FY2015 (56th)
Results Briefing

March 10, 2016

(Tokyo Stock Exchange‐8068)

http://www.ryoyo.co.jp

1Overview

Date ofestablishment: February 27, 1961

Domesticnetwork: Sendai, Koriyama, Matsumoto,Takasaki, Omiya, Hachioji,
Yokohama, Nagoya, Kyoto, Osaka,
Fukuoka

Capital: 13.672 million yen

Represented by : Kenhachiro Ogawa– Chairman & CEO
Takayoshi Oouchi– President & COO

Overseas
network: Dalian, Shanghai, Shenzhen, Hong
Kong, Taipei, Bangkok, Kuala
Lumpur, Singapore, Silicon Valley

Number ofemployees: (As at January 31, 2016)
Consolidated: 501
Non-consolidated: 452*Whole group: 596

Domestic: Ryoyo Semicon, Ryoyo Security
subsidiaries
ServiceBusiness areas: ◇Sales of semiconductors/devices◇Sales of ICT products (HW/SW)◇Sales of embedded devices◇Various engineering support◇Various services

Sales by product (FY2015)36%
ISO 9001 / 14001 / 27001 :All offices and subsidiaries in Japan(excluding Satellite Office)64%
Semiconductors/Devices
ICT/Solution

2

FY2015 Business results3

P/L: Higher sale but lower profits than the previous year
FY2014Actual(Unit: 100 million yen, %)FY2015
YoYDiffPlan※
ActualSales

1,101

1,130

1,123+2.0%(0.6%) Higher than the previous year

Gross profit

88.0

76.5

78.5(10.8%)

+2.7%

(%)

8.0%

6.8%

7.0%

SG&A

67.5

71.0

69.8

+3.4%

(1.7%)

Operating income

20.5

5.5

8.8(57.3%) +59.4%

(%)

1.9%

0.5%

0.8%

Non-operating income

4.4

3.5

2.2

(50.7%)

Ordinary income

25.0

9.0

11.0(56.1%) +21.8%

(%)

2.3%

0.8%

1.0%

(37.4%)

Extraordinary income

1.9

1.3(33.6%)

Income before income taxes

26.9

12.2(54.5%)

Income taxes

10.1

4.8(52.3%)

Net profit

16.8

6.5

7.4(55.9%) +14.4%

(%)

1.5%

0.6%

0.7%

ROE

2.6%

1.0%

1.1%

Comments

Q3: Recognized loss on abandoned inventory and loss
on inventory revaluation
Q4: Reduced loss on inventory revaluation

Much higher than the estimate announced in Nov due tobetter gross profit than expected and reduction ofSG&A*Announced the revised business forecast on Mar 2
Fell by 50% from the previous year due to moreexchange loss and less gains

Recognized gain/loss on sale of investment securities
and loss on fixed asset revaluation※ Announced on Nov 274

Sales by segment:
Increase in semiconductors/devises but decrease in ICT(Unit: 100 million yen, %)FY2014FY2015
YoYDiff

1,123

+2.0%

(0.6% )

725

723

+6.1%

(0.3% )

135

155

153

+13.4%(1.4% )

Digital consumer electronics
and other home electronics

87

110

101

+15.8%(7.9% ) Increased mainly in products for TVs

Vehicle installation

3740

37

+0.1%

(7.1% ) No significant change from the previous year

ActualPlan※Actual

1,101

1,130

Semiconductors/Devises

681

Communications

By Application

Total

Increased in the contract manufacturing businessfor communication devices

PC and peripherals

217

205

211

(2.9% )

+3.0%

Overall, including peripherals, ended up with thesame level as the pervious year, despite lower sales
in products for PCs due to production adjustments
by some customers

Industrials and others

205

215

221

+7.9%

+2.7%

Higher than the previous year, driven by solarrelated business, despite some impacts ofslowdown of the Chinese economy since summer

420

405

400

(4.6% )

(1.2% )

PC/Server/Network

140120115(18.2% )(4.5% ) been expecting

I/O equipment

647570+9.6%(6.1% ) the start of new orders

Software/Embedded devices

215210215(0.1% )

+2.5%ICT/Solution
By productComments

In a slump for large-volume orders which we have
Higher than the previous year, partly contributed by
Decreased in software for PCs but increased inembedded devices※ Announced on Nov 275Quarterly change in sales:
Returned to an increase on a year-on-year basis
 Semiconductors/Devices:
Returned to an increase after the impacts by large-volume orders forcommunications which ended ICT/Solution:Increased on a year-on-year basis in all items, excepted to exceed 10,000 million yen(Unit: 100 million yen)

301
277

235

292

299

287

263

270

161

173

102

96

104

105

102

Q2

Q3

Q4

Q1

Q2260

277

238

205

172
159
146

147

80

90

91

Q1

Q2

Q3

188

195

174

Semiconductors/Devices

90103

ICT/Solution

Q3

Q4

185

170

125

129

FY2013Q4118

Q1

FY2014FY2015

6

Segment information (sales by region)(Unit: 100 million yen)

1,101907

Slightly decreased in Japan, but
still expanding in Asia

1,123904Japan Japan:
Increased in LCD for communication
devices, but decreased insemiconductors for PCs and software Asia(Singapore, Hong Kong, Shanghai):
Increased in semiconductors for TVs
and LCD for communication devices

194

219

FY2014FY2015

Total

Total

Asia

7

B/S: Change from FY2014 (as at January 31, 2015)(Unit: 100 million yen)829
Cash in hand andat banks

116

769

128
46

135

96

Notes andaccounts payable trade34
Other liabilities

Notes andaccounts
receivable - trade

344
335

Inventories

145

Other current
assets46

Fixed assets

178

656

639
112
40146Assets Liabilities
and netassetsAssets Liabilities
and netassets

As at Jan 31, 2015

As at Jan 31, 2016

Net assets

Continue to maintain thestrong financial position Accounts receivable /Inventories / Accounts
payable:Decreased in line with thecurrent sales trend
 Other current assets / Fixed
assets:Investment securities (e.g.
euro-yen bonds) being
redeemed Net assets:
Implemented a payback(600,000 shares)
 Equity ratio:
83.1%
8

FY2016 Business plan9

P/L (Plan): Expect a recovery in profits, despite lower sales
 Sales:
Lower than the previous year due to the end of large-volume orders as well as thecurrent uncertain situation

 Gross profit / Operating income / Ordinary income / Net profit:
Higher than the previous year, since the impacts of loss on abandoned inventory
and loss on inventory revaluation which were recognized in FY2015 will beeliminated(Unit: 100 million yen, %)FY2015Total

FY2016
H1

H2

Total

Diff

YoY

Sales

1,123530

570

1,100(23.3)(2.1% )

Gross profit

78.5

43.5

48.5

92.0

+13.5

+17.2%

(%)

7.0%

8.2%

8.5%

8.4%SG&A

69.8

35.5

35.5

71.0

+1.2+1.8%

Operating income

8.8

8.0

13.0

21.0

+12.2

+139.5%

(%)

0.8%

1.5%

2.3%

1.9%

Ordinary income

11.0

8.0

13.0

21.0

+10.0

+91.6%Net profit

7.4

5.3

8.6

13.9

+6.5

+87.0%

(%)

0.7%

1.0%

1.5%

1.3%

ROE

1.1%

2.2%

10Semiconductors/Devices (sales by application)(Unit: 100 million yen)

-5,100 million yen (-7.1%):
End of some large-volume orders

723

672
153

Communications

117
101

103

Digital consumer
electronics and other
home electronics

3730Vehicle installation

211

210

PC and peripherals Communications:
Sales will be decreased due to the end ofsome large-volume orders

 Digital consumer electronics andother home electronics:
Sales will remain stable mainly inproducts for TVs and game machines PC and peripherals:
The weak demand for PCs will becompensated by printers and otherperipherals

221

212

ActualPlan

FY2015FY2016

Industrials and others

 Industrials and others:
The future situation is still uncertain,
especially for businesses whereend-users are in China
11

ICT/Solution (sales by product)(Unit: 100 million yen)428

+2,800 million yen (+6.9%):
Sales expected to be increasing in all
product groups

400

132

PC/Server/Network

115

7078

I/O equipment PC/Server/LAN:
Orders for systems will be expandingby new marketing strategies, with
contributions of new orders in network
 I/O equipment:
No significant change expected from
FY2015

215

218

ActualPlan

FY2015FY2016

Software/ Embeddeddevices

 Software/Embedded devices:
The increasing sales in embedded
devices will compensate the downward
trend in products for PCs

12

Return to shareholders (1) Dividend policy:
Allocation of profit earning through our business activity is one of our mostimportant matters. While we seek to maintain the stable management base andexpand business, we also seek a return for shareholders based on our financial
condition and business performance.
In FY2015 and the subsequent periods, we will target 100% of the payout ratio toa net profit of each period through dividend payment and payback
Dividend per share
Interim (Q2)FY2016FY2015FY2014(Forecast)

20 yenYear-endTotal

Payoutratio

20 yen40 yen70.9%

Refer to thefollowing page

Payback(Common: 20 yen)(Commemorative: 5 yen)(Common: 20 yen)

(Forecast)-

15 yen30 yen100.0%-(Actual)15 yen---600,000shares(Actual)15 yen15 yen30 yen44.9%―*In FY2016, we forecast that 5 yen per share of the 55th anniversary commemorative dividend at theend of Q2 and an increase in the year-end common dividend by 5 yen.

13

Return to shareholders (2) Cancellation of treasury shares- Number of sharescancelled:

600,000 shares(2.13% of the total shares issued before
cancellation)- Date of cancellation:

March 2, 2016

- Number of shares issued
after cancellation:

27,600,000 shares- Number of treasury shares
after cancellation:

2,964,147 shares(10.74% of the total shares issued after cancellation)

 Payback：- Number of shares paidback:

150,000 shares (a cap under laws)(0.61% of the total shares issued (excluding treasury shares)
before payback)- Total payback amount:

200 million yen (a cap under laws)- Payback period:

March 10, 2016 to April 15, 201614

Medium-term actions (up to FY2018)15

Basic policy of the medium-term actions

Basic policy

Contribute to customers’ higher value added bycreating new strengths through the IoT approach
Basicstrategy I

Expand the core businesses throughthe IoT approach

Basicstrategy II

Strategically focus investments on
growing markets

Basicstrategy III

Accelerate the global strategy

Basicstrategy IV

Strengthen the business base forsustainable growth16

New value

Our goals

Value to value chains• Proposing new businessmodels• Developing solutions• Matching with partners

ConventionalvalueValue• Exploring ventures

Direct connection withcustomers’ issues / strategies
Made-to-order / Irreplaceable
Expertise / Diversity

Value to supply chains• Distributorships / traderights• Logistics functions• Inventory functions• Financial functions

Low-cost operation
Scale expansion

Time17

Setting up a project team to IoTLast year, we set up “IoT Promotion Project,” a dedicated teamwhich assists in promoting company-wide leverage of new
business models that we have achieved

Identify bestpractices

Develop IoT
solutionsSupportproposal
activities

Enhanceproducts /services

18

<News> “NVIDIA Jetson TX1” added to our product lineups

RYOYO Group has been
appointed as the only one
authorized distributor in Japanand started to deliver theproducts in the middle of March“NVIDIA Jetson TX1”
Development Kit What is “Jetson TX1”?
“Jetson TX1” is the world first module-type supercomputer developed by NVIDIA.
It embodies state-of-art technologies such as “deep learning,” “computer vision,”“GPU computing” and “graphics.”
It’s expected to be used for developing new-generation autonomous robot
systems with AI19Summary<FY2015 Business results>
While sales are higher than the previous year, operating income, ordinary
income and net profit are much lower than the previous year due to loss onabandoned inventory and loss on inventory revaluation<FY2016 Business plan>
Sales is expected to be lower than the previous year due to the end ofsome large-volume orders as well as the increasing uncertainties in theglobal economy
While profits at all levels (including gross profit) will be higher than theprevious year, operating income is expected to be at the same level as
FY2014 (2,050 million yen)

<Medium-term actions>We’ll start the medium-term management plan in FY2016
Our initiatives focusing on IoT is going to bring results gradually but steadily

20About this report Notice
The business forecast and other forecasts contained in thisreport are based on certain assumptions, which we deemed
reasonable at the time of release, and the actual results may
differ due to the economic environment or various otherfactors.

- Contact Corporate Strategy Office
Corporate Planning Department
Ryoyo Electro Corporation
Tel: +81-3-3546-5088
e-mail: irmanager@ryoyo.co.jp

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