Performance Briefing 3Q of Fiscal Year March, 2016 TDK Corporation January 29, 2016 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -1- ◆Consolidated Results for 3Q of FY March 2016 Consolidated Full Year Projections for FY March 2016 Tetsuji Yamanishi, Corporate Officer Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -2- Consolidated Results for 3Q of FY March 2016 Consolidated Full Year Projections for FY March 2016 Tetsuji Yamanishi Corporate Officer Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -3- Key points concerning earnings for 3Q of FY March 2016 ◆Net sales and operating income achieved historical highs for both the third quarter and the nine-month period. The third-quarter operating income margin was 10% on a companywide basis. ◆Operating income of passive components and film application products achieved historical highs for both the third quarter and the nine-month period. ◆HDD market in FY March 2016 *TDK’s estimation About 463 million units (Previous estimation) About 452 million units (Current estimation) ◆Growth strategies (announced projects) ・Acquisition of Hutchinson Technology Incorporated (HDD suspension business) ・Acquisition of Micronas Semiconductor Holding AG (Sensor business) ・Forming a joint venture with Qualcomm Incorporated (high-frequency components business) ・Transfer of Renesas Semiconductor Manufacturing’s Tsuruoka factory (thin-film components business) ・Business Cooperation with Trigence Semiconductor (SESUB business) Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -4- Consolidated Results for 3Q of FY March 2016 (Yen billions） Net Sales Operating Income FY March 2015 3Q Results FY March 2016 3Q Results Change Yen billions % 300.4 301.7 1.3 0.4 25.2 30.3 5.1 20.2 8.4% Operating Income Margin 10.0% +1.6pt - Income before Income Taxes 22.2 29.9 7.7 34.7 Net Income 16.4 24.9 8.5 51.8 130.24 197.83 114.25 142.79 121.41 133.05 Earning Per Share (JPY) US$ (JPY) EURO (JPY) Ex-rate impact to Net sales & Operating Income - - Depreciated by 6.3% Appreciated by 6.8% Net sales：Increased by about 15.2 billion Yen Operating income：Increased by about 4.1 billion Yen Forex Sensitivity (impact by 1 (one) yen change) ・US$ : Sales 5.0 billion yen, Operating Income 1.4 billion yen) Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -5- 3Q Results - Passive Components Segment Net Sales (Yen billions) 143.2 141.5 Net Sales 141.5 billion yen (down 1.2% year on year) Operating Income 17.5 billion yen (up 53.5% year on year) ◆ Ceramic Capacitors ・Sales were level year on year with strong sales to the automotive market offset by a decline in sales to the industrial machinery market. 15/3 16/3 Operating Income (OP margin) (Yen billions) 11.4 17.5 12.4% ◆ Inductive Devices ・Sales were level year on year with an increase in sales to the automotive market driven by electrification automobiles offset by a decline in sales to the ICT market and the industrial machinery market. ◆ High-frequency Components ・Sales were level year on year with brisk sales of discrete products for smartphones offset by a decline in Wi-Fi module sales. ・Profit margins also improved significantly year on year due to increased productivity and improved product portfolio. 8.0% 15/3 16/3 ◆ Piezoelectric Material Products ・Sales increased year on year due to sales growth in OIS for camera modules. 15/3 : FY March 2015 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -6- 3Q Results - Magnetic Application Segment Net Sales Net Sales 81.8 billion yen (down 18.5% year on year) Operating income 4.7 billion yen (down 39.0% year on year) (Yen billions) 100.4 81.8 ◆ Recording Devices (HDD Heads) ・ Shipment volume declined significantly year on year. 15/3 16/3 Operating Income (OP margin) (Yen billions) 7.7 7.7% 4.7 ◆ Magnets ・ Sales for the HDD market declined, and also declined for the automotive (xEV*) and industrial machinery markets due to the decline in oil prices and the economic slowdown in China. ◆ Power Supplies ・ Sales to the industrial equipment market of products such as semiconductor manufacturing equipment and measuring equipment remained strong. 5.7% 15/3 16/3 *xEV : EV, HEV, PHEV 15/3 : FY March 2015 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -7- 3Q Results - Film Application Segment Net Sales (Yen billions) 68.5 Net sales 68.5 billion yen (up 44.5% year on year) Operating income 14.6 billion yen (up 52.1% year on year) 47.4 15/3 16/3 ◆ Energy Devices (Rechargeable Batteries) ・ Sales and profits increased year on year. ・ Increased share among major customers and expanded customer portfolio. ・ Expanded applications beyond smartphones to include drones, etc. Operating Income (OP margin) 14.6 (Yen billions) 9.6 21.3% 20.3% 15/3 16/3 15/3 : FY March 2015 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -8- Breakdown of Operating Income Changes (3Q) Operating Income (Yen billions) Changes in sales +15.1 + 5.1 billion yen Sales price Reduction -21.3 Rationalization, cost reduction +10.1 25.2 Benefits from Restructuring +0.7 SG&A expenses increase -3.6 (including impairment +5.3) 30.3 Exchange fluctuation (US$=Yen 121.41) +4.1 3Q of FY March 2015 Copyright© 2016 TDK Corporation. All rights reserved. 3Q of FY March 2016 Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 -9- Quarterly Results by Segment (Yen billions) 3Q of FY March 2015 (A) 2Q of FY March 2016 (B) 3Q of FY March 2016 (C) YoY Change (C)-(A) Yen billions QoQ Change (C)-(B) % Yen billions % Net Sales Capacitors 37.5 39.5 36.4 (1.1) -2.9 (3.1) -7.8 Inductive Devices 38.1 38.6 37.4 (0.7) -1.8 (1.2) -3.1 Other Passive Components 67.6 72.1 67.7 0.1 0.1 (4.4) -6.1 143.2 150.2 141.5 (1.7) -1.2 (8.7) -5.8 75.1 25.3 60.7 24.6 58.5 23.3 (16.6) -22.1 (2.2) -3.6 (2.0) -7.9 (1.3) -5.3 100.4 47.4 9.4 300.4 85.3 64.1 8.6 308.1 81.8 68.5 10.0 301.7 (18.6) -18.5 (3.5) -4.1 21.1 44.5 4.4 6.9 0.6 6.4 1.4 16.3 1.3 0.4 (6.4) -2.1 11.4 17.4 17.5 6.1 53.5 0.1 0.6 7.7 9.6 0.2 28.9 (3.8) 4.5 11.6 0.2 33.7 (6.3) 4.7 14.6 (0.1) 36.7 (6.4) (3.0) -39.0 0.2 4.4 5.0 52.1 3.0 25.9 27.4 30.3 Passive Components Recording Devices Other Magnetic Application Products Magnetic Application Products Film Application Products Other Total Passive Components Operating Income Magnetic Application Products Film Application Products Other Sub total Corporate and Eliminations Total Operating Income margin Ex- US$/Yen rate EURO/Yen Copyright© 2016 TDK Corporation. All rights reserved. 25.1 8.4% 114.25 142.79 8.9% 122.31 136.06 Performance Briefing 3Q of Fiscal Year March, 2016 (0.3) 7.8 (2.6) 5.2 10.0% +1.6pt 27.0 20.7 (0.3) 3.0 (0.1) 2.9 - +1.1pt 8.9 10.6 - 121.41 133.05 January 29, 2016 - 10 - Consolidated Results through 3Q of FY March 2016 (Yen billions） FY March 2015 Results through 3Q Net Sales Operating Income FY March 2016 Results through 3Q Change Yen billions % 802.7 889.3 86.6 10.8 53.1 75.9 22.8 42.9 6.6% Operating Income Margin 8.5% +1.9 pt - Income before Income Taxes 49.6 73.9 24.3 49.0 Net Income 34.5 56.4 21.9 63.5 274.43 447.54 106.78 140.24 121.67 134.42 Earning Per Share (JPY) US$ (JPY) EURO (JPY) Ex-rate impact to Net sales & Operating Income Copyright© 2016 TDK Corporation. All rights reserved. - - Depreciated by 13.9% Appreciated by 4.2% Net sales：Increased by about 94.0 billion Yen Operating income：Increased by about 18.3 billion Yen Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 11 - FY March 2016 Full Year Projections TDK keeps initial projections (announced on April 28) unchanged. (Yen billions） Net sales FY March 2015 Full Year Results % Yen billions 1,180.0 97.4 9.0% 72.5 95.0 22.5 31.0% 6.7% 8.1% +1.4pt - 49.4 65.0 15.6 31.6% 392.78 515.92 - - - - Operating income margin Earning per share (JPY) YoY Change 1,082.6 Operating income Net income FY March 2016 Full Year Projections 1st half : 40 2nd half : 50 Annual: 90 1st half : 60 2nd half : 60 Annual : 120 US$/JPY 109.84 115.00 - EURO/JPY 138.88 130.00 - Dividends (JPY) Ex-rate Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 12 - FY March 2015 Projections -Capex, Depreciation, R&D- Capital expenditure Depreciation R&D (Yen billions) 160 150.0 140 130.0 120 102.5 100 85.6 77.4 80 82.9 90.0 80.2 86.0 68.6 63.4 70.6 77.0 85.0 53.5 60 40 20 0 3/13 3/16 3/16 3/16 3/16 Initial Projections Projections at Jan-end Initial Projections Projections at Jan-end Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 3/14 3/15 3/13 3/14 3/15 3/13 3/14 3/15 3/16 3/16 Projections Initial Projections at Jan-end 3/13 : FY March 2013 January 29, 2016 - 13 - Supplementary Data Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 14 - Quarterly sales and operating income by segment FY March 2015 (Yen billions) 1Q 2Q 3Q Capacitors 36.5 37.3 37.5 Inductive Devices 35.7 37.1 38.1 Other Passive Components 49.7 55.5 67.6 121.9 129.9 143.2 Recording Devices 59.1 63.7 75.1 Other Magnetic Application Products 26.2 25.5 25.3 85.2 22.5 7.8 237.5 89.2 37.2 8.5 264.8 100.4 47.4 9.4 300.4 Passive Components 7.8 9.4 11.4 Magnetic Application Products 7.3 8.5 7.7 Film Application Products 0.3 5.2 9.6 (0.5) 0.2 0.2 14.8 23.3 29.0 (5.2) (5.0) (3.8) Passive Components Net Sales Magnetic Application Products Film Application Products Other Total Operating Income Other Sub-total Corporate and Eliminations Total 9.6 18.3 25.2 Ex-rate US$/JPY 102.17 103.86 114.25 EURO/JPY 140.17 137.77 142.79 Copyright© 2016 TDK Corporation. All rights reserved. FY March 2016 4Q Total 37.6 149.0 36.4 147.3 62.8 235.8 136.9 532.0 62.6 260.5 25.9 102.8 88.5 363.3 44.1 151.3 10.3 35.9 279.9 1,082.6 8.0 36.6 6.3 29.7 9.4 24.6 0.6 0.6 24.3 91.4 (5.0) (18.9) 19.4 72.5 119.21 109.84 134.74 138.88 Performance Briefing 3Q of Fiscal Year March, 2016 1Q 2Q 3Q 39.1 39.5 36.4 37.9 38.6 37.4 70.8 72.1 67.7 147.8 150.2 141.5 54.6 60.7 58.5 24.8 24.6 23.3 79.4 43.2 9.2 279.6 85.3 64.1 8.6 308.1 81.8 68.5 10.0 301.7 15.0 17.4 17.5 3.8 4.5 4.7 4.7 11.6 14.6 0.4 0.2 (0.1) 23.9 33.7 36.7 (5.8) (6.3) (6.4) 18.1 27.4 30.3 121.29 122.31 121.41 134.15 136.06 133.05 4Q January 29, 2016 Total - 15 - Financial Position (Yen billions） March End, 2015 September End, Deceember End, 2015 2015 Change from Sep End, 2015 1,404.3 1,445.1 1,513.8 68.7 Total Liability 646.3 701.5 755.4 53.9 Stockholders's Equity 738.9 735.7 750.3 14.6 (5.9) (15.8) (18.8) (3.0) Stockholders's Equity ratio 52.6% 50.9% 49.6% -1.3pt Cash and Cash equivalents 286.5 269.2 339.0 69.8 Interest-bearing Debt (*1) 268.3 300.2 356.7 56.5 18.2 (31.0) (17.7) 13.3 Total Asset (comprehensive income) Net Cash (*2) *1: Short-term debt + Current installments of long-term debt + Long-term debt, excluding current installments *2: Cash and Cash equivalents - Interest-bearing Debt Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 16 - Cash Flows (Yen billions） FY March 2015 Results through 3Q FY March 2016 Results through 3Q YoY Change Operating Cash Flow 89.3 117.5 28.2 Investing Cash Flow (93.1) (103.4) (10.3) (3.8) 14.1 17.9 Financing Cash Flow (19.7) 46.2 65.9 Effect of exchange rate chagens on cash and cash equivalents 36.2 (2.4) (38.6) Free Cash Flow 263.6 Cash and Cash Equivalents （ Yen billions） FY March 2015 Results through 3Q 323.0 FY March 2016 Results through 3Q 59.4 YoY Change Capital Expenditures 70.6 114.8 44.2 Depreciation and amortization 59.8 62.5 2.7 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 17 - Quarterly sales by applications (1Q of FY March 2015 –3Q of FY March 2016) Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 18 - Passive Components Business quarterly sales by applications (1Q of FY March 2015 –3Q of FY March 2016) Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 19 - 2006/3 : FY March 2006 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 20 - 2006/3 : FY March 2006 Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 21 - Cautionary Statements with Respect to Forward-Looking Statements This material contains forward-looking statements, including projections, plans, policies, management strategies, targets, schedules, understandings, and evaluations about TDK, or its group companies (TDK Group). These forward-looking statements are based on the current forecasts, estimates, assumptions, plans, beliefs, and evaluations of the TDK Group in light of the information currently available to it, and contain known and unknown risks, uncertainties, and other factors. The TDK Group therefore wishes to caution readers that, being subject to risks, uncertainties, and other factors, the TDK Group’s actual results, performance, achievements, or financial position could be materially different from any future results, performance, achievements, or financial position expressed or implied by these forward-looking statements, and the TDK Group undertakes no obligation to publicly update or revise any forwardlooking statements after the issue of this material except as provided for in laws and ordinances. The electronics markets in which the TDK Group operates are highly susceptible to rapid changes, risks, uncertainties, and other factors that can have significant effects on the TDK Group including, but not limited to, shifts in technology, fluctuations in demand, prices, interest and foreign exchange rates, and changes in economic environments, conditions of competition, laws and regulations. Also, since the purpose of these materials is only to give readers a general outline of business performance, many numerical values are shown in units of a billion yen. Because original values, which are managed in units of a million yen, are rounded off, the totals, differences, etc. shown in these materials may appear inaccurate. If detailed figures are necessary, please refer to our financial statements and supplementary materials. Copyright© 2016 TDK Corporation. All rights reserved. Performance Briefing 3Q of Fiscal Year March, 2016 January 29, 2016 - 22 - Text data including Q&A of performance briefing will be uploaded on following site http://www.global.tdk.com/ir/ir_events/conference/2016/3q_1.htm