Q2/FY2013 (54th)
Results Briefing

August 30, 2013

(Tokyo Stock Exchange‐8068)

http://www.ryoyo.co.jp

1Overview
Sales by product
Date of Establishment : February 27, 1961
Capital : 13,672 million Yen（ H1 / FY2 0 1 3 ）Domestic
Electronic semiconductors
devices etc.
11%

11%

Represented by :Kenhachiro Ogawa – Chairman & CEO
Takayoshi Oouchi – President & COO
Number of employees : (as at July 31, 2013)
Consolidated: 512 （Whole group: 595）

Business areas :Comprehensive electronic devices service
 Sales of semiconductors
 Sales of computer systems & peripherals
 Sales of software & embedded devices
 Engineering support
 Various services
ISO 9001 / 14001 / 27001 :All offices and a subsidiary (excluding satellite
offices) in Japan

Computersystems &peripherals

38%

Total

51%

Overseas
semiconductors

40%

Domestic network :Sendai, Koriyama, Matsumoto, Takasaki(satellite),
Hachioji, Yokohama, Nagoya, Kyoto, Osaka, Fukuoka
Overseas network :Dalian, Shanghai, Shenzhen, Hong Kong, Taipei,
Bangkok, Kuala Lumpur, Singapore, U.S.

Domestic subsidiaries :Ryoyo Semicon, Ryoyo Security Service2

Business results for H1/FY2013

3

External environments
 Japanese economy:• Recovered export/production trends and improved exchange rates by thegovernment’s economic measures Whereas the outlook for the global economy is still uncertain,
a sense of expectation for economic recovery in Japan is increasing

 Electronics industry:• The situation is still severe structurally due to sluggish demands for consumer
products (especially digital consumer electronics) and price drop
• The industrial sector where has been suffering from prolonged production
adjustments is now showing a sign of recovery and gradually improving towards
the second half IT industry:• Stable private investment on IT hardware, mainly infrastructure• Along with accelerated shift from “individual /diversified investment” to“concentrated investment”, the size of projects is growing, making competition
fiercer4

P/L: Actual results in H1/FY2013(Unit: 100 million yen)
H1/
FY12

Initial
plan

H1/
FY13

YoY

Sales

447

440

440

(1.5% )

+0.0% as planned

Gross profit

38.1

37.5

40.2

+5.5%

+7.3% Exceeding the initial plan in both amount

(% )

8.5%

8.5%

9.1%

SG&A

33.6

33.0

32.2

(4.0% )

4.6

4.5

8.0

+74.6%

Operating income

Actual/Initial plan

Comments
Slightly lower than the previous year, but

and rate due to the continuing depreciationof yen and changes in the sale composition(2.4% ) Decreased labor cost, rent, etc.
+78.1% Much higher than the previous year andthe initial plan due to increased gross profit
and decreased SG&A

(% )

1.0%

1.0%

1.8%

Non-operating income

0.3

1.0

1.7

+397.2%+65.1% improved exchange gain/loss

Ordinary income

4.9

5.5

9.7

+96.4%+75.7%

(% )

1.1%

1.3%

2.2%

Extraordinary income

0.0

0.0

0.2

―

Income before income taxes

4.9

5.5

9.8

+99.6%+78.6%

Income taxes

2.5

2.0

3.3

+30.5%+65.0% Reduced tax burden

Quarterly net profit

2.4

3.5

6.5

+172.7%+86.4%

(% )

0.5%

0.8%

1.5%

EPS (Yen)

9.26 13.55 25.26

Increased investment income andIncluding gain from sales of investment― securities

5Sales by segment(Unit: 100 million yen)
H1/
FY12

H1/
FY13

447

440

(7)

(1.5%)

230

223

(7)

(2.9%) communications

Communications28

24(4) (15.8%) Decline in high-frequency products for cellular phones

Digital consumer electronics
and other home electronics

34

31

(3)

Vehicle installations

26

32

+5

PC and peripherals

7865(13) (16.7%) products for peripherals such as storage media

Industrials and others

64

72

+8

171

169

(1)

(0.9%) previous year

PC/Server/LAN

68

65

(3)

(4.7%) not enough to compensate weaker sales in the spring season

I/O equipment

31

32

+0

+1.0% Stable sales in monitor and printer products

Software/Embedded devices

71

73

+1

+2.0% embedded devices especially graphic boards

Electronic devices and others

46

48

+1

+2.8% New orders contributing higher sales than the previous year

Domestic devices

31

34

+3

+9.8% networking

Overseas devices1614(2) (10.8%) but increase in LC for communication devices

Total
Semiconductors

Computer systems
and peripherals

Diff

YoY

Comments

Continuing slump in semiconductors for peripherals and(7.7%) Slump in products for TVs, Blu-ray and game machines+20.1% Continuously stable
End of a spot order for tablet terminals as well as decrease in+12.4% Showing a sign of gradual recovery
Weaker sales in the spring season but generally same as the
Gradual recovery in IT-related investments by customers, but

Continuing slump in software for PCs but increasing sales in

Increase in LC for industrial use and cables for optical
End of a spot order contributing to sales in the previous year,

6Quarterly change in sales
 Semiconductors:
Higher sales on both year-on-year (Q2/FY2012) andquarter-on-quarter (Q1/FY2013) bases

 Computer systems & peripherals:
Sales in Q2 has recovered to around 9 billion yen
due to delayed some large orders Electronic devices and others:
Significant increased from the previous quarter (Q1/FY2013),
mainly LC products
Unit: 100 million yen

219

222

125

115

75

87

205

107

77

205

102

82

223

205

201
115

89

115

81

235

224

224

102

79

112

91

119

Semiconductors

89

Computersystems &peripherals

105

80

20

20

20

21

19

27

20

21

20

27

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

FY2011FY2012

Electronic
devices andothers

FY2013

7

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

447

374

Slightly decreased sales in both
Japan and Asia

440

370

73

70

H1/FY2012

H1/FY2013

Japan

Asia

 Japan:Slightly lower than the previous year
due to slump in computer systems andperipherals as well as the end offavorable demands for IT-related
investments

 Asia (Singapore, Hong Kong, Shanghai):Decreased sales due to the end of spotorders for tablet terminals
compensating increasing sales forindustrials

8B/S: Comparison with FY2012 (as of Jan 2013)
Unit: 100 million yen

751

725
132

89

159

24

22

233

Inventories

113

Other
current
assets

117

93

Fixed
assets129140

 Cash in hand and at banks /Other current assets:
Some investments have reachedmaturity for redemption.

241

Jan 2013

118

AssetsLiabilities andnet assets

613

The financial position iscontinuously strong.

Otherliabilities

Notes andaccounts
receivable- tradeAssets102626

Net assets

 Notes and accounts receivable /payable - trade:
Increase in both in conjunction withcurrent sales growth Fixed assets:
Increase in investment securities

Liabilities andnet assets

Cash inhand andat banks

Notes andaccounts
payable trade Net assets:
Increase in exchange adjustment
accounts

Jul 2013

9

Business plan for the whole 201310

Whole year plan (P/L)
Upward revision from the initial plan in both sales and profit
Target at least 100% increase in operating income - net profit
Unit: 100 million yen

FY2012
ActualSales
Gross sales
(% )
SG&A
Operating income(% )Non-operating inome
Ordinary income(% )Extraordinary income
Income before income taxes
Income taxes
Net profit(% )EPS (Yen)

872
73.7
8.5%
66.5
7.2
0.8%
1.9
9.1
1.0%
0.0
9.1
4.9
4.2
0.5%
16.41

FY2013 (Plan)
Initial plan

Revised（ 8/26）

900
77.0
8.6%
66.0
11.0
1.2%
2.0
13.0
1.4%
0.0
13.0
5.0
8.0
0.9%
30.98

920
82.0
8.9%
66.0
16.0
1.7%
2.5
18.5
2.0%
0.2
18.7
7.2
11.5
1.3%
44.53

+5.5%
+11.2%

Actual/Initial plan
+2.2%
+6.5%

(0.8% )
+121.5%+0.0%+45.5%+33.3%+103.3%+25.0%+42.3%―+105.5%+48.1%+171.4%―+43.8%+44.0%+43.8%YoY

11

Sales by product
Unit: 100
million yen

872

444

340

900

920

455

465

360

Semiconductors

 Semiconductors:
More serious situation in PC-related
businesses as expected but gradually
recovering in H2

360

Computersystems andperipherals Computer systems and peripherals:
No change in the initial plan,
anticipating contribution to sales bybusinesses for enterprises

Electronic
devices andothers Electronic devices and others:
Expected higher growth than expectedin H1 is continuing in H2

87

85

95

ActualInitial

RevisedFY2012

Upward revision insemiconductors and electronic
devices & others, no change incomputer systems and peripherals

FY2013 (Plan)

12

Semiconductors (Sales by application)
Unit: 100
million yen

444

455

465
46

Communications

63

65

Digital consumer
electronics and other
home appliances

55

60

Vehicle installations

150

134

Computer systems
and peripherals

145

160

Industrials and others

42
53

64

53

147

127

Actual
FY2012

Initial+1,000 million yen over the initialplan due to earlier start-up of thebusiness for industrials

 Vehicle installations:
Currently still stable, and expected tocontinue in H2

 Computer systems and peripherals:
Downward revision from the initial plan,
including peripherals, anticipating theprolonged severe market situation
 Industrials and others:
Heading for recovery in both orders
and sales since Q2, increasing
expectation for new orders in H2

RevisedFY2013 (Plan)

13

Computer systems and peripherals (Sales by product)
Unit: 100
million yen

360

No change in the initial plan360

PC/Server/LAN
出力機器
ソフトウェア/ 組込み

340

合計
150

150

PC/Server/LAN

67

65

65

I/O equipment

143

145

145

Software/
Embedded
devices

ActualInitial

Revised130

FY2012

 PC/Server/LAN:
Accelerated start-up of businesses forenterprises in/after H2
 Software/Embedded devices:
Slightly soft demands for software forPCs, but expecting growth in embedded
devices such as embedded software andgraphic boards

FY2013 (Plan)●

14

Electronic devices and others (Sales by supplier)Unit: 100
million yen

87+1,000 million yen over the initial
国内製
plan
due to higher sales in LC, etc.
海外製
than expected
合計

95
85

 Domestic suppliers:
Increasing trend in LC panels forindustrial use, contact image sensors,
etc.

65
58

Domestic
suppliers

57

29

28

30

ActualInitial

RevisedFY2012 Overseas suppliers:
Expecting sales at the same level as
the previous year, with increase inproducts for communications
compensating LC panels for which aspot order ended

Overseas
suppliers

FY2013 (Plan)●

15

Return to shareholders
 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.
We will maintain the current dividend level (30 yen per share per year) for a few years
ahead, which will be reviewed in accordance with the profit level on a medium-termbasis.

 Dividend:
Estimate to maintain the annual dividend of 30 yen in FY2013.
Dividend per share
Interim

Estimate

EPS

Payout ratio

Year-endTotal

15 yen30 yen44.53 yen

67.4%

15 yen30 yen16.41 yen

182.8%FY2013
FY2012

Actual15 yenActual15 yen16

Medium-term actions

17

- Ryoyo Group Vision -Become a solution partner impressing the“fully-connected smart society”

18Deepen business in the smart society

PCs/Tablets

Smart phones

M2M

Energy-saving
Semiconductors/ Devices

Integrated
businesses

ICT

Derivative
businesses
OA devices

Next-generation cars

Medical/Health-care

Industries/FA
19

FY2015 Target● Overall strategy●
1. Reinforce and expand the base of corebusinesses
2. Focus on integrated businesses• Launch new businesses• Link with core businesses
3. Expand (self-sustained) business inoverseas
4. Renovate management/HR/administrative
systems
5. Be active on M&A and alliance

FY2015 (Target)
Sales: 120.0 billion yen

Operating income: 4.0 billion yen

FY2012 (Actual)
Sales: 87.2 billion yen
Operating income: 0.7 billion yen

FY2013 (Plan)
Sales: 92.0 billion yen
Operating income: 1.6 billion yen

20Topics

21

<New product> Empress

Empress: Empress’s embedded database software is used for wide applications suchas defense, military, aerospace, aviation, power generation and medical mainly inNorth America as well as in telecommunication, FA and finance industries in Japan• Products:
Embedded database software• Features:
Facilitate linkage/interconnection of smart phones, tables and embedded devices
with cloud-based database with an extremely low risk of information leakage andlimited load to devices and network• Target markets:
Target a variety of applications with the keyword “M2M” by offering not only standalone software products but also solutions using the software (refer to Page 28)

22

<New product> u-blox

u-blox: u-blox is a global provider of highly integrated embedded GNSS (GPS) &wireless communication solutions which has a wide portfolio of chips, modules andsoftware solutions• Products:
GPS chips, 3G modules, etc.
• Features:With combination of innovative functions and packages having the best sensitivity
and performance in the industry, provide the best product, software and solution
meeting customers’ design requirements. u-blox products are widely used forvehicle installations and industrial uses where the tough standards are applied aswell as for mobile devices which require specific specifications (small-size, highperformance and energy-efficiency)• Target markets:
Target 500 million yen sales in FY2014 for various applications such as smart phones,
tablets, vehicle installations and M2M

23

<New product> Silego

Silego: Silego was initially established as a semiconductor manufacturer which
engaged in development of silicon timing devices for supporting Intel products, but
has been expanded its business on development of low-cost/ultra-miniature mixed
signal FPGA products• Products:
Ultra-miniature mixed signal FPGA “GreenPAK”• Features:
A user-programmable product where “analog circuit”, “discrete/digital circuit” and“passive component” are integrated in one piece of chip, which contributes toreplacement of micon functions and integration of glue logic• Target markets:
Target 200 million yen sales in FY2014 mainly for cellular phones, digital cameras
and major home electrical appliances

24

Talk in an event hosted by NVIDIA
On July 30, we delivered the talk “Utilization of GPU for inspection equipment andcomparison with FPGA”, which discussed comparison between GPU and FPGA as well as
advantages of replacement of FPGA by GPU, in “GPU Technology Conference (GPU)hosted by NVIDIA in Tokyo.
The talk gathering a number of audience, we recognize a great deal of attention to GPU.
After the talk, we are also receiving many inquiries.

“Tech-On!” (Nikkei BP)

25

Accelerate development of solutions for the IS market(1) Ultra-miniature client“RyPLE”(2) Appliance server“M2M Data Connector”“RyPLE” is an ultra-miniature client which has
the features of Intel’s next-generation form
factor NUC (“small-size”, “high-performance”
and “energy-efficiency”) as well as is
excellent in design, durability, expandability
and security“M2M Data Connector” is the first applianceserver having the M2M replication function
which is equipped with Empress embedded
database software and enables data linkage ofembedded devices with the main and cloudbased database<Major applications>• Digital signage• Receiving terminals• Bed-side terminal• Terminals forlogistics management• Terminals for educational use• Etc.

<Major application>• Remote monitoring• Industrial/Officeequipment• POS terminals• Smart grid
• Terminals for medical/
finance use• Etc.

We offer these products not only as stand-alone hardware but also“a part” of solutions for the intelligence system market

26

<CSR> Received a visit by a US university
As part of CSR activities, we received a visit by 19 membersof George Mason University in the US to introduce Japaneseculture and business.

The members listed to the profile and business of ourcompany. They also made an office tour, by which theyexperienced the “real business”.
Especially our “showroom” gathered a great deal of interest
from the member where they experienced solutions
developed by us.

27Summary<Business results for H1/FY2013>
Sales have been in line with the initial plan, whereas operating income
has significantly increased due to the improved gross sales ratio andreduced SG&A

<Business plan for the whole FY2013>
Upward revision from the initial plan in both sales and profit
For semiconductors, expecting those for industrial uses which is
showing a sign of recovery since the late of the first half. For
computer systems and peripherals, the full-ranged start-up ofbusinesses for enterprises is expected<Medium-term actions>With the medium-term vision “Become a solution partner impressing
the “fully-connected smart society”, achieve sustainable growth by
expanding core businesses and developing integrated businesses
FY2015 Target
Sales: 120.0 billion yen, Operating income: 4.0 billion yen

28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
Saotome / Uno
Corporate Planning Dept.
Ryoyo Electro Corporation
Tel: +81-3-3546-5088
URL: http://www.ryoyo.co.jp
e-mail: irmanager@ryoyo.co.jp

29