Presentation of Operating Results forthe 2nd Quarter (Apr.‐Sep.) of FY2012
November 6, 2012FUNAI ELECTRIC CO., LTD.
Security code 6839

0Ⅰ. Q2 Summary and Basic Future Policies
1.
2.
3.

Summary of 1st Half (Apr.‐Sep.) Operating Results
2nd Half (Oct.‐Mar.) Macro Outlook
2nd Half (Oct.‐Mar.) and Full‐Year Projections

4.
5.

Growth Strategy
Recent Events

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

Net Sales
Operating Income(Margin)
Average USD-JPY
Exchange Rate

SummaryFY 2011

ForecastFY 2012

1,406

1,020890

2111-14（1.5%）（1.1%）（- 1.6%）

80.00

78.96

79.15

Both of net sales and operating income, less than projected2

1．Summary of 1st Half (Apr.‐Sep.) Operating Results ②
Display Segment
Less than projected

Digital Media Segment
Less than projected due toBD‐recorder weakness in Japan

Office Solutions Segment
Less than projected due toincreased competition3

2. 2nd Half (Oct.‐Mar.) Macro Outlook
Economic Trends●US: The economy is recovering but there is concern about the Fiscal Cliff●Europe: Economic contraction deepened last quarter and business conditions have become
difficult●Emerging Markets: Consumer demand is growing, but the growth rate is decreasing●Japan: Economic stimulus measures have been drawn up as the post‐quake recovery slows

Industry Trends●Continuing commoditization ‐ especially for TVs●Rapid growth of the smartphone and tablet markets, accelerated fusion of AV, home appliance,
auto vehicle, and Internet products.
●Developed countries are mature, but emerging countries are tentatively expected to grow●TV and BD recorder markets in Japan have shrunk drastically year‐over‐year4

3．2nd Half (Oct.‐Mar.) and Full‐Year Projections(100 million yen)

Revised Earnings Forecast

1st Half
Actuals

2nd HalfForecast

Full‐YearForecast

Net Sales890

1,160

2,050

Operating
Income-14-11-25（-1.6%）（-0.9%）（-1.2%）

78.96

78.00

78.48

Average USD‐JPY
Exchange Rate

Above changes have been made to the earnings forecast that was previously
announced on May 7, 2012, due to reviews of 2nd half exchange rate (USD=JPY 80 to
JPY 78), and increased competitions of LCD TVs/ DVD‐related products.
We revised Full‐Year net sales projections to 205 billion yen from original 229 billion.
54．Growth Strategy

Boost sales anda.strengthen
existingbusinesses

b.Enter emerging
markets

GrowthStrategyc. Launch newbusinesses

6

5．Recent Events ― a. Existing Business Areas
Corporate Action
Boost sales and profit
through cost competitiveness
Sales

Display Division●Manage PSI effectively●Expand capacity and strengthen
competitiveness at Thailand plant

Digital Media Division

1. Build trust withclients and customers●Start production of 5th generation BD
recorders

2. Emphasize existing business areas
3. Cultivate emerging markets●Develop and launch new items

Profitability
1. Accelerate shift to offshore
engineering
2. Restructure manufacturing base
3. Strengthen patent portfolio
4. Aggressively curtail fixed costs

Office Solutions Division●Start production of laser printers●Start production of Android OS devices●Commercialize in‐house developed printer7

5．Recent Events ― a. Existing Business Areas

Strong relationships with major retailers
We’ve received awards from Wal‐Mart in rapid succession.
Supplier Collaboration Award in the Entertainment
Department for 2012
This annual award recognizes suppliers that have madesignificant contributions to Wal‐Mart’s businesses byproviding planning, design, manufacturing, shipping, PSI(Purchase, Sales, Inventory), and sales support.

Selected for this award out of a pool of over fifty electronics suppliers

Supplier Award of Excellence for the first quarter of 2012
Each quarter, each Wal‐Mart Stores buying team selects one
supplier to receive a Supplier Award of Excellence. Selections
are based upon a number of performance measurements, andone of the quarterly recipients will also be recognized as a
Supplier of the Year.

Selected for this award out of a pool of over thirty electronics suppliers
8

5．Recent Events ― b. Emerging Markets●Launched in India, next is Thailand, the Middle East, and other Asian markets●Rapidly expanding in Central and Latin America● Making inroads into emerging markets
Forecast Demand for LCD TVs

Middle East and Africa
Central and Latin America
Asia Pacific

208

205
52236

221

81

71

63

（millions of units）

China
EuropeN. America
Japan2011

2012

2013

2014

Source：DisplaySearch

9PHILIPS Branded Audio and Accessory Products BusinessWe are now the sole N.A. distributor of PHILIPS
branded audio and accessory products.
（Effective: September,2012）

Sales Area・・・North America (USA, Canada), Mexico currently under study
Products・・・Audio and Accessories (headphones, docking speakers, portable audio and video, and other accessories)
10LED Lighting BusinessWith the high quality and cost competitiveness, expand sales worldwide.
LED Bulb Light

LED MR16 Spot Light

LED Lighting Demand Forecast(World Wide)
1.9（UNIT: trillion yen）

LED Tube Light

LED Tunnel Light

0.8

2011 20122013 2014 2015

Data: Funai Electric Marketing at Oct. 201211

5．Recent Events ― c. New Business Areas
and Energy Efficiency
1 Ecology●Launched LED lighting business in China, next is Japan, other areas●Recently started production of ecological materials

2 Networks●Launch Android tablet soon
●Unveil Android internet devices shortly

3 Devices and Modules●Master high‐density implementation skills and technologies●Develop applied MEMS related products
MEMS・・・Micro Electro Mechanical Systems

12

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 Equipment
131．Summary of 2nd Quarter (Jul.‐Sep.)（100 million yen）

FY 2011

FY 2012

Y/Y‐260Net Sales

750490(‐34.7%)

Operating Income

17‐5‐22(2.4%)(‐1.0%)

4‐10(0.6%)(‐2.0%)‐1 (※2)‐6‐11‐5(‐0.9%)(‐2.3%)(Margin)

Ordinary Income(Margin)

Net Income after tax(Margin)Average USD‐JPY
Exchange Rate77.08（※3） decrease of forex loss ＋9、other ‐1（※2） extraordinary loss ‐1（※4） decrease of income taxes ＋9

11/6
80.73

（USD/JPY）‐14＋9 (※4)78.12（※1） forex loss ‐5Month End Exchange Rate＋8 (※3)

‐5 (※1)

11/9
76.65

12/6
79.31

12/977.60
14

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

FY2011Net Sales

Y/Y

Y /Y

(Actual base)(Forecast base)‐516‐130(‐36.7%)(87.3%)‐14‐35‐25

ForecastFY2012

1,406

1,020890

2111

Operating Income(1.5%)(1.1%)(‐1.6%)‐16 (※1)

512‐30‐35( M a r g i n )(0.4%)(1.2%)(‐3.4%)＋1 (※2)Net Income after tax‐292‐290( M a r g i n )(‐2.1%)(0.2%)(‐3.4%)

79.15

80.00

78.96

( M a r g i n )Ordinary Income

Average USD‐JPY
Exchange Rate

±0 (※3)‐42＋35 (※4)（※1） interest received ＋1、forex loss ‐17（※3） interest received ±0、forex gain and loss ±0（※5） increase of forex loss ‐17（※4） increase of extraordinary loss ‐1、decrease of income taxes ＋27、decrease of income taxes for prior periods ＋9（※6） increase of extraordinary loss ‐2、decrease of income taxes ＋13（USD/JPY）

11/3
83.15

11/9
76.65

12/3
82.19

12/9
77.60

＋11 (※6)‐31（※2） extraordinary loss ‐2、income taxes ＋3

Month End Exchange Rate

‐17 (※5)15

3．Breakdown of Sales by Equipment

1,406（100 million yen）

（100 million yen）

890
1,011

AV
Equipment

Y/Y： ‐266 （‐26.3％）

AV Equipment： ‐ 204： ‐ 62DVD Equip.
T V Equip.

DVD：355
T V ：656

745
DVD：151
T V ：594

Information
Equipment

182

Others

213

41
104

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）（‐ 57.5％）（‐ 9.5％）

Information Equipment： ‐141 （‐77.6％）

Others： ‐109 （‐50.9％）

Total： ‐516 （‐36.7％）

16

4．Sales of DVD related Equipment

355DVD Players

DVD Recorders

DVD Players（100 million yen）

60

DVD Recorders

・Both DVD players and recorders declined due tomarket contraction.

Blu‐ray disc・BD players increased, but BD recorders significantly
dropped due to ongoing market contraction.

64（100 million yen）

151
Blu‐ray disc

220

41
4257
Others1111

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）

Y/YDVD Players： ‐ 19 （‐31.7％）

DVD Recorders： ‐ 22 （‐34.4％）

Blu‐ray disc： ‐163 （‐74.1％）

Others： −（− ）Total： ‐204 （‐57.5％）

17

5．Sales of Television related Equipment（100 million yen）

656
594

LCD TV・LCD TVs declined due to reduced demand in the wakeof transition to digital terrestrial broadcasting in Japan.

656（100 million yen）

594

Y/Y
： ‐ 62 （‐ 9.5%）

LCD TV

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）
18

6．Geographic Breakdown of Sales

1,406（100 million yen）

North America
・The sales of information equipment and DVD‐relatedproducts declined.

JapanNorthAmerica

EuropeAsia & Others

Japan713(51%)

6999(5%)(7%)

890（100 million yen）

644

Y/Y(72%)

525
(37%)

・The sales of BD recorders, LCD TVs, antenna andrelated devices fell in the wake of transition to digitalterrestrial broadcasting and due to ongoing market
contraction.

27 (3%)
55 (6%)
164

North America： ‐ 69 （‐ 9.6％）

Europe： ‐ 42 （‐61.1％）

Asia & Others： ‐ 44 （‐44.4％）

Japan： ‐361 （‐68.7％）

Total： ‐516 （‐36.7％）(19%)

Previous 2Q

Current 2Q（Apr.‐Sep.）（Apr.‐Sep.）

197．Factor of Changes of Operating Income＊ Add‐value=Sales – (Cost of sales + selling expenses)《Comparison to the forecast》《Comparison to 2011/9》（100 million yen）

Sales decrease

Sales decrease21
Operating
Income11
Operating
Income-14

Decreased
add‐value*-14-44-14

Decrease ofgeneralOperatingexpenses
IncomeDecreased
add‐value*-23

Decrease ofgeneral Operating
Incomeexpenses+10+12-1
Previous 2Q

Current 2Q

Forecast

Current 2Q20

8．Financial Conditions（100 million yen）

1,813

AssetsLiabilities
AndNet Assets

Comparison to 2011/91,766

1,762

726

615

Assets‐ 51・Cash / Deposit‐ 30366

・Accounts Receivables＋ 1339404

・Inventories＋ 7406379

377

・Fixed Assets andOthers‐ 29

Trade Payables

357
244

296
232

358

Accounts Payables
and Others

Liabilities‐ 2・Trade Payables+ 1・Accounts Payables
and Others‐ 3Net Assets‐49（Equity Ratio65.3%）

Cash / Deposit

645

Accounts
Receivables

365

Inventories

397

Fixed Assets
and Others

Net Assets

1,212

322

1,238

241

1,163

1,813

1,766

1,762

2011/92012/3

2012/921

9．Changes of Inventories

404397339272

Finished products

285
223

（100 million yen）

Comparison to 2011/9

Work in process

125116119

2011/92012/3

2012/91.6 months

2.4 months

2.5 months

Finished products： ＋13Work in process： ‐ 6<Inventories Turnover>
22

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

Depreciation
ExpenseFull Year
R&DExpenditures

CapitalExpenditures

Depreciation
ExpenseR&DExpenditures（100 million yen）

（100 million yen）

120

120

‐4‐4‐7100

10080806060

105103404054202319244749
2040

40402000

2011/9 2012/9

2011/9 2012/9

2011/9 2012/9

FY2011 FY2012（Projection）

FY2011 FY2012（Projection）

FY2011 FY2012（Projection）

23

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

FY2011Net Sales

M

argin

M

argin

M

argin

Y /Y(Actual base)(Forecast base)‐411‐240(‐16.7%)(‐10.5%)2,050440‐25‐29‐65(0.2%)(1.7%)(‐1.2%)‐16 (※1)‐13 (※3)

140‐41‐42‐81(0.1%)(1.7%)(‐2.0%)‐17 (※2)‐4625‐58‐12(‐1.9%)(1.1%)(‐2.8%)

78.8180.0078.48))

Net Income after tax(Y/Y（2012/11/2）

2,290

Ordinary Income(Forecast（2012/5/7）

2,461

Operating Income(Forecast)

Average USD‐JPYExchange Rate（※1） interest received +2、interest expense ‐1、 （※3） increase of forex loss ‐13
forex loss ‐17（※2） extraordinary loss ‐18、income taxes ＋1＋30 (※4)‐16 (※5)‐2 (※6)‐83（※5） decrease of interest expense ＋1、increase of forex loss ‐17（※4） increase of extraordinary loss ‐11、（※6） increase of extraordinary loss ‐18、decrease of income taxes ＋32、decrease of income taxes ＋16
decrease of income taxes for prior periods ＋924

12．Revised Forecast of Sales by Equipment（100 million yen）

（100 million yen）

Y / Y (Actual base)

2,461
2,290

AV Equipment

2,050

AVEquipment

Information
Equipment
Others1,835
DVD： 626
T V ：1,209

1,906
DVD： 565
T V ：1,341

DVD Equip.
T V Equip.

： ‐ 302 （ ‐ 48.2％）： ＋114 （＋9.4％）

Information Equipment： ‐ 196 （‐65.3％）

Others： ‐ 27 （‐ 8.3％）

Total： ‐411 （‐16.7％）

1,647
DVD： 324
T V ：1,323

Y / Y (Forecast base)
AV Equipment
DVD Equip.
T V Equip.

300
104326139245FY 2011

ForecastForecast【2012/5/7】【2012/11/2】（Apr.‐ Mar.）（Apr.‐ Mar.）（Apr.‐ Mar.）： ‐ 188 （‐10.2％）299： ‐ 259 （‐ 13.6％）： ‐241： ‐ 18（ ‐ 42.7％）（ ‐ 1.3％）

Information Equipment： ‐ 35 （‐ 25.2％）

Others： ＋54 （＋22.0％）

Total： ‐ 240 （‐ 10.5％）
25

Ⅲ．

Supplemental Data ①

Summary of Operating Results (Jul.‐Sep.）
1. Sales by Equipment
2. Sales by AV Equipment
3. Geographic Sales

26

1．Sales by Equipment

750（100 million yen）

（100 million yen）

AV
Equipment

550490AV Equipment

DVD：171
T V ：379

DVD Equip.
T V Equip.

424
InformationEquipment
Others

Y/Y

DVD： 70
T V ：354

95
105

1551

Previous 2Q

Current 2Q(Jul.‐Sep.)(Jul.‐Sep.)： ‐ 126 （‐22.9%）： ‐ 101： ‐ 25（‐59.1%）（‐ 6.6%）

Information Equipment ： ‐ 80 （‐84.2%）

Others： ‐ 54 （‐51.4%）

Total： ‐ 260 （‐34.7%）

27

2．Sales by AV Equipment
DVD379171
DVD Players

30

DVD Recorders

34LCD TV

354

379

354

70
20101

Blu‐ray disc（100 million yen）

TV（100 million yen）

256196

Previous 2Q

Current 2Q

Previous 2Q

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

Others28

3．Geographic Sales（100 million yen）

750

NorthAmerica

EuropeAsia & Others

Japan

415

（100 million yen）

490
Y/Y

(55%)

39 (5%)
48 (7%)

375(77%)

248
(33%)

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

Current 2Q(Jul.‐Sep.)(Jul.‐Sep.)

North America： ‐ 40 （‐ 9.6%）

Europe： ‐ 27 （‐69.2%）

Asia & Others： ‐ 19 （‐39.6%）

Japan： ‐174 （‐70.2%）

Total： ‐260 （‐34.7%）

29Ⅳ．Supplemental Data ②

1. Quarterly Operating Summary of FY 2011 / 2012
2. Quarterly Changes of Sales Amount by Equipment

30

1．Quarterly Operating Summary of FY 2011 / 2012（100 million yen）

FY2011
1Q

2Q

FY2012
3Q

4Q

1Q

2Q

S a l e s

656

750

628

427

400490Operating Income

3178‐24‐9‐5( M a r g i n )（0.5％）（2.4％）（1.3％）(‐5.8%)(‐2.4%)(‐1.0%)

Ordinary Income048‐12‐20‐10( M a r g i n )（0.1％）（0.6％）（1.4％）(‐2.9%)(‐5.1%)(‐2.0%)Net Income after tax‐23‐6‐5‐10‐18‐11( M a r g i n )（‐3.6％）（‐0.9％）（‐1.0％）(‐2.4%)（‐4.6％）（‐2.3％）

N e t

31

2．Quarterly Changes of Sales Amount by Equipment
DVD Equipment

TV Equipment

Information Equipment

Others（100 million yen）

750
656

171

184

628
166

379
277

427

490
400

70

105

81

219

240

49
54
4Q

26
53
1Q

15
51
2Q

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

334

87

95

108

105

1Q

2Q

69
59
3Q

(11/6)(11/9)(11/12)354

32Disclaimer

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 business performancethat 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 such areas
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.

33