Consolidated Financial Results for the Second Quarter Fiscal 2015 Ⅰ. Financial Results for 1H Fiscal 2015 Ⅱ. Financial Results Forecast for Fiscal 2015 Ⅲ. Information by Product Group Ⅳ. Supplementary Data SHARP CORPORATION October 30, 2015 Forward-Looking Statements This presentation material contains certain statements describing the future plans, strategies and performance of Sharp Corporation and its consolidated subsidiaries (hereinafter “Sharp”). These statements are not based on historical or present fact, but rather assumptions and estimates based on information currently available. These future plans, strategies and performances are subject to known and unknown risks, uncertainties and other factors. Sharp’s actual performance, business activities and financial position may differ materially from the assumptions and estimates provided on account of the risks, uncertainties and other factors. Sharp is under no obligation to update these forward-looking statements in light of new information, future events or any other factors. The risks, uncertainties and other factors that could affect actual results include, but are not limited to: (1) The economic situation in which Sharp operates; (2) Sudden, rapid fluctuations in demand for Sharp’s products and services, as well as intense price competition; (3) Changes in exchange rates (particularly between the yen and the U.S. dollar, the euro, and other currencies); (4) Regulations such as trade restrictions in other countries; (5) The progress of collaborations and alliances with other companies; (6) Litigation and other legal proceedings against Sharp; (7) Rapid technological changes in products and services, etc. *Amounts less than 100 million yen shown in this presentation material have been rounded down. Copyright © 2015 SHARP CORPORATION, all rights reserved. Ⅰ. Financial Results for 1H Fiscal 2015 1 Financial Results for 1H Fiscal 2015 • Net sales in the first half of fiscal 2015 were 1,279.6 billion yen, down 3.6% from the same period last year. • All products groups’ businesses are in progress as schedule at the fiscal top, except Display Devices. • Structural reforms are on progress steadily (Billions of Yen) FY2014 FY2015 1H Net Sales Operating Income (margin) Net Income Attributable to Sharp Corporation (margin) 1H Results Change (Y on Y) Difference (Y on Y) 1,327.6 1,279.6 -3.6% -47.9 29.2 -25.1 - -54.3 (2.2%) (-2.0%) 4.7 -83.6 - -88.3 (0.4%) (-6.5%) 2 Financial Results for 2Q Fiscal 2015 • Net sales in 2Q FY2015 were 661.3 billion yen, up 7.0% over the previous quarter. • Operating income was in the black, as all product groups except Display Devices were in the black. • Due to factors including continuous structural reforms, a net loss attributable to Sharp Corporation was recorded during this quarter. (Billions of Yen) FY2015 1Q Difference (Q on Q) Change (Q on Q) 2Q Net Sales 618.3 661.3 +7.0% +43.0 Operating Income -28.7 3.5 - +32.3 (-4.7%) (0.5%) -33.9 -49.6 - -15.6 (-5.5%) (-7.5%) (margin) Net Income Attributable to Sharp Corporation (margin) 3 Other Income (Expenses) (Billions of Yen) FY2014 FY2015 1H 1Q 2Q Difference (Y on Y) 1H 29.2 -28.7 3.5 -25.1 -54.3 -15.5 -1.5 -48.5 -50.0 -34.5 Equity in earnings of affiliates +4.0 +1.7 +1.3 +3.0 -0.9 Gain on sales of investment securities Reversal of provision for loss on litigation +5.9 +1.7 +0.0 +1.8 -4.1 +19.2 +2.0 - +2.0 -17.1 - +6.2 +0.8 +7.1 +7.1 Interest expense -11.8 -5.5 -4.4 -9.9 +1.8 Impairment loss -2.4 -6.5 -4.6 -11.1 -8.6 Restructuring charges -5.7 - -35.3 -35.3 -29.5 -14.3 - - - +14.3 Pretax Income 13.6 -30.3 -44.9 -75.2 -88.9 Income Taxes, etc. -8.9 -3.6 -4.7 -8.3 +0.5 4.7 -33.9 -49.6 -83.6 -88.3 Operating Income Other Income (Expenses) Receipt of settlement package Settlement Net Income Attributable to Sharp Corporation 4 Sales by Product Group (Billions of Yen) FY2014 1H FY2015 1Q 2Q FY2015 1H Results (5/14) Forecast difference Change (Y on Y) (5/14) 1H Forecast Digital Information Equipment 211.8 70.3 96.9 167.3 -21.0% -2.6 170.0 Communications 119.5 56.8 60.8 117.6 -1.6% -2.3 120.0 Health and Environmental Equipment 162.8 74.7 75.8 150.5 -7.5% -14.4 165.0 Consumer Electronics 494.2 201.9 233.6 435.5 -11.9% -19.4 455.0 Energy Solutions 142.9 36.8 41.8 78.7 -44.9% -1.2 80.0 Business Solutions 165.9 80.6 91.7 172.3 +3.8% +7.3 165.0 803.1 319.4 367.1 686.6 -14.5% -13.3 700.0 Electronic Components and Devices 149.7 131.7 111.5 243.2 +62.4% +43.2 200.0 Display Devices 460.9 187.8 203.3 391.1 -15.1% -88.8 480.0 610.7 319.6 314.8 634.4 +3.9% -45.5 680.0 1,413.8 639.0 682.0 1,321.0 -6.6% -58.9 1,380.0 -86.1 -20.7 -20.6 -41.3 - +38.6 -80.0 1,327.6 618.3 661.3 1,279.6 -3.6% -20.3 1,300.0 Product Business Device Business Subtotal Adjustments Total *Sales of each product group include internal sales between segments (Product Business / Device Business) 5 Sales by Product Group (Billions of Yen) 600 Left bar ：1H FY2015 Forecast (5/14) Right bar：1H FY2015 Results 500 400 300 200 100 0 Digital Information Equipment Communications Health and Environmental Equipment Energy Solutions Business Solutions Electronic Components and Devices Display Devices *Sales of each product group include internal sales between segments (Product Business / Device Business) 6 Operating Income by Product Group (Billions of Yen) FY2014 1H Digital Information Equipment Communications Health and Environmental Equipment Consumer Electronics Energy Solutions Business Solutions Product Business Electronic Components and Devices Display Devices Device Business Subtotal Adjustments Total FY2015 1Q 2Q FY2015 1H Results 0.3 (0.2%) 7.1 (6.0%) 7.7 (4.8%) 15.2 (3.1%) -0.2 (-0.2%) 15.9 (9.6%) -17.3 (-24.7%) 4.9 (8.7%) 0.7 (1.0%) -11.7 (-5.8%) -3.9 (-10.7%) 6.8 (8.4%) 2.3 (2.4%) 5.5 (9.1%) 1.8 (2.4%) 9.7 (4.2%) 1.3 (3.2%) 9.9 (10.8%) -15.0 (-9.0%) 10.5 (8.9%) 2.5 (1.7%) -1.9 (-0.5%) -2.6 (-3.4%) 16.7 (9.7%) 30.9 (3.9%) -2.4 (-1.6%) 20.8 (4.5%) 18.3 (3.0%) 49.2 (3.5%) -20.0 29.2 (2.2%) -8.8 (-2.8%) 2.8 (2.2%) -13.7 (-7.3%) -10.8 (-3.4%) -19.7 (-3.1%) -9.0 -28.7 (-4.7%) 20.9 (5.7%) 5.1 (4.7%) -12.7 (-6.3%) -7.5 (-2.4%) 13.3 (2.0%) -9.7 3.5 (0.5%) 12.1 (1.8%) 8.0 (3.3%) -26.4 (-6.8%) -18.4 (-2.9%) -6.3 (-0.5%) -18.8 -25.1 (-2.0%) (5/14) Forecast difference Change (Y on Y) (5/14) 1H Forecast - -6.0 +46.1% +6.5 -67.3% -3.4 - -2.9 - -3.6 +5.2% +1.7 -60.8% -4.8 - +5.0 - -34.4 - -29.4 - -34.3 - -0.8 -35.1 -9.0 (-5.3%) 4.0 (3.3%) 6.0 (3.6%) 1.0 (0.2%) 1.0 (1.3%) 15.0 (9.1%) 17.0 (2.4%) 3.0 (1.5%) 8.0 (1.7%) 11.0 (1.6%) 28.0 (2.0%) -18.0 10.0 (0.8%) *Figures within parentheses indicate operating margin. 7 Operating Income by Product Group Left bar ：1H FY2015 Forecast (5/14) Right bar：1H FY2015 Results (Billions of Yen) 20 10 0 -10 -20 -30 Digital Information Equipment Communications Health and Environmental Equipment Energy Solutions Business Solutions Electronic Components and Devices Display Device 8 Consolidated Balance Sheets • The equity ratio decreased from 12.3% at the end of June 2015 to 9.4% at the end of September 2015. (Billions of Yen) FY2014 FY2015 FY2014 End of Mar. 2015 End of Jun. 2015 End of Sep. 2015 Cash, time deposits and restricted cash 258.4 214.2 175.0 Notes and accounts receivable 605.6 557.1 574.2 Inventories 338.3 344.2 294.2 96.7 97.7 106.4 1,299.1 1,213.4 1,149.8 Plant and Equipment 400.5 390.9 377.1 Investments and Other Assets 262.0 265.5 259.8 Deferred Assets 0.0 0.0 0.0 1,961.9 1,869.9 1,787.0 Other current assets End of Jun. 2015 End of Sep. 2015 Short-term borrowings 848.9 661.5 666.4 Notes and accounts payable 468.0 422.3 422.7 Other current liabilities 369.9 326.1 324.9 1,686.9 1,410.0 1,414.1 230.4 216.8 191.9 1,917.3 1,626.8 1,606.1 44.5 243.0 180.9 1,961.9 1,869.9 1,787.0 1.5% 12.3% 9.4% Current Liabilities Current Assets Total Assets FY2015 End of Mar. 2015 Long-term Liabilities Liabilities Net Assets Total Liabilities and Net Assets Equity Ratio 9 Transition of Inventories • Inventory was 294.2 billion yen, down 50 billion yen compared to the end of June 2015, and the ratio vs. monthly sales decreased from 1.67 months to 1.38 months during the same period. (Months) (Billions of Yen) 600 1.80 1.67 Ratio vs. monthly sales 1.39 1.46 1.38 1.21 400 295.1 307.5 338.3 1.20 344.2 294.2 0.60 200 LCDs 0.00 0 End of Mar. 2014 End of Sep. 2014 End of Mar. 2015 End of Jun. 2015 End of Sept. 2015 10 Transition of Interest-Bearing Debt • Interest-bearing debt at the end of September 2015 declined by 15.9 billion yen, in comparison to the end of June 2015. The ratio vs. monthly sales decreased from 3.76 months to 3.56 months. • Net interest-bearing debt* increased from 560.4 billion yen at end of June 2015 to 583.6 billion yen. (Months) (Billions of Yen) 1,127.1 1,000 931.8 1,174.4 Left bar: Interest-bearing debt Right bar: Net interest-bearing debt 1,093.5 988.0 982.4 Interest-bearing debt on the ratio vs. monthly sales 713.9 5.51 500 696.6 974.2 715.7 8.00 774.6 560.4 5.69 4.47 4.48 758.7 583.6 4.00 4.20 3.76 3.56 End of Jun. 2015 End of Sept. 2015 0 Net D/E ratio 0.00 End of Mar. 2012 End of Mar. 2013 End of Mar. 2014 End of Sept. 2014 End of Mar. 2015 1.5 7.9 3.7 3.1 23.7 2.4 3.5 *Net interest-bearing debt: interest-bearing debt – cash, time deposits, and restricted cash 11 Implementation Status of Medium-Term Management Plan Implementation of the three key strategies announced in the Medium-Term Management Plan is currently making steady progress. Medium-Term Management Plan Three Key Strategies Current Implementation Status Withdrew from TV production/sales; shifting to brand license business in the Americas Ⅰ Restructure business portfolio Review of the production structure of the electronic device business Fundamental restructuring of LCD business Voluntary retirement program (3,234 employees) Ⅱ Reduce fixed costs Concluding a contract for sales transfer of the head office Continue to cut remunerations/salaries and bonuses of board of directors and employees Transition to virtual company system from October 1, 2015 Ⅲ Reorganize and strengthen corporate/governance systems Revamp management structure and expand number of outside directors Fundamental restructuring of personnel system (flat & simple organization) 12 Ⅱ. Financial Results Forecast for Fiscal 2015 13 Financial Results Forecast for Fiscal 2015 • Based on the first half results, the current situation, and future estimates, we announced a revised Fiscal year forecast on October 26, 2015. • Sharp Group intends to announce the forecast for net income (loss) attributable to Sharp Corporation once it becomes possible to make a reasonable estimate of the impact on consolidated financial statements of the materialization of structural reforms currently under consideration or in progress. (Billions of Yen) FY2015 1H Results Net Sales Operating Income (margin) 2H Forecast Fiscal Year Forecast Change (Y on Y) 1,279.6 1,420.3 2,700.0 -3.1% -25.1 35.1 10.0 - (-2.0%) (2.5%) (0.4%) 14 Sales Forecast by Product Group (Billions of Yen) FY2015 1H Results 2H Forecast FY2015 Fiscal Year Forecast Change (Y on Y) Forecast Difference (5/14) Fiscal Year Forecast (5/14) Digital Information Equipment 167.3 172.6 340.0 -18.6% -30.0 370.0 Communications 117.6 92.3 210.0 -15.9% -30.0 240.0 Health and Environmental Equipment 150.5 169.4 320.0 +1.6% -20.0 340.0 435.5 434.4 870.0 -11.4% -80.0 950.0 78.7 101.2 180.0 -33.5% 0.0 180.0 172.3 177.6 350.0 +1.9% 0.0 350.0 686.6 713.3 1,400.0 -12.3% -80.0 1,480.0 Electronic Components and Devices 243.2 286.7 530.0 +20.1% +50.0 480.0 Display Devices 391.1 478.8 870.0 -4.1% -130.0 1,000.0 634.4 765.5 1,400.0 +3.8% -80.0 1,480.0 1,321.0 1,478.9 2,800.0 -4.9% -160.0 2,960.0 -41.3 -58.6 -100.0 - +60.0 -160.0 1,279.6 1,420.3 2,700.0 -3.1% -100.0 2,800.0 Consumer Electronics Energy Solutions Business Solutions Product Business Device Business Subtotal Adjustments Total *Sales of each product group include internal sales between segments (Product Business / Device Business) 15 Sales Forecast by Product Group (Billions of Yen) 1,200 Left bar: FY2015 Forecast (5/14) Right bar: FY2015 Revised Forecast 1,000 800 600 400 200 0 Digital Information Equipment Communications Health and Environmental Equipment Energy Solutions Business Solutions Electronic Components and Devices Display Devices *Sales of each product group include internal sales between segments (Product Business / Device Business) 16 Operating Income Forecast by Product Group (Billions of Yen) FY2015 1H Results Digital Information Equipment Communications Health and Environmental Equipment Consumer Electronics Energy Solutions Business Solutions Product Business Electronic Components and Devices Display Devices Device Business Subtotal Adjustments Total 2H Forecast -15.0 (-9.0%) 10.5 (8.9%) 2.5 (1.7%) -1.9 (-0.5%) -2.6 (-3.4%) 16.7 (9.7%) 12.1 (1.8%) 8.0 (3.3%) -26.4 (-6.8%) -18.4 (-2.9%) -6.3 (-0.5%) -18.8 -25.1 (-2.0%) FY2015 Fiscal Year Forecast 2.0 (1.2%) 4.4 (4.9%) 11.4 (6.8%) 17.9 (4.1%) 5.6 (5.6%) 19.2 (10.8%) 42.8 (6.0%) 9.9 (3.5%) -3.5 (-0.7%) 6.4 (0.8%) 49.3 (3.3%) -14.1 35.1 (2.5%) -13.0 (-3.8%) 15.0 (7.1%) 14.0 (4.4%) 16.0 (1.8%) 3.0 (1.7%) 36.0 (10.3%) 55.0 (3.9%) 18.0 (3.4%) -30.0 (-3.4%) -12.0 (-0.9%) 43.0 (1.5%) -33.0 10.0 (0.4%) Forecast difference (5/14) Change (Y on Y) - -10.0 -4.8% +4.0 -12.1% 0.0 -16.2% -6.0 - -2.0 +15.0% +3.0 - -5.0 26.6 -fold +8.0 - -75.0 - -67.0 - -72.0 - +2.0 -70.0 Fiscal Year Forecast (5/14) -3.0 (-0.8%) 11.0 (4.6%) 14.0 (4.1%) 22.0 (2.3%) 5.0 (2.8%) 33.0 (9.4%) 60.0 (4.1%) 10.0 (2.1%) 45.0 (4.5%) 55.0 (3.7%) 115.0 (3.9%) -35.0 80.0 (2.9%) *Figures within parentheses indicate operating margin. 17 Operating Income Forecast by Product Group (Billions of Yen) 50 40 Left bar: FY2015 Forecast (5/14) Right bar: FY2015 Revised Forecast 30 20 10 0 -10 -20 -30 Digital Information Equipment Communications Health and Environmental Equipment Energy Solutions Business Solutions Electronic Components and Devices Display Devices 18 Analysis of Difference in Operating Income for Fiscal 2015 (May 14 Forecast vs. Revised Forecast) (Billions of Yen) 100 80 80.0 Sales decline -50.0 60 40 20 0 -20 -40 10.0 Fiscal 2015 Forecast (5/14) Selling price down -75.0 Variable cost reduction +35.0 Fixed cost reduction etc. +20.0 Revised Fiscal 2015 Forecast -60 19 Ⅲ. Information by Product Group 20 Introduction to Virtual Company System and Vision ・Effective from October 1, 2015, Sharp has shifted to virtual company system accelerating the expansion speed of each businesses. Company Vision Consumer Electronics Innovation by fusions of technology in Japan and Asia as the main market Current Measures & Achievements • New products combining AI and IoT (RoBoHoN, “TOMODACHI KADEN “ friend appliance concept) • Market share expansion of the 4K TV in Japanese market • Creating Sharp one-of-a-kind new products (Healsio Hot Cook, S-style*, etc.) *new stylish air purifier product • Strengthen the foundation of solutions business (development of DC air conditioner, sales expansion of storage batteries) • Establishment of a new company to expand EPC business in Thailand • Strengthen the residential solar business in Japan (commercialize solar cell module that achieves 19% conversion efficiency—the industry‘s best in class) Energy Solutions Shift to local fit solution business Business Solutions Utilization of current product line-up and customer basis & Global solution business expansion with proactive investment increase • Steady expansion of current businesses (model change of full-color MFPs for first time in three years) • Strategic expansion of BIG PAD into the education market (sales to Ritsumeikan University) • Robotics business expansion as a key segment (security, concierge, commercial vacuum cleaners, etc.) Electric Components and Devices Shift to value-added segment centered by sensing business • Steady expansion of camera module business (up 92% over same period last year) • Improved competitiveness via shift to high-value-added fields –Initiate sales of Sharp’s color night-vision camera in high-potential fields –Release of line-up of new sensor products for detecting dust, PM2.5, and environmental factors Display Devices Gaining stable customers by utilizing the technology advantage and expansion of high-value-added panels • On road to increased sales in the PC field, tapping new major smartphone customers • Reduce fluctuating expenses by revamping procurement and by revamping system for design and product promotion to customers • Expansion of high-value-added panels (announcement of see-through display, curved FreeForm Display, joint development with U.S. company Kymeta of satellite antennas, etc.) 21 Consumer Electronics (Billions of Yen) FY2015 Change (Y on Y) 1H 2H Forecast FY2015 Change (Y on Y) Fiscal Year Forecast 5/14 Forecast Change (Y on Y) 1H 2H Fiscal Year 435.5 -11.9% 434.4 -11.0% 870.0 -11.4% 455.0 495.0 950.0 Digital Information Equipment 167.3 -21.0% 172.6 -16.1% 340.0 -18.6% 170.0 200.0 370.0 Communications 117.6 -1.6% 92.3 -29.1% 210.0 -15.9% 120.0 120.0 240.0 150.5 -7.5% 169.4 +11.3% 320.0 +1.6% 165.0 175.0 340.0 -1.9 (-0.5%) - 17.9 (4.1%) 4.7-fold 16.0 (1.8%) -16.2% 1.0 (0.2%) 21.0 (4.2%) 22.0 (2.3%) -15.0 - 2.0 - -13.0 - -9.0 6.0 -3.0 10.5 +46.1% 4.4 -47.5% 15.0 -4.8% 4.0 7.0 11.0 2.5 -67.3% 11.4 +40.3% 14.0 -12.1% 6.0 8.0 14.0 Sales Health and Environmental Equipment Operating Income (margin) Digital Information Equipment Communications Health and Environmental Equipment *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) • Sales: 11.9% decrease • Operating income: 17.2 billion yen decrease Current Measures & Achievements FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: Downturn by 80 billion yen • Operating income: Downturn by 6 billion yen • New products combining AI and IoT (RoBoHoN, “TOMODACHI KADEN “ friend appliance concept) • Market share expansion of the 4K TV in Japanese market *new stylish air purifier product • Creating Sharp one-of-a-kind new products (Healsio Hot Cook, S-style*, etc.) 22 (Consumer Electronics) Digital Information Equipment (Billions of Yen) FY2015 Change (Y on Y) 1H Sales LCD TVs Change (Y on Y) Fiscal Year Forecast Change (Y on Y) 1H 2H Fiscal Year 167.3 -21.0% 172.6 -16.1% 340.0 -18.6% 170.0 200.0 370.0 154.6 -18.2% 155.3 -14.1% 310.0 -8.1% 160.0 180.0 340.0 -15.0 - 2.0 - -13.0 - -9.0 6.0 -3.0 (-5.3%) (3.0%) (-0.8%) Operating Income (margin) 2H Forecast FY2015 5/14 Forecast (-9.0%) (1.2%) (-3.8%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: 21.0% decrease • Operating income: 15.3 billion yen decrease • Sales: Downturn by 30 billion yen • Operating Income: Downturn by 10 billion yen 23 （Consumer Electronics） Digital Information Equipment FY2015 2H Analysis of Difference in Operating Income (1H Results and 2H Forecast） (Billions of Yen) 10 0 FY2015 1H Results 2.0 Fixed cost reduction etc. +9.0 -10 -15.0 -20 Sales increase +3.3 Selling price down -10.5 FY2015 2H Forecast Variable cost reduction +15.2 -30 24 （Consumer Electronics） Communications (Billions of Yen) FY2015 Change (Y on Y) 1H Sales Mobile phones Operating Income (margin) 2H Forecast FY2015 Change (Y on Y) Fiscal Year Forecast Change (Y on Y) 5/14 Forecast 1H 2H Fiscal Year 117.6 -1.6% 92.3 -29.1% 210.0 -15.9% 120.0 120.0 240.0 83.5 -2.8% 76.4 -29.0% 160.0 -17.4% 96.2 98.8 195.0 10.5 +46.1% 4.4 -47.5% 15.0 -4.8% 4.0 7.0 11.0 (3.3%) (5.8%) (4.6%) (8.9%) (4.9%) (7.1%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: 1.6% decrease • Operating income: 46.1% increase • Sales: Downturn by 30 billion yen • Operating income: Upturn by 4 billion yen 25 （Consumer Electronics） Health and Environmental Equipment (Billions of Yen) FY2015 Change (Y on Y) 1H Sales Operating Income (margin) 2H Forecast Change (Y on Y) FY2015 Fiscal Year Forecast Change (Y on Y) 5/14 Forecast 1H 2H Fiscal Year 150.5 -7.5% 169.4 +11.3% 320.0 +1.6% 165.0 175.0 340.0 2.5 -67.3% 11.4 +40.3% 14.0 -12.1% 6.0 8.0 14.0 (3.6%) (4.6%) (4.1%) (1.7%) (6.8%) (4.4%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) • Sales: 7.5% decrease • Operating income: 67.3% decrease FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: Downturn by 20 billion yen • Operating income: No change 26 （Consumer Electronics） Health and Environmental Equipment (Billions of Yen) FY2015 2H Analysis of Difference in Operating Income （1H Results and 2H Forecast） 15 Fixed cost reduction etc. 11.4 +0.7 10 Variable cost reduction +4.7 Selling price down -1.7 Sales increase 5 +5.2 2.5 0 FY2015 2H Forecast FY2015 1H Results 27 Energy Solutions (Billions of Yen) FY2015 Change 2H Forecast (Y on Y) 1H Sales Operating Income (margin) 78.7 -44.9% -2.6 - (-3.4%) FY2015 Change (Y on Y) Fiscal Year Forecast 101.2 -20.8% 5.6 - (5.6%) 5/14 Forecast Change (Y on Y) 1H 180.0 -33.5% 3.0 - (1.7%) 2H 80.0 Fiscal Year 100.0 180.0 1.0 4.0 5.0 (1.3%) (4.0%) (2.8%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) • Sales: 44.9% decrease • Operating income: 2.3 billion yen decrease Current Measures & Achievements FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: No change • Operating income: Downturn by 2 billion yen • Strengthen the foundation of solutions business (development of DC air conditioner, sales expansion of storage batteries) • Establishment of a new company to expand EPC business in Thailand • Strengthen the residential solar business in Japan (commercialize solar cell module that achieves 19% conversion efficiency—the industry‘s best in class) 28 Business Solutions (Billions of Yen) FY2015 Change (Y on Y) 1H Sales Operating Income (margin) 2H Forecast FY2015 Change (Y on Y) Fiscal Year Forecast Change (Y on Y) 5/14 Forecast 1H 2H Fiscal Year 172.3 +3.8% 177.6 +0.2% 350.0 +1.9% 165.0 185.0 350.0 16.7 +5.2% 19.2 +25.2% 36.0 +15.0% 15.0 18.0 33.0 (9.1%) (9.7%) (9.4%) (9.7%) (10.8%) (10.3%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: 3.8% increase • Operating income: 5.2% increase Current Measures & Achievements • Sales: No change • Operating income: Upturn by 3 billion yen • Steady expansion of current businesses (model change of full-color MFPs for first time in three years) • Strategic expansion of BIG PAD into the education market (sales to Ritsumeikan University) • Robotics business expansion as a key segment (security, concierge, commercial vacuum cleaners, etc.) 29 Electronic Components and Devices (Billions of Yen) FY2015 Change (Y on Y) 1H Sales Operating Income (margin) 2H Forecast FY2015 Change (Y on Y) Fiscal Year Forecast Change (Y on Y) 5/14 Forecast 1H 2H Fiscal Year 243.2 +62.4% 286.7 -1.7% 530.0 +20.1% 200.0 280.0 480.0 8.0 - 9.9 3.2-fold 18.0 26.6-fold 3.0 7.0 10.0 (1.5%) (2.5%) (2.1%) (3.3%) (3.5%) (3.4%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) • Sales: 62.4% increase • Operating income: 10.4 billion yen increase Current Measures & Achievements FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: Upturn by 50 billion yen • Operating income: Upturn by 8 billion yen • Steady expansion of camera module business (up 92% over same period last year) • Improved competitiveness via shift to high-value-added fields –Initiate sales of Sharp’s color night-vision camera in high-potential fields –Release of line-up of new sensor products for detecting dust, PM2.5, and environmental factors 30 Display Devices (Billions of Yen) FY2015 Change (Y on Y) 1H Sales Operating Income (margin) 2H Forecast FY2015 Change (Y on Y) Fiscal Year Forecast 5/14 Forecast Change (Y on Y) 1H 2H Fiscal Year 391.1 -15.1% 478.8 +7.3% 870.0 -4.1% 480.0 520.0 1,000.0 -26.4 - -3.5 - -30.0 - 8.0 37.0 45.0 (1.7%) (7.1%) (4.5%) (-6.8%) (-0.7%) (-3.4%) *Sales of each product group include internal sales between segments (Product Business / Device Business) FY2015 1H Results (Y on Y) • Sales: 15.1% decrease • Operating income: 47.3 billion yen decrease Current Measures & Achievements FY2015 Fiscal Year Forecast (Against May 14 Forecast) • Sales: Downturn by 130 billion yen • Operating income: Downturn by 75 billion yen • On road to increased sales in the PC field, tapping new major smartphone customers • Reduce fluctuating expenses by revamping procurement and by revamping system for design and product promotion to customers • Expansion of high-value-added panels (announcement of see-through display, curved Free-Form Display, joint development with U.S. company Kymeta of satellite antennas, etc.) 31 Display Devices Factors in Discrepancy between Operating Income Target and Results in 1H FY2015 & Measures to Improve Earnings in 2H Inadequate product appeal and cost competitiveness Decrease in sales of Smartphone LCDs Factors in Discrepancy between Operating Income Target and Results in 1H Measures to Improve Earnings in 2H • Changes in Chinese smartphone market – Delay in response towards the deceleration of growth and intensifying price competition • Break away from omnidirectional customer strategy – Rearrange customer portfolio by focusing resources on priority customers – Strengthen user support system centered on new local sales company in Shenzhen (dedicated support system for each priority customers) (Developed Number of Models : 1.8 times vs 1H) • Changes in target customers’ market position – Failed to foresee the trend shift to mid- to low-end • Shift to high-value-added areas centered on mid-size displays, such as those for notebook PCs and industrial appliances – Enhancing the line-up of high-resolution, narrow-bezel, low-powerconsumption models (Mid-size LCDs Sales : 1.6 times vs 1H) (Market share increase for Note PC / Tablets : 1H 14%→2H 25%) • Inability to stay cost competitive amid drastic decreases in selling price led to decrease in share • Delay in support system set up for the launch of in-cell touchscreen business • Implement thorough structural reforms related to costs across entire supply chain – Reduce material costs and processing costs through strategic development and procurement – Implement joint cost-reduction projects with priority users – Strengthen support system for in-cell customers in joint effort with manufacturers of touchscreen controllers (Number of In-cell display equipped models : 4 times vs 1H) 32 Display Devices FY2015 2H Analysis of Difference in Operating Income (1H Results and 2H Forecast) (Billions of Yen) 10 0 FY2015 2H Forecast FY2015 1H Results Fixed cost reduction etc. +6.3 -10 Sales increase +20.6 -20 Selling price down -25.3 -30 -3.5 Variable cost reduction +21.2 -26.4 33 Ⅳ. Supplementary Data 34 Sales of Main Products (Billions of Yen) FY2014 1H LCD TVs Fiscal Year 2H FY2015 2H Fiscal Year Change Forecast Forecast (Y on Y) 1H 189.1 180.8 370.0 154.6 155.3 310.0 -16.2% 3.60 3.43 7.03 2.99 2.90 5.90 -16.2% 85.9 107.6 193.6 83.5 76.4 160.0 -17.4% 2.41 3.15 5.56 2.26 1.73 4.00 -28.1% Refrigerators 47.9 45.6 93.5 48.2 48.7 97.0 +3.7% Air Conditioners 42.1 21.3 63.5 36.0 27.9 64.0 +0.7% Copiers / Printers 73.4 78.5 152.0 78.2 81.7 160.0 +5.2% 103.5 235.5 339.1 198.9 231.0 430.0 +26.8% Unit (million units) Mobile Phones Unit (million units) CCD / CMOS Imagers 35 Sales of Main Products by Quarter (Billions of Yen) FY2014 1Q 2Q FY2015 3Q 4Q 1Q 2Q 85.7 103.3 104.3 76.5 64.1 90.5 1.73 1.86 1.74 1.68 1.41 1.58 49.6 36.2 64.1 43.5 44.1 39.4 1.23 1.17 1.79 1.35 1.01 1.25 Refrigerators 23.9 24.0 22.1 23.4 23.0 25.1 Air Conditioners 23.6 18.4 8.0 13.3 20.6 15.3 Copiers / Printers 34.3 39.1 38.2 40.3 37.2 40.9 CCD / CMOS Imagers 38.8 64.7 129.3 106.2 110.8 88.0 LCD TVs Unit (million units) Mobile Phones Unit (million units) 36 Capital Investment and Depreciation, etc. (Billions of Yen) FY2014 1H FY2015 2H 1H Fiscal Year 2H Forecast Fiscal Year Forecast Change (Y on Y) Capital Investment 31.2 31.3 62.6 20.9 39.0 60.0 -4.2% LCDs 12.9 19.0 31.9 8.9 19.0 28.0 -12.4% 49.9 52.6 102.6 33.7 46.2 80.0 -22.0% 65.8 75.1 141.0 68.6 71.3 140.0 -0.7% Depreciation and Amortization R&D Expenditures (Yen) Exchange Rate FY2015 FY2014 1H 2H 1H Fiscal Year 2H Forecast US Dollar 102.05 115.83 108.94 120.80 120.00 Euro 137.41 137.14 137.28 133.57 135.00 37 Capital Investment and Depreciation, etc. by Quarter (Billions of Yen) FY2014 1Q Capital Investment LCDs Depreciation and Amortization R&D Expenditures 2Q FY2015 3Q 1Q 4Q 2Q 14.5 16.6 9.3 22.0 9.7 11.1 5.7 7.1 4.3 14.7 3.8 5.1 24.4 25.5 26.5 26.0 18.0 15.7 34.4 31.4 38.1 37.0 36.3 32.3 (Yen) Exchange Rate FY2014 FY2015 1Q 2Q 3Q US Dollar 101.16 102.93 113.55 Euro 138.56 136.26 141.59 1Q 2Q 118.10 120.37 121.24 132.68 132.66 134.48 4Q 38 Overseas Sales by Region Top: Sales (Billions of yen) Bottom : Composition ratio (%) FY2014 1H 2H FY2015 Fiscal Year 1H 165.6 19.9% 155.2 15.8% 320.9 17.7% 160.0 18.0% 71.4 8.6% 71.0 7.2% 142.5 7.8% 69.9 7.8% China 487.8 58.6% 653.0 66.3% 1,140.8 62.8% 554.3 62.2% Other 107.7 12.9% 105.6 10.7% 213.4 11.7% 106.4 12.0% Total 832.7 100.0% 985.1 100.0% 1,817.8 100.0% 890.7 100.0% The Americas Europe 39