Performance Briefing Fiscal Year March, 2015 TDK Corporation April 28, 2015 Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -1- ◆Consolidated Results for FY March 2015 Takakazu Momozuka, Corporate Officer ◆Consolidated Full Year Projections for FY March 2016 and Mid-Term Policy Takehiro Kamigama, President and CEO Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -2- Consolidated Results for FY March 2015 Takakazu Momozuka Corporate Officer Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -3- Highlights of the Operating Results for FY March 2015 ◆Net sales exceeded 1 trillion yen and reached a record 1,082.6 billion yen. Record net sales in the Passive Components and Film Application Products segments are on the back of upward sales trends in the automotive market and smartphones for China and North America. ◆Operating income increased 98% year on year to 72.5 billion yen. A balanced earnings structure has become the norm in the 3 main segments. Net income tripled from the previous year results to 49.4 billion yen. ◆Capital expenditures was implemented proactively in response to robust demand. TDK achieved a net cash position for the first time in 7 fiscal years with investments leading cash flow improvements. Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -4- Consolidated Full Year Results for FY March 2015 (Yen billions） Net sales Operating income FY March 2014 Full Year Results FY March 2015 Full Year Results Change Yen billions % 984.5 1,082.6 98.1 10.0 36.6 72.5 35.9 98.1 3.7% Operating income margin - 6.7% Income from continuing operations before Income Taxes 39.8 74.5 34.7 87.2 Income from continuing operations 21.8 52.8 31.0 142.2 Loss from discontinued operations (3.6) - 1.9 3.3 1.4 73.7 16.3 49.4 33.1 203.1 Earning per share (JPY) 129.47 392.78 US$ (JPY) EURO (JPY) 100.26 134.42 109.84 138.88 Net income attributable to noncontrolling interests Net income Ex-rate Ex-rate impact to Net sales & Operating income - - - - Depreciated by 9.6% Depreciated by 3.3% Net sales：Increased by about 79.7 billion Yen Operating income：Increased by about 15.0 billion Yen Note: The figures related to the data tape business and the blu-ray business, which became discontinued operations in the year ended March 31, 2014, are restated. Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -5- FY March 2015 Results - Passive Components Segment Net Sales 541.2 (Yen billions) 471.7 Net Sales 541.2 billion yen (up 14.7% year on year) Operating Income 37.9 billion yen (up 146.1% year on year) 379.6 ●Ceramic Capacitors ・Both sales and profits increased year on year, particularly due to increased sales for automobile market. ・Profit margins also improved due to increased productivity. 13/3 14/3 15/3 Operating Income 37.9 7.0% 15.4 3.3% 13/3 14/3 -11.1 13/3: FY March 2013 15/3 ●Inductive Devices ・Both sales and profits increased year on year due to the robust sales for automobile market and the ICT market centering on demands for the North American and Chinese smartphone customers and also improved product mix. ●High-frequency Components ・Both sales and profits increased year on year due to strong sales for the ICT market centering on demands for the North American and Chinese smartphone customers and due to increased productivity. ●Piezoelectric Material Products ・Both sales and profits increased year on year due to increased sales of VCMs for camera modules and components for automobiles. Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -6- FY March 2015 Results - Magnetic Application Segment Net Sales (Yen billions) 337.9 364.3 369.2 Net sales 369.2 billion yen (up 1.3% year on year) Operating income 28.7 billion yen (up 2.1% year on year) ● Recording Devices ・Sales increased year on year due to increased sales of HDD suspensions even though shipment volume of HDD heads decreased on a year-on-year basis. ・Profits increased year on year due to improved productivity and the turnaround of product portfolio reflecting growing sales to data centers. 13/3 14/3 15/3 Operating Income 37.1 28.1 ●Magnets ・Sales to the automobile market and ICT market decreased. ・Impairment of metal magnet-related facilities was implemented in 3Q. 28.7 11.0% 7.7% 13/3 14/3 7.8% ●Power Supplies ・Sales increased year on year due to steady sales for the industrial equipment market of products such as semiconductor production equipment and FA equipment. ・Impairment loss in goodwill was implemented in 3Q. 15/3 13/3: FY March 2013 Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -7- FY March 2014 Results - Film Application Segment Net Sales 151.3 (Yen billions) 129.3 102.9 Net sales 151.3 billion yen (up 17.0% year on year) Operating income 24.6 billion yen (up 83.6% year on year) ● Energy Devices (Rechargeable Batteries) 13/3 14/3 15/3 Operating Income 24.6 12.8 13.4 ・Both sales and profits increased year on year due to a growth in sales for new smartphones manufactured by our main customers and the expanded customer portfolio mainly in the Chinese market. 16.3% 12.4% 10.4% 13/3 14/3 15/3 13/3: FY March 2013 Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 -8- FY March 2015 results by Segment FY March 2014 Full Year Results Yen billion FY March 2015 Full Year Results ％ Yen billion Change ％ Yen billion % Capacitors 139.6 14.2 149.0 13.8 9.4 6.7 Inductive devices 140.3 14.3 154.2 14.2 13.9 9.9 Other Passive Components 191.7 19.5 238.0 22.0 46.3 24.2 471.7 47.9 541.2 50.0 69.5 14.7 Recording devices 256.7 26.1 260.5 24.1 3.8 1.5 Other Magnetic Application Products 107.6 10.9 108.7 10.0 1.1 1.0 Magnetic Application Products 364.3 37.0 369.2 34.1 4.9 1.3 Film Application Products 129.3 13.1 151.3 14.0 22.0 17.0 Other 19.3 2.0 20.9 1.9 1.6 8.3 Total 984.5 100.0 1,082.6 100.0 98.1 10.0 Passive Components 15.4 3.3 37.9 7.0 22.5 146.1 Magnetic Application Products 28.1 7.7 28.7 7.8 0.6 2.1 Film Application Products 13.4 10.4 24.6 16.3 11.2 83.6 (3.2) -16.6 0.3 1.4 3.5 - 5.5 91.4 8.4 37.7 70.2 Passive Components Net Sales Operating Income Other Sub total Corporate and eliminations Total Copyright© 2015 TDK Corporation. All rights reserved. 53.7 (17.1) 36.6 3.7 (19.0) 72.5 6.7 TDK Corporation (1.9) 35.9 April 28, 2015 98.1 -9- Breakdown of Operating Income Changes FY March 2014 36.6 billion yen Operating Income FY March 2015 72.5 billion yen +35.9 billion yen (Yen billions) Changes in sales +58.1 Sales price Reduction -53.0 Rationalization, cost reduction +24.8 Benefits from Restructuring +2.9 SG&A expenses increase -11.9 (including gain on sales of assets -0.9) 72.5 Exchange fluctuation (US$=Yen 109.84) +15.0 36.6 Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 10 - FY March 2015 Quarterly Results by Segment (Yen billions) Capacitors Inductive Devices Other Passive Components Net Sales Passive Components Recording Devices Other Magnetic Application Products Magnetic Application Products Film Application Products Other Total Passive Components Operating Income Magnetic Application Products Film Application Products Other Sub total Corporate and Eliminations Total Operating Income margin Ex- US$(JPY) rate EURO(JPY) Copyright© 2015 TDK Corporation. All rights reserved. 4Q of FY March 2014 (A) 3Q of FY March 2015 (B) 4Q of FY March 2015 (C) 36.1 34.9 47.1 37.5 40.3 68.2 37.6 38.4 63.4 118.1 146.1 61.2 28.3 89.5 29.1 5.8 242.5 YoY Change (C)-(A) Yen billions QoQ Change (C)-(B) % Yen billions 1.5 4.2 0.1 0.3 3.5 10.0 (1.9) -4.7 16.3 34.6 (4.8) -7.0 139.4 21.3 18.0 (6.7) -4.6 75.1 26.5 62.6 27.5 1.4 2.3 (12.5) -16.6 101.6 47.4 5.3 300.4 90.1 44.1 6.3 279.9 (0.8) 0.6 -2.8 1.0 0.7 (11.5) 3.8 -11.3 15.0 0.5 51.5 8.6 (3.3) 1.0 -7.0 18.9 37.4 15.4 (20.5) -6.8 0.3 5.4 1.1 (0.8) 6.1 (4.5) 11.9 7.3 9.6 0.1 29.0 (3.8) 8.0 8.3 0.7 13.0 6.1 8.3 754.5 9.4 1.3 0.5 24.3 18.2 298.4 (5.0) (0.5) 1.7 25.2 19.4 0.7% 8.4% 6.9% +6.2pt 102.97 141.12 % 114.25 142.79 17.7 (3.6) -30.3 (1.2) (0.2) -16.4 -2.1 0.4 400.0 (4.7) -16.2 (1.2) (5.8) -23.0 - -1.5pt - - 119.21 134.74 TDK Corporation April 28, 2015 - 11 - Financial Position (Yen billions) Total Assets Total Liabilities Stockholder’s equity (comprehensive income) Stockholder’s equity ratio Cash and cash equivalents, Short-term investments Interest-bearing Debt Net Cash (Yen billions) March End, 2013 March End, 2014 295.6 224.4 Change 2014-2015 1,169.6 589.0 561.2 (159.0) 48.0% 1,239.6 587.3 635.3 (87.1) 51.3% 1,404.3 646.3 738.9 (5.9) 52.6% 164.7 59.0 103.6 81.2 1.3% 224.4 259.5 286.5 27.0 295.6 (71.2) 267.0 (7.5) 268.3 18.2 1.3 25.7 Cash and cash equivalents, Short-term investments 300 March End, 2015 259.5 267.0 Interest-bearing Debt Net cash 286.5 268.3 200 100 (7.5) 0 18.2 (71.2) -100 March End, 2013 Copyright© 2015 TDK Corporation. All rights reserved. March End, 2014 March End, 2015 TDK Corporation April 28, 2015 - 12 - Free Cash Flow Operating cash flow Investment cash flow Free cash flow (Yen billions) 150 142.9 127.3 108.9 100 71.9 50 18.7 15.6 0 -50 (55.4) -100 (90.2) -150 FY March 2013 (Yen billions) FY March 2014 FY March 2013 (127.3) FY March 2015 FY March 2014 FY March 2015 Change 2014-2015 Capital Expenditure 85.6 68.6 102.5 33.9 Depreciation 77.9 83.1 80.2 (2.9) Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 13 - Consolidated Full Year Projections for FY March 2016 and Mid-Term Policy Takehiro Kamigama President and CEO Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 14 - Consolidated Full Year Projections for FY March 2016 Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 15 - FY March 2016 Full Year / Dividend Projections (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 - 74.5 95.0 20.5 27.5% 49.4 65.0 15.6 31.6% 392.78 515.92 - - - - Operating income margin Income from continuing operations before income taxes 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$(JPY) 109.84 115.00 - EURO(JPY) 138.88 130.00 - Dividends (JPY) Ex-rate Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 16 - Projections for FY March 2016 -Image of change in sales (Yen billions) Segment FY March 2015 Full Year Results FY March 2016 Full Year Projections (YoY Change) Passive Components 541.2 +7～+10% Magnetic Application Products 369.2 ±0% Film Application Products 151.3 +25%+α Other 20.9 - Total 1,082.6 1,180.0 Forex assumptions US$(JPY) EURO(JPY) Copyright© 2015 TDK Corporation. All rights reserved. 109.84 138.88 115.00 130.00 TDK Corporation April 28, 2015 - 17 - Points of FY March 2016 Segment The Market Environment and Key Themes Passive Components Share expansion of thin-film and multi-layered products in the ICT and automotive markets (Inductive Devices) Passive Components (High-frequency Components) Passive Components (Piezoelectric Materials) Magnetic Application Products (HDD Heads) Film Application Products (Rechargeable Batteries) Copyright© 2015 TDK Corporation. All rights reserved. Sales growth of small, high performance discrete components (TC-SAW, BAW) as a result of the LTE market expanding Expanded market share of modular products Expansion of the OIS business (increased usage rate among smartphones in China) Unit decrease in the HDD market due to demand for PCs diminishing 551 million units in FY March 2015 ⇒530 million units in FY March 2016 (3.8% decrease) Continued expansion in products for data centers, and improved product mix Continued expansion in demand for polymer batteries as a result of thinner profile mobile devices Customer portfolio expansion TDK Corporation April 28, 2015 - 18 - Mid-Term Policy (FY March 2016 – FY March 2018) Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 19 - Priority Markets, Priority Businesses and New Business Automobile Priority Five Businesses ・Inductive Devices ・High-frequency Components ・Piezoelectric Material Product ・HDD Heads ・Rechargeable Batteries ICT Copyright© 2015 TDK Corporation. All rights reserved. New Business Industrial equipment / Energy TDK Corporation April 28, 2015 - 20 - Sales Growth Projections by Priority Markets Sales ratio for Automobile market to be 30% FY March 2015 FY March 2018 17% ■Automobile ■ICT* 30% ■Industrial & Others ■Consumer *Includes HDD Heads and HDD Suspensions Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 21 - New businesses in growth fields Aim for over 100.0 billion yen or more in sales by FY March 2018 Thin-film components Wearable Healthcare Copyright© 2015 TDK Corporation. All rights reserved. Sensors for automobile and industrial equipment Energy units for automobile and industrial equipment TDK Corporation April 28, 2015 - 22 - Sales Growth of Priority Five Businesses & New Business ■Priority Five Businesses ■New Business ■Others 8% 1% 70% FY March 2015 Copyright© 2015 TDK Corporation. All rights reserved. 74% FY March 2018 Target TDK Corporation April 28, 2015 - 23 - Operating results and mid-term projections (Yen billions) (Yen billions) 1,600 160 Sales (left) Operating Income (Right) 1,400 140 1,200 120 1,000 100 800 80 600 60 400 40 200 20 0 0 12/3 13/3 14/3 15/3 16/3 18/3 *Forex assumptions after FY March 2016 onward ：US$ 115 yen, EURO 130 yen Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 24 - Monozukuri innovation (Zero defect quality) Industrial 4.0 Monitoring network with the sensor and ICT Real time control of manufacturing process Pursuit of zero defects Construct an origin control scheme Big data analyses ⇒ feedback to Monozukuri Monozukuri innovation Inventory control innovation Energy control innovation Implement this innovation to Akita new factory ⇒Roll out to other factories Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 25 - Growth Investment (Yen billions) Total investment over the next 3 years (Mid-Term Business Plan) FY March 2016 Projections Capital Expenditure 350.0～ 400.0 130.0 R&D Investment About 230.0 77.0 ●Construction of new factory buildings in the Akita area ●Production capacity increase in the 5 core businesses ●Investment in new products and new businesses Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 26 - Management Target in Mid-Term Growth Investment • Investment in new products, new businesses, and M&A • Increase production capacity of existing businesses Return to Shareholders • Stabilize or increase dividends through EPS growth • Target a 30% dividend payout ratio FY March 2015 Results FY March 2018 Target Operating Income Margin 6.7% Over 10% ROE 7.2% Over 10% Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 27 - Supplementary Data Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 28 - Quarterly sales and operating income by segment FY March 2014 FY March 2015 2Q 35.1 3Q 34.7 4Q 36.1 Total Capacitors 1Q 33.7 Inductive Devices 35.0 35.5 34.9 34.9 Other Passive Components 48.3 48.8 47.5 47.1 117.0 119.4 117.1 118.1 Recording Devices 60.2 66.3 69.0 61.2 Other Magnetic Application Products 26.0 26.6 26.8 28.3 Magnetic Application Products 86.2 92.9 95.7 89.5 Film Application Products 26.5 32.7 41.0 29.1 Other 4.7 4.4 4.3 5.8 Total 234.4 249.4 258.2 242.5 Passive Components 2.8 6.2 6.1 0.3 Magnetic Application Products 4.6 7.8 10.3 5.4 Film Application Products 2.1 3.3 6.8 1.1 (0.8) (0.8) (0.8) (0.8) 8.7 16.5 22.3 6.1 (4.2) (4.0) (4.4) (4.5) 4.5 12.5 17.9 1.7 98.74 99.02 100.38 128.96 131.11 136.56 Yen billions Net Sales Passive Components Operating Income Other Sub total Corporate and Eliminations Total Ex-rate US$(JPY) EURO(JPY) Copyright© 2015 TDK Corporation. All rights reserved. 1Q 36.5 2Q 37.3 3Q 37.5 4Q 37.6 Total 140.3 191.7 36.7 38.8 40.3 38.4 50.2 56.2 68.2 63.4 154.2 238.0 471.7 256.7 107.7 123.4 132.4 146.1 139.4 59.1 63.7 75.1 62.6 28.0 26.7 26.5 27.5 364.3 129.3 87.1 90.4 101.6 90.1 22.5 37.2 47.4 44.1 19.3 984.5 15.4 4.5 4.8 5.3 6.3 237.5 264.8 300.4 279.9 7.8 9.8 11.9 8.3 28.1 13.4 7.1 8.2 7.3 6.1 0.3 5.2 9.6 9.4 (3.2) 53.7 (0.4) 0.1 0.1 0.5 14.8 23.3 29.0 24.3 (17.1) 36.6 (5.2) (5.0) (3.8) (5.0) 9.6 18.3 25.2 19.4 (19.0) 72.5 102.97 100.26 102.17 103.86 114.25 119.21 109.84 141.12 134.42 140.17 137.77 142.79 134.74 138.88 139.6 TDK Corporation April 28, 2015 149.0 541.2 260.5 108.7 369.2 151.3 20.9 1,082.6 37.9 28.7 24.6 0.3 91.4 - 29 - FY March 2016 Projections and Forex sensitivity Expenses (Yen billions) Capital expenditure 140 R&D 130.0 120 100 Depreciation 102.5 99.7 85.6 80 79.9 68.6 77.4 82.9 80.2 90.0 60 52.6 53.5 12/3 13/3 63.4 70.6 77.0 40 20 0 12/3 13/3 14/3 15/3 16/3 Projections 12/3 133/3 14/3 15/3 16/3 14/3 15/3 Projections 16/3 Projections Forex Sensitivity (impact by 1 (one) yen change) ●US$ : Sales 5.0 billion yen, Operating Income 1.4 billion yen Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 30 - Annual Sales by applications (FY March FY March 2015) 2015) Annual Sales by applications (FY 2012 March‒ 2012 – FY March Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 31 - Passive Components Business AnnualAnnual sales bysales applications Passive Components Business by applications March 2012 ‒ FY March 2015) (FY March(FY 2012– FY March 2015) Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 32 - Quarterly sales applications (1Q of FY March 2014 ‒ 4Q of FY March 2015) Quarterly sales byby applications (1Q of FY March 2014 –4Q of FY March 2015) Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 33 - Passive Components Business quarterly sales bysales applications Passive Components Business quarterly by applications FY March 2014 ‒ 4Q of FY March 2015) (1Q of(1Q FY of March 2014 –4Q of FY March 2015) Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 34 - Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 35 - Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 36 - 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© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 37 - Text data including Q&A of performance briefing will be uploaded on following site http://www.global.tdk.com/ir/ir_events/conference/2015/4q_1.htm Copyright© 2015 TDK Corporation. All rights reserved. TDK Corporation April 28, 2015 - 38 -