Presentation of Operating Results forthe 2nd Quarter (Apr.‐Sep.) of FY2013
November 12, 2013

FUNAI ELECTRIC CO., LTD.
TSE 6839

0Ⅰ. Message from the President
1.

Summary of 1st Half(Apr.‐Sep.) Operating Results2.

2nd Half (Oct.‐Mar.) Macro Outlook

3.

2nd Half (Oct.‐Mar.) and Full‐Year Projections

4.

Growth Strategy
4.‐1 Growth Strategy ‐ Summary
4.‐2 Growth Strategy ‐ Optimal Production Sites
4.‐3 Growth Strategy ‐ Accelerated Development of M&As and Alliances

5.

Brand Strategy

6.

Accelerate Growth Strategy

1１．Summary of 1st Half (Apr.‐Sep.) Operating Results ①(100 million yen)

FY 2012

Forecast

FY 2013Net Sales890960

1,205

Operating Income‐1405（‐1.6%）（0.0%）（0.5%）

96.00

98.64

(Margin)Average USD‐JPY
Exchange Rate

Summary

78.96

Both of net sales and operating income, more than projected.

2

1． Summary of 1st Half (Apr.‐Sep.) Operating Results ②
Display Segment (LCD TVs)
Both of Net Sales and Operating Income, more thanexpected (TVs turnaround)Contributes the larger sized TVs, for the sales increase.

Digital Media Segment (DVDs, Blu‐ray Discs, Home Theaters)
Net Sales, more than expected.
Operating Income, less than projected due torecorded as an expense to optimize production sites.
( However, significant improvements were seen for Q2 onward.)

Office Solutions Segment (Laser Beam Printers /Ink‐Jet Cartridges)
Net Sales, more than expected.
Operating Income, less than expected due torecorded as expenses to investment for the original
printer development.
3

2. 2nd Half (Oct.‐Mar.) Macro Outlook
Economic Trends●US: Sustained, gradual growth supported by improvements in thehousing and labor markets, as well as a recovery in personal consumption●Europe: Expected the bottoming out as the European Central Bank’s responses to thedebt crisis have dispelled economic concerns, but slow domestic growth.
●Emerging Markets : Slow growth in emerging markets ‐ especially China, due to ended subsidies
for promoting energy efficiency at end‐May, and a new program has notbeen in place.
●Japan: Continued modest recovering after the countermeasures of monetary easingat the Bank of Japan, expected the last minute surge in demand before
coming the consumption tax increase.

Industry Trends●TVs experience continuing commoditization ‐ although the average screen size has increased in the US and China.
●Rapid growth of the smartphone and tablet markets, accompanied with Wi‐Fi technology by anaccelerated fusion of AV, home appliance, auto vehicle, and Internet products.
●TV and BD recorder markets in Japan have shrunk drastically year‐over‐year, but expected to have seen somebottoming out in the recent weeks.

43．2nd Half (Oct.‐Mar.) and Full‐Year Projections(100 million yen)

Revised Earnings Forecast

1st HalfActuals

Full‐YearForecast

2nd HalfForecast

Net Sales

1,205

1,085

2,290

Operating
Income505（0.5%）（0.0%）（0.2%）

98.64

96.00

97.32

Average USD‐JPY
Exchange Rate

Compared with Original Forecast
Ne t Sales：
OperatingP r o f i t ：＜Original＞＜Revised＞

2,020

2,290

25+270 （+13.4%）+3（+150.0%）
5

4．Growth Strategy

Boost Sales andExisting
1 ReinforceBusinesses

GrowthStrategy
3 of Keywords

Launch newOpen up
32 Emerging
Marketsbusinesses¾ Improve profit ratios and strengthen the competitive power of the existing businesses¾ Deploy newly acquired businesses¾ Quickly create business for newly developed products
6

4‐1．Growth Strategy – SummaryCreating synergies and growth strategies
Boost Sales and1 Reinforce
ExistingBusinesses

2Open up
EmergingMarkets●Stabilize the business performance●Expand the size of business●Accelerate the globalization①Expand the sales channels②Optimize for existing plants●Strengthen the patent portfolio●Improve the marketing power

3Launch newbusinesses●More focusing to the industrial design7

4‐2．Growth Strategy – Optimal Production Sites
Optimize the existing our plants, while the business environment fluctuation
Put together●Optimize the existing plants from 3 to 2CHINA(Huan Jiang, Zhong Shang)（April, 2013 -)●Newly build the third plant, as well as
increasing the production capacities

THAILAND（July, 2013-）

Expand●Acquired former Lexmark’s Cebu Plant,
started the Ink Cartridge production

PHILIPPINES（May, 2013-）●Planning the new plant（May, 2014-）
8

4‐3．Growth Strategy – Accelerated Development of M&As and Alliances●Over 16years of robust mutual partnerships●Altogether approx. 130million units have been sold to the market.
（Over 80 models and more)●Mechatronics products should be taken advantage of our strength.

Acquired Inkjet-Related Techs and Assets of LEXMARK
InkjetRelatedPatents
R&D
Resources

ProductionSites●More than 1,000 of Inkjet‐Related Patents
were transfered●Acquired R&D firm and resources for IJP‐Related＜Establish R&D firm in Lexington＞ （approx. 30 of technicians）●Acquired the Manufacturing Plant for Ink
Cartridges and Printing Head, and Started ofProduction on May, 2013. （approx. 750 employee)

Circuit Assembly
11,178㎡, Class 1,000

Bottle Assembly
13,941㎡, Class 10,000

With the highly
profitable Ink‐
Cartridge, enable usto establish as likevertical integration
in‐house95．

Brand Strategy
Delivers and Promote

Brand Products

Into All Over the World, as well as US and Japan MarketEuropeJapanUS(July, 2013-)

Asia
Mid-East●Started to sell DVD at Wal‐Mart stores by July,2013.
●Planning to sell BD,TV.

- DVD Player- DVD Recorder- BD Player- LCD TV
10

6．Accelerate Growth Strategy
Expanding Business with Diversity through Active Growth Strategy,
Our Performance will Recover
sing
Increa slethe Sa

Expand Sales
Channels for LE
Products（Sales） 3,149

2,959
2,461

Deliver the IJPs /LBPs into all overthe world
Release of own
Developed NewProducts

2,290
1,920

2010/3

2011/3

2012/3

2013/3

2014/3（Forecast）

11

Ⅰ．Outline of Operating Results
Summary of 2nd Quarter (Jul.‐Sep.)
Summary of 2nd Quarter (Apr.‐Sep.)
Breakdown of Sales by Equipment
Sales of DVD related Equipment
Sales of LCD Television
Geographic Breakdown of Sales
Factor of Changes of Operating Income
Financial Conditions
Changes of Inventories
Capital Expenditures, Depreciation Expense and R&D Expenditures
Projection of Fiscal 2013 ending March 2014
Projection of Sales by Equipment in Fiscal 2013 ending March 2014
Projection of Sales by Geography in Fiscal 2013 ending March 2014

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

1．Summary of 2nd Quarter (Jul.‐Sep.)（100 million yen）

FY 2012FY 2013

Y/Y+210

S a l e s

490

700

(+42.9%)Operating Income‐522+27)(‐1.0%)(3.3%)‐ 2 (※1)

Ordinary Income‐1020+30)(‐2.0%)(2.9%)‐ 14 (※2)

Net Income after tax‐116+17(‐2.3%)(0.9%)

78.12

98.06

N e t(((MMMaaarrrgggiiinnn)

Average USD‐JPY
Exchange Rate（※2） extraordinary loss ‐11,income taxes ‐3（USD/JPY）‐ 13 (※4)（※3） decrease of interest received ‐1,forex gain and loss +5,other ‐1（※4） increase of extraordinary loss ‐10
increase of income taxes ‐3（※1） others ‐2Month End Exchange Rate+3 (※3)

12/6

12/9

13/6

13/9

31

60

59

97.75

79.

77.

98.

13

2．Summary of 2nd Quarter (Apr.‐Sep.)（100 million yen）

Y/Y

Y /Y

(Actual base)(Forecast base)+315+245(+35.4%)(125.5%)

5+19+5(0.0%)(0.5%)+16 (※1)‐30

321+51(‐3.4%)(0.3%)(1.8%)‐15 (※2)‐2906+35(‐3.4%)(0.0%)(0.5%)

78.96

96.00

98.64

FY2012

ForecastFY2013

Net Sales

890

960

1,205

Operating Income‐140(‐1.6%)(Margin)

Ordinary Income(Margin)

Net Income after tax(Margin)

Average USD‐JPY
Exchange Rate

+18+6（※5） interest received+1、increase of forex gain+15、other ‐3（※2） extraordinary loss ‐12、 income taxes ‐3（※6） increase of extraordinary loss ‐12Month End Exchange Rate

12/3

12/9

13/3

13/9

（USD/JPY）

82.19

77.60

94.05

97.75

‐12 (※6)‐16 (※4)（※1） interest received +1、interest expense ‐1、 （※3） forex gain and loss+36、other ‐4forex gain+19、other ‐3（※4） increase of extraordinary loss ‐10、increase of income taxes ‐6+13 (※5)+32 (※3)

3．Breakdown of Sales by Equipment（100 million yen）

1,205
（100 million yen）

890

Y/Y

939
745
AV
Equipment

InformationEquipment
OthersD V D ：172
LCD TV ：767

D V D ：151
LCD TV ：594

AV Equipment： +194 （+26.0％）： + 21： +173（+13.9 ％）（+29.1％）

Information Equipment ： + 66（+163.7％）

DVD Equip.
LCD TV

Others： + 55 （+52.6％）

Total： +315 （+35.4％）

107
41
104

159

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）
15

4．Sales of DVD related Equipment（100 million yen）

172
151
42
DVD Players

Blu‐ray disc・BD recorders were flat, but BD players increased in
North America.

4139

DVD Recorders

Y/Y

4275
Blu‐ray discOthers（100 million yen）

57

1116

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）

DVD Players： + 1 （+ 2.4％）

DVD Recorders： ‐ 3 （‐ 7.1％）

Blu‐ray disc： + 18 （+31.6％）

Others： + 5 （+45.5％）

Total： + 21 （+13.9％）

16

5．Sales of LCD Television（100 million yen）

767

LCD TV・LCD Tvs increased revenue because of strong sales
in North America and Mexican market.

594

767

（100 million yen）

594

Y/Y
LCD TV

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）： +173 （+29.1%）

17

6．Geographic Breakdown of Sales（100 million yen）

North America

1,205

・Sales of LCD TVs, audio accessories products, DVD‐related products and information equipment
increased.

890

Asia & Others
・The sales of LCD Tvs showed steady increases inMexico.

882(73%)

NorthAmerica（100 million yen）

644

Y/Y(72%)EuropeAsia & Others

39 (3%)
114 (10%)27 (3%)
55 (6%)
164

JapanNorth America： +238 （+36.8％）

Europe： + 12 （+44.4％）

Asia & Others： + 59 （+107.3％）

Japan： + 6 （+ 3.7％）

Total： +315 （+35.4％）

170

(19%)

(14%)

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）

18

7．Factor of Changes of Operating Income＊ Add‐value=Sales – (Cost of sales + selling expenses)（100 million yen）

△14Salesincrease

Decreased
add‐value* Increase ofgeneralexpenses

25-3

Operating
IncomeOperating
Income26-4

Operating
Income5-14

Previous 2Q

Decreased
Sales
increase add‐value*

Operating
Income0-25
Decrease ofgeneral Operating
expenses Income

55

営業利益

Current 2Q

Forecast

Current 2Q
19

8．Financial Conditions（100 million yen）

1,945

1,762
Cash / Deposit

AssetsLiabilities
AndNet Assets

678

Comparison to 2012/9
1,810403

Assets+ 48402

・Cash / Deposit‐ 212

・Accounts Receivables+ 36

・Inventories+122

・Fixed Assets and Others+102615331

Accounts
Receivables

366
404556526

Inventories
Fixed Assetsand Others

377

380479Trade Payables

358

391

298

Accounts Payables
and Others

241

341

Net Assets

1,163

1,213

1,762

1,945

2012/92013/3

286

1,226

1,810

Liabilities‐ 15・Trade Payables‐ 60・Accounts Payables
and Others+ 45

Net Assets+ 63（ Equity Ratio

67.1%）

2013/920

9．Financial Conditions（100 million yen）

556
526
404
345
342

（100 million yen）

Comparison to 2012/9
285
Finished products

Work in process

211

184

2012/92013/3

2013/92.5 months

3.7 months

2.3 months

Finished products： ＋ 57Work in process： ＋ 65

119<Inventories Turnover>21

10．Capital Expenditures, Depreciation Expenseand R&D Expenditures
2Q (Apr.‐Sep.)
CapitalExpenditures

Depreciation
ExpenseFull Year
R&DExpenditures

Depreciation
ExpenseR&DExpenditures（100 million yen）

（100 million yen）

140

CapitalExpenditures+73+6140‐4120120

100

10080

80

6060

12293

93

4092

40
20472019264360

53

20

40

00
2012/9 2013/9

2012/9 2013/9

FY2012 FY2013

2012/9 2013/9

FY2012 FY2013（Projection）

FY2012 FY2013（Projection）（Projection）

2211．Projection of Fiscal 2013 ending March 2014（100 million yen）

FY2012Net Sales
Operating Income(Margin)

Ordinary Income(Margin)

Net Income after tax(Margin)Average USD‐JPY
Exchange Rate

Forecast

Forecast

Y/YY /Y（2013/5/7）（2013/11/11）(Actual base)(Forecast base)

+370

+270

(+19.3%)(+13.4%)

1,920

2,020

2,290

‐522

5+57+3(‐2.7%)(0.1%)(0.2%)+16 (※1)‐33 (※3)

‐35

21+24

(‐0.2%)(0.2%)(0.9%)‐20 (※2)+62 (※4)‐85

1

1+860(‐4.4%)(0.0%)(0.0%)

83.32

96.00

97.32+16（※1） interest received +2、 interest expense ‐2、 （※3） decrease of interest received ‐1、increase of interest expense ‐1、forex gain+19、other ‐3（※5） increase of interest received +1、increase of forex gain +15、other ‐3（※2） extraordinary loss ‐12、income taxes ‐8（※6） increase of extraordinary loss ‐12、increase of income taxes ‐4

decrease of forex gain ‐28、other ‐3（※4） decrease of extraordinary gain ‐4、decrease of extraordinary loss +14、decrease of income taxes +52+13 (※5)

‐16 (※6)23

12．Projection of Sales by Equipment in Fiscal 2013 ending March 2014
（ 100 million yen ）TV related Equipment

DVD related Equipment

2,290
Comparison toPrevious Forecast+10.7％

Comparison toPrevious Forecast+13.5％
358

370

326

1,199

1,261

2013.3

1,396【Plus Factor】
・Blu‐rai Disc players

2014.32014.3

Previous
Forecast

Current
Forecast2014.3
Previous
Forecast

Information Equipment

Others2014.3

119

PreviousForecast244

2013.32013.3 2014.3 2014.3

1,396
1,261
1,199

Comparison toPrevious Forecast+16.5％

185【Plus Factor】
・Ink cartridges

358

Current
Forecast

Comparison toPrevious Forecast+30.3％

142370326【Plus Factor】・Strong sales in North
America and Mexico

・DVD players, recorders

2013.3

2,020
1,920

Current
Forecast

291

2014.3
Previous
Forecast

339【Plus Factor】
・ Antenna andRelated devices
・ AV Accessories (NA)1192442013.32014.3Current
Forecast

142291

185
339

2014.32014.3

Previous
Forecast

Current
Forecast

24

13．Projection of Sales by Geography in Fiscal 2013 ending March 2014
EuropeNorth America（ 100 million yen ）2,290Comparison toPrevious Forecast‐18.9％

Comparison toPrevious Forecast+16.2％
1,590
1,33390

1,368【Plus Factor】
・LCD TVs
・Ink cartridges
2013.32014.32014.3

Previous
Forecast

Current
Forecast

2,020
1,9207362【Minus Factor】
・LCD TVs
1,590

2013.32014.32014.3

Previous
Forecast

Current
Forecast

1,368
1,333

Japan

Asia & Others

Comparison toPrevious Forecast+7.9％

Comparison toPrevious Forecast+16.3％

286
246359【Plus Factor】
・LCD TVs in Mexico

166316341【Plus Factor】
・ Antenna andRelated devices

2014.32014.3

Previous
Forecast

Current
Forecast2013.32014.3
Previous
Forecast2014.3Current
Forecast

73246359

316341

2014.32014.3

Previous
Forecast

Current
Forecast2013.32013.3

9062
166

286

25

Ⅲ．Appendix ①< Summary of Operating Results (Jul.– Sep.) >
1.
2.
3.

Sales by Equipment
Sales of AV Equipment
Sales by Geography

26

1．Sales by Equipment（ 100 million yen ）700（ 100 million yen ）

Y/Y

490
560

： + 9 （+ 12.9%）： +127 （+ 35.9%）

424

Information Equipment： + 43 （+286.7%）

D V D ： 70
LCD TV ：354

Others： + 31 （+ 60.8%）

Total： +210 （+ 42.9%）

InformationEquipment
Others： +136 （+ 32.1%）

DVD Equip.
LCD TVD V D ： 79
LCD TV ：481

AV
Equipment

AV Equipment

58155182

Previous 2Q

Current 2Q(Jul.‐Sep.)(Jul.‐Sep.)
27

2．Sales of AV Equipment
DVD related Equipment

TV related Equipment（ 100 million yen ）（ 100 million yen ）

481

7970
20
DVD Players

354

20
18481

DVDRecorders

25

LCD TVs

354

33
Bru‐ray disc

19Others

68

Previous 2Q

Current 2Q

Previous 2Q

Current 2Q(Jul.‐Sep.)(Jul.‐Sep.)(Jul.‐Sep.)(Jul.‐Sep.)
28

3．Sales by Geography（ 100 million yen ）700（ 100 million yen ）

490
541

Y/Y

(77%)

NorthAmericaEurope
Asia & Others
Japan375(77%)

12 (2%)
29 (6%)
74 (15%)20 (3%)
64 (9%)

North America： +166 （+44.3%）

Europe： + 8 （+66.7%）

Asia & Others： + 35 （+120.7%）

Japan： + 1 （+ 1.4%）

Total： +210 （+42.9%）

75 (11%)

Previous 2Q

Current 2Q(Jul.‐Sep.)(Jul.‐Sep.)
29

Ⅳ．Appendix

1. Quarterly Operating Summary of FY 2012 / 2013
2. Quarterly Changes of Sales Amount by Equipment
3. Quarterly Changes of Sales Amount by Geography

30

1．Quarterly Operating Summary of FY 2012 / 2013

（ 100 million yen ）FY2012
1Q

2Q

FY2013

3Q

4Q

1Q

2Q

S a l e s

400490580

450505700

Operating Income‐9‐5‐3‐34‐1722( m a r g i n )(‐2.4%)(‐1.0%)(‐0.7%)(‐7.6%)(‐3.4%)(3.3%)

Ordinary Income‐20‐1032‐4120( m a r g i n )(‐5.1%)(‐2.0%)(5.5%)(‐1.1%)(0.2%)(2.9%)Net Income aftert
ax

‐18

‐116

‐62

‐06

( m a r g i n )（‐4.6％）（‐2.3％）（1.2％）(‐13.9%)（‐0.0％）（0.9％）

N e t

31

2．Quarterly Changes of Sales Amount by Equipment
LCD TVs

DVD Equipment

OthersInformation Equipment（ 100 million yen ）

700
79580
490
400505126450

70

93

81

481

81
340
354

265

240

286

15
51

34
80

44
60

49
77

58

26
53
1Q

2Q

3Q

4Q

1Q

2Q

(12/6)(12/9)(12/12)(13/3)(13/6)(13/9)

82

32

3．Quarterly Changes of Sales Amount by Geography
North America

EuropeAsia & OthersJapan（ 100 million yen ）

700
580
490

450

505

400

541
421
375

269

(73%)

(77%)

(77%)

268

341

(60%)

(67%)

16 (3%)
73(16%)
93

19 (4%)
50(10%)
95(67%)(4%)
15 (7%)
26
90
(22%)

12 (2%)
29 (6%)
74(15%)

19 (3%)
38 (6%)
102
(18%)

(21%)

(19%)

20 (3%)
64 (9%)
75(11%)

1Q

2Q

3Q

4Q

1Q

2Q

(12/6)(12/9)(12/12)(13/3)(13/6)(13/9)
33

Disclaimer

This document contains forward‐looking statements and projections regarding
business performance which are not historical facts. Please note that these statements
are based on information relating to factors that may impact future businessperformance that was available for analysis at the time this document was printed.
These factors include industry trends relating to the business areas of Funai Electric Co.,
Ltd. or the Funai Group, such as audio‐visual devices and information communicationequipment, the economic conditions of both domestic and international markets, andfluctuations in currency exchange rates. Actual performance may greatly differ fromprojections included in this document because of the impacts of uncertainty in suchareas as the competitive conditions of the electronics industry, market trends, currency
exchange rate, introduction and success of new products, and various other global
conditions that may affect the tax system and other systems.

34