Presentation of Operating Resultsin 2nd Quarter (Apr.-Sep.) of FY2011

November 8, 2011

FUNAI ELECTRIC CO., LTD.
Security code 6839

0Ⅰ．Briefing of the 1st Half Operating Results,
Future Outlook and Emphasizing Measures
1. Briefing of the 1st Half of Operating Results
2. Macro Outlook of the 2nd Half
3. Projection of the 2nd Half and the Full Year
Operating Results
4. Emphasizing Measures1１．Briefing of the 1st Half of Operating Results ①（100 million yen）

FY 2010

Forecast

FY 2011

S a l e s

1,540

1,568

1,406

Operating Income453421( M a r g i n )（3.0%）（2.2%）（1.5%）

88.15

83.00

79.15

N e t

Average USD-JPY
Exchange Rate

Net Sales
Operating Income

Less than projection

2

１．Briefing of the 1st Half of Operating Results ②TV Segment
Less than projection
Profitability are back on the recovery track

DVD/BD Segment
In line with projection

Information Equip. Segment
Less than projection
3

２．Macro Outlook of the 2nd Half ①
U.S. economic outlook●Continued slow and low growth［Positive factors］

・Export increase / the dollar depreciation
・Firm capex and auto production and sales［Negative factors］

・High jobless rate・income disparity
・Long slump of housing market
・Remaining high gas price⇒ Decline of purchasing power

European economic outlook●Continental Europe： European debt crisis spurring low growth⇒ Concerted action for stabilization the issue facing crucial moment●U. K : Declining recovering speed, increasing opacity for prospects
High inflation rate, Decline of purchasing power⇒ Decrease of personal disposal income
4

２．Macro Outlook of the 2nd Half ②
Economic outlook of other major market
Japan●Historical high yen rate, convergence of policy effect leading to economicdeterioration
China●Slow down of high growth due to economic deterioration in U.S. andEurope, higher inflation rate than policy target
New emerging countries●Tracking on strong demand centering on BRICs

Risk factors in the market
1. Further deterioration of global economy
2. Further decline of the Dollar and Euro
3. Sharp hike of raw material and components due to a high oil price/the high yen value
4. Prolonged negative impact of Thai flood on supply chain
5

３．Projection of the 2nd Half and the Full Year
Operating Results（100 million yen）

RevisedResults of 1H

Projection of 2H

Projection of FY

S a l e s

1,406

1,244

2,650

Operating Income

211132( M a r g i n )（1.5%）（0.8%）（1.2%）

79.15

78.00

78.57

N e t

Average USD-JPY
Exchange Rate

Revised assumption of forex rate（$=¥83→¥78）
Sales revised from 3,100 yen to 2,650 yen, taking account ofcompetition in LCD TV and Printer.
6４．Emphasizing Measures ①
Re-strengthening the Management BaseStrongly promote competitiveness with all-out effort
・In-depth marketing

Customer
Product Planning・Growing ties withcustomer

Sales・Thorough PSI

SpeedProcurement&Manufacturing

Development

・Design cost down
・Global-scaledevelopment

・Promote strategic procurement
・Thorough pursue for ＦＰＳ（Funai Production System）
・Make key devices

Thorough PSI management

Optimized SCM（Purchases・Sales・Inventory）（Supply-chain management )7

４．Emphasizing Measures ①
Driving Force for Growth Strategy

Promote global development・manufacturing・sales structure
R&D

Manufacturing

Sales

Strengthening ofdevelopmental regime

Optimized diversification

Entry into emerging market

Establishment of development
company in China

Input resources in Thai Plant

Strengthening of developmental
regime in Malaysia

Establish new overseas base（Emerging markets, such as BRICs）＋

Further expansion of sales
in U.S.
Reinforce Europe

Further necessity measures for new business plan
●Networking・telecom areas●Devices・components●New technology for next generation

Proactive stance on strategic alliance / M&A
8

Ⅱ．Outline of Operating Results
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Summary of 2nd Quarter (Jul.-Sep.)
Summary of 2nd Quarter (Apr.-Sep.)
Breakdown of Sales by Equipment
Sales of DVD related Equipment
Sales of Television related Equipment
Geographic Breakdown of Sales
Factor of Changes of Operating Income
Financial Conditions
Changes of Inventories
Capital Expenditures, Depreciation Expense and R&D Expenditures
Revised Forecast of Consolidated Operating Results
Revised Forecast of Sales by Equipment9

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

FY 2010

FY 2011Y/Y△41

S a l e s

791750(△5.2%)

Operating Income

2017△3)(2.6%)(2.4%)△13 (※1)

Ordinary Income

344△30)(4.4%)(0.6%)△10 (※2)

Net Income after tax

34△6△40(4.4%)(△0.9%)

N e t(M(aM（raMgraigriginnn)

Average USD-JPY
Exchange Rate

85.02

△27 (※3)△10 (※4)77.08（※1） interest received＋1、forex loss△14（※3） decrease of interest received△1、fores loss△26（※2） extraordinary loss△1、income taxes△9（※4） increase of extraordinary loss△1、increase of income taxes△9Month End Exchange Rate
（USD/JPY）

10/6

10/9

11/6

11/9

48

82

73

76.65

88.

83.

80.

10

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

Y/YY /Y(Actual base)(Forecast base)△134△162(△8.7%)(89.7%)

21△24△13(2.2%)(1.5%)△16 (※1)47345)(3.1%)(2.2%)(0.4%)Net Income after tax

382△29(2.5%)(0.1%)(△2.1%)

88.15

83.00

79.15

FY 2010

Forecast

FY 2011

S a l e s

1,540

1,568

1,406

Operating Income

4534)(3.0%)

Ordinary Income

N e t(((MMMaaarrrgggiiinnn)

Average USD-JPY
Exchange Rate（※3） decrease of interest received△2、increase of forex loss△16（※1） interest received+1、forex loss△17△42△18 (※3)△29△34 (※2) △25 (※4)△67△16 (※5)

△2 (※6)△31（※5） decrease of interest expense＋1、increase of forex loss△17（※2） extraordinary loss△1、income taxes△24、 （※4） increase of income taxes△16、（※6） increase of interest taxes△2
income taxes for prior periods△9
increase of income taxes for prior periods△9Month End Exchange Rate

10/3

10/9

11/3

11/9（USD/JPY）

93.04

83.82

83.15

76.65
11

３．Breakdown of Sales by Equipment

1,540
1,406
（100 million yen）

Y/YAV
Equipment

1,003
DVD：253
T V ：750

1,011

AV Equipment：＋8 （＋ 0.9％）

DVD Equip. ： ＋ 102
T V Equip. ： △ 94

DVD：355
T V ：656（＋40.3％）（△12.5％）

Information Equipment ： △178 （△49.5％）
Information
Equipment

360

Others182

Others： ＋ 36 （＋19.9％）

177

213

Total： △134 （△ 8.7％）

Previous 2Q

Current 2Q（Apr.-Sep.）（Apr.-Sep.）
12４．Sales of DVD related Equipment

DVD Players

355

DVD Recorders・DVD player declined, DVD recorder remained flat.
Blu-ray disc60

253
DVD Players

DVD Recorders

・BD recorder more gained than decline of BD player.
（100 million yen）

64

Y/Y7163

DVD Players： △ 11 （△ 15.5％）

DVD Recorders：＋220
Blu-ray discBlu-ray disc104

Others1511

Previous 2Q

Current 2Q（Apr.-Sep.）（Apr.-Sep.）

1 （＋ 1.6％）： ＋116 （＋111.5％）

Others：△4 （△ 26.7％）

Total： ＋102 （＋40.3％）

13

５．Sales of Television related Equipment

750
656

LCD TV・Continued market slump and consequent ASP
decline significantly impacted.

750（100 million yen）

656

Y/Y
LCD TV

Previous 2Q

Current 2Q（Apr.-Sep.）（Apr.-Sep.）： △ 94 （△12.5%）

14

６．Geographic Breakdown of Sales
North America

1,540
1,406・Information Equipment largely dropped andLCD TV, BD player also declined.
Japan・BD recorder, antennas and related devices moregained than decline of LCD TV.

North America

885

713(57%)(51%)（100 million yen）

Y/YEurope

146 (10%)

Asia & Others

138 (9%)6999(5%)
(7%)

525
Japan

371

(37%)

(24%)

Previous 2Q

Current 2Q（Apr.-Sep.）（Apr.-Sep.）

North America： △172 （△19.5％）

Europe： △ 77 （△52.6％）

Asia & Others： △ 39 （△28.3％）

Japan： ＋154 （＋41.4％）

Total： △134 （△ 8.7％）

15７．Factor of Changes of Operating Income＊ Add-value=Sales – (Cost of sales + selling expenses)《Comparison to the forecast》《Comparison to 2010/9》
Sales decrease△13Sales decrease

Add-value
deteriorated *△12451

Operating
IncomeDecrease ofgeneral expenses△16

Decrease ofgeneral expenses

34
Operating
Income21

Add-value
deteriorated *△101321
Operating
IncomeOperating
IncomePrevious 2Q

Current 2Q

Forecast

Current 2Q
16

８．Financial Conditions（100 million yen）

2,134

Comparison to 2010/9
1,939

Cash / Deposit

700

Assets

Accounts
Receivables
Inventories

Liabilities
AndNet Assets

Assets645

357673Fixed Assetsand Others459

Trade Payables

490

Accounts Payables
and Others

278363

365

438

397

438406

289

357

338

244

1,312
Net Assets

1,813

645

1,212

1,366

1,939

1,813

△321

・Cash / Deposit−・Accounts Receivables＋・Inventories△ 276

・Fixed Assets and Others△ 53

8Liabilities△167

・Trade Payables△ 133

・Accounts Payables
and Others△ 34

Net Assets△154（Shareholder’s Equity Ratio 66.3%）

2,134
2010/92011/3

2011/917

９．Changes of Inventories

673

438397424

Finished products（100 million yen）

Comparison to 2010/9235272249

Work in process

203125

2010/92011/3

2011/92.6 months

2.0 months

1.6 months

Finished products： △ 152

Work in process： △ 124<Inventories Turnover>18

10．Capital Expenditures, Depreciation Expenseand R&D Expenditures
CapitalExpenditures

Depreciation
ExpenseR&DExpenditures△22＋2△9Capital
Expenditures

R&D
Expenditures（100 million yen）

（100 million yen）
140

140

120

120

100

100

80

80

60

60

129
118

40

40

63
20

Depreciation
Expense

5445
23

2260
2048

48

53

2400

2010/9 2011/9

2010/9 2011/9

2010/9 2011/9

2010/3 2011/3
2010/3 2011/3
2010/3 2011/3（Projection）（Projection）（Projection）
19

11．Revised Forecast of Consolidated Operating Results（100 million yen）

FY 2010

ForecastForecast（2011/8/1）（2011/10/28）

Y/Y

△309

△450(△10.4%)(△14.5%)32＋25△48(2.6%)(1.2%)△17 (※1)80

15

S a l e s

2,959

3,1002,650

Operating Income

780)(0.3%)

Ordinary Income

12N e t(Margin)(0.4%)(2.6%)(0.6%)Net Income after tax△1142△28(△0.4%)(1.4%)(△1.1%)

85.21

83.00

(M（Mararggiinn)

Average USD-JPY
Exchange RateY /Y(Actual base) (Forecast base)△22 (※3)＋3△17 (※5)△65△43 (※2) △20 (※4)

△17△5 (※6)△7078.57（※1） interest received +3、interest expense△3、 （※3） decrease of interest received△1、increase of interest expense△2、forex loss△19
forex loss△17（※5） forex loss△17（※2） extraordinary loss△1、income taxes△33、 （※4） decrease of extraordinary gain△3、income taxes for prior periods△9
increase of income taxes△8、increase of income taxes for prior periods△9（※6） increase of income taxes△52012．Revised Forecast of Sales by Equipment（100 million yen）

2,959

3,100

Y / Y (Actual base)
AV Equipment

2,650

AVEquipment

Information
Equipment
Others1,986
DVD： 656
T V ：1,330

DVD Equip.
T V Equip.

1,994

Others： △ 78 （△19.1％）

Total： △309 （△10.4％）

Y / Y (Forecast base)
AV Equipment409
FY 2010（Apr.-Mar.）

420

325

305

331

ForecastForecast【2011/8/1】【2011/10/28】（Apr.-Mar.）（Apr.-Mar.）（＋ 9.8％）（△ 4.2％）： △239 （△42.4％）

DVD： 720
T V ：1,274564

8 （＋ 0.4％）： ＋ 64： △ 56

Information Equipment

2,375
DVD： 725
T V ：1,650：＋

DVD Equip.
T V Equip.

： △381 （△16.0％）： △ 5： △376（△ 0.7％）（△22.8％）

Information Equipment： △ 95 （△22.6％）

Others： ＋ 26 （＋ 8.5％）

Total： △450 （△14.5％）
21

Ⅲ． Supplemental Data ①
Summary of Operating Results (Jul.-Sep.）
1.
2.
3.

Sales by Equipment
Sales by AV Equipment
Geographic Sales

22

１．Sales by Equipment791
750（100 million yen）

AVEquipment

Y/Y

511
DVD：123
T V ：388

550
DVD：171
T V ：379

AV Equipment
DVD Equip.
T V Equip.

： ＋ 39 （＋ 7.6%）：：＋ 48△ 9（＋39.0%）（△ 2.3%）

Information Equipment ： △ 94 （△49.7%）
Information
Equipment
Others189

Others： ＋ 14 （＋15.4%）

Total： △ 41 （△ 5.2%）

95

91

105

Previous 2Q

Current 2Q(Jul.-Sep.)(Jul.-Sep.)

23

２．Sales by AV Equipment
DVD（100 million yen）

TV

（100 million yen）

388

171

379

30

123
34DVD Players

37

DVD Recorders

27

LCD TV

388

379

101
53

Blu-ray disc

Others66

Previous 2Q

Current 2Q

Previous 2Q

Current 2Q(Jul.-Sep.)(Jul.-Sep.)(Jul.-Sep.)(Jul.-Sep.)
24

３．Geographic Sales791750（100 million yen）

North America

475(60%)Europe74 (9%)

Asia & Others

71 (9%)

415

39 (5%)
48 (7%)
248

Japan

171

Y/Y(55%)

(33%)

(22%)

Previous 2Q

Current 2Q(Jul.-Sep.)(Jul.-Sep.)

North America： △60 （△12.6%）

Europe： △35 （△47.3%）

Asia & Others： △23 （△32.4%）

Japan： ＋77 （＋45.0%）

Total： △41 （△ 5.2%）

25

Ⅳ．Supplemental Data ②

1. Quarterly Operating Summary of FY 2010 / 2011
2. Quarterly Changes of Sales Amount by Equipment

26

１．Quarterly Operating Summary of FY 2010 / 2011（100 million yen）

FY 2010
1QFY 2011

2Q

3Q4Q

1Q

2Q

S a l e s749

791760659656750

Operating Income2520△5△32317( M a r g i n )(3.4%)(2.6%)(△0.7%)(△5.0%)（0.5％）（2.4％）O r d i n a r y I n c om e1234

△7△2704( M a r g i n )(1.7%)(4.4%)(△0.9%)(△4.2%)（0.1％）（0.6％）Net Income after tax

434△16△33△23△6( M a r g i n )(0.6%)(4.4%)(△2.2%)(△5.1%)（△3.6％）（△0.9％）

N e t

27

２．Quarterly Changes of Sales Amount by Equipment
DVD Equipment

TV Equipment

Information Equipment

Others（100 million yen）

749

791

760
659

123
130

362

750
656
171

229
174

184

300

277

79

87

95

388
379

280

171

189

125

86

91

126

106

108

105

1Q

2Q

3Q

4Q

1Q

2Q

(10/6)(10/9)(10/12)(11/3)(11/6)(11/9)
28

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.

29