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November 18, 2011
Results for the First Half of Fiscal Year Ended March 31, 2012
This datum is based on the data as of September 30, 2011. The opinion and forecast described here is based on our judgment at that time and may possibly be changed without notice.
2
Subject
1. Operating results for the First Half of Fiscal Year Ended March 31, 2012
2. Forecast for the Year Ended March 31, 2012
3. Business Challenges
3
1. Operating results for the First Half of Fiscal Year
Ended March 31, 2012
4
1-1 Summary of Consolidated Financial Results for the Six Months Ended September/2011
( Million yen )
FY20111H
FY20121H
ChangeOriginal Forecast(as of 13th May)
Vs. Original Forecast(amount)Amount Ratio
Net Sales 16,159 13,096 -3,062 -19.0% 12,500 596
Operating Income 393 409 16 4.1% 150 259
( Margin ) 2.4% 3.1% - - 1.2% 1.9%Ordinary Income 211 190 -20 -9.8% 50 140
( Margin ) 1.3% 1.5% - - 0.4% 1.1%
Net Income 93 17 -75 -80.9% -150 167
( Margin ) 0.6% 0.1% - - -1.2% 1.3%
5
1-2 Highlight
◆Decrease in sales and income year on year Net sales decreased 19.0% year on year mainly due to exclusion of Motor business subsidiary, Fuji Micro Co., Ltd. and the impact of the earthquake. Although operating income increased 4.1% thanks to improved gross margin rate and reductions in SGA costs, the net income decreased 80.9% to \17 million, because of factors such as recorded extraordinary loss and the foreign exchange loss. Both sales and income performed over the original forecast.
◆Income improved in Plastic businessSales in Precision Springs and Plastics decreased mainly in OA equipment and automotive market due to the impact of the earthquake, though it was improved in the second quarter. Profitability in Plastic business both in domestic and overseas was improved. Domestic income in Precision Springs was improved, although it was decreased in overseas.
◆Loss decreased due to the downsizing of Hinge businessAlthough the loss was increased compared to the forecast due to the delay of downsizing the business, it was reduced by rise in sale prices and reduction of fixed costs such as labor cost in the second quarter.
6
1-3 Trend of Sales and Income ( Consolidated )
13,096
16,159
FY2011 1H FY2012 1HFY2012 1H
9317
( Million yen )
393 409
( Million yen )
FY2011 1H
Net Sales
Net Income
FY2012 1HFY2011 1H
3.12.4
11/ 3 2期第 Q 12/ 3 2期第 Q
FY2011 1H FY2012 1H
Operating Income ・ Margin(%)
FY2011 1H FY2012 1H
( Million yen )
(%)
7
9
115177
149
293216
1Q 2Q 3Q 4Q 1Q 2Q
7974 81857,648
6,3316,765
7651
1Q 2Q 3Q 4Q 1Q 2Q
1-4 Quarterly Transition of Sales and Income ( Consolidated ) 4.3%
0.1% 1.8%2.7% 2.0%2.2%
1Q 2Q 3Q 4Q 1Q 2Q
4
- 11
- 145
163
- 235
- 702Q 3Q 4Q 1Q 2Q
Operating Income ・ Margin(%)
Net Income
Net Sales
Mar ‘11 Mar. ‘12
Mar ‘11 Mar. ‘12
Mar ‘11 Mar. ‘12
(Million yen )
(Million yen )
(Million yen )
8
( million yen )
1-5 Analysis for Change of Operating Income ( Consolidated )
FY2012 1H
Decrease in fixed cost ( personnel cost and etc. )
FY2011 1H
Decrease in sales ( other than motor business )
Exclusion of motor business and etc.
Decrease in variable cost ( product mix, price raise, cost cut )
Since Motor business subsidiary was changed consolidated subsidiary to equity method affiliate, net sales and operating income decreased 2,274 million yen and 89 million yen respectively year on year. Net sales besides Motor business decreased 788 million yen due to the impact of the earthquake. Declined income caused by sales decrease was covered by a decrease in variable cost for domestic Spring and Plastic business and a decrease in fixed cost by downsizing of Hinge business.
409
234
393
-73
-274
128
9
2,274
7,082
5,515
1,286
6,973
4,961
1,161
00
2,500
5,000
7,500
10,000
1-6 Net Sales and Operating Income by Business Segment
Net Sales
Operating Income
< Factors for change from First Half of the previous year >
762
8912
- 476 -331
593
139
0
-500
-200
100
400
700
FY20111H
FY20121H
Precision Springs・ Sales in the OA equipment and automotive markets decreased due to
the impact of the earthquake.・ Though domestic earnings were improved due to the increase of
profitable products, total earnings decreased because of decreased sales and increased labor costs in overseas markets.
< Sales : -1.5%, Operating Income : a decrease of \168 million >
Plastics
・ Sales to automotive markets decreased due to the impact of the earthquake.
・ Earnings were improved due to the increased sales of profitable products in domestic markets and rise in product price and cost reduction in China. < Sales : -10.1%, Operating Income : an increase of \ 127 million>
Hinges・ Net sales decreased due to the downsizing of mobile phone handset.・ Loss amount decreased by rise in sale price and reduction of fixed costs
such as labor cost after the second quarter. < Sales : -9.7%, Operating Loss : a decrease of \ 145 million >
Motors(excluded from business segment)
As of the first quarter of this fiscal year , motor segment is excluded because Motor business subsidiary, Fuji Micro Co., was changed from consolidated subsidiary to equity method affiliate.
Precision Springs Plastics Hinges Motors
( Million Yen )
Precision Springs Plastics Hinges Motors
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
( Million Yen )
10
10,698
4,191
599 670
8,086
3,831628 551
0
5,000
10,000
15,000J apan Asia USA Europe
1-7 Net Sales and Operating Income by Geographical Segment
Operating Income
Net Sales < Factors for change from First Half of the previous year >
- 53
249
55
149134169
46 68
-100
0
100
200
300J apan Asia USA Europe
Japan
In addition to the decreased sales due to exclusion of Motor subsidiary, sales in Plastics decreased due to the impact of the earthquake. Hinge business was also downsized.
In Plastics, earnings were improved due to the increase of profitable products. Loss in Hinge business decreased after 2nd quarter.
< Sales : -24.4%, Operating income : an increase of \188 million >
Overseas・ In Europe, sales and income decreased due to decreased sales of Tangless Coilthread . In Asia , though earnings in Plastics were improved, sales and income in Precision Springs decreased in Singapore and China affected by the earthquake in Japan, etc.
< Sales : -8.3%, Operating Income : a decrease of \170 million >
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
FY20111H
FY20121H
( Million Yen )
( Million Yen )
11
1-8 Net Sales by Market
( Million yen )Mar/2011 Mar/2012 Change
1H % 1H % Amount %
OA equipment 4,758 29.4% 3,857 29.5% -900 -18.9%
Automotive 3,242 20.1% 3,005 22.9% -236 -7.3%
PC and PC related 728 4.5% 1,108 8.5% 381 52.3%
Mobile phone and related 1,054 6.5% 813 6.2% -241 -22.9%
AV/ Home appliance 1,178 7.3% 764 5.8% -414 -35.2%
Precision Components 792 4.9% 887 6.8% 95 11.9%
Medical and Healthcare equipment 528 3.3% 409 3.1% -119 -22.5%
Household equipment 1,954 12.1% 901 6.9% -1,054 -53.9%
Others 1,925 11.9% 1,352 10.3% -573 -29.8%
Total 16,159 100.0% 13,096 100.0% -3,063 - 19.0 %
12
1-9 Consolidated Cash Flows
3,165
419 492
- 553 -551
-30
- 264
2,4642,641
1,934
-1,000
0
1,000
2,000
3,000
4,000
Operating CFInvesting CFFinancing CFBalance at beginning of the periodBalance at year end
.
< Status of CF for 1H of Mar ’12 >
Free CF -134 Free CF -59
FY20111H
Operating CF
Net cash increased \492 million due to the fund reserve reflecting depreciation and amortization, etc.
Investing CF
The fund decreased \551 million by capital investment to production sites in Japan and Asian countries.
Financing CF
The fund decreased \30 million by the repayment of lease obligations. A decrease in debt by excluding Motor subsidiary was offset by an increase in borrowing for Plastic business.
Cash/equiv.
FY20121H
13
2. Forecast for the Year Ended March 31, 2012
14
2-1 Forecast for FY ended March 2012 (Consolidated )
( Million yen )
FY Ended March 2011
Forecast for FY Ended
March 2012
Y to Y Change
(amount)
Original Forecast
(as of 13th May)
Vs. Original Forecast(amount)
Net Sales 31,459 25,000 -6,459 26,000 -1,000
OperatingIncome
552 700 148 850 -150
OperatingIncome ratio
1.8% 2.8% 1.0% 3.3% -0.5%
OrdinaryIncome
326 360 34 590 -230
Net Income -152 50 202 330 -280
15
2-2 Forecast for FY ended March 2012
◆Decrease in both net sales and income for the full FY2012Although net sales and income resulted better than original forecast for 1st Half, income in the 2 nd Half of FY2012 is expected to be decreased due to decreased sales in Precision Spring and Plastic business. Decrease in income for the full FY2012 will be forecasted due to increased loss due to the delay in downsizing Hinge business. Compared with the previous year, a decrease in sales, but an increase in income will be expected.
◆Slow down in Precision Spring business from the 3QLess orders from PC related and OA equipment markets are expected both in domestic and overseas from the 3rd quarter due to customers’ production adjustment. In addition, a decrease in sales at our subsidiary in Thailand which suffered from the historical flood and customers’ production adjustment both in domestic and overseas operations given the parts shortage are expected. A decrease of \500 million in net sales and a decrease of \150 million in operating income will be forecasted.
◆Extraordinary loss recorded from share exchangeAn extraordinary loss of \122 million will be recorded from the share exchange to make Strawberry Corporation a wholly-owned subsidiary of Advanex in the 3 rd quarter. Its influence will be reduced by an extraordinary income from the change in employee pension plan.
16
2.4
1.0
2.43.1
0.0
4.0
2-3 Transition of Sales and Income (Consolidated)
16,159
31,459
25,000
13,09615,299
11,904
0
10,000
20,000
30,000
Mar. '11 Mar. '12 F
1st Half 2nd Half Full Year
393 409
159291
552700
0
200
400
600
800
93 17 33
-246-152
50
-700
-450
-200
50
300
Operating Income ・ Margin(%)
1H/11 2H/11 1H/12 2H/12 F
Mar. ‘11 Mar. ’12 F
Net Income
Mar. ‘11 Mar. ’12 F
Net Sales
(%)( Million yen )
( Million yen )
( Million yen )
17
13,50013,911 13,400
9,70011,00010,696
1,5002,472 1,9004,379
0
10,000
20,000
30,000
40,000
50,000
Mar. '11 Mar. '12Forecast
Mar. '12Forecastrevision
Precision Springs Plastics Hinges Motors
2-4 Revision of Segment Forecast
31,459
< Reasons for revisions >
26,000Mar. '11
Mar. '12Forecast
Mar. '12Forecastrevision
VS. Forecast(Amount)
Motors 171 - - -Hinges - 1,032 - 300 - 470 - 170Plastics 93 100 190 90Precision Springs 1,309 1,050 980 - 70Total 552 850 700 - 150
25,000
Although sales and income in Precision Spring business resulted better than the original forecast in the 1 st half, they are expected to be decreased due to the less orders in PC related and OA equipment markets in the 2nd half. In addition, decrease of \500 million in net sales and \150 million in operating income is forecasted due to the historical flood in Thailand. In Plastics business, profitability both in domestic and overseas will be improved, while net sales will decrease. In Hinge business, net sales will be increased due to the delay in downsizing the business, and net loss will be expanded.
Operating Income
Net Sales (Million yen)
(Million yen)
18
3. Business Challenges
19
3- 1 Flood Damage of Factory in Thailand (1)Location : High Tech Industrial Estate in Ayutthaya Province (The Central part of Thailand)Oct. 6 Started transferring wire spring manufacturing machines and forming machines to the neighborhoodOct. 11 Stopped operation and started evacuation of employeesOct. 13 High Tech IE was flooded and press machines in the factory were submergedOct. 18 Started re-transferring machines except press machines to Amata Nakorn IE in Chonburi ProvinceOct. 24 Took out the die set for press and moved them to Kashiwazaki Factory and other factories Nov. 1 Started operation at the factory in Amata Nakorn as the 2nd factory
Impact on Business Performance
High Tech IE starts pumping out water from 8th Nov. and expects the water level being lowered within 2 to 3 weeks. The date of restarting production is uncertain because many of the Japanese customers were submerged. The impact will be expanded in domestic and overseas of Thailand due to the cut off supply chains. In Precision Springs and Plastics, decrease of \500 million in net sales and \150 million in operating income is forecasted from decreased production in Thailand and Asian subsidiaries at this stage.
20
3-1 Flood Damage of Factory in Thailand (2)
Submerged Ayutthaya Factory ( Photo : Oct. 16 )
Taking out die set evacuated in Double-deck Container ( Photo : Oct. 25 )
21
3-2 Establishment of 2nd factory in Thailand
Details of the 2nd factory in Thailand Location : Amata Nakorn Industrial Estate in Chonburi Province (57km from Bangkok and many Japanese Automotive makers around) Building area: 2,875 ㎡ ( 1st Factory : 3,300 ㎡) Background : A plan for factory foundation sometime in 2012 to deal with demand for
springs in East part of Thailand. Advanced the foundation to Nov.1st, 2011 Products : Wire springs and forming processing for the time being. Press machines are under arrangement. No of employees : 170 employees moved from the 1st factory temporarily
Photo: Oct. 18
22
3-3 Making Strawberry Corporation Advanex’s wholly-owned subsidiary
Share exchange conducted on Nov. 1st, 2011・ Allocated 92 shares of common stock of Advanex to one share of Strawberry Number of shares allocated : 1,843,956
Number of new shares issued : 1,378,071 (3.4% of shares outstanding)・ Goodwill of 112 million yen was booked as an impairment loss. An extraordinary loss will be recorded in 3Q・ Strawberry was delisted from JASDAQ on October 27, 2011
Purpose and business plan・ Strawberry announced to downsize hinge sales to mobile phone handset market this April. As withdrawal from this business was much delayed, Strawberry recorded greater loss than the original forecast and it put the company in the state of asset deficiency of 770 million yen. Loss of 140 million yen is forecasted for the 2nd half of this fiscal year.・ By making Strawberry Advanex’s wholly-owned subsidiary, we will reduce cost by integrating all the redundant functions of two companies and exercise flexible funding to support their business. Accelerate making them fabless by tranfering production within the group. ・ Finish production of unprofitable hinge unit to mobile phone handset by March 2012. Continue sales for PC market for the time being. In future, we will develop market such as automotive, housing related and medical market.
23
3-4 Business Challenges ( Summary )
Precision Springs ・ Expand business network in overseasStrengthen Advanex brand in overseasFactory foundation ( India next to the 2nd factory in Thailand )
・ Strengthen the development of high value added products
Plastics ・ Increase of sales in overseas and improvement of profitability Corresponding to overseas transfer of Japanese customers
Enforcement of sales especially in China and support from Japan・ Strengthen development of high perfomance gear product to increase profitability
Hinges ・ Complete structural reform Assumption of Strawberry’s debt and withdrawal from unprofitable business
Making Mid-term business plan within this year. Improving the financial structure and promoting structural reform.
24
( CONTACT )ADVANEX INC.
Corporate Communication Dept.
TEL : 81-3 - 3822 - 5865 FAX : 81-3 - 3822 - 5873
URL : http://www.advanex.co.jp