2012 1H Financial Results 2012/08/29 By Eric Chen AVP of Finance & IT [email protected] 1 Y2012 YTM Financial Highlights consolidate 2011 2012 1H *1H Net Sales 13,448 Gross Profit % NT$ M 2012 QoQ% YoY% 1Q *2Q 13,511 6,267 7,244 15.6% 0.5% 38.8% 40.0% 39.8% 40.0% 0.2% 1.2% Operating Expense 3,062 3,423 1,674 1,749 4.5% 11.8% Operating Profit % 16.0% 14.6% 13.1% 15.9% 2.8% -1.4% 177 104 78 26 -66.7% -41.2% 1,881 1,728 750 978 30.4% -8.1% 3.40 3.10 1.35 1.75 29.6% -8.8% Non-Operating Income Net Profit AT EPS - (NT$) *un-audited Y2012 YTM By Product - 1/2 Consolidate Sales: US$451M, -2% Service Automation US 40.3M 9%, -4.6% Embedded System 51% US 61.9M 14%, -3.6% Automation Group US 70.8M 16%, -10.4% Global Services US 58.5M 13%, -3.9% % of Sales, YoY Growth US 231.5M -6.0% Y2012 YTM By Product - 2/2 Consolidate Sales: US$451M, -3% NC-DMS 49% US 56.6M 12%, -15.0% AC-DMS US 219.8M +1.6% US 62.5M 14%, +1.7% Embedded Core US 100.7M 22%, +14.0% % of Sales, YoY Growth Y2012 YTM By Region/Sales Forces Consolidate Sales: US$451M, -2% USD$ M 2011 1H 2012 1H GR% % North America 112 129 +15% 29% Europe/ADLoG 78 70 -11% 15% Greater China 128 122 -5% 27% Asia/Intercon. 60 68 +13% 15% DMS/E2E 60 42 -29% 10% Affiliates 25 463 21 451 -16% -2% 5% 100% Total Affiliates DMS/E2E 6%, -16% 10%, -29% North America 29%, +15% Asia/Intercon. 14%, +13% % of Sales, YoY Growth Greater China 27%, -5% Europe/ADLoG 15%, -11% Y2012 YTM Working Captial consolidate 2010 2011 Year-End Year-End Cash Position 2,228 3,396 4,596 5,718 Account Receivable DSO(Days) 3,338 4,116 4,164 4,863 47 58 59 65 Inventory DOH(Days) 3,531 3,892 3,850 3,998 83 90 92 89 Account Payable Days 1,759 1,998 2,353 2,873 41 46 56 64 NT$ M *un-audited 6 2012 1Q End *2Q End Industrial Insights *1 Following the IPC has become a global leader in the field, start from 2010, Advantech is also the leading player in Embedded Computing Technology (ECT). The leading trend in the first half of 2012 is more clearly. 2. Smarter city & IoT industry continues to heat up, major international companies such as IBM, GE, NEC also optimistic about prospects for development in areas such as digital healthcare, energy saving and smarter transportation. We believe the growth of related industries for an “Intelligent Planet” can be expected in the next decade. 3. Although the network communications business group (NC-DMS) revenue declined due to its telecommunications customers poor business performance, but Advantech has excellent manufacturing and designing capacity. In the long run, for the design and manufacture of telecommunications operations outsourcing services, we still has a considerable advantage. * Broker Research Major Events & 2H Outlook 1. Sales dropped in greater China and European region due to weak requirements. But in North America, South Korea and emerging markets shows strong demand. 2. The revenues of Q3 is expected to close with Q2, Q4 will be stronger than Q3 , 2H GP will be close to the level of first half average. 3. The first phase of Linkou collaborative R&D campus has been contracting and under construction, expected to be finished in the end of 2014. it will fulfill Advantech next decade biz expansion in Taiwan. 4. Established three overseas subsidiaries - India, Indonesia and Mexico. 5. Ranked 11th as “2012 corporate citizen – large enterprise award” of CommonWealth Magazine