Consolidated Financial Results for the th S Second dQ Quarter t Fi Fiscall 2013 Ⅰ. Financial Results for the 1H Fiscal 2013 Ⅱ. Information by Product Group Ⅲ. Financial Results Forecast for Fiscal 2013 Supplementary Data -Sales of Main Products, etc.- SHARP CORPORATION October 31, 2013 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 R l i suchh as trade d restrictions i i in i other h countries i (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 © 2013 SHARP CORPORATION, All Rights Reserved. Ⅰ. Financial Results for the 1H Fiscal 2013 1 Financial Results for the 1H Fiscal 2013 ・Net sales, operating income and net loss improved significantly compared with 1H FY2012, exceeding previous forecast. (Billions of Yen) FY2012 1H FY2013 Initial forecast (5/14) Previous forecast 1H Change (Y on Y) (9/18) Difference Difference from from initial previous forecast forecast Net Sales 1,104.1 1,270.0 1,310.0 1,342.0 +21.5% +72.0 +32.0 Operating Income -168.8 15.0 30.0 33.8 - +18.8 +3.8 (vs. sales) (-15.3%) (1.2%) (2.3%) (2.5%) Net Income -387.5 -20.0 -10.0 -4.3 - +15.6 +5.6 (vs. sales) (-35.1%) (-1.6%) (-0.8%) (-0.3%) 2 Financial Results by Quarter ・The operating margin on sales improved from 0.5% in 1Q to 4.2% in 2Q. ・In 2Q, operating income and net income were both in the black. (Billions of Yen) FY2013 1Q 2Q Change Net Sales 607.9 Operating Income 3.0 ( sales) (vs. l ) Net Income -17.9 (vs. sales) (-3.0%) 734.1 +32.6% - ((4.2%)) 13.6 - Change +13.7% 30.8 - ((0.5%)) 1H Change - (1.9%) 1,342.0 +21.5% 33.8 ((2.5%)) -4.3 (-0.3%) - - 3 Transitions in Net Sales/Operating Income/Net Income by Quarter ・Quarterly net sales have been improved to the 600 to 700 billion yen level. ・Operating income and net income have continued to recover since the lows of 1Q and 2Q FY2012. ・Operating income has stayed in the black for 4 consecutive quarters. Net Sales 800 700 Operating Income (Billions of Yen) Net Income (Billions of Yen, %) 40 10.0 50 20 5.0 0 0 0.0 -50 (Billions of Yen) 600 500 -20 -5.0 -100 -40 -10.0 -150 -60 -15.0 -200 -20.0 -250 -25.0 -300 400 300 200 100 0 -80 Operating Income Operating Margin -100 4 Sales by Product Group ・ In 1H FY2013, all product groups except Digital Information Equipment showed growth compared with 1H FY2012. ・ In particular, Solar Cells, Business Solutions, LCDs and Electronic Devices showed a significant improvement in results. (Billions of Yen) FY2012 FY2013 1H 1Q Difference (Q on Q) 2Q Change (Y on Y) 1H Difference (Y on Y) Digital Information Equipment 338.5 158.9 175.6 +16.6 334.6 -1.2% -3.9 Health and Environmental Equipment 154.9 82.3 77.5 -4.7 159.8 +3.2% +4.8 93.0 84.3 83.9 -0.4 168.2 +80.8% +75.1 138.9 77.6 80.7 +3.1 158.4 +14.0% +19.4 725.6 403.3 417.9 +14.5 821.2 +13.2% +95.5 LCDs 368 0 368.0 193 8 193.8 284 7 284.7 +90 9 +90.9 478 5 478.5 +30 0% +30.0% +110 5 +110.5 Electronic Devices 126.4 61.2 86.5 +25.3 147.8 +17.0% +21.4 494.4 255.0 371.3 +116.2 626.4 +26.7% +131.9 Sub Total 1,220.1 658.3 789.2 +130.8 1,447.6 +18.6% +227.5 Adjustments -115.9 -50.4 -55.1 -4.6 -105.6 - +10.3 1,104.1 607.9 734.1 +126.1 1,342.0 +21.5% +237.8 Solar Cells Business Solutions Product Business Device Business Total *Sales of each product group include internal sales between segments (Product Business / Device Business) 5 Operating Income by Product Group ・In 1H FY2013, all product groups were in the black. (Billions of Yen) FY2012 1H FY2013 Digital Information Equipment -21.1 (-6.3%) Health and Environmental Equipment 17.3 (11.2%) 6.4 Solar Cells -12.3 (-13.2%) Business Solutions Product Business 2Q 1Q 1H Difference (Y on Y) 2.2 (1.3%) +3.5 0.8 (0.3%) +22.0 (7.8%) 3.2 (4.2%) -3.1 9.6 (6.0%) -7.6 6.8 (8.1%) 3.0 (3.7%) -3.7 9.8 (5.9%) +22.2 (5.0%) 7.5 (9.8%) 8.3 (10.3%) +0.7 15.9 (10.1%) +8.9 -9.1 (-1.3%) 19.4 (4.8%) 16.8 (4.0%) -2.6 36.3 (4.4%) +45.5 -9.5 (-4.9%) 6.9 LCDs -115.5 (-31.4%) Electronic Devices -23.7 (-18.8%) -1.3 (-0.9%) Difference (Q on Q) 0.1 18.1 (6.4%) +27.6 8.6 (1.8%) +124.2 (0.2%) 5.1 (5.9%) +5.0 5.2 (3.5%) +29.0 Device Business -139.3 (-28.2%) -9.3 (-3.7%) 23.3 (6.3%) +32.7 13.9 (2.2%) +153.2 Sub Total -148.5 (-12.2%) 10.0 40.1 (5.1%) +30.0 50.2 (3.5%) +198.7 Adjustments Total -20.3 -168.8 (-15.3%) (1.5%) -7.0 3.0 -9.3 (0.5%) 30.8 (4.2%) -2.3 +27.7 -16.4 33.8 (2.5%) +3.9 +202.7 *The percentage figures noted in brackets show operating margin 6 Breakdown of Operating Income by Product Group (comparison of 1H FY2012 and 1H FY2013) (Billions of Yen) Product Business: +45.5 Device Business: +153.2 33.8 +3 9 +3.9 +29.0 0 +124.2 +8.9 +22.2 +22.0 -7.6 -168.8 -200 Operating Digital Health and Income 1H Information Environmental FY2012 Equipment Equipment Solar Cells Business Solutions LCDs Electronic Devices Adjustments Operating Income 1H FY2013 7 Breakdown of Operating Income by Factors (comparison of 1H FY2012 and 1H FY2013) ・Reduction in fixed costs and assets contributed to turnaround in 1H FY2013. (Billions of Yen) Positive effects by business restructuring (12/1H ⇒13/1H): Total +146.1 billion yen Increased revenue, etc. 0 Operating Income 1H FY2013 33 8 33.8 33.8 +56.6 Reduction of assets +75.2 Reduction of fi d costs fixed t +70.9 -168.8 -200 Depreciation due to the effects of loss from inventory revaluation, and retirement/impairment of noncurrent assets, etc. Labor cost cuts and Reduction in depreciation, etc. Operating Income 1H FY2012 8 Other Income (Expenses) ・Recording of the costs associated with restructuring has been almost completed, leading to a significant improvement in other income (expenses). (Billions of Yen) FY2012 FY2013 1 1H 1 1H Difference -168.8 33.8 +202.7 -153.9 -28.9 +124.9 Gain on sales of noncurrent assets 3.8 3.0 -0.8 Gain on sales of investment securities 0.3 1.6 +1.3 -5.3 -8.9 -3.6 -8.3 -1.1 +7.1 Operating Income Other Income (Expenses) Interest expense Loss on sales and retirement of noncurrent assets Loss on valuation of investment securities -2.8 -0.9 +1.9 Restructuring charges -98.6 0.0 +98.6 Settlement package -15.8 0.0 +15.8 0.0 -1.0 -1.0 -27.1 -21.5 +5.5 Provision for loss on litigation Others Income Taxes, etc. Net Income -64.7 -9.1 +55.5 -387.5 -4.3 +383.2 9 Consolidated Balance Sheets ・The equity ratio improved from 6.0% at end of March 2013 to 6.4% at end of September 2013. (Billions of Yen) FY2012 End of Sep. 2012 FY2012 FY2013 End of Mar. 2013 End of Sep. 2013 FY2013 End of Sep. 2012 End of Mar. 2013 End of Sep. 2013 200 7 200.7 200 3 200.3 00 0.0 Cash, C s , timee depos depositss andd restricted cash 221 1 221.1 191 9 191.9 167 5 167.5 Notes and accounts receivable 470.2 558.2 608.0 Short-term borrowings 898.0 924.1 874.0 422.2 405.6 449.3 333.9 337.7 289.6 1,654.2 1,667.5 1,613.0 338.3 285.3 355.9 CB Inventories 325.7 310.7 317.5 Notes and accounts payable Other current assets 241.9 160.9 189.9 Other current liabilities 1,259.0 1,221.8 1,282.9 Plant and Equipment 636.6 563.6 535.2 Long-term Liabilities Investments and Other Assets 323 7 323.7 301 6 301.6 297 1 297.1 Liabilities 1 992 5 1,992.5 1 952 9 1,952.9 1 968 9 1,968.9 1.0 0.6 0.1 Net Assets 227.9 134.8 146.6 2,220.4 2,087.7 2,115.5 2,220.4 2,087.7 2,115.5 9.9% 6.0% 6.4% Current Assets Deferred Assets Total assets Current Liabilities Total liabilities and net assets Equity Ratio Only amounts settled by end of October are reflected in these figures. Capital increase through : - public offering 109.0 - third-party allotments with DENSO, Makita and LIXIL 17.4 + Increased amount of net assets 126.5 10 “Asset Light” Approach [ Transition of Inventory ] ・ Inventory at end Sep. 2013 has been cut down by 38.6 billion yen compared with end Jun. 2013 to the level at end Mar. 2013, and the ratio vs. monthly sales has fallen from 1.76 months to 1.42 months due to sales expansion. (Billions of Yen) 600 (Months) 3.00 Inventory (left) Ratio vs. monthly sales (right) 486.0 500 527.4 2.58 2.50 454.4 411.2 399.9 1.93 400 2.00 356.2 300 1.60 1.79 1.69 310.7 1.76 317.5 1.50 1.42 1.50 200 1.00 100 0.50 0 0.00 End Mar. 2008 End Mar. 2009 End Mar. 2010 End Mar. 2011 End Mar. 2012 End Mar. 2013 End Jun. 2013 End Sep. 2013 11 Transition of Interest-bearing Debt ・ Interest-bearing debt at end Sep. 2013 has increased by 25.8 billion yen compared with end Jun. 2013, but ratio vs. monthly sales has improved by 0.43 months. (Billions of Yen) (Months) Short-term borrowings (left) 1,127.1 Longt-term debt (left) 1,174.4 1,169.4 5.69 5.77 1,195.3 Ratio vs. monthly sales (right) 1,000 5.51 829.7 820.1 847.2 3.50 3.57 3.36 6.00 5.34 703.9 500 3.00 2.47 0 0.00 End Mar. 2008 End Mar. 2009 End Mar. 2010 End Mar. 2011 End Mar. 2012 End Mar. 2013 End Jun. 2013 End Sep. 2013 12 Implementation of the Medium-Term Management Plan <Exit Closed Innovation and Aggressively Utilize Alliances > ▪ The implementation of the second third-party allotment capital increase to Qualcomm according to the agreement concerning the development of MEMS displays. (Sharp has received 5.9 billion yen for the second issuance of new shares, 10.8 billion yen in sum total.) ▪ The execution of the agreement with China Electronics Corporation (CEC) for LCD panel production project j in i China. hi - Sharp to provide its technologies of high-definition TFT LCD panel and module to CEC, and to take part in a joint venture for producing LCD panels and modules using 8.5th generation glass substrates. <Reducing Fixed Costs by Reformation of Cost Structure> ▪ The reduction in fixed costs under progress: 70.9 billion yen (vs. 1H FY2012) - Labor cost cuts and reduction in depreciation as planned <Improving Financial Position> ▪ Stable funding through the renewal of the syndicated loan of 360 billion yen, and redemption of convertible bond of 200 billion yen (end of September 2013) with additional borrowing facility set at 150 billion yen. ▪ Capital increase through a public offering (109 billion yen) and through third-party allotments with DENSO, Makita, and LIXIL (17.4 billion yen). *Payment for capital increase through a third-party allotment to be undertaken in relation to the secondary offering of Sharp’s shares due to over-allotment (maximum of 11.2 billion yen) is planned to be completed on November 12, 2013. 13 Ⅱ. Information by Product Group 14 Digital Information Equipment (Billions of Yen, millions of units) FY2013 FY2012 FY2013 Full Year 1H Sales Change Change Change Forecast (8/1) 158.9 +18.5% 175.6 -14.1% 334.6 -1.2% 185.7 3.89 98.3 2.73 80.3 1.56 50.2 1.31 +3.4% -6.2% +71.8% +69.1% 113.7 2.12 37.2 1.11 +5.3% -4.6% -46.0% -43.0% 194.0 3.69 87.5 2.42 +4.5% -5.3% -11.0% -11.1% -21.1 -1.3 - 2.2 - 0.8 - (-6.3%) (-0.9%) LCD TVs Unit Amt Unit Operating Income (vs. sales) 1H 2Q 338.5 Amt Mobile Phones 1Q (1.3%) Change (Y on Y) 730.0 -0.4% 400.0 +3.0% 8.00 -0.4% 210.0 -8.5% 5.50 -10.0% 5.0 (0.3%) - (0.7%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] (LCD TVs) TV ) Sales S l grew in i Japan, J China Chi andd emerging i countries i but b fell f ll in i Europe E andd the h U.S. US (Mobile phones) Stiffening competition with Japanese and overseas mobile phone manufacturers. The above situations have resulted in squeeze on sales of Digital Information Equipment Group. [ Onward Actions ] (LCD TVs) Shift to 60 inch and larger (70/80/90 inch) models and strengthen product range, invest in providing locally suitable products in emerging countries and other important regions. (Mobile phones) Win back market share in Japan by enhancing the lineup centering on new products equipped with IGZO LCDs that feature high definition and low power consumption. 15 Health and Environmental Equipment (Billions of Yen) FY2012 FY2013 FY2013 Full Year 1H 1Q Q 1H 2Q Q Change Change Change Forecast (8/1) Ch Change (Y on Y) Sales 154.9 82.3 +5.2% 77.5 +1.1% 159.8 +3.2% 320.0 +3.3% Operating Income 17.3 6.4 -22.1% 3.2 -64.3% 9.6 -44.2% 20.0 -37.9% (11.2%) (7.8%) (vs. sales) (4.2%) (6.0%) (6.3%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] ・Sales of air conditioners and refrigerators were strong. ・The profitability of business in Japan relying on imports from overseas worsened due to the depreciation of the yen. [ Onward Actions ] ・Expand overseas business with ASEAN region as top-priority area, and strengthen production capabilities in Indonesian factories. ・Minimize the influence of exchange rate fluctuations by promoting local production for local consumption. 16 Solar Cells (Billions of Yen) FY2012 FY2013 FY2013 Full Year 1H 1Q 1H 2Q Change Change Change Forecast (8/1) Change (Y on Y) Sales 93.0 84.3 +101.1% 83.9 +64.1% 168.2 +80.8% 310.0 +19.3% Volume (MW) 542 343 +35.7% 560 +93.6% 904 +66.6% 1,800 +36.4% -12.3 6.8 - 3.0 - 9.8 - (-13.2%) (8.1%) Operating Income (vs. sales) (3.7%) 13.0 (5.9%) - (4.2%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] ・Sales increased in Japan p for residential and industrial use ((e.g. g mega-solar g power generation p g plants). p ) [ Onward Actions ] ・Secure profitability by expanding sales in Japanese market with steady demand. Residential use: Expand product range so suit various roof shapes, boost sales and marketing activity, increase sales of systems including HEMS and storage batteries. Industrial use: Steady completion of installation and increase sales based on strengthened product supply and servicing systems, and acquire mega-solar power generation projects through enhanced design and sales function. Overseas: Expand solution and developer businesses. 17 Business Solutions (Billions of Yen) FY2012 FY2013 FY2013 Full Year 1H 1Q Q 1H 2Q Q Change Sales Operating Income (vs. sales) 138.9 6.9 (5.0%) 77.6 +20.0% 7.5 +223.8% (9.8%) Change 80.7 +8.8% 8.3 +80.2% (10.3%) Change 158.4 Forecast (8/1) +14.0% 15.9 +128.5% (10.1%) Change (Y on Y) 310.0 +4.4% 22.0 -9.6% (7.1%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] ・Sales of color MFPs grew in Japan and overseas. Sales of information displays increased overseas. [ Onward Actions ] ・Increase sales of high-speed MFPs in developed countries and shift to color MFPs in emerging countries. ・Develop new customers by offering enhanced solutions and services through combination of MFPs and displays. 18 LCDs (Billions of Yen) FY2013 FY2012 FY2013 Full Year 1H 1Q 1H 2Q Change Sales Operating Income (vs. sales) 368.0 Change 193.8 +32.8% -115.5 -9.5 - (-31.4%) (-4.9%) Change 284.7 +28.2% 18.1 - (6.4%) Forecast (8/1) 478.5 +30.0% 8.6 - Change ( on Y)) (Y 970.0 +14.5% 30.0 (1.8%) - (3.1%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] ▪ In 1H FY2012, huge loss recorded due to reduction of operation of the large-size LCD plants and postponed orders of small- and medium-size LCDs from major customers. ▪ In 1H FY2013, strong sales recorded in large-size LCDs to external customers and in small- and medium-size LCDs due to increased demands of smartphones and tablet terminals. ▪ Strategic partnership contributed to maintaining the utilization rate of Kameyama No.2 Plant at the level as planned. [ Onward Actions ] ▪ Stabilize and expand business by promoting design-in activities with new customers. ▪ Shift to the panels featuring high definition and low power consumption such as IGZO LCDs. ▪ Streamline and optimize production, sales and inventory of TV panels by closely monitoring supply and demand trend. 19 Electronic Devices (Billions of Yen) FY2013 FY2012 FY2013 Full Year 1H 1Q 1H 2Q Change Change Change Forecast (8/1) Sales 126.4 61.2 +29.0% 86.5 +9.7% 147.8 +17.0% Operating Income -23.7 0.1 - 5.1 - 5.2 - (-18.8%) (0.2%) (vs. sales) (5.9%) (3.5%) Change (Y on Y) 320.0 +18.2% 12.0 - (3.8%) * Sales of product group including internal sales between segments (Product Business / Device Business) [ 1H ] ・Sales S l off camera modules d l for f mobile bil devices d i were strong. t [ Onward Actions ] ・Expand sales of camera modules for mobile devices to develop new customers. ・Enhance sales of sensing devices to be applied in security, in-vehicle and medical fields. ・Enhance sales of system devices such as optical sensor, touchscreen, and power devices. ・Promote sales of lighting devices such as LED. 20 Ⅲ. Financial Results Forecast for Fiscal 2013 21 Consolidated Financial Results Forecast for Fiscal 2013 ・ Aim to achieve positive results of net income in FY2013. ・ The forecast for the full year remains unchanged from the previous forecast. ・ Sharp will make a timely announcement on forecast revision, if it is deemed to be required in monitoring company progress and market conditions. (Billions of Yen) FY2013 FY2013 Full Year 1Q Change (Y on Y) 2Q Change (Y on Y) 1H Change (Y on Y) Forecast (8/1) Change (Y on Y) 607.9 +32.6% 734.1 +13.7% 1,342.0 +21.5% 2,700.0 +8.9% Domestic 258.8 +38.1% 285.5 +6.4% 544.3 +19.4% 1,020.0 +1.3% Overseas 349.1 +28.7% 448.5 +18.9% 797.6 +23.0% 1,680.0 +14.2% 3.0 - 30.8 - 33.8 - 80.0 - -17.9 - 13.6 - -4.3 - 5.0 - Net Sales Operating Income Net Income 22 Supplementary Data -Sales of Main Products, etc.- 23 Sales of Main Products and Electronic Components (Billions of Yen) FY2012 FY2013 FY2013 Full Year 1H LCD Color TVs Full Year 1H Change g (Y on Y) Forecast (8/1) Change g (Y on Y) 185.7 388.4 194.0 +4.5% 400.0 +3.0% Unit (million units) 3.89 8.03 3.69 -5.3% 8.00 -0.4% Mobile Phones 98.3 229.6 87.5 -11.0% 210.0 -8.5% Unit (million units) 2.73 6.11 2.42 -11.1% 5.50 -10.0% Refrigerators 45.1 87.9 47.5 +5.3% 96.0 +9.1% Air Conditioners 35.8 59.6 42.5 +18.9% 62.0 +3.9% Solar Cells 93.0 259.9 168.2 +80.8% 310.0 +19.3% 542 1,319 904 +66.6% 1,800 +36.4% Copiers / Printers 56.3 128.4 66.2 +17.6% 140.0 +9.0% CCD / CMOS Imagers 66.7 153.5 84.5 +26.7% 190.0 +23.8% Volume (MW) 24 Overseas Sales by Region Above: Sales (Billions of Yen) Below: Composition Ratio FY2012 FY2013 FY2013 Full Year 1H Full Year 1H Change (Y on Y) 146.9 355.2 204.2 22.6% 24.1% 25.6% 91.9 174.3 77.8 14.2% 11.9% 9.7% 278.7 667.9 382.5 43.0% 45.4% 48.0% 130.8 273.7 133.0 20.2% 18.6% 16.7% 648.4 1,471.3 797.6 100.0% 100.0% 100.0% +39.0% Change (Y on Y) Forecast (8/1) 360.0 +1.3% The Americas 21.4% -15.3% 170.0 -2.5% Europe 10.1% +37.2% 820.0 +22.8% China 48.8% +1.7% 330.0 +20.6% Asia etc. 19.7% +23.0% 1,680.0 +14.2% Total 100.0% 25 Other Information (Billions of Yen) FY2012 FY2013 FY2013 Full Year 1H Capital Investment Full Year 1H Change (Y on Y) Forecast (8/1) Change (Y on Y) 55 0 55.0 82 4 82.4 21 5 21.5 -60 9% -60.9% 80 0 80.0 -3 0% -3.0% 36.9 46.0 6.8 -81.6% 27.0 -41.4% Depreciation and Amortization 92.6 173.3 58.6 -36.6% 130.0 -25.0% R&D Expenditures 74.3 137.9 65.4 -12.0% 160.0 +16.0% <Reference>LCDs*1 Exchange Rate 1H Full Year 1H Difference Previous Forecast Difference from previous year U.S. Dollar ¥ 78.42 ¥ 82.11 ¥ 97.86 + ¥ 19.44 ¥ 95.00 + ¥ 12.89 Euro ¥ 99.14 ¥ 105.65 ¥ 128.51 + ¥ 29.37 ¥ 125.00 + ¥ 19.35 End of Mar. 2012 End of Mar. 2013 End of Sep. 2013 56,756 50,647 51,080 Domestic 29,387 24,758 24,433 Overseas 27,369 25,889 26,647 Number of Employees*2 *1 Sharp Corporation (Sharp Corporation and Sharp Display Products Corporation until 1Q FY2012) *2 Sharp Corporation and its consolidated subsidiary companies 26