Management’s Discussion and Analysis Third Quarter Ended ...
Financial Results for the Third Quarter Ended December 31, 2016...UMC ELECTRONICS CO., LTD....
Transcript of Financial Results for the Third Quarter Ended December 31, 2016...UMC ELECTRONICS CO., LTD....
UMC ELECTRONICS CO., LTD. (Securities Code: 6615)
Financial Results for the Third Quarter
Ended December 31, 2016
UMC ELECTRONICS, an EMS Specialist, Supports Manufacturing in Japan!
Copyright © 2017 UMC Electronics, All Rights Reserved. 1
(Note) Monetary figures are rounded down to the nearest whole unit and ratios are rounded off to the first decimal place.
1. FY2016 (Fiscal Year Ending March 2017) Third-Quarter Consolidated Financial Results ・・・・・・・・・・・・・・・2 2. Sales by Product Category ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・11 3. Topics ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・14
Contents
Copyright © 2017 UMC Electronics, All Rights Reserved.
FY2016 Q1-Q3 Results Sales by Product Category Topics
Summary of Consolidated Financial Results(FY2015/3Q vs.FY2016/3Q)
2
(Millions of yen) FY2015 3Q Result
FY2016 3Q Result
YoY Consolidated
foreign currency translation effect
excl. forex impacts
Change Percentage change
Change (vs. FY2016 3Q)
FY2016 3Q
(YoY) Percentage
change
Net Sales 83,321 82,205 (1,116) (1.3)% (9,577) 91,782 +10.2%
(Plant Output)*1 17,712 21.3%
18,031 21.9%
+319 +0.7pt
+1.8% -
(1,960) 19,991 +12.9%
Gross Profit 4,096 4.9%
5,228 6.4%
+1,131 +1.4pt
+27.6% -
(408) 5,637 +37.6%
Operating Income 1,613 1.9%
2,273 2.8%
+659 +0.8pt
+40.9% -
(170) 2,443 +51.5%
EBITDA*2 3,340 4.0%
3,912 4.8%
+571 +0.8pt
+17.1% -
(368) 4,281 +28.1%
Net Income 1,249 1.5%
836 1.0%
(412) (0.5)pt
(33.0)% -
(23) 860 (31.1)%
USD Rate
(JPY) Average 121.70
End of period 120.54 Average 106.68
End of period 116.53 (15.02)
(4.01)
*3
Operating income for the first nine months reached its highest-ever level
*3 Chinese business restructuring expenses of 331 million yen were recorded in 1Q. * USD Rate:JPY121.70
*1 Plant Output= Net sales - Parts cost The net sales of an EMS company depends heavily on the product unit price and thus the Company discloses it as an indicator
of “plant output," which shows the added value. *2 EBITDA = Operating income + Depreciation and amortization
Copyright © 2017 UMC Electronics, All Rights Reserved.
FY2016 Q1-Q3 Results Sales by Product Category Topics
Summary of Consolidated Financial Results (FY2016/1Q~3Q)
3
(Millions of yen) FY2016 1Q
Result (three months)
FY2016 2Q Result
(three months)
FY2016 3Q Result
(three months)
Compared to previous period
(2Q vs. 3Q)
Change Percentage change
Net Sales 25,138 27,110 29,956 +2,845 +10.5%
(Plant Output)*1 5,729 22.8%
5,848 21.6%
6,453 21.5%
+605 (0.1)pt
+10.4% -
Gross Profit 1,662 6.6%
1,750 6.5%
1,815 6.1%
+64 (0.4)pt
+3.7% -
Operating Income 675 2.7%
794 2.9%
802 2.7%
+7 +0.2pt
+1.0% -
EBITDA*2 1,226 4.9%
1,328 4.9%
1,358 4.5%
+29 (0.4)pt
+2.2% -
Net Income (110) -%
427 1.6%
520 1.7%
+92 +0.1pt
+21.6 -
USD Rate (JPY) Average 108.25 End of period 102.96
Average 105.35 End of period 101.12
Average 106.68 End of period 116.53
+1.33 +15.41
*3
*3 Chinese business restructuring expenses of 331 million yen were recorded in 1Q.
*1 Plant Output= Net sales - Parts cost The net sales of an EMS company depends heavily on the product unit price and thus the Company discloses it as an indicator
of “plant output," which shows the added value. *2 EBITDA = Operating income + Depreciation and amortization
Copyright © 2017 UMC Electronics, All Rights Reserved.
FY2016 Q1-Q3 Results Sales by Product Category Topics
1,613 +319 -200
-59
+341
+259
2,273
1,300
1,500
1,700
1,900
2,100
2,300
2,500
Higher expenses
associated with increased plant
output
Increase in depreciation
and amortization as a result of
new investment
Increased plant
output
Lower labor costs
Lower overheads
Factors for Change in Consolidated Operating Income (FY2015/3Q vs.FY2016/3Q)
4
FY2016/ 3Q
(Millions of yen)
Operating Income +659
FY2015/3Q
YoY:Up ¥659 million (40.9% UP)
0
Effect of improvement
activities
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FY2016 Q1-Q3 Results Sales by Product Category Topics
Initiatives to Improve Profitability
5
Improvement activities through the introduction of LCA*
(Units) (People)
97
0
100
200
300
400
'15/3Q '16/3Q '16/通期計画
285
(390)
Japan
China
Vietnam Thailand
6,000
7,000
8,000
9,000
10,000
11,000
’16/12末時点 0
9,804
1,143
(Units) ’15/ 3Q
’16/ 3Q (Change)
‘16/ Full-Year
Plan Japan 34 86 (+52) 109
China 39 119 (+80) 167
Vietnam 13 41 (+28) 53
Thailand 11 39 (+28) 61 Total 97 285 (+188) 390
(People)
Number of direct Personal
(end of Dec 2016)
Number of personnel reduced
through LCA
Japan 373 82
China 5,476 570
Vietnam 3,379 389
Thailand 576 102 Total 9,804 1,143
*LCA:Low Cost Automation
・Number of personnel reduced through the introduction of LCA
・Units of LCA introduced
LCA effect
Full-Year Plan As of end Dec. 2016
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FY2016 Q1-Q3 Results Sales by Product Category Topics
China 50.5%
Japan 20.4%
Vietnam 21.4%
Thailand 7.7%
Automotive equipment
+ Industrial equipment
61.3%
Sales Breakdowns by Product Category and by Region
6
(Note) Sales component ratio of each region is ratio of total net sales not including “consolidation adjustments”.
Ratio of automotive and industrial equipment sales rose 8.3% YoY
Improvement in balance of base portfolio
-5.8pt
+2.4pt
+3.3pt
+0.1pt
30.3%
22.7%
12.0%
23.6%
8.4% 2.6%
0.4%
Other Business
0.5%
56.3%
18.0%
18.1%
7.7%
Net sales by product category Net sales by region
Outside: FY2016 3Q Inside: FY2015 3Q
Outside: FY2016 3Q Inside: FY2015 3Q
Automotive equipment
37.5%
Industrial equipment
23.8%
Consumer8.1%
Office automation
19.2%
Information 6.8%
Other EMS
4.1%
Copyright © 2017 UMC Electronics, All Rights Reserved.
FY2016 Q1-Q3 Results Sales by Product Category Topics
21.1%
8.8%
32.9%
11.4%
8.5%
7.8%
6.1% 3.5%
23.7%
8.8%
30.9%
12.8%
8.9%
6.1%
6.6% 2.2%
Change in Automotive Equipment Portfolio
7
Growth in high added value areas such as critical safety parts where high reliability is required
32.5% Engine and power train-related parts
Engine electrical system
Body control/
Drive system
Electrical equipment
Body
Exterior
Door handles & locks
Speedometers Other
Inside: FY2015 3Q Outside: FY2016 3Q
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FY2016 Q1-Q3 Results Sales by Product Category Topics
620 543 400 675
415 463 484
794 531 352 729
802 312 685 725
0
500
1,000
1,500
2,000
2,500
FY2013 FY2014 FY2015 FY2016
4Q
3Q
2Q
1Q
5,423 5,365 5,901 5,729
5,891 5,350 5,599 5,848
6,106 5,879 6,212 6,453
5,356 5,344 5,823
0
5,000
10,000
15,000
20,000
25,000
FY2013 FY2014 FY2015 FY2016
4Q
3Q
2Q
1Q
(Millions of yen)
8
1.4% 1.8%
2.1%
2.8%
0.0%
1.0%
2.0%
3.0%
FY2013/期末 FY2014/期末 FY2015/期末 FY2016/3Q
Performance Trends
Trend of Plant Output
Trend of Operating Income
Trend of Operating Margin
(Millions of yen)
FY2013 FY2014 FY2015
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FY2016 Q1-Q3 Results Sales by Product Category Topics
Balance Sheet
9
Balance sheet and Cash flow
FY2015 FY2016/3Q
Total Assets ¥56,723million Equity Ratio 28.1%
Total Assets ¥63,624million Equity Ratio 25.8%
63,624 (Millions of yen)
19,229
21,530
15,963
41,927
14,795
(Note) Interest-bearing debt is all liabilities recorded on the balance sheet on which the Company pays interest
56,723
Cash Conversion Cycle
26,516
20,671
16,435
46,204
17,419
Notes and accounts
receivable -trade 17,274
Inventories 10,363 11,090
Notes and accounts
payable-trade 16,547
0.03 months CCC reduction
Notes and accounts
receivable -trade 20,549
Inventories 13,221 11,301
Notes and accounts
payable-trade 22,469
Cash Flow (For Reference)
1,166
3,050
- 2,246
- 3,384
-1,080
- 334
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
営業CF 投資CF FCF
Total assets increased due to increase in new transactions and depreciation of the yen.
Operating CF increased 161.6% year on year.
Net Assets
Interestbearing
Debt
Liabilities
Noncurrent Assets
Current Assets
Net Assets
Interestbearing
Debt
Liabilities
Noncurrent Assets
Current Assets
First three quarters of FY2016
First three quarters of FY2015
(Millions of yen)
Operating CF
Investment CF
Copyright © 2017 UMC Electronics, All Rights Reserved.
FY2016 Q1-Q3 Results Sales by Product Category Topics
Capital Investment and Depreciation & Amortization
10
(Millions of yen)
Breakdown of Capital Investment (Millions of yen) FY2014 FY2015
FY2016 3Q Result
Japan 567 318 445 China 1,533 1,157 1,006 Vietnam 496 959 415 Thailand 72 574 109 Mexco 0 0 973 Total 2,668 3,008 2,948
2,668 3,008 2,948
1,786
2,307
1,639
0
500
1,000
1,500
2,000
2,500
3,000
3,500
FY2014 通期
FY2015 通期
FY2016 3Q実績
設備投資 減価償却費 Capital Investment
Depreciation & amortization
3Q (Result)
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Sales by Product Category FY2016 Q1-Q3 Results Topics
Net Sales by Product Category
Automotive Equipment
Industrial Equipment
(Millions of yen)
(Millions of yen)
37.5%
23.8%
25,267
30,803
0
8,000
16,000
24,000
32,000
FY20153Q
FY20163Q
18,895 19,553
0
8,000
16,000
24,000
FY20153Q
FY20163Q
◆Our track record in the stable supply of domestically produced power control products in China was recognized and sales of critical safety parts such as power train systems, control systems and drive systems were strong.
◆New development of various electrical equipment for environmentally-friendly vehicles.
◆Sales of exterior products that require a high level of mounting technology were strong.
◆Sales of power supply systems and inverters of leading Japanese manufacturers recovered.
◆Products for mobile phone
base stations sold briskly.
11
FY2016/3Q component ratio
Power control unit
Automotive precision metal mold and injection molding
Industrial unit products
Industrial power supply
Payment terminal
Products for mobile base stations
FY2016/3Q component ratio
Copyright © 2017 UMC Electronics, All Rights Reserved.
Sales by Product Category FY2016 Q1-Q3 Results Topics
Consumer Equipment
Office Automation
(Millions of yen)
(Millions of yen)
8.1%
19.2%
10,039
6,669
0
4,000
8,000
12,000
FY20153Q
FY20163Q
19,667
15,795
0
8,000
16,000
24,000
FY20153Q
FY20163Q
◆Cost competition was fierce.
◆Aiming at integrally
manufactured products from the design stage through to finished products.
◆Currently targeting Chinese
manufacturers.
◆Continuous recovery since 1Q due to expansion of in-house share.
12
Net Sales by Product Category
FY2016/3Q component ratio
FY2016/3Q component ratio
LED lighting
Circuit board for air purifier
Various circuit boards for leading printer manufacturers
Copyright © 2017 UMC Electronics, All Rights Reserved.
Sales by Product Category FY2016 Q1-Q3 Results Topics
Information Equipment
XX.X%
Other EMS (Millions of yen)
(Millions of yen)
4.1%
6.8%
7,007
5,573
0
2,000
4,000
6,000
8,000
FY20153Q
FY20163Q
2,142
3,399
0
700
1,400
2,100
2,800
3,500
FY20153Q
FY20163Q
◆Transferred control of mature products with stable demand from China to Vietnam, while maintaining cost competitiveness.
13
Optical pickup
FY2016/3Q component ratio
FY2016/3Q component ratio
Net Sales by Product Category
Copyright © 2017 UMC Electronics, All Rights Reserved.
Topics Sales by Product Category FY2016 Q1-Q3 Results
Status of New Bases
1. China/ Qiaotou Plant Transfer Project ・Began operation in September 2016, and transfer was almost completed, with the exception of some
molding customers, by December. ・Integration from molding through to board mounting and assembly, with focus on industrial
equipment.
Board mounting Plastic molding
Preparation of metal molds
Assembly of finished products
2. New Plant in Mexico ・Construction of plant for trail production in July and mass production in December ・Integrated manufacturing plant from molding through to board mounting and assembly
Integrated production of finished products
14
Copyright © 2017 UMC Electronics, All Rights Reserved.
Topics Sales by Product Category FY2016 Q1-Q3 Results
・ We link experience and knowhow gained in trial production and mass production to the design of board layouts, incorporating our artwork capabilities to improve quality on manufacturing front lines, and we provide an end-to-end solutions, from design though to production.
・ We provide high quality and high productivity manufacturing lines to every base and strive to improve customer added value.
ArtWork Production Design Process
and jig design
SAP
Custom
er N
eeds
Product DB, EDI(Electronic Data Interchange)
Incorporation of AW design
UMC
End-to-end solutions, from design to production C
ustomer
Manufacturing technology, production
Purchasing
15
Copyright © 2017 UMC Electronics, All Rights Reserved.
Topics Sales by Product Category FY2016 Q1-Q3 Results
Increasing Name Recognition at Events
We participated in Internepcon Japan held January 18-10, 2017 (Japan’s largest electronics technology exhibition). Positioned the automotive market as our core market and stressed our superiority and track record in terms of quality strength built up in automotive products and cost competitiveness achieved through the introduction of LCA.
Details of Exhibition ・Actual orders received in the automotive market, including critical safety parts and power electronics products for environmentally-friendly cars
・Exhibition of precision molding parts ・LCA concept. Manufacturing track record ・Cyber Core’s LynxEye:Image sharpening demo ・Introduction of UMC Global Standard (identical systems, common platform, global
procurement capability, SCM)
Participated in Nepcon Japan/ CAR-ELE JAPAN (Tokyo, January 2017) And electronica 2016(Munich, November 2016)
Exhibition booths at Nepcon Japan and CAR-ELE JAPAN 16
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Topics Sales by Product Category FY2016 Q1-Q3 Results
Established sales office in automotive cluster in Hubei Province, China (February 2017)
Establishment of Wuhan Sales Office
・Market : Hubei Province’s output of vehicles ranks 7th in China. Wuhan (the capital city of Hubei Province) manufactures mainly automobiles.
The city is home to 6 finished car manufacturers and more than 250 auto parts manufacturers. ・Aim :With many companies operating in the area, including existing customers, our aim is to promptly grasp customer needs and capture projects more quickly though immediate solutions.
We are also targeting Chinese auto manufacturers.
Chongqing Shanghai
Xi’an
Beijing
Guangzhou
Wuhan
【By plane】 Around 4 hrs from Tokyo (direct) Around 3 hrs from Osaka (direct) 1 hr 30 mins from Shanghai 1 hr 40 mins from Shenzhen 1 hr 50 mins from Guangzhou 2 hrs from Beijing 【By high-speed rail】 5 hrs from Shanghai 4 hrs from Guangzhou 5 hrs from Beijing
Around 40 mins by car
Wuhan Airport
17
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Topics Sales by Product Category FY2016 Q1-Q3 Results
UMC’s strength: Proposal from upstream design process
UMC’s Manufacturing Vision
Towards the Realization of Smart Factories
UMC provides its customers with “KAIZEN(=improvements)” in their manufacturing processes
・Impressive manufacturing plants
・Proposal-based EMS
・Realization of “smart factory” for customers
・Development into stock business
18
■ This material is provided for informational purposes only and does not constitute solicitation for investment activity or a recommendation of specific stock.
■ Some of the information disclosed by the Company may contain projections about the
future and forward-looking statements. Such forward-looking statements are based on the Company’s judgment and information available to the Company at the time this material was prepared, and may change due to a variety of factors. These projections and forecasts involve risks and uncertainties, and the Company makes no guarantee that they will prove to be correct. Actual results may differ materially from the forecasts.
■ While the Company makes every effort to ensure that the information contained in this
material is correct, the Company makes no guarantee whatsoever with respect to the accuracy, reliability, suitability or fairness of the content. Please note that the information contained in this material may be changed or removed without notice.
■ No portion of this material may be reproduced or appropriated without the Company’s
prior permission.
[Inquiries] PR/IR Dept., Administration Division, UMC Electronics Co., Ltd. TEL. +81-48-724-0001