Financial Results for the Third Quarter Ended December 31, 2016...UMC ELECTRONICS CO., LTD. (Securities Code: 6615) Financial Results for the Third Quarter Ended December 31, 2016

UMC ELECTRONICS CO., LTD. (Securities Code: 6615)

Financial Results for the Third Quarter

Ended December 31, 2016

UMC ELECTRONICS, an EMS Specialist, Supports Manufacturing in Japan!

Copyright © 2017 UMC Electronics, All Rights Reserved. 1

(Note) Monetary figures are rounded down to the nearest whole unit and ratios are rounded off to the first decimal place.

1. FY2016 (Fiscal Year Ending March 2017) Third-Quarter Consolidated Financial Results ・・・・・・・・・・・・・・・2 2. Sales by Product Category ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11 3. Topics ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・14

Contents

Copyright © 2017 UMC Electronics, All Rights Reserved.

FY2016 Q1-Q3 Results Sales by Product Category Topics

Summary of Consolidated Financial Results（FY2015/3Q vs.FY2016/3Q）

2

(Millions of yen) FY2015 3Q Result

FY2016 3Q Result

YoY Consolidated

foreign currency translation effect

excl. forex impacts

Change Percentage change

Change (vs. FY2016 3Q)

FY2016 3Q

(YoY) Percentage

change

Net Sales 83,321 82,205 (1,116) (1.3)% (9,577) 91,782 +10.2%

（Plant Output）*1 17,712 21.3%

18,031 21.9%

+319 +0.7pt

+1.8% －

(1,960) 19,991 +12.9%

Gross Profit 4,096 4.9%

5,228 6.4%

+1,131 ＋1.4pt

+27.6% －

(408) 5,637 +37.6%

Operating Income 1,613 1.9%

2,273 2.8%

+659 ＋0.8pt

+40.9% －

(170) 2,443 +51.5%

EBITDA*2 3,340 4.0%

3,912 4.8%

+571 +0.8pt

+17.1% －

(368) 4,281 +28.1%

Net Income 1,249 1.5%

836 1.0%

(412) (0.5)pt

(33.0)% －

(23) 860 (31.1)％

USD Rate

（JPY） Average 121.70

End of period 120.54 Average 106.68

End of period 116.53 (15.02)

(4.01)

*3

Operating income for the first nine months reached its highest-ever level

*3 Chinese business restructuring expenses of 331 million yen were recorded in 1Q. * USD Rate：JPY121.70

*1 Plant Output= Net sales - Parts cost The net sales of an EMS company depends heavily on the product unit price and thus the Company discloses it as an indicator

of “plant output," which shows the added value. *2 EBITDA = Operating income + Depreciation and amortization



Summary of Consolidated Financial Results （FY2016/1Q～3Q）

3

(Millions of yen) FY2016 1Q

Result (three months)

FY2016 2Q Result

(three months)

FY2016 3Q Result

(three months)

Compared to previous period

（2Q vs. 3Q）

Change Percentage change

Net Sales 25,138 27,110 29,956 +2,845 +10.5%

(Plant Output)*1 5,729 22.8％

5,848 21.6％

6,453 21.5％

+605 (0.1)pt

+10.4% －

Gross Profit 1,662 6.6％

1,750 6.5％

1,815 6.1％

+64 (0.4)pt

+3.7% －

Operating Income 675 2.7％

794 2.9％

802 2.7％

+7 ＋0.2pt

+1.0% －

EBITDA*2 1,226 4.9％

1,328 4.9％

1,358 4.5％

+29 (0.4)pt

+2.2% －

Net Income (110) -％

427 1.6％

520 1.7％

+92 +0.1pt

+21.6 －

USD Rate (JPY) Average 108.25 End of period 102.96

Average 105.35 End of period 101.12

Average 106.68 End of period 116.53

+1.33 +15.41

*3

*3 Chinese business restructuring expenses of 331 million yen were recorded in 1Q.

*1 Plant Output= Net sales - Parts cost The net sales of an EMS company depends heavily on the product unit price and thus the Company discloses it as an indicator

of “plant output," which shows the added value. *2 EBITDA = Operating income + Depreciation and amortization



1,613 +319 -200

-59

+341

+259

2,273

1,300

1,500

1,700

1,900

2,100

2,300

2,500

Higher expenses

associated with increased plant

output

Increase in depreciation

and amortization as a result of

new investment

Increased plant

output

Lower labor costs

Lower overheads

Factors for Change in Consolidated Operating Income (FY2015/3Q vs.FY2016/3Q)

4

FY2016/ ３Ｑ

(Millions of yen)

Operating Income +659

FY2015/３Ｑ

YoY：Up ¥659 million (40.9％ UP)

0

Effect of improvement

activities



Initiatives to Improve Profitability

5

Improvement activities through the introduction of LCA*

（Units）（People）

97

0

100

200

300

400

'15/3Q '16/3Q '16/通期計画

285

(390)

Japan

China

Vietnam Thailand

6,000

7,000

8,000

9,000

10,000

11,000

’16/12末時点 0

9,804

1,143

(Units) ’15/ 3Ｑ

’16/ 3Ｑ (Change)

‘16/ Full-Year

Plan Japan 34 86 (+52) 109

China 39 119 (+80) 167

Vietnam 13 41 (+28) 53

Thailand 11 39 (+28) 61 Total 97 285 (+188) 390

(People)

Number of direct Personal

(end of Dec 2016)

Number of personnel reduced

through LCA

Japan 373 82

China 5,476 570

Vietnam 3,379 389

Thailand 576 102 Total 9,804 1,143

*LCA：Low Cost Automation

・Number of personnel reduced through the introduction of LCA

・Units of LCA introduced

LCA effect

Full-Year Plan As of end Dec. 2016



China 50.5%

Japan 20.4%

Vietnam 21.4%

Thailand 7.7%

Automotive equipment

+ Industrial equipment

61.3％

Sales Breakdowns by Product Category and by Region

6

(Note) Sales component ratio of each region is ratio of total net sales not including “consolidation adjustments”.

Ratio of automotive and industrial equipment sales rose 8.3% YoY

Improvement in balance of base portfolio

-5.8pt

+2.4pt

+3.3pt

+0.1pt

30.3%

22.7%

12.0%

23.6%

8.4% 2.6%

0.4%

Other Business

0.5％

56.3%

18.0%

18.1%

7.7%

Net sales by product category Net sales by region

Outside: FY2016 3Q Inside: FY2015 3Q

Outside: FY2016 3Q Inside: FY2015 3Q

Automotive equipment

37.5%

Industrial equipment

23.8%

Consumer8.1%

Office automation

19.2%

Information 6.8%

Other EMS

4.1%



21.1%

8.8%

32.9%

11.4%

8.5%

7.8%

6.1% 3.5%

23.7%

8.8%

30.9%

12.8%

8.9%

6.1%

6.6% 2.2%

Change in Automotive Equipment Portfolio

7

Growth in high added value areas such as critical safety parts where high reliability is required

32.5％ Engine and power train-related parts

Engine electrical system

Body control/

Drive system

Electrical equipment

Body

Exterior

Door handles & locks

Speedometers Other

Inside: FY2015 3Q Outside: FY2016 3Q



620 543 400 675

415 463 484

794 531 352 729

802 312 685 725

0

500

1,000

1,500

2,000

2,500

FY2013 FY2014 FY2015 FY2016

４Ｑ

３Ｑ

２Ｑ

１Ｑ

5,423 5,365 5,901 5,729

5,891 5,350 5,599 5,848

6,106 5,879 6,212 6,453

5,356 5,344 5,823

0

5,000

10,000

15,000

20,000

25,000

FY2013 FY2014 FY2015 FY2016

４Ｑ

３Ｑ

２Ｑ

１Ｑ

（Millions of yen）

8

1.4% 1.8%

2.1%

2.8%

0.0%

1.0%

2.0%

3.0%

FY2013/期末 FY2014/期末 FY2015/期末 FY2016/3Q

Performance Trends

Trend of Plant Output

Trend of Operating Income

Trend of Operating Margin


FY2013 FY2014 FY2015



Balance Sheet

9

Balance sheet and Cash flow

FY2015 FY2016/3Q

Total Assets ¥56,723million Equity Ratio 28.1％

Total Assets ¥63,624million Equity Ratio 25.8％

63,624 （Millions of yen）

19,229

21,530

15,963

41,927

14,795

(Note) Interest-bearing debt is all liabilities recorded on the balance sheet on which the Company pays interest

56,723

Cash Conversion Cycle

26,516

20,671

16,435

46,204

17,419

Notes and accounts

receivable -trade 17,274

Inventories 10,363 11,090

Notes and accounts

payable-trade 16,547

0.03 months CCC reduction

Notes and accounts

receivable -trade 20,549

Inventories 13,221 11,301

Notes and accounts

payable-trade 22,469

Cash Flow (For Reference)

1,166

3,050

- 2,246

- 3,384

-1,080

- 334

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

営業CF 投資CF FCF

Total assets increased due to increase in new transactions and depreciation of the yen.

Operating CF increased 161.6% year on year.

Net Assets

Interestbearing

Debt

Liabilities

Noncurrent Assets

Current Assets

Net Assets

Interestbearing

Debt

Liabilities

Noncurrent Assets

Current Assets

First three quarters of FY2016

First three quarters of FY2015


Operating CF

Investment CF



Capital Investment and Depreciation & Amortization

10


Breakdown of Capital Investment （Millions of yen） FY2014 FY2015

FY2016 3Q Result

Japan 567 318 445 China 1,533 1,157 1,006 Vietnam 496 959 415 Thailand 72 574 109 Mexco 0 0 973 Total 2,668 3,008 2,948

2,668 3,008 2,948

1,786

2,307

1,639

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY2014 通期

FY2015 通期

FY2016 ３Ｑ実績

設備投資減価償却費 Capital Investment

Depreciation & amortization

3Q (Result)


Sales by Product Category FY2016 Q1-Q3 Results Topics

Net Sales by Product Category

Automotive Equipment

Industrial Equipment



37.5%

23.8%

25,267

30,803

0

8,000

16,000

24,000

32,000

FY20153Q

FY20163Q

18,895 19,553

0

8,000

16,000

24,000

FY20153Q

FY20163Q

◆Our track record in the stable supply of domestically produced power control products in China was recognized and sales of critical safety parts such as power train systems, control systems and drive systems were strong.

◆New development of various electrical equipment for environmentally-friendly vehicles.

◆Sales of exterior products that require a high level of mounting technology were strong.

◆Sales of power supply systems and inverters of leading Japanese manufacturers recovered.

◆Products for mobile phone

base stations sold briskly.

11

FY2016/3Q component ratio

Power control unit

Automotive precision metal mold and injection molding

Industrial unit products

Industrial power supply

Payment terminal

Products for mobile base stations




Consumer Equipment

Office Automation



8.1%

19.2%

10,039

6,669

0

4,000

8,000

12,000

FY20153Q

FY20163Q

19,667

15,795

0

8,000

16,000

24,000

FY20153Q

FY20163Q

◆Cost competition was fierce.

◆Aiming at integrally

manufactured products from the design stage through to finished products.

◆Currently targeting Chinese

manufacturers.

◆Continuous recovery since 1Q due to expansion of in-house share.

12




LED lighting

Circuit board for air purifier

Various circuit boards for leading printer manufacturers



Information Equipment

XX.X%

Other EMS （Millions of yen）


4.1%

6.8%

7,007

5,573

0

2,000

4,000

6,000

8,000

FY20153Q

FY20163Q

2,142

3,399

0

700

1,400

2,100

2,800

3,500

FY20153Q

FY20163Q

◆Transferred control of mature products with stable demand from China to Vietnam, while maintaining cost competitiveness.

13

Optical pickup





Topics Sales by Product Category FY2016 Q1-Q3 Results

Status of New Bases

1. China/ Qiaotou Plant Transfer Project ・Began operation in September 2016, and transfer was almost completed, with the exception of some

molding customers, by December. ・Integration from molding through to board mounting and assembly, with focus on industrial

equipment.

Board mounting Plastic molding

Preparation of metal molds

Assembly of finished products

2. New Plant in Mexico ・Construction of plant for trail production in July and mass production in December ・Integrated manufacturing plant from molding through to board mounting and assembly

Integrated production of finished products

14



・ We link experience and knowhow gained in trial production and mass production to the design of board layouts, incorporating our artwork capabilities to improve quality on manufacturing front lines, and we provide an end-to-end solutions, from design though to production.

・ We provide high quality and high productivity manufacturing lines to every base and strive to improve customer added value.

ArtWork Production Design Process

and jig design

SAP

Custom

er N

eeds

Product DB, EDI（Electronic Data Interchange）

Incorporation of AW design

UMC

End-to-end solutions, from design to production C

ustomer

Manufacturing technology, production

Purchasing

15



Increasing Name Recognition at Events

We participated in Internepcon Japan held January 18-10, 2017 (Japan’s largest electronics technology exhibition). Positioned the automotive market as our core market and stressed our superiority and track record in terms of quality strength built up in automotive products and cost competitiveness achieved through the introduction of LCA.

Details of Exhibition ・Actual orders received in the automotive market, including critical safety parts and power electronics products for environmentally-friendly cars

・Exhibition of precision molding parts ・LCA concept. Manufacturing track record ・Cyber Core’s LynxEye：Image sharpening demo ・Introduction of UMC Global Standard （identical systems, common platform, global

procurement capability, SCM)

Participated in Nepcon Japan/ CAR-ELE JAPAN （Tokyo, January 2017) And electronica 2016（Munich, November 2016)

Exhibition booths at Nepcon Japan and CAR-ELE JAPAN 16



Established sales office in automotive cluster in Hubei Province, China (February 2017)

Establishment of Wuhan Sales Office

・Market : Hubei Province’s output of vehicles ranks 7th in China. Wuhan (the capital city of Hubei Province) manufactures mainly automobiles.

The city is home to 6 finished car manufacturers and more than 250 auto parts manufacturers. ・Aim ：With many companies operating in the area, including existing customers, our aim is to promptly grasp customer needs and capture projects more quickly though immediate solutions.

We are also targeting Chinese auto manufacturers.

Chongqing Shanghai

Xi’an

Beijing

Guangzhou

Wuhan

【By plane】 Around 4 hrs from Tokyo (direct) Around 3 hrs from Osaka (direct) 1 hr 30 mins from Shanghai 1 hr 40 mins from Shenzhen 1 hr 50 mins from Guangzhou 2 hrs from Beijing 【By high-speed rail】 5 hrs from Shanghai 4 hrs from Guangzhou 5 hrs from Beijing

Around 40 mins by car

Wuhan Airport

17



UMC’s strength: Proposal from upstream design process

UMC’s Manufacturing Vision

Towards the Realization of Smart Factories

UMC provides its customers with “KAIZEN(=improvements)” in their manufacturing processes

・Impressive manufacturing plants

・Proposal-based EMS

・Realization of “smart factory” for customers

・Development into stock business

18

■ This material is provided for informational purposes only and does not constitute solicitation for investment activity or a recommendation of specific stock.

■ Some of the information disclosed by the Company may contain projections about the

future and forward-looking statements. Such forward-looking statements are based on the Company’s judgment and information available to the Company at the time this material was prepared, and may change due to a variety of factors. These projections and forecasts involve risks and uncertainties, and the Company makes no guarantee that they will prove to be correct. Actual results may differ materially from the forecasts.

■ While the Company makes every effort to ensure that the information contained in this

material is correct, the Company makes no guarantee whatsoever with respect to the accuracy, reliability, suitability or fairness of the content. Please note that the information contained in this material may be changed or removed without notice.

■ No portion of this material may be reproduced or appropriated without the Company’s

prior permission.

[Inquiries] PR/IR Dept., Administration Division, UMC Electronics Co., Ltd. TEL. +81-48-724-0001

Documents

Financial Results for the Third Quarter Ended December 31, 2016...UMC ELECTRONICS CO., LTD. (Securities Code: 6615) Financial Results for the Third Quarter Ended December 31, 2016