Performance Briefings Fiscal Year March, 2013 TDK Corporation April 26, 2013 Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -1- ◆Consolidated Full Year Results of FY March, 2013 Consolidated Full Year Projections of FY March, 2014 Takehiro Kamigama President and CEO ◆Consolidated Full Year Results of FY March, 2013 Consolidated 4Q Results of FY March, 2013 Takakazu Momozuka Corporate Officer, General Manger of Finance & Accounting Department ◆Passive Components Business Hiroyuki Uemura Executive Vice President ◆Recording Device Business Shigenao Ishiguro General Manager of Data Storage & Thin Film Technology Components BG Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -2- Consolidated Full Year Results of FY March, 2013 Consolidated Full Year Projections of FY March, 2014 Takehiro Kamigama President and CEO Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -3- Consolidated Full Year Results of FY March, 2013 (Yen billions） Net Sales FY March 2012 Full Year Results FY March 2013 Full Year Results (2011.4.1-2012.3.31) (2012.4.1-2013.3.31) Change Yen billions % 814.5 851.6 37.1 4.6 18.7 21.6 3.0 15.8 Operating Income Margin 2.3% 2.5% 0.2 pt Income from Continuing Operations before Income Taxes 12.2 18.9 6.6 54.0 Net Income -2.5 1.2 3.6 - -19.06 9.50 Operating Income Earning Per Share (JPY) Ex-rate US$ Yen 79.07 Yen 83.03 EURO Yen 109.06 Yen 107.05 Ex-rate impact to Net sales & Operating Income Copyright© 2013 TDK Corporation. All rights reserved. - - - Depreciated by 5.0% Appreciated by 1.8% Net sales：Increased about 32.4 billion Yen Operating income：Increased about 4.1 billion Yen Performance Briefings Fiscal Year March, 2013 April 26, 2013 -4- Review of FY March 2013 ◆Consolidated sales up 4.6%, operating income up 15.8% year on year Significant downward revision to initial projections two consecutive fiscal year Sales of passive components for communications market were below our expectations “Sales of Industrial equipment and others” were down 11.8% year on year (*) • Weak industrial equipment market • Sales of passive components, magnet and power supply were decreased Reevaluation of metal magnet inventory due to rare earth material price down HDD market was much softer than our expectations ◆Restructuring for solid earning base and growth Completed restructuring centered on passive components business as planned ◆Year-end dividend : ¥30 (same as projections on Jan. 31) Combined with the interim dividend of ¥40 (actual), the planned annual dividend will be ¥70 *) Sales transition by market applications are listed on page 25-28 Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -5- Full Year Projections of FY March 2014 FY March 2013 Full Year Results (JPY billion） FY March 2014 Full Year Projections Change JPY billion % 851.6 930.0 78.4 9.2 21.6 30.0 8.4 38.9 Operating Income Margin 2.5% 3.2% 0.7pt - Net income from continuing operations before income taxes 18.9 28.0 9.1 48.1 Net Income 1.2 13.0 11.8 983.3 Earning Per Share (JPY) 9.50 103.34 - - - - Net Sales Operating Income Devidneds (JPY) Ex-rate 1st half :40 (results) 2nd half :30 (projections) Annual: 70 (projections) US$ EURO Copyright© 2013 TDK Corporation. All rights reserved. Yen 83.03 Yen 107.05 1st half :30 (projections) 2nd half :40 (projections) Annual: 70 (projections) Yen 90.00 Yen 118.00 Performance Briefings Fiscal Year March, 2013 - April 26, 2013 -6- Points of business activities in FY March 2014 ●Road to the target ●Establishment of strong business base for growth ●Growth scenario Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -7- Road to the target Implemented structural reform to respond to changes in the business environment (FY March 2012 – FY March 2014) zTo optimize business portfolio zTo optimize production bases zTo improve cost structure zTo prioritize the allocation of business resources for growth area Realize the target (FY March 2015 onward) •Exit non-core business •Further integrate bases worldwide (Targeting bases not already announced for integration) •Sites consolidation of passive components in Japan •Sold OLED business •Sold unemployed assets •Reduced employees worldwide Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -8- Establishment of strong business base for growth FY March 2013：Implemented restructuring centered on passive components business FY March 2014：Final stage in business portfolio optimization and restructuring Promote business portfolio review Optimize production bases ・To withdraw or sell Blu-ray Disc business (by the end of March in 2014) ・To continue streamlining other business and product ・Further integration of its’ bases worldwide Projected benefits from these actions 8.0 billion yen (FY March 2015) (Targeting bases not already announced for integration) ・To optimize direct and indirect cost etc. To spend 10.0 billion yen for above mentioned actions in FY March 2014 Further review of cost structure To concentrate management resources on growing market and core business Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 -9- Growth Scenario points of each segment To concentrate management resources on growing market and core business Passive components Recording devices (Magnet application products) TDK position this business as center of growth strategy and revitalize this business for pillar of profit of the company ・High frequency components for communications equipment such as smartphone to be on growth track again ・Growth of inductive device continues centered on the communications and automotive market ・Ceramic capacitors generates stable earnings after completion of the restructuring In response to the change in the HDD industry For a stable business utilizing the position as an exclusive HDD head specialized manufacturer ・To strengthen R&D for heads integrated in HDD for data center ・To accelerate mass production of TAMR (Thermal Assisted Magnetic Recording) Head ・To develop electronic components by applying HDD head technology With vertical integration business model Rechargeable batteries (Film application products) To next growth stage ・Vertical integration from materials, cell, packaging (*1) ・To expand functional film, separator business by applying the technology developed in the magnetic tape business(*2) ・To accelerate in-house development of electrode material ・To cultivate new customers in addition to smartphone and tablet manufactures *1：Acquired Navitasys Technology Limited in 2Q of FY March 2013 (Packaging) *2：Acquired 66% stake in NITTO DENKO (SHANGHAI) ELECTRO-ENERGY CO.,LTD.in November in 2011 and have its shares 77% as of March 31 in 2013 (Separator) Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 10 - Consolidated Full Year Results of FY March, 2013 Consolidated 4Q Results of FY March, 2013 Takakazu Momozuka Corporate Officer, General Manager of Finance & Accounting Department Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 11 - Results of FY March 2013 by segment FY March 2012 Full Year Results Yen billion ％ Capacitors 132.4 16.3 Inductive devices 121.2 128.0 FY March 2013 Full Year Results Yen billion ％ Change Yen billion % 13.9 (14.4) -10.9 14.9 118.0 119.6 14.0 (1.6) -1.3 15.7 142.1 16.7 14.0 11.0 381.6 46.9 44.6 (2.0) -0.5 25.6 27.4 24.8 11.9 Other Magnetic Application Products 208.7 107.7 379.6 233.5 13.2 104.4 12.3 (3.3) -3.0 Magnetic Application Products 316.4 38.8 39.7 21.5 6.8 11.4 13.2 19.9 21.5 Other 92.7 23.8 337.9 112.6 2.9 21.4 2.5 (2.4) -10.1 Total 814.5 100.0 Other Passive Components Net Sales Passive Components Recording devices Applied Film Products Passive Components Operating Income Magnetic Application Products Applied Film Products Other Sub total Corporate and eliminations Total Copyright© 2013 TDK Corporation. All rights reserved. (6.6) 39.0 -1.7 851.6 (11.1) 12.3 37.1 11.0 (1.9) -5.0 6.3 6.7 12.4 (1.8) 11.0 6.2 98.5 -8.3 3.1 - 4.2 36.7 4.3 2.8 8.4 2.3 (15.0) 21.6 (4.8) 33.8 -20.3 (15.1) 18.7 Performance Briefings Fiscal Year March, 2013 100.0 37.1 4.6 -2.9 (4.4) - 0.1 2.5 3.0 April 26, 2013 15.8 - 12 - Breakdown of Operating Income Changes FY March 2012 18.7 billion yen Operating Income Changes in sales (including utilization, products mix) -15.4 Decrease in negative impact by change of pension plan +3.1 Benefits from restructuring +12.9 Rationalization, cost reduction +16.7 SG&A expenses Decrease (including restructuring Cost) +6.5 FY March 2013 21.6 billion yen +3.0 billion yen Decrease in negative impact by earthquake +3.6 Insurance gain (Thai flooding) +6.7 Decrease in negative impact by Thai flooding +4.9 Decrease in gain of land sales -6.7 FY March 2013 21.6 FY March 2012 18.7 Exchange fluctuation （US$=Yen 83.03) +4.1 Rare earth material price fluctuation -7.4 Sales price reduction -26.1 Copyright© 2013 TDK Corporation. All rights reserved. (Yen billions) Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 13 - Financial Position （JPY billion） March End, 2012 March End, 2013 Change 1,072.8 1,169.6 96.8 Total Liability 560.8 589.0 28.2 Stockholders's Equity 498.2 561.2 63.0 (comprehensive income) (230.8) (159.0) 71.8 Stockholders's Equity ratio 46.4% 48.0% 1.6pt Cash and Cash equivalents 173.4 223.5 50.1 Interest-bearing Debt 272.8 295.6 22.8 Net Cash (99.4) (72.1) 27.3 Total Asset Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 14 - Segment Information (4Q of FY2012 vs. 4Q of FY2013, 3Q vs. 4Q） 4Q of FY 2013 Jan 1- Mar 31, 2013 （C） YoY Change （Ｃ）－（Ａ） QoQ Change （Ｃ）－（Ｂ） 4Q of FY 2012 Jan 1- Mar 31, 2012 （Ａ） 3Q of FY 2013 Oct 1- Dec 31, 2012 （B） Capacitor 31.6 26.6 30.7 (0.9) -2.8 4.1 15.4 Inductive Device 28.4 30.6 31.2 2.8 9.9 0.6 2.0 Other Passive Comp 30.5 36.0 42.5 12.0 39.3 6.5 18.1 90.5 93.1 104.4 13.9 15.4 11.3 12.1 Recording Divices 58.2 60.2 (0.6) -1.0 (2.6) -4.3 Other Magnetic Application Products 24.0 84.2 33.0 5.0 (5.2) -17.5 0.5 2.1 -6.5 (2.1) -2.5 4.4 18.2 (4.4) -13.3 0.8 17.4 0.4 8.0 Total 207.0 215.4 82.1 28.6 5.4 220.5 (5.7) Other 29.7 87.8 24.2 4.6 57.6 24.5 13.5 6.5 5.1 2.4 Passive Components -13.2 -1.8 (3.9) 9.3 - (2.1) - Magnetic Application Products 14.0 -0.5 7.5 3.6 (12.2) -87.1 (5.7) -76.0 2.2 - (1.9) -52.8 -2.6 -2.3 -0.9 -3.2 -0.6 8.8 -3.7 5.1 1.8 1.7 (0.3) 2.3 - 0.3 - (0.8) (3.0) (3.8) 1.5 - (9.6) - (2.1) - 0.7 - (0.6) - (8.9) - -1.5% 2.4% -1.7% -0.2pt - -4.1pt - JPY billion Net Sales Passive Components Magnetic Application Products Film Application Products Operating Income Film Application Products Other Sub total Corporate and Eliminations Total Operating Income margin Ex- US$ rate EURO Copyright© 2013 TDK Corporation. All rights reserved. Yen 79.27 Yen 81.17 Yen 92.20 Yen 103.94 Yen 105.28 Yen 121.74 Performance Briefings Fiscal Year March, 2013 Yen billions % Yen billions April 26, 2013 % - 15 - Projections for FY March 2014 – Image of change in sales Segment FY March 2013 Results FY March 2014 Projections (vs. FY March 2013) Main factor and premise of projections Increase in sales of high frequency components, inductive devices, circuit protection components for information and communication equipment Gradual recovery of aluminum and film capacitors for industrial equipment market Stable increase of sales for automobile market Passive components 379.6 +15～+20% Magnetic application products 337.9 -2～0% Film application products 112.6 +15～+20% Other 21.4 - Total 851.6 930.0 Mainly due to maturation of HDD market Increase in sales of secondary battery and functional film (ITO film) for information and communication market - Forex assumption Forex $/Yen Forex EURO/Yen 83.03 90.00 107.05 118.00 Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 16 - Passive Components Business Hiroyuki Uemura Executive Vice President Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 17 - Passive components business - points of main products Ceramic Capacitor Completed sites consolidation worldwide in FY March 2013 Established stable earning structure by restructuring effects To shift resources to growth strategy in FY March 2014 Automotive market is the highest prioritized market To develop customized products for target applications utilizing key technologies cultivated through automotive business To launch new products as mentioned below To develop components for ultra-miniatualized power supply module collaborating with coil technology セラミック Capacitor コンデンサ セラミックコンデンサ Customized products New MLCC processed for highdensity mounting 50% Less Mounting space Mega Cap.: strong for PCB bending Copyright© 2013 TDK Corporation. All rights reserved. Embedded ultra-low profile MLCC Performance Briefings Fiscal Year March, 2013 Mounting space New SRCT series April 26, 2013 - 18 - Passive components business - points of main products To improve profitability and increase sales by launching module and SAW device Production capacity of SAW filter (including duplexer) is being increased High Frequency Components ・To respond to recent order increase ・To respond to demand increase (both discrete and module) in the medium term To accelerate design-in activities for next-generation communication technology (such as carrier aggregation) To launch thin-film filter To optimize customers’ portpholio To maximize TDK group synergy ・Optimal allocatoin of development resources/optimization of production line placement FEMiD (example) Components built in the module SAW Duplexer x4 SAW/BAW Duplexer x1 SAW Filter x2 Swich x1 Passive components for matching x8 Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 19 - Passive components business - points of main products Full product line-up of power inductors ・Stable production by optimization of customers’ portfolio ・To expand production capacity and sales of metal power inductors ・To provide flexible solutions with full range of products to customers (Thin film, Wire-wound, Multi layer processes) Inductive Device To develop & expand biz of high frequency inductors To expand production capacity for responding to strong market requirement of VCM(*1), OIS(*2) for smart phone camera module Piezo Device Power inductors （Wire wound coil） VCM （Thin film coil） *1：Voice Coil Motor *2：Optical Image Stabilizer Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 20 - Recording Device Business Shigenao Ishiguro General Manager of Data Storage & Thin Film Technology Components BG Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 21 - Recording Device Business ●HDD market FY March 2013 (TDK’s forecast ) : About 570 million units FY March 2014 (TDK’s forecast ) : About 530 million units ●Shipment index Recording Device Sales (Left, including HDD Head (HGA) and HDD Suspention) HDD Head Shipment Index (Right) (JPY billion) 60.0 40.0 55.2 100 53.3 42.0 58.2 110 104 59.9 109 55.8 98 60.2 57.6 Projection 120index) (shipment 88 107 84 20.0 (shipment index) 77 0.0 Forex $/¥ 1Q 81.74 2Q 3Q 4Q 77.96 77.35 79.27 FY March 2012 Copyright© 2013 TDK Corporation. All rights reserved. 1Q 80.27 2Q 3Q 4Q 78.67 81.17 92.20 FY March 2013 Performance Briefings Fiscal Year March, 2013 110 100 90 80 70 60 50 1Q 90.00 FY March 2014 April 26, 2013 - 22 - Supplementary Data Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 23 - Quarterly sales and operating income by segment FY March 2012 Yen billions Net Sales Capacitors 36.1 34.2 3Q 30.6 31.4 29.2 3Q 26.6 Inductive Devices 32.9 31.4 28.6 28.4 121.2 28.2 29.6 30.6 31.2 119.6 Other Passive Components 32.8 34.4 30.4 30.5 128.0 31.8 31.7 36.0 42.5 142.1 101.7 99.9 89.5 90.5 381.6 91.5 90.6 93.1 104.4 379.6 Recording Devices 55.2 53.3 42.0 58.2 208.7 59.9 55.8 60.2 57.6 233.5 Other Magnetic Application Products 24.4 27.7 26.0 29.7 107.7 28.3 27.6 24.0 24.5 104.4 Magnetic Application Products 79.6 81.0 68.0 87.8 316.4 88.2 83.4 84.2 82.1 337.9 Film Application Products 18.0 22.4 28.2 24.2 92.7 23.2 27.7 33.0 28.6 112.6 6.7 6.6 5.7 4.6 23.8 5.8 5.2 5.0 5.4 21.4 206.2 209.9 191.3 207.0 814.5 208.7 207.0 215.4 220.5 851.6 Passive Components 3.8 1.3 1.5 (13.2) (6.6) (2.9) (2.5) (1.8) (3.9) (11.1) Magnetic Application Products 8.6 9.5 7.0 14.0 39.0 14.6 13.2 7.5 1.8 37.1 Film Application Products 1.2 2.6 2.9 (0.5) 6.3 2.1 5.0 3.6 1.7 12.4 (0.4) (1.2) (0.7) (2.6) (4.8) (0.4) (0.5) (0.6) (0.3) (1.8) 13.2 12.2 10.8 (2.3) 33.8 13.4 15.2 8.8 (0.8) 36.7 (7.2) (3.7) (3.4) (0.9) (15.1) (4.2) (4.1) (3.7) (3.0) (15.0) 6.0 8.5 7.4 (3.2) 18.7 9.2 5.1 (3.8) 21.6 81.74 77.96 77.35 79.27 79.07 80.27 78.67 81.17 92.20 83.03 117.62 110.42 104.30 103.94 109.06 103.18 98.28 105.28 121.74 107.05 Passive Components Other Total Operating Income Other Sub-total Corporate and Eliminations Total Ex-rate ￥/USD ￥/EURO 1Q Copyright© 2013 TDK Corporation. All rights reserved. 2Q FY March 2013 4Q 31.6 Total 132.4 1Q Performance Briefings Fiscal Year March, 2013 2Q 11.2 April 26, 2013 4Q 30.7 Total 118.0 - 24 - Annual Sales by applications Copyright© 2013 TDK Corporation. All rights reserved. (FY2009/Mar – FY2013/Mar) Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 25 - Passive Components Business Annual sales by applications (FY2009/Mar –FY2013/Mar) Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 26 - Quarterly sales by applications Copyright© 2013 TDK Corporation. All rights reserved. (1Q/FY2012/Mar –4Q/FY2013/Mar) Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 27 - Passive Components Business quarterly sales by applications (1Q/FY2012/Mar –4Q/FY2013/Mar) Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 28 - Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 29 - Copyright© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 30 - 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 TDK Group in light of information currently available to it, and contain known and unknown risks, uncertainties and other factors. TDK Group therefore wishes to caution readers that, being subject to risks, uncertainties and other factors, 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 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 TDK Group operates are highly susceptible to rapid changes. Risks, uncertainties and other factors that can have significant effects on TDK Group include, but are 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© 2013 TDK Corporation. All rights reserved. Performance Briefings Fiscal Year March, 2013 April 26, 2013 - 31 - Text data including Q&A of performance briefing will be uploaded on following site http://www.global.tdk.com/ir/ir_events/conference/2013/4q_1.htm