinary income of 35.2 billion yen.
Extraordinary losses were 12.9 billion yen, and the main components were as follows.
First, impairment loss was 5.3 billion yen. This was mainly due to impairment of goodwill incurred upon consolidating our subsidiary, ELNA CO., LTD. We decided to record the impairment loss because ELNA has a high proportion of sales for use in automobiles. Currently, the outlook of the global economy is becoming increasingly uncertain due to sluggish demand in the automotive market and the spread of COVID-19, which has been constraining economic activity.
Second, antitrust-law-related loss was 3.6 billion yen. The main factor was settlements for class actions instituted in the United States against ELNA in relation to transactions of aluminum electrolytic capacitors.
Third, loss on disaster was 3.2 billion yen accompanying damage at FUKUSHIMA TAIYO YUDEN, a subsidiary of TAIYO YUDEN, arising from a typhoon in October 2019. Meanwhile, insurance claim income of 1.4 billion yen for damage arising from the typhoon was recorded as extraordinary gain.
As a result, net income attributable to owners of parent company was 18.0 billion yen.
The average exchange rate during FYE March 2020 was US$1:¥109.06, an appreciation of 1.43 yen compared to the previous fiscal year.
The impact from this was a decrease of 3.9 billion yen in net sales and 0.9 billion yen in operating income.
R&D expenses were 12.9 billion yen, nearly the same Y/Y.
Capital investment was 39.4 billion yen, an increase of 0.8 billion yen Y/Y.
Depreciation expenses were 27.0 billion yen, an increase of 0.5 billion yen Y/Y.
©TAIYO YUDEN 2017 4
37.235.2
10.7
2.4
(3.7)(0.9)
(6.5)
Factors behind Operating Income in FYE March 2020
Operating income(FYE Mar 2019)
Impact of selling price
Effect from capacity utilization
Effect from Cost reduction
Changes in fixed costs
Currency
fluctuations
Operating income
(FYE Mar 2020)
A factor for increase in operating income was a 10.7 billion yen effect from capacity utilization.
This includes the impacts of sales volume changes, improvement in the product mix, and changes in inventory.Company-wide inventory as of March 31, 2020 increased 2.6 billion yen from March 31, 2019 on the actual base, excluding the portion with no effect on changes in operating income, such as the impact of exchange rates.
The 2.4 billion yen effect from cost reductions was also a factor for increase in operating income.
The 6.5 billion yen effect from selling prices was a factor for decrease in operating income.
Price reductions in 1Q were moderate, but they resumed at the normal pace from 2Q onwards.
The 3.7 billion yen increase in fixed costs and the 0.9 billion yen effect of exchange rates due to appreciation in the value of the yen were also factors for decrease in operating income.
As a result, operating income increased 2.0 billion yen Y/Y to 37.2 billion yen.
©TAIYO YUDEN 2017 5
¥ in million FYE Mar 31, 2019 FYE Mar 31, 2020 Change Y/Y
Capacitors 170,633 62.2% 176,457 62.5% 5,824 3.4%
Ferrite and appliedproducts 40,595 14.8% 38,770 13.7% (1,825) (4.5)%
Integrated modules & devices 47,930 17.5% 49,808 17.6% 1,877 3.9%
Others 15,189 5.5% 17,292 6.1% 2,103 13.8%
Total net sales 274,349 100.0% 282,329 100.0% 7,980 2.9%
Financial Results by Product Classification (Y/Y)
©TAIYO YUDEN 2017 6
■ Capacitors (+3.4%)
The growth was led by expansion of sales for automobiles where use of electronic components is advancing. Sales for use in IT infrastructure/industrial equipment, such as base station communication devices, also increased.
■ Ferrite and applied products ((4.5)%)
Although sales for use in automobiles increased, sales for use in consumer products, information equipment/IT infrastructure, industrial equipment, etc. declined.
■ Integrated modules & devices (+3.9%)
Sales for use in communication devices (FBAR/SAW) increased.
■ Capacitors ■ Ferrite and applied products ■ Integrated modules & devices ■ Others
Financial Results by Product Classification (Y/Y)
Net sales of capacitors were ¥176.5 billion, up 3% Y/Y.
There was strong demand for use in automobiles and IT infrastructure/industrial equipment, such as base station communication devices.
Net sales of ferrite and applied products were 38.8 billion yen, down 5% Y/Y.
While sales for use in automobiles increased, sales for consumer products, information equipment, and IT infrastructure/industrial equipment decreased.
Net sales of integrated modules & devices were 49.8 billion yen, up 4% Y/Y.
An increase in sales of communication devices (FBAR/SAW) contributed to this.
Communication devices account for between 60% and 65% of integrated modules & devices sales.
©TAIYO YUDEN 2017 7
*Estimated by the Company
Sales by Market Sector
Composition of sales classified by market sector was 18% for use in automobiles, up 3 percentage points Y/Y.
TAIYO YUDEN has focused on sales for use in automobiles for some time, and both net sales and composition of sales have increased steadily.
Composition of sales classified by market sector was 23% for use in IT infrastructure/industrial equipment.
Strong demand for use in base station communication devices has continued. In addition, demand for use in servers, which had slowed temporarily, recovered from 2Q onwards, and sales have continued to expand.
Composition of sales classified by market sector was 35% for use in communication equipment, 14% for use in information equipment, and 10% for use in consumer products, down 2 percentage points Y/Y.
Going forward, we will focus on sales for use in automobiles and IT infrastructure in which seasonal fluctuations are low in order to develop a business structure that is not easily affected by changes in demand.
©TAIYO YUDEN 2017
Forecast of Consolidated PerformanceFirst quarter of the year ending March 31, 2021
©TAIYO YUDEN 2017 9
¥ in millionFYE Mar 31, 2020
4QFYE Mar 31, 2021
1Q ForecastChange
Net sales 68,233 100.0% 60,000 100.0% (8,233) (12.1)%
Operating income 7,431 10.9% 3,000 5.0% (4,431) (59.6)%
Ordinary income 6,835 10.0% 2,500 4.2% (4,335) (63.4)%
Net income attributable to owners of parent company
(1,975) ー 1,500 2.5% 3,475 -
Yen to USD average exchange rate 109.54 yen
(Assumption)
107.00 yen2.54 yen
appreciated
Forecast for 1Q of FYE March 2021
As explained at the beginning of the presentation, at present, we will announce financial results forecasts for 1Q.
We project net sales of 60.0 billion yen, operating income of 3.0 billion yen, ordinary income of 2.5 billion yen, and net income attributable to owners of parent company of 1.5 billion yen.
This forecast of financial results was calculated based on the assumption that operating constraints at plants in the Philippines and Malaysia due to the impact of COVID-19 will last until the end of May. The assumed exchange rate for the financial results forecasts is US$1:¥107.
©TAIYO YUDEN 2017 10
¥ in millionFYE Mar 31, 2020
4QFYE Mar 31, 2021
1Q ForecastChange
Capacitors 43,738 64.1% 39,000 65.0% (4,738) (10.8)%
Ferrite and appliedproducts 9,090 13.3% 8,000 13.3% (1,090) (12.0)%
Integrated modules & devices 11,226 16.5% 10,000 16.7% (1,226) (10.9)%
Others 4,178 6.1% 3,000 5.0% (1,178) (28.2)%
Total net sales 68,233 100.0% 60,000 100.0% (8,233) (12.1)%
Forecast by Product Classification for 1Q of FYE March 2021
By product, we forecast net sales down 11% Q/Q to 39.0 billion yen for capacitors, down 12% Q/Q to 8.0 billion yen for ferrite and applied products, down 11% Q/Q to 10.0 billion yen for integrated modules & devices, and down 28% Q/Q to 3.0 billion yen for other products.
©TAIYO YUDEN 2017
Impact of Novel Coronavirus Disease(COVID-19)
©TAIYO YUDEN 2017
Impact of COVID-19
12
Production sites in the Philippines and Malaysia are operating although there are constraints due to government restrictions on activities and travel. Sites in other regions are operating as normal.
Production
We are closely monitoring production trends at client companies and final demand for equipment, etc.
Sales
There are some problems with procurement from suppliers, but we are resolving this by changing procurement channels and utilizing current inventory.
Procurement
The decrease in the number of flights is lengthening distribution lead times and increasing distribution costs. We are addressing this through transportation using alternative flights and routes.
Distribution
Production:
Production activities have continued at all plants, but there are constraints on operations due to government policies at plants in the Philippines and Malaysia.
Plants in other regions are operating as normal.
Sales:
We are working to gather information, including client production trends and final demand for mainstay equipment and preparing to be able to respond to clients’ requests in a timely manner.
Procurement:
There have not been any problems that are likely to have a significant impact on TAIYO YUDEN’s business performance.
Suppliers are also gradually resuming production.
There are some problems with procurement of parts and materials, but we are resolving this by changing procurement channels and utilizing current inventory.
Distribution:
There have been some lengthening in distribution lead times and increase in distribution costs due to the reduction in the number of flights.
We have been taking measures so that we can minimize the impact by using alternative flights and routes.
©TAIYO YUDEN 2017
Operating Status of Production Sites
13
Country Company Main production itemsOperation
status
Japan
TAIYO YUDEN, FUKUSHIMA TAIYO YUDEN, NIIGATA TAIYO YUDEN,WAKAYAM TAIYO YUDEN, TAIYO YUDEN Mobile Technology, etc.
Multilayer ceramic capacitors,inductors, communication devices, modules, etc.
Operating as normal
KoreaKOREA KYONG NAM TAIYO YUDEN
Multilayer ceramic capacitorsOperating as normal
China
TAIYO YUDEN (TIANJIN) ELECTRONICS
InductorsOperating as normal
TAIYO YUDEN (GUANGDONG) Multilayer ceramic capacitorsOperating as normal
Philippines TAIYO YUDEN (PHILIPPINES) InductorsOperating (with
constraints)
Malaysia
TAIYO YUDEN (SARAWAK) Multilayer ceramic capacitorsOperating (with
constraints)
ELNA-SONICAluminum electrolytic capacitors
Operating as normal
Thailand TANIN ELNAAluminum electrolytic capacitors
Operating as normal
Japan/South Korea/Thailand
Continuing operations as normal. No impact from COVID-19 on operations
China: TAIYO YUDEN (TIANJIN) ELECTRONICS CP., LTD.
Shutdown from January 24 (first day of Chinese New Year holiday) to February 19. Constraints on operations for about one month afterwards due to limits on number of workers, but operating as normal since late March.
China: TAIYO YUDEN (GUANGDONG) CO., LTD.
Shutdown from January 24 (first day of Chinese New Year holiday) to February 9.
Subsequently, securing personnel was a bottleneck, but increased employees and gradually lifted capacity utilization and operating as normal.
Philippines
Suspended operations for three days at the end of March due to movement restriction order, but resumed from April 1.
Constraints on operations due to limits on number of workers.
Malaysia: TAIYO YUDEN (SARAWAK) SDN. BHD.
Restriction of Movement Order enforced from March 18, but production activities continued without shutting down operations after obtaining approval from government authorities.
Constraints on operations due to limits on number of workers.
Malaysia: ELNA-SONIC
Operations shut down for approximately one month from March 18 due to Restriction of Movement Order.
There were limits on the number of workers even when operations were resumed after obtaining approval from government authorities, but currently operating as normal.
©TAIYO YUDEN 2017
Supplementary Information
©TAIYO YUDEN 2017
¥ in millionFYE Mar 31, 2018 FYE Mar 31, 2019 FYE Mar 31, 2020
1H 2H 1H 2H 1H 2H
Net sales 118,180 125,937 133,565 140,783 141,908 140,420
Capacitors 66,767 76,091 80,168 90,464 87,812 88,645
Ferrite and applied products 20,223 20,753 21,154 19,441 19,376 19,393
Integrated modules & devices 29,582 27,256 26,369 21,561 25,960 23,848
Others 1,606 1,836 5,873 9,316 8,759 8,533
Operating income 8,775 11,445 14,703 20,534 20,298 16,877
Ordinary income 10,021 10,531 15,385 18,966 19,176 15,988
Net income attributable to owners of parent company
7,378 8,976 10,980 12,707 15,332 2,690
15
Yen to USD average exchange rate
111.46yen
111.43 yen
109.30yen
111.67yen
109.26yen
108.86yen
Consolidated Earnings Trends (Half Yearly)
©TAIYO YUDEN 2017
¥ in millionFYE Mar 31, 2019 FYE Mar 31, 2020
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net sales 59,576 73,989 73,963 66,820 68,635 73,272 72,187 68,233
Capacitors 36,184 43,984 47,362 43,101 43,338 44,473 44,907 43,738
Ferrite and applied products 9,228 11,926 11,209 8,231 8,633 10,742 10,303 9,090
Integrated modules& devices 13,208 13,160 10,783 10,778 12,523 13,436 12,621 11,226
Others 954 4,918 4,607 4,708 4,139 4,620 4,354 4,178
Operating income 5,981 8,722 11,789 8,744 9,595 10,703 9,446 7,431
Ordinary income 6,896 8,489 11,403 7,562 8,846 10,330 9,152 6,835
Net income attributable to owners of parent company
5,645 5,334 9,069 3,638 7,151 8,180 4,666 (1,975)
16
Yen to USD average exchange rate
107.76yen
110.84yen
112.71yen
110.64yen
110.95yen
107.58yen
108.17yen
109.54yen
Consolidated Earnings Trends (Quarterly)
©TAIYO YUDEN 2017 17
Net sales
Consolidated Earnings Trends (Quarterly)
©TAIYO YUDEN 2017 18
(¥ in billion)
Orders Received and Order Backlog Trends (Quarterly)
■ Capacitors ■ Ferrite and applied products ■ Integrated modules & devices ■ Others
©TAIYO YUDEN 2017 19
Consolidated Financial Position
©TAIYO YUDEN 2017 20
Forward-looking statements
This document contains information about the plans, business results, and strategies of TAIYO YUDEN CO., LTD. and the TAIYO YUDEN Group. These forward-looking statements other than historical facts represent judgments made by the Company based on information available at present and are inherently subject to a variety of uncertainties. TAIYO YUDEN cannot provide any guarantee as to the attainment of certain figures in the future. The Company’s actual activities and business results could differ significantly due to changes including, but not limited to, changes in the electronics market in which the Company’s business activities are centered. Readers should not overly rely on the information contained in this document.
©TAIYO YUDEN 2017