Consolidated Results for FY March 2016 Tetsuji Yamanishi Corporate Officer Copyright© 2016 TDK Corporation. All rights reserved. -1- Highlights of the Operating Results for FY March 2016 ◆Net sales achieved a new record at 1,152.3 billion yen. Record net sales in the Passive Components and Film Application Products segments. Magnetic Application Products segment recorded a much sharper decline in net sales than initially expected, due to a significant drop in HDD demand. ◆Operating income increased 29% year on year to 93.4 billion yen. Passive Components and Film Application Products achieved new record highs, absorbing the downturn in HDD heads. The Company conducted restructuring in HDD heads in 4Q to prepare for a further slump in HDD demand. ◆Executing growth investment in line with Medium-Term Management Plan. Expanding from ICT to the automotive and industrial businesses. Conducted various M&As to accelerate growth. Formed business alliance and established joint venture with Qualcomm. Aggressively invested in strategic growth product expansion. Copyright© 2016 TDK Corporation. All rights reserved. -2- Consolidated Full Year Results for FY March 2016 (Yen billions） Net sales Operating income FY March 2015 Full Year Results FY March 2016 Full Year Results Change Yen billions % 1,082.6 1,152.3 69.7 6.4 72.5 93.4 20.9 28.8 8.1% 6.7% Operating income margin - Ex-rate Income before Income Taxes 74.5 91.8 17.3 23.2 Net income 49.4 64.8 15.4 31.2 Earning per share (JPY) 392.78 514.23 US$ (JPY) 109.84 138.88 120.13 132.67 EURO (JPY) Ex-rate impact to Net sales & Operating income Copyright© 2016 TDK Corporation. All rights reserved. - - Depreciated by 9.4% Appreciated by 4.5% Net sales：Increased by about 85.3 billion Yen Operating income：Increased by about 17.3 billion Yen -3- FY March 2016 Results - Passive Components Segment Net Sales (Yen billions) 532.0 575.7 466.1 14/3 ●Ceramic Capacitors ・Both sales and profits increased year on year, particularly due to increased sales for automobile market. 15/3 16/3 Operating Income 66.4 11.5% 36.6 16.1 14/3 Net Sales 575.7 billion yen (up 8.2% year on year) Operating Income 66.4 billion yen (up 81.4% year on year) 6.9% 15/3 14/3: FY March 2014 16/3 ●Inductive Devices ・Both sales and profits increased year on year, particularly due to increased sales for automobile market. ●High-frequency Components ・Both sales and profits increased year on year due to strong sales for the ICT market. ・Profit margins also improved significantly due to increased productivity and improved product mix. ●Piezoelectric Material Products ・Both sales and profits increased year on year due to increased sales of OISs for camera modules. Copyright© 2016 TDK Corporation. All rights reserved. -4- FY March 2016 Results - Magnetic Application Segment Net sales 315.3 billion yen (down 13.2% year on year) Operating income 13.2 billion yen (down 55.6% year on year) Net Sales (Yen billions) 357.0 363.3 315.3 ●Recording Devices ・HDD head shipment volume declined significantly due to contraction of the HDD market (PC demand slowdown and acceleration of switch to SSDs in PCs). Significant decline in sales and profit year on year. 14/3 15/3 16/3 Operating Income 30.2 automotive (xEV*) and industrial machinery markets due to the decline in oil prices and the economic slowdown in China. 29.7 8.2% 13.2 4.2% 14/3 15/3 ●Magnets ・ Sales for the HDD market declined, and also declined for the 16/3 14/3: FY March 2014 Copyright© 2016 TDK Corporation. All rights reserved. ●Power Supplies ・ Sales to the industrial equipment market of products such as semiconductor manufacturing equipment and measuring equipment remained strong. *xEV : EV, HEV, PHEV -5- FY March 2016 Results - Film Application Segment Net Sales 222.4 (Yen billions) Net sales 222.4 billion yen (up 47.0% year on year) Operating income 36.4 billion yen (up 48.0% year on year) 151.3 129.3 ●Energy Devices (Rechargeable Batteries) 14/3 15/3 16/3 Operating Income 36.4 24.6 ・ Sales and profits increased significantly year on year. ・ Increased share among major customers and expanded customer portfolio. ・ Expanded applications beyond smartphones to include drones, etc. 16.4% 16.2% 13.4 14/3 15/3 16/3 14/3: FY March 2014 Copyright© 2016 TDK Corporation. All rights reserved. -6- FY March 2016 results by Segment FY March 2015 Full Year Results Yen billion FY March 2016 Full Year Results ％ Yen billion Change ％ Yen billion % Capacitors 149.0 13.8 150.4 13.1 1.4 0.9 Inductive devices 147.3 13.6 149.2 12.9 1.9 1.3 Other Passive Components 235.8 21.8 276.1 24.0 40.3 17.1 532.0 49.1 575.7 50.0 43.7 8.2 Recording devices 260.5 24.1 219.8 19.1 (40.7) -15.6 Other Magnetic Application Products 102.8 9.5 95.5 8.3 (7.3) -7.1 Magnetic Application Products 363.3 33.6 315.3 27.4 (48.0) -13.2 Film Application Products 151.3 14.0 222.4 19.3 71.1 47.0 Other 35.9 3.3 38.8 3.4 2.9 8.1 Total 1,082.6 100.0 1,152.3 100.0 69.7 6.4 Passive Components 36.6 6.9 66.4 11.5 29.8 81.4 Magnetic Application Products 29.7 8.2 13.2 4.2 (16.5) -55.6 Film Application Products 24.6 16.2 36.4 16.4 11.8 48.0 Other 0.6 1.6 1.9 4.8 1.3 - 91.4 8.4 117.8 10.2 26.4 28.9 Passive Components Net Sales Operating Income Sub total Corporate and eliminations Total Copyright© 2016 TDK Corporation. All rights reserved. (18.9) 72.5 6.7 (24.4) 93.4 8.1 (5.5) 20.9 28.8 -7- Breakdown of Operating Income Changes FY March 2015 72.5 billion yen (Yen billions) Changes in sales +39.3 Operating Income Sales price Reduction -66.8 +20.9 billion yen Rationalization, cost reduction +38.5 Benefits from Restructuring +2.3 FY March 2016 93.4 billion yen SG&A expenses increase -9.7 93.4 72.5 Exchange fluctuation (US$=Yen 120.13) +17.3 Copyright© 2016 TDK Corporation. All rights reserved. -8- FY March 2016 Quarterly Results by Segment (Yen billions) 4Q of FY March 2015 (A) 3Q of FY March 2016 (B) 4Q of FY March 2016 (C) YoY Change (C)-(A) Yen billions QoQ Change (C)-(B) % Yen billions % Net Sales Capacitors 37.6 36.4 35.4 (2.2) -5.9 (1.0) -2.7 Inductive Devices 36.4 37.4 35.4 (1.0) -2.7 (2.0) -5.3 Other Passive Components 62.8 67.7 65.5 2.7 4.3 (2.2) -3.2 136.9 141.5 136.3 (0.6) -0.4 (5.2) -3.7 62.6 25.9 58.5 23.3 46.0 22.9 (16.6) -26.5 (12.5) -21.4 88.5 44.1 10.3 279.9 81.8 68.5 10.0 301.7 68.9 46.6 11.1 262.9 (19.6) 8.0 17.5 16.5 8.5 106.3 (1.0) -5.7 6.3 9.4 0.6 24.3 (5.0) 4.7 14.6 (0.1) 36.7 (6.4) 0.2 5.4 1.4 23.5 (6.0) (6.1) -96.8 (4.5) -95.7 (4.0) -42.6 (9.2) -63.0 0.8 133.3 1.5 19.4 30.3 17.5 6.9% 10.0% 6.7% -0.2pt Passive Components Recording Devices Other Magnetic Application Products Magnetic Application Products Film Application Products Other Total Passive Components Operating Income Magnetic Application Products Film Application Products Other Sub total Corporate and Eliminations Total Operating Income margin Ex- US$(JPY) rate EURO(JPY) Copyright© 2016 TDK Corporation. All rights reserved. 119.21 134.74 121.41 133.05 (3.0) (0.4) -1.7 -22.1 (12.9) -15.8 2.5 5.7 (21.9) -32.0 0.8 7.8 (17.0) (0.8) -11.6 1.1 -6.1 (38.8) -3.3 (13.2) (1.0) - (1.9) - (12.8) - 0.4 -3.3pt 11.0 -12.9 -36.0 -42.2 - 115.46 127.37 -9- 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 forward-looking 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. - 10 - Text data including Q&A of performance briefing will be uploaded on following site http://www.global.tdk.com/ir/ir_events/conference/2016/4q_1.htm Copyright© 2016 TDK Corporation. All rights reserved. - 11 -