fy2012 2q financial results - topcon · fy2012 2q financial results . october 31, 2012 topcon...

©2012 Topcon Corporation From Reform To Enhancement

FY2012 2Q Financial Results

October 31, 2012 TOPCON CORPORATION President Norio Uchida

In this presentation, “FY2012” refers to the year ending March 31, 2013. In addition, “FY2012 2Q” refers to the period from April 1 to September 30, 2012.


CONTENTS

Ⅰ

III Appendix

II



FY2012 Full Year Forecast

１



2


TOPCON TOPCON

Review of 1H <Adoption of 3 in-house companies system accelerated management speed>

3

Clarify target domains and markets

Eye Care Business unit

Major Businesses ・Surveying/GIS ・3D Measurement Focus Markets ・Emerging Countries

Major Businesses ・Machine Control ・Precision Agriculture Focus Markets ・Developed Countries

Topcon Positioning Systems (TPS)

Positioning Business Unit

Eye Care Company

Smart Infrastructure Company

Positioning Company （TPS）

Corporate Strategy Div.

ECC SIC POC

Outcome: Speed of business decision making accelerated by clarifying each company’s responsibility!


Operating income gained at all Companies (YoY)

Profits of consolidated domestic companies highly improved +1,500 million yen (YoY)

Review of 1H <Reform plan was successfully realized >

1. Launching new strategic products 2. Reducing domestic personnel (consolidated) 3. Selection and concentration of former Finetech Business unit is proceeding as it was planned

Main Strategies

4

SIC POC ECC

with currency translation +800 +10 +6 without currency translation +900 +300 +300

(million yen)


New model of Total Station/ World’s 1st TSshield (launched in June）

will continue to earn high profits in FY2012 2H

World’s 1st GPS （launched in September）

will contribute to sales and profits for FY2012 2H

Development of strategic products

is proceeding as scheduled and new products will be

launched in FY2012 2H

5

POC

ECC

SIC

Launching new strategic products

Review of 1H <Reform plan was successfully implemented>


Efficiency of development, manufacturing and sales highly improved

FY2009/1H （A） FY2012/1H （B）（B）/（A） %

Sales of new products / per engineer 19.2 38.2 199％ Output / per manufacturing staff 14.6 17.1 117％ Sales / per full-time employee 10.8 15.2 141％

(million yen)

6

Reform Plan generated strong management system

Review of 1H <Efficiency improved >


Exchange Rate for FY2012 Total Amount of Impact (FY2012 1H)

Assumed Rate (original)

Average Exchange Rate Net Sales Operating

Income

US$ ¥80 ¥79.43 (0.1) (0.1)

EUR ¥110 ¥101.12 (0.9) (0.3)

Cross Rate of

US$/EUR 1.37US$ per EUR 1.27US$per EUR (0.1)

Total (1.0) (0.5)

7

Impact of yen appreciation and our action plan

Operating Income

(0.5) billion yen

Ordinary Income

(1.0) billion yen

Acceleration of our Reform Plan Action Plan

Impact of yen appreciation <FY2012 1H(YoY)>

Review of 1H <Acceleration of Reform Plan is necessary to overcome our issue>

(billion yen)


[Consolidated] FY2011 1H FY2012 1H July 31, 2012

Actual Actual A YoY Converted Actual

B ＊１ Announcement Converted Actual C＊2

Net Sales 49,577 46,121 (3,456) 47,511 51,000 47,133 Gross profit (Gross profit Ratio)

18,886 （38.1%）

19,400 （42.1%）

514 20,541 （43.2%）

SGA 18,369 17,894 (475) 18,338

Operating Income (Operating Income Ratio)

517 （1.0%）

1,505 （3.3%）

988 2,202 （4.6%）

2,000 （3.9%）

2,008 （4.3%）

Non-Operating Expenses (1,205) (1,019) 186 (1,234) Ordinary Income (Loss) (688) 486 1,174 968 1,400 1,452 Extraordinary Income (Loss) (642) (1,162) (519) (1,162) Loss Before Income Taxes and Minority Interests

(1,331) (675) 656 (193)

Net Income (Loss) (1,960) (1,221) 739 (931) 400 (642) Dividends（¥） ¥2 ¥2 ¥2

Exchange Rate (Average)

US$ ¥79.73 ¥79.43 ¥80

EUR ¥114.09 ¥101.12 ¥110

8

(million yen)

FY2012 1H Results (consolidated)

＊１ B is converted by exchange rate of FY2011 1H ＊2 C is converted by exchange rate we announced on July 31, 2012


[Consolidated] FY2011 1H FY2012 1H July 31, 2012

Actual Actual A YoY Converted Actual

B *１ Announcement Converted Actual C *2

Net Sales

Smart Infrastructure 9,274 9,535 261 9,659 12,000 9,613

Positioning 16,729 16,380 (349) 17,063 18,000 16,894

Eye Care 15,620 14,478 (1,142) 15,059 16,000 14,890

Others 7,952 5,728 (2,224) 5,730 5,000 5,736

Total 49,577 46,121 (3,456) 47,511 51,000 47,133

Operating Income (Operating

Income Ratio)

Smart Infrastructure

(19) （△ 0.2%）

756 （7.9%）

775 889 （9.2%）

600 （5.0%）

856 （8.9％）

Positioning 528 （3.2%）

538 （3.3%）

10 853 （5.0%）

900 （5.0%）

774 （4.6％）

Eye Care 424 （2.7%）

430 （3.0%）

6 679 （4.5%）

800 （5.0%）

597 （4.0％）

Others (416) （△ 5.2%）

(219) （ △ 3.8%）

197 (219) （ △ 3.8%）

(300) （△ 6.0%）

(219) （3.8％）

Total 517 （1.0%）

1,505 （ 3.3% ）

988 2,202 （4.6%）

2,000 （3.9%）

2,008 （4.3％）

9

(million yen)

Consolidated FY2012 1H Results (by company)

*１ B is converted by exchange rate of FY2011 1H *２ C is converted by exchange rate we announced on July 31, 2012


[Consolidate]

FY2011 1H FY2012 1H FY2012 1H

Sales composition ratio by areas Actual Actual YoY

（％）

Excluding exchange impact

and former Finetech Business

（％）

Japan 11,627 11,496 99％ 115％

North America 9,326 9,400 101％ 101％

Europe 10,899 9,326 86％ 95％

China 5,565 4,738 85％ 87％

Asia/ Oceania/ Others

12,160 11,161 92％ 100％

Total 49,577 46,121 93％ 101％

Japan 25％

Europe 20％

North America 20％

China 10％

Asia Oceania Others 25％

10

（million yen）

Domestic and Overseas Sales （YoY） <Ratio of China is small>


1.5

1.01.1

1.5

(0.4)(0.7)

0.5

(0.5)

Total Amountof Gain and

Losses Factors

Results for 1H FY2012

SalesPrice Down

Changein Sales

Results for1H FY2011

Fixed-costReduction

ExchangeFluctuation

COGSReduction

(billion yen )(codes are based on gain and loss)

[Consolidated] Results of 1H FY2011 Results of 1H FY2012

11

Analysis of Gain and Loss in Operating Income (YoY)

Effect of VA/CD


FY2012 Full Year Forecast

12

©2012 Topcon Corporation From Reform To Enhancement 13

We revised assumed exchange rate ¥80/US$ ･ ¥110/EUR ¥75/US$ ･ ¥95/EUR

２． Revision of exchange rate and our action

３． Launching of new strategic products

We are considering sovereign risk in Europe and country risk in China

Acceleration of Reform Plan

Strategies for 2H <To achieve our mid-term plan :ROE 20%>

１．Change of market conditions


2,529 2,324

1,885 1,800 1,650 1,650

205 439

Original Plan 85

FY2012 235 personnel will be reduced

Plan will be completed 2 years earlier

than it was scheduled

14

Acceleration of Reform Plan <Early reduction of domestic personnel>

FY2009 Actual

FY2010 Actual

FY2011 Actual

FY2012 Forecast Plan

FY2014 Midterm

Business Plan


Integrate domestic plants by the end of FY2012 2H

15

Complete by the end of FY2014 Complete by the end of FY2012 Mid-term Business Plan 2014

Impacts We estimate extraordinary losses for FY2012 2H, but profits we make after FY2012 will offset the exchange loss in this fiscal year.

FY2012 ： extraordinary losses ¥(1.0) billion From FY2013 ： operating income ¥ 2.0 billion

Cost for personnel reduction : ¥1.5 billion Running cost : ¥0.5 billion

Details of the plan <Details of personnel reduction plan>

５Places

３ Places


Product Launch <New products>

Company (New) Main Products Sales Composition Ratio to

Strategic Product Sales (%) FY2012 1H (Actual) FY2012 2H (Forecast)

Smart Infrastructure

Total Station (cloud compatible) 3D Measurement Laser Equipment

Total Station (low price) Total Station (motor drive)

Positioning

GPS Receiver Software for GPS (cloud compatible) GNSS board

Auto Steering Systems for Agriculture OEM (for construction and agriculture )

Eye Care

High-end OCT Slit Lamp Refraction Equipment

Affordable Model of OCT Pascal (new line-up) Specular Microscope Basic RM/KR (common platform) Optical Biometer

16

*OCT…Optical Coherence Tomography

*

World’s First

World’s Smallest and Lightest

Industry's First

World’s Smallest

World’s First

World’s Lightest

World’s First World’s First


Product Launch (Plan for FY2012)

(models)

Company

FY2012 FY2012-FY2014

Plan 1Q Actual

2Q Actual

2H Plan

Full-year Plan

Smart Infrastructure 2 2 2 6 18 Positioning 3 3 2 8 23

Eye Care 0 5 6 11 17 Total 5 10 10 25 58

Product Launch <New products>

17


[Consolidated] FY2011 FY2012

Full Year Full Year July 31,2012

Actual Revised Forecast YoY(%) Original Forecast

Net Sales 98,834 98,000 99% 108,000

Operating Income (Operating Income Ratio)

2,080 （2.1%）

5,000 （5.1%）

240% 8,000 （7.4%）

Ordinary Income 467 3,200 685% 6,800

Net Income △3,686 500 3,000

ROE △10.6％ 1.6％ 8.8％

ROIC 1.6％ 4.5％ 6.8％

Dividends ¥4 ¥6 ¥6

Average Exchange

Rate

US$ ¥79.30 ¥77.38 ¥80

EUR ¥110.17 ¥98.30 ¥110

18

(million yen)

Full Year Business Forecast

Assumed exchange rate for FY2012 2H is ¥75/US$, ¥95/EUR * After extraordinary Income reduced 4.6％

*


Reasons for revision of assumed exchange rate

19

Reasons for revision Amount of change

Revision of assumed exchange rate ¥(4.0) billion

Risks for sluggish economy in Europe and China ¥(6.0) billion

Total ¥(10.0) billion

Reasons for revision Amount of change

Revision of assumed exchange rate ¥(2.0) billion

Risks for sluggish economy in Europe and China ¥(1.0) billion

Total ¥(3.0) billion

★Net Sales

★Operating Income

Considering over following risks, we set conservative targets

We will implement Reform Plan in Europe and China for further profit improvement

(YoY)


［Consolidated］ FY2011 FY2012

Full Year Full Year July 31, 2012

Actual Revised forecast YoY(%) Original Forecast

Net Sales

Smart Infrastructure 19,656 21,000 107% 25,000

Positioning 33,000 33,000 100% 37,000

Eye Care 32,598 33,000 101% 35,000

Others 13,579 11,000 81% 11,000

Total 98,834 98,000 99% 108,000

Operating Income （Operating Income

Ratio）

Smart Infrastructure 975 （5.0%）

1,600 （7.6%）

164% 2,500 （10.0%）

Positioning 508 （1.5%）

1,400 （4.2%）

276% 2,500 （6.8%）

Eye Care 1,766 （5.4%）

2,000 （6.1%）

113% 3,000 （8.6%）

Others (1,168) （ △8.6%）

0 （0%）

-% 0 （0%）

Total 2,080 （2.1%）

5,000 （5.1%）

240% 8,000 （7.4%）

20

(million yen)

Business Forecast by Company


5.0

2.9

0.6

(1.1)

3.3

1.7

(1.6)

2.1

COGSReduction

ExchangeFluctuation

Fixed-costReduction

Results forFY2011

Changein Sales

SalesPrice Down

Forecast forFY2012

Total Amountof Gain

and LossesFactors

(billion yen)

(codes are based on gain and loss)

[Consolidated] FY2011Actual Results

FY2012Forecast

21

After revision of forecasts

Analysis of Gain and Loss in Operating Income (YoY)


1. Smart Infrastructure - Strategy for Emerging Market

Road &Railroad: 15 Tri. Yen Housing: 2.3 Tri. Yen

Housing & Road: 14 Tri. Yen

★World’s Lightest Motor-driven Total Station

★Low-end Total Station

Strategy of Companies in 2H

22

Targeting Emerging Countries where infrastructure spending is rapidly growing

New Products

New New


1. Smart Infrastructure – Products: Cloud Service

23


TSshield: World’s First Cloud Service for Total Stations (Already on sale)

New


2. Positioning – Strategy: Structural Reform


24

“Reform 15” - Accelerate Reform Plan in POC

Target: Operating Profit 15% in FY2015

-20%

-10%

0%

10%

20%

2015201420132012201120102009200820072006

15%


2. Positioning – Enhance Products: Unrivaled Products

25


Introducing World’s Smallest and Lightest GPS Receivers Lighten users’ workload for easier and faster survey jobs!

New

Launch New Strategic Product

World’s Smallest & Lightest GPS Receiver “HiPer SR” (Released in Sept.)


2. Positioning – Enhance Products: Lead the Innovation

26


Introducing World’s Smallest Precision GPS chip Less than quarter size of existing products, best processing speed and least power consumption (Released in Sept.)

New


2. Positioning - Enhance Products: Distinguishing Products

FY2007 08 09 10 11 12 Plan

Precision Ag Sales

27


Gaining market shares of Precision Ag with new product

Introducing World’s smallest Auto-steering System (Easier installation even for small tractors)

New


Strategy of Companies in 2H 3. Eye Care – Business Strategy

Launch Strategic Products

New Development in Vision Care Business

Sales Strategy

28


3. Eye Care – Enhance Products: Taking OCT Market


Hospital

Private MD

Optometrist Low-end World’s First fully-automated

image acquisition OCT for private clinic & OD

Hospital

Researcher

Screening market

High-end DRI OCT-1 Atlantis

Launch World’s First Deep Range Imaging OCT (High-end)

OCT-New

World’s First deep range imaging OCT for

researchers & specialists (Released in Aug)

Full Line-up

3D OCT-2000 (Current model)

Launch World’s First Fully-automated Image Acquisition OCT (Low-end)


3. Eye Care – Enhance Products: Improve Line-up


Introducing new line-up for World’s First Pattern Laser Equipment PASCAL

Hospital

30

PASCAL Streamline (Already in market) New PASCAL (Attachment Type)

New

+ 20% Cost Reduction!


3. Eye Care – Enhance Products: Common Platform

31


Common platform to enable large cost reduction

25% Cost Reduction!

Common Platform


3. Eye Care - Structural Reform

32


Vision Care Business in Japan

Establish “Topcon Vision Care Japan Co., Ltd.” on November 1. - Targeting Speedy Management by Corporate Split


Summary <To achieve our business plan for FY2012…>

We will strive to increase the corporate value to reach the target of ROE20% by the final year 2014 of Mid-term business plan.

Enhance our profitability Speedy execution !

Keep launching World’s first and World’s No.1 products by Topcon’s competitive global operation.

Execute the strategies of Mid-term business plan two years ahead of schedule to secure our profit of the final year of the Mid-term Plan (2014).

33


Appendix

34


Consolidated Cash Flows

35

Cash flows

(billion yen)

10

5

(10)

(5)

0

100

50

0

D/E Ratio (％）

150

C/F from Operating Activities

C/F from Investment Activities Free Cash Flow

D/E Ratio

2011/9 2012/9

158.6%

4.2

(1.7)

2.5 2.0

(2.0)

179.7%

2012/3

0

(3.6) (3.6)

180.2%

0


2011/9 2012/9 2010/9 2011/9 2012/9 2010/9

60

40

20

0

10

5

2.0

1.0

1.5

0.5

9.0％

1.5

1.3

0.6

4.4 1.7

10.7％

1.6

0.8

5.3

1.7 1.6

1.4

1.6

1.6 1.5

1.4

0.2

1.5

9.0％

4.2

1.1

0.0

1.1 1.3

CAPEX / Depreciation / R&D

Capital Expenditure / Depreciation R&D

Capital Expenditure

Depreciation

Positioning

R&D Expenditure to Sales Ratio

Eye Care Others

R&D Expenditure to Sales Ratio (%)

R&D (billion yen)

(billion yen)

36

Positioning Smart Infrastructure


Exchange Rate Impact from Fluctuation (FY2012 2H)

Assumed Exchange Rate for FY2012 2H Net Sales Operating Income

Impact from Fluctuation

by ¥1

/US$ ¥75/US$ ¥0.3 ¥0.1

/EUR ¥95/EUR ¥0.1 ¥0.05

Impact from Fluctuation

by $0.01 /EUR 1.27US$/EUR ¥0.01

Impact from Currency Exchange

Impact from Currency Exchange (FY2012 2H)

(billion yen)


▶Market in developed countries did not grow because of yen appreciation and market uncertainty ▶Market of emerging countries expanded but did not contributed than we expected because of economic uncertainty and political instability

▶Stable growth in MC, precision agriculture and measurement ▶No growth in surveying field because of yen appreciation and more

severe competition with peers ▶Demands for high value added products increased in emerging countries

✔Moderate recovery in the U.S. because of improvement of housing starts ✔Sluggish economy will continue in Europe ✔Country risk in China will exist ✔Some areas in emerging countries will grow by investing in infrastructure while economic uncertainty still exist

✔MC, precision agriculture and measurement business will expand globally

✔Demands for high value added products will continue to increase in emerging countries

FY2012 1H 2H

America

Europe

Japan

Emerging Countries

FY2012 1H 2H

《Overview of 1H 》


《Forecast for 2H》


Construction

Precision Agriculture

Surveying / GIS

3D Measurement

By Market

By Region

Regional and Market Trend


FY2012 1H 2H

FY2012 1H 2H

Japan

Europe

U.S.A.

Asia

▶ Wait-and-see attitude before the presidential election in the U.S. ▶ Continuing Economic slump in Europe ▶ No change or slightly improved in Japan/Increasing Ophthalmic clinics ▶ Stable growth in China, India and other emerging countries, and their

health care markets expanded

✔ U.S. will show slow and moderate recovery ✔ Economic slump will continue in Europe ✔Increase of demand in ophthalmic market can be expected because of

further aging society ✔ Diplomatic problem between China and Japan seems to continue

▶ Less budget in ophthalmic equipments and less tendering opportunities because of sluggish economy.

▶ Chain glasses stores were strong globally ▶ Stable growth in screening market

✔ Less budget in ophthalmic equipments and less tendering opportunities because of sluggish economy. ✔ Emerging countries’ brands will actively enter our markets ✔ Stable growth in screening market



Regional and Market Trend

BY Market

By Region

39



Ophthalmic Market

Optometric Market

Diabetes and Glaucoma Screening Market


5.63.93.53.8

5.5 6.81.0

(0.2)

1.6

(0.6)

0.3

(0.3)

0

5

10

FY11/1Q FY11/2Q FY11/3Q FY11/4Q FY12/1Q FY12/2Q(1)

0

1

2Net Sales Operating Income

21.7

27.9

19.3 20.525.6

30.03.4

2.4

(0.9)(1.8)

1.4

(0.9)

0

10

20

30

40

FY11/1Q FY11/2Q FY11/3Q FY11/4Q FY12/1Q FY12/2Q(4)

(2)

0

2


8.57.9

10.0

6.28.48.4

0.5

0.0

0.6

(0.6)

0.40.1

0

5

10

15

FY11/1Q FY11/2Q FY11/3Q FY11/4Q FY12/1Q FY12/2Q(1.0)

(0.5)

0.0

0.5

1.0Net Sales Operating Income

40

Financial Results (Quarterly)

１．Consolidated ２．Smart Infrastructure

４．Eye Care ３．Positioning

Net Sales (billion yen)

Operating Income (billion yen) Operating Income (billion yen)

Operating Income (billion yen) Operating Income (billion yen) Net Sales (billion yen)

Net Sales (billion yen) Net Sales (billion yen)

7.08.6

7.2

9.8

6.4 8.1

0.8

(0.4)

1.5

(0.1)

0.7

(0.2)0.0

5.0

10.0

15.0

FY11/1Q FY11/2Q FY11/3Q FY11/4Q FY12/1Q FY12/2Q(0.5)

0.0

0.5

1.0



16.616.416.316.715.515.8

0.90.5

0.0

0.5

(0.3)

0.5

0

5

10

15

20

10/1H 10/2H 11/1H 11/2H 12/1H 12/2H

(0.5)

0.0

0.5

1.0


49.7 52.8 49.6 49.3 46.151.9

3.5

1.51.5

0.5

1.8

0.00

20

40

60

80

10/1H 10/2H 11/1H 11/2H 12/1H 12/2H

0

1

2

3


18.5

14.517.0

15.616.414.5

1.6

0.4

1.3

0.40.6

(0.3)

0

5

10

15

20

10/1H 10/2H 11/1H 11/2H 12/1H 12/2H

(0.5)

0.0

0.5

1.0

1.5


10.0 10.3 9.310.4 9.5

11.50.80.8

1.0

0.00.3

(0.4)

0

5

10

15

20

10/1H 10/2H 11/1H 11/2H 12/1H 12/2H

(0.5)

0.0

0.5

1.0


１．Consolidated ２．Smart Infrastructure

４．Eye Care ３．Positioning

41

Financial Results and Forecast (Semiannually)

Net Sales (billion yen)

Operating Income (billion yen) Operating Income (billion yen)

Operating Income (billion yen) Operating Income (billion yen) Net Sales (billion yen)

Net Sales (billion yen) Net Sales (billion yen)


Inquiries: IR Affairs Corporate Communication Dept. TOPCON CORPORATION Tel: +81-3-3558-2532 E-mail: [email protected] URL: http: //global.topcon.com/invest/

Cautionary Note regarding Forward-Looking Statements These materials contain forward-looking statements, including projections of future operating performance. Such statements are based on management’s best judgment, given the materials available to them at the time these statements are made. However, please be aware that actual performance may differ from projected figures owing to unexpected changes in the economic environment in which we operate, as well as to market fluctuations.

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