2nd Quarter Results of FY2008, ended March 31, 2009 1 Contents Financial Financial review review Outlook Outlook 2 Downward revision of our performance ➢ On October 24, we made a downward revision of the original plan for our performance for the whole fiscal year announced on May 8. ➢ The revision is mainly due to the following two reasons. - Downward revision of sales due to a decrease in orders from customers in major markets. - A decrease in profit ratio due to price drops & steep rise in material cost. (JPY million) FY 2008, the year ending March 2009 Full year Forecast (disclosed on October 24) Net sales Operating income Net income 68,000 1,300 900 Full year Original forecast Diff. Rate of change 79,000 ▲ 11,000 ▲ 13.9% 3,900 ▲ 2,600 ▲ 66.7% 2,500 ▲ 1,600 ▲ 64.0% *1st half Results 35,625 937 698 *2nd half Forecast (disclosed on October 24) 32,375 363 202 (Note) * 1st half of FY 2008 : April 1, 2008 to September 30, 2008 (Note) * 2nd half of FY 2008 : October 1, 2008 to March 31, 2009 3 Financial highlights 2007/1H Results Net sales Cost of sales S.G. & A. expenses Operating income Operating income ratio Non-operating income & loss Ordinary income Extraordinary losses Net income Income per share 2008/1H Results (JPY million) YOY Diff. % 39,550 35,625 ▲ 3,925 28,124 28,442 +318 +1.1% 5,729 6,245 +516 +9.0% ▲ 9.9% 5,696 14.4% ▲ 32 937 ▲ 4,759 ▲ 83.5% 2.6% +120 88 5,664 1,025 ▲ 4,639 ▲ 81.9% ▲ 210 3,962 ¥198.6 ▲ 138 +72 - 698 ▲ 3,264 ▲ 82.4% ¥35.6 ▲¥163.0 - Capital expenditures 4,154 7,767 +3,613 +87.0% Depreciation 3,541 4,690 +1,149 +32.4% R&D expenses 1,095 1,278 +183 +16.7% 4 Trend of quarterly results Net sales Operating income Ordinary income Net income 25,000 5,000 Sales (JPY million) 20,000 18,222 18,438 19,167 20,383 20,829 17,719 17,621 18,004 16,678 4,000 15,000 3,000 10,000 2,000 5,000 1,000 0 0 2006 Net sales Operating income Ordinary income Net income Income (JPY million) 19,969 2007 2008 2Q 3Q 4Q 2Q 3Q 4Q 1Q 1Q 1Q 2Q 16,678 18,222 19,969 18,438 19,167 20,383 20,829 17,719 17,621 18,004 1,938 2,271 3,146 2,072 2,801 2,895 2,953 995 776 161 1,793 1,849 3,022 1,887 2,768 2,896 2,956 1,114 693 332 1,278 829 1,699 910 1,781 2,181 1,920 622 378 320 Operating income ratio 11.6% 12.5% 15.8% 11.2% 14.6% 14.2% 14.2% 5.6% 4.4% 0.9% 5 Trend of half-year results Net sales Operating income Ordinary income Net income 50,000 10,000 Sales (JPY million) 33,136 39,550 38,548 8,000 35,625 34,900 32,375 30,506 30,000 6,000 20,000 4,000 10,000 2,000 0 0 2005 1H Net sales Operating income Ordinary income Net income Operating income ratio Income (JPY million) 38,407 40,000 2006 2H 1H 2007 2H 1H 2008 2H 1H 2H (Forcast) 30,506 2,094 2,057 1,558 33,136 3,176 3,126 1,699 34,900 4,209 3,642 2,107 38,407 5,218 4,909 2,609 39,550 5,696 5,664 3,962 38,548 3,948 4,070 2,542 35,625 937 1,025 698 32,375 363 475 202 6.9% 9.6% 12.1% 13.6% 14.4% 10.2% 2.6% 1.1% 6 Sales breakdown by market segment 100% Others 80% Automotive electronics 5.2% 5.0% 4.9% 5.0% 5% 18.1% 17.3% 17.2% 18.0% 17.6% 17% 5% 7% 33% 31% 31.1% 31.1% 31.3% 40% 10.4% 8.4% 8.6% 9.4% 12.1% 13% 20% 34.6% 38.0% 37.9% 34.7% 34.6% 34% 60% Audiovisual/ Office automation Fixed radio communication Mobile communications 5.8% 33.0% 30.7% 16% 39% 0% 2005/3 Mobile communications Fixed radio communication Audiovisual/ Office automation Automotive electronics Others 34.6% 10.4% 31.1% 18.1% 5.8% 2006/3 38.0% 8.4% 31.1% 17.3% 5.2% 2007/3 37.9% 8.6% 31.3% 17.2% 5.0% 2008/3 34.7% 9.4% 33.0% 18.0% 4.9% 2008/9 34.6% 12.1% 30.7% 17.6% 5.0% World Wide (presumed (Forecast) by NDK) 2009/3 34% 13% 31% 17% 5% 39% 16% 33% 7% 5% 7 Sales breakdown by product segment 100% 8% 7% 6% 7% 10% 8% 9% 9% 38% 42% 42% 42% 26% 29% 31% 31% 16% 18% 14% 12% 11% 2005/3 2006/3 2007/3 2008/3 2008/9 12% Others 80% 10% 60% 39% Optical products Crystal oscillators Crystal units for consumer use Crystal units for industrial use 40% 23% 20% 0% Crystal units for industrial use Crystal units for consumer use Crystal oscillators Optical products Others 16% 23% 39% 10% 12% 18% 26% 38% 10% 8% 14% 29% 42% 8% 7% 12% 31% 42% 9% 6% 11% 31% 42% 9% 7% 8 Break-even analysis (JPY million) Sales Break-even point Fixed cost ratio Variable cost ratio 80,000 70% 60,000 60% 40,000 20,000 53.6% 41.9% 52.0% 40.5% 54.7% 51.9% 50.4% 50.9% 42.7% 39.8% 36.7% 30% 2004/3 Mergin of safety ratio 40% 36.7% 0 Sales Variable cost ratio Marginal cost ratio Fixed cost Fixed cost ratio Break-even point 50% 55,899 53.6% 46.4% 23,444 41.9% 50,563 9.5% 2005/3 60,695 52.0% 48.0% 24,610 40.5% 51,305 15.5% 2006/3 63,642 51.9% 48.1% 25,309 39.8% 52,672 17.2% 2007/3 73,307 50.4% 49.6% 26,896 36.7% 54,280 26.0% 2008/3 78,098 50.9% 49.1% 28,679 36.7% 58,445 25.2% 2008/9 35,625 54.7% 45.3% 15,216 42.7% 33,558 5.8% 9 R&D expenses / Capital expenditures Trend of R&D expenses (JPY million) Trend of capital expenditures R&D expenses Ratio of R&D expenses to net sales 3,000 (JPY million) 6% 2,464 2,500 14,000 12,755 2,600 2,336 2,189 5% 2,310 12,000 11,000 10,530 10,305 10,000 2,000 1,814 4% 4.1% 3.8% 3.7% 1,500 8,000 3% 3.2% 3.0% 3.0% 6,345 6,431 6,000 1,000 1H Results 7,767 2% 4,000 1H Results 1,278 1% 500 0 2,000 0% 2004/4 2005/3 2006/3 2007/3 2008/3 2009/3 (Forecast) 0 2004/4 2005/3 2006/3 2007/3 2009/3 2008/3 (Forecast) R&D expenses 1,814 2,464 2,336 2,189 2,310 2,600 6,431 10,305 6,345 10,530 12,755 11,000 Ratio of R&D expenses to net sales Capital expenditures 3.2% 4.1% 3.7% 3.0% 3.0% 3.8% Depreciation 6,237 6,318 7,054 7,462 7,787 10,000 10 Cash Flow (JPY million) 2007/1H Results 2008/1H Results Diff. Cash flow from operating activities (1) 6,075 3,461 ▲ 2,614 Cash flow from investing activities (2) ▲ 4,398 ▲ 8,449 ▲ 4,051 1,677 ▲ 4,988 ▲ 6,665 ▲ 2,423 4,608 7,031 14,772 11,070 ▲ 3,702 Free cash flow (1)+(2) Cash flow from financing activities Cash & cash equivalents at end of year Breakdown of free cash flow Increase in free cash flow Depreciation 4,690 Net Capital income expenditures 698 ▲7,767 Decrease in free cash flow Free cash flow Working ▲4,988 capital ▲2,609 11 Contents Financial Financial review review Outlook Outlook 1. Industry trends (QIAJ) 2. Trends of strategic markets 3. Business forecast 4. New products & new markets 5. Toward the new era 12 1. Industry trends (QIAJ) (1) Production volume of crystal devices 120 Annual trend of production volume (100 million pcs) Revised on Sept. 29 105⇒103 100 60 59 51 47 120 100 90 Optical product 光デバイス Crystal filter 水晶フィルタ 80 Clock oscillator ｸﾛｯｸ用水晶発振器 64 60 53 43 37 40 (100 million pcs) 103 75 80 Half-year trend 47 49 54 Consumer crystal unit 民生用水晶振動子 40 Crystal unit for auto 自動車用水晶振動子 Quartz crystal tuning fork 音叉型水晶振動子 20 20 Industrial oscillator 産業用水晶発振器 産業用水晶振動子 Industrial crystal unit 0 0 '00 '01 '02 '03 (Year ended March 31) '04 '05 '06 '07 08 Forecast 予測 '07 '07 '08 '08 2H 1H 下期 2H 上期 1H 下期 上期 Forecast ** Although the QIAJ has been compiling surface acoustic wave (SAW) device data since 2002, we are not including SAW device figures. This is because during compilation of the data, the QIAJ includes only SAW devices whose board material is quartz crystal (In fact, the major material is Lithium niobate), and therefore the data do not reflect the overall SAW device trend. * SAW and OUT-OUT are not included (QIAJ: Quartz Crystal Industry Association of Japan) 13 1. Industry trends (QIAJ) (2) Production value and unit price of crystal devices Annual trends of production value & unit price (index) (JPY 100 million) 3,000 2,817 Revised on Sept. 29 2800⇒2565 (Index) 1,908 2,000 2,034 74 120 120 100 2,500 100 光デバイス Optical product 水晶フィルタ Crystal filter 2,178 80 84 1,500 (Index) 3,000 2,565 2,182 100 1,724 (JPY 100 million) 2,642 2,477 2,500 Half-year trend 2,000 80 ｸﾛｯｸ用水晶発振器 Clock oscillator 産業用水晶発振器 Industrial oscillator 70 66 61 60 1,500 40 1,000 20 500 1,311 1,331 60 1,262 1,303 60 53 1,000 45 500 55 51 47 44 40 民生用水晶振動子 Consumer crystal unit 自動車用水晶振動子 Crystal unit for auto 音叉型水晶振動子 Quartz crystal tuning fork 20 産業用水晶振動子 Industrial crystal unit unit price index 単価指数 0 0 '00 '01 '02 '03 (Year ended March 31) '04 '05 '06 '07 08 Forecast 予測 0 0 '07 1H 上期 '07 2H 下期 Index: Year2000=100 '08 '08 2H 1H 上期 下期 予測 Forecast ** Although the QIAJ has been compiling surface acoustic wave (SAW) device data since 2002, we are not including SAW device figures. This is because during compilation of the data, the QIAJ includes only SAW devices whose board material is quartz crystal (In fact, the major material is Lithium niobate), and therefore the data do not reflect the overall SAW device trend. * SAW and OUT-OUT are not included (QIAJ: Quartz Crystal Industry Association of Japan) 14 2. Summary of the trends of the strategic markets Mobile Mobile communications communications market market AV・OA AV・OAmarket market ➢ 2007⇒2008⇒2009: Although the year-on-year growth rate of the production volume of mobile phones will be below the originally predicted figure, the actual production volume will not fall below the previous year’s level. ➢ 2008⇒2009: Crystal products will increase on a volume basis. However, due to price drops & decrease in the ratio of TCXO for PLL arising from an increase in the ratio of low-end models, the increase in value will be slight. ➢ 2007⇒2008⇒2009: The year-on-year growth rate of the production volume of AV・OA devices will fall below the originally predicted figure. (Recovery will be made from 2010). ➢ 2008⇒2009: The production volume of crystal products will stay flat, and the production value will decrease both in 2008 & 2009. Automotive Automotive applications applications market market ➢ The production volume of automobiles will fall below the previous year’s level in 2008 & 2009. Recovery will be made from 2010 onwards. ➢ Due to an increase in new car electronics devices & hybrid cars, the volume of crystal devices will increase from 2010 onwards. Fixed Fixedradio radio communications communications market market ➢ Unlike other markets, year-on-year growth will occur in 2008 in the fixed radio communications market, due to an increase in mobile phone base stations in emerging countries as well as an increase in optical communications devices arising from a rise in traffic volume despite the recession. Although the growth will level off in 2009, this market will grow again from 2010 onwards. 15 3. Business forecast Sales breakdown by market segment Others Automotive electronics Audiovisual/ Office automation Fixed radio communication Mobile communications (JPY million) 2008/3 Net sales Operating income Operating income ratio Ordinary income Net income Income per share Capital expenditures 2009/3 (JPY billion) YOY Diff. % Results Forecast 78,098 68,000 ▲ 10,098 ▲ 12.9% 9,644 12.3% 9,734 1,300 ▲ 8,344 ▲ 86.5% 1.9% 1,500 ▲ 8,234 ▲ 84.6% 6,504 900 ▲ 5,604 ▲ 86.2% ¥326.2 ¥45.9 ▲¥280.4 ▲ 85.9% 12,754 11,000 ▲ 1,754 ▲ 13.8% Depreciation 7,786 10,000 +2,214 +28.4% R&D expenses 2,310 2,600 +290 +12.6% 80 4.9% 5.0% 60 17.2% 18.0% 5% 17% 31.3% 33.0% 31% 40 8.6% 9.4% 37.9% 34.7% 34% 2007/3 2008/3 2009/3 (Forecast) 13% 20 0 16 4. Efforts for the new markets (1) Development of new products ➢ Promoting R & D of market-leading new products May 2008 Developed a mechanical 3D linear probe used in medical ultrasonic diagnostic equipment for obtaining 3D/4D image of mammary gland etc. August 2008 Developed an ultra small (the world’s smallest) low-loss SAW filter for one-segment broadcasting September 2008 Developed the 2016type (the world’s smallest) TCXO for GPS September 2008 Developed a high precision 8-output reference signal source with built-in-OCXO September 2008 Developed a high-performance low phase noise synthesizer 17 4. Efforts for the new markets (2) CHITOSE technical center ➢ Developing the world’s No.1 new technologies and launching new businesses (1) Microwave synthesizer ➢ High performance synthesizers for digital terrestrial broadcasting are now on sale. Achieved ultra high performance, low noise and high reliability Delivered 5000units to a major broadcasting equipment manufacturer for use in relay equipment (From September 2008). Achieved 100% market share (Dominated the market and the establishment of the No.1 brand is underway.) ➢ Application to measuring instruments (Commencement of sales of a signal generator for industrial use) ➢ Exclusive orders for synthesizers for next generation PHS base stations (Full scale sales from 2009) (2) Biosensor ➢ Joint press release with AIST. Presentation at an academic conference related to biosensor (Real time measurement of highly sensitive immune reaction captured great attention since the presentation in May 2008. Selling to universities & research institutes. ➢ Ultra high sensitivity twin sensor NAPICOS released in June 2008 （Published in a newspaper) ➢ Joint development of the biosensor with a major manufacturer for commercialization (Toward commercialization in 2008) (3) High-performance wireless transceiver ➢ Developed a new wireless system （100 times sensitive & 10,000 times resistant) Compatible with various wireless systems. Demonstration to major customers (Mid & small size plant monitoring system) ➢ FY2008 Commercialization of a wireless network system 18 4. Efforts for the new markets (3) Microwave synthesizer High frequency synthesizer Broadcasting Broadcastingmarket market Relay Relaystations stationsfor fordigital digital terrestrial terrestrialbroadcasting broadcasting High performance synthesizer for digital terrestrial broadcasting Base Basestations stationsmarket market ・・Base Base stations stationsfor fornext next generation mobile generation mobilephones phones ・・Base Base stations for industrial stations for industrialuse use Base stations for mobile phones Base stations for industrial use Gap filler Measuring Measuringinstrument instrumentmarket market Repeater Transmitting station Weak signal area Repeater service area ・・Standard Standard signal signalgenerator generator ・・Synthesizer Synthesizer for measuring for measuring instruments instruments Signal generator Synthesizer for measuring instruments Repeater 19 4. Efforts for the new markets (4) Biosensor ➢ Developed a QCM analyzer (product name: NAPiCOS) and peripheral devices. ➢ Various fields such as immune reaction, biochemistry, molecular biology, clinical inspection, food & environment will be covered. QCM twin sensor Food Food inspection inspection Simplified immunologic measurement equipment - Antibacterial agent detection - Allergy source detection Analysis/ Analysis/Clinical Clinical inspection inspection Medical biosensor Bio-sensing measurement system Environmental Environmental inspection inspection Heavy metal (in soil) analyzer 20 4. Efforts for the new markets (5) Multifunctional wireless transceiver ➢ A standard for faint radio wave for car keyless entry ➢ Developed crystal products-based modules whose communication distance is 150meter (Conventional ratio: 5 times) Wireless sensor network Valve position Home system Abnormal value report Fire alarm Various data Data server Car solution Switch state Factory monitoring system - Check of locking - Invader alarm Home security system Car alarm for mischief Intelligent keyless * In-car monitoring * Immobilizer Proposing an interactive key system 21 5. Toward the new era The recession caused by the sub-prime loan issue will last for a long time. ＆ The rise of emerging countries will accelerate in the world market. Making preparation in 2008 & 2009 for the future. For a leap from 2010 onwards 22 Thank you for your attention We are grateful for your continuous support 【Note】 Statements made in this presentation with respect to our current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of information currently available to it. We caution that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not rely on the belief that it is our obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties that might affect us include, but are not limited to; fluctuation of currency exchange rates, overall supply and customer demand in the industry, product development and production capacities, performance of affiliated companies, and other risks and uncertainties. 23