Information Meeting for The First Half of
Fiscal Year ending March 2013

November 15, 2012

KAGA ELECTRONICS CO., LTD. (TSE 1st section, 8154)
3-12-8 Sotokannda, Chiyoda-ku, Tokyo 101-8629
Tel: (03) 4455-3131 Fax: (03) 3815-6807
URL：http://www.taxan.co.jp

Financial Highlights
First Half of FY3/2013

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■ Consolidated Statement of Income（million yen）

1H FY3/2012
AmountPct.

1H FY3/2013
AmountPct.

平成18年3月期
Net Sales
116,237平成19年3月期（予）100.0%
103,845
Cost of sales
101,91387.7%
91,515Gross profit
14,323
12.3%
12,329
SG&A expenses
13,551
11.7%
12,800Operating income
771
0.7%
-470
Non-operating income
381
0.3%
432
Non-operating expenses
257
0.2%
318
Ordinary income
895
0.8%
-355
Extraordinary items
50
0.0%
-324

Income before income taxaes

Income taxes
Income taxes-beferred
Minority interests
Net income

945
677
-62
29
301

0.8%
0.6%
-0.05%
0.02%
0.3%

-680
530
238
-75
-1,373100.0%
88.1%
11.9%
12.3%
-0.5%
0.4%
0.3%
-0.3%
-0.3%
-0.7%
0.5%
0.23%
-0.07%-1.3%

ChangesAmountPct.
-12,392-10,398-1,994-751-1,24151
61-1,250-374-1,625
-147
300
-104
-1,674-10.7%-10.2%-13.9%-5.5%-161.0%13.4%
23.7%-139.7%-748.0%-172.0%-21.7%-483.9%-358.6%-556.1%

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Comparison of Consolidated Sales by Business Category（million yen）

1H FY3/2012
Net sales
Segment income

1H FY3/2013
Net sales

Pct.

Segment income

116,237
Pct.

AmountPct.

83,411

71.8%

77,78374.9%-5,628

-6.7%

636

82.5%

343

-73.0%-293-46.1%

Informationequipment

26,55722.8%

19,27018.6%-7,287-27.4%-111-14.4%

-337

71.7%

-226

203.6%

1,533

1.3%

1,491

1.4%

-42

-2.7%

163

21.1%

-403

85.7%

-566 -347.2%

4,734

4.1%

5,299

5.1%

565

142
116,237771

18.4%
100.0%
100.0%-27
103,845-470

5.7%
100.0%
100.0%

Other
Total

Segment income

Changes

Electtronic
components

Software（million yen）

Net sales

103,845

771

-470

11.9%

-169 -119.0%-12,392 -10.7%-1,241 -161.0%* Figures of each segment income are not inter-segment adjusted other than total.

Summary■ Electronic components (Development, manufacture and sale of semiconductors, general electronic components and other products, electronic
manufacturing service (EMS), and other activities)
There was growth in sales of in-vehicle electronic components and semiconductors and in EMS business sales, mainly for office and air
conditioning equipment overseas. In Japan, orders were lower for electronic components for amusement devices and for semiconductors andother products. As a result, segment sales were 77,783 million yen■ Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, and other products)
Lower sales of personal computers and the negative impact of changes in sales and distribution channels for memory-card products sold at large
consumer electronics stores and specialty shops caused sales to decrease to 19,270 million yen.
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4

【Reference】Comparison of Consolidated Sales by Business Category（million yen）

（million yen）

116,237

Changes

1H FY3/2012

1H FY3/2013

AmountPct.

AmountPct.

Information equipment

26,11722.5%

21,851

21.0%-4,266-16.3%

EMS

28,87824.8%

30,943

29.8%

2,064

7.2%

Semiconductors

30,65526.4%

26,34225.4%-4,313-14.1%

Generalelectronic
components

16,603

14.3%

12,611

12.1%-3,991-24.0%

Others13,982

12.0%

12,096

11.6%-1,886-13.5%

Total

116,237

100.0%

103,845100.0%-12,391-10.7%

103,845

AmountPct.

Summary■ Information equipment sales: Down 4,266 million yen (-16.3%)
Changes in sales and distribution channels for memory-card products sold at large consumer electronics stores and specialty shops along withlower sales of personal computers, terrestrial digital TV broadcast tuners and compact digital cameras resulted in sales of 21,851 million yen.

■ EMS sales: Up 2,064 million yen (+7.2%)
Higher EMS orders, mainly overseas from Japanese manufacturers of air conditioning equipment, raised sales to 30,943 million yen.

■ Semiconductor sales: Down 4,313 million yen (-14.1%)
Sales were 26,342 million yen mainly because of a decline in orders in Japan for semiconductors used in amusement devices.
■ General electronic components sales: Down 3,991 million yen (-24.0%)
Sales were 12,611 million yen because of lower orders for electronic components used at the overseas factories of Japanesemanufacturers of digital consumer electronics products.

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Selling, General and Administrative Expenses（million yen）
（million yen）

1H FY3/2012
AmountPacking and freight
1,284
R&D
258
Others698
Total selling expenses
2,240
Depreciations
335
Rent
995
Personnel expenses
7,312
Others2,669
Total administrative
11,311
Total SG&A expenses
13,551

1H FY3/2013

Pct.
Amount
9.5%
1,096
1.9%
144
5.2%
498
16.5%
1,738
2.5%
280
7.3%
1,036
54.0%
7,130
19.7%
2,615
83.5%
11,061100.0%
12,800Changes

Pct.
Amount
8.6%
-188
1.1%
-114
3.9%
-200
13.6%
-502
2.2%
-55
8.1%
41
55.7%
-182
20.4%
-54
86.4%
-250
100.0%-751

13,551

12,800Pct.
-14.6%-44.2%-28.7%-22.4%-16.4%
4.1%
-2.5%
-2.0%
-2.2%
-5.5%

Summary
Selling, general and administrative expenses
Personnel expenses: Reduction of 182 million yen year-on-yearGroup workforce: Reduction of 596 (from 5,550 to 4,954)
Reason for the workforce decline: Decrease of 563 at overseas EMS factories (China, Thailand, Malaysia, Czech Republic)*Decrease of 196 at KAGA (SHENZHEN), 188 at KAGA ELECTRONICS (THAILAND), 125 at DONGGUAN POWERTEK, etc.
Packing and freight: Reduction of 188 million yen year-on-year because of the decline in sales

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Consolidated Balance Sheets
Consolidated Balance Sheets

Current assets
Cash and cash equivalents
Notes and account receivable-trade

Merchandize and f inished goods

Goods in progress
Raw materials and other supplies

OthersFixed assets
Property , plant and equipment

Intangible assets
Investments and other assets

Total assets（million yen）

End of
End ofChangeFY3/2012 FY9/2012
94,374
83,811 -10,563 Current liabilities
9,775
8,985
-790 Notes and accounts payable-trade
Short-term bank loans
55,97948,338-7,641Others17,104
16,576-528
334
664
330 Long-term liabilities
Long-term bank loans
4,115
4,618
503
Others
7,067
4,630-2,437
Total liabilities
Shareholders' equity
20,340
9,487
2,245
8,607

21,149
9,843
2,499
8,806

114,714104,961

End of
End ofChangeFY3/2012 FY9/2012
59,47453,170-6,304
41,74835,910-5,83811,084
12,129
1,045
6,642
5,131
-1,511
7,303
6,456
-847
2,833
1,934
-899
4,470
4,522
52
66,77759,627-7,1500
Paid-in capital
12,133
12,1330Capital surplus
13,912
13,9120809
Retained earnings
25,03823,250-1,788356
Treasury stock-1,333-1,3330
254
Valuation and translation adjustment-3,341-3,951-610
199
Minority interests
1,526
1,321
-205
Total net assets
47,93645,333-2,603
Total liabilities and net assets
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Consolidated Cash Flows（million yen）

Operating activities

1H FY3/2012
1H FY3/2013-2,446
3,293

Changes
5,739

Investing activities-1,449-3,695-2,246

Financials activities

2,735

-258

-2,993

Net change in cash and cash equivalents

-383

-129

254

Increase (decrease) in cash and cash equivalents-1,544-789

755

Cash and cash equivalents at beginning of year

11,796

9,695-2,101

Cash and cash equivalents at end of year

10,251

8,905-1,346

Summary
Operating activities: Net cash provided was 3,293 million yen mainly due to a decrease in notes and accounts receivable-trade.
Investing activities: Net cash used was 3,695 million yen mainly due to payments for the purchase of property, plant and equipment.
Financing activities: Net cash used was 258 million yen mainly due to repayments of long-term loans payable.

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Forecast for FY3/20139© 20102012 KAGAKAGA ELECTRONICS
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■ Forecast for FY3/2012
Consolidated Statement of Income（million yen）

Net Sales
Cost of sales
Gross profit
SG&A expenses
Operating income
Non-operating income
Ordinary income
Net income

FY3/2012(actual)

FY3/2012 (plan)

AmountAmount

平成18年3月期

229,856

Pct.

平成19年3月期（予）Pct.

Changes
AmonutPct.

100.0%

230,000

100.0%

144

0.1%

201,350

87.6%

202,300

88.0%

950

0.5%

28,506

12.4%

27,700

12.0%

-806

-2.8%

26,438

11.5%

26,200

11.4%

-238

-0.9%

2,067

0.9%

1,500

0.7%

-567

-27.4%

502

0.2%

300

0.1%

-202

-40.2%

2,569

1.1%

1,800

0.8%

-769

-29.9%

914

0.4%

300

0.1%

-614

-67.2%

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Comparison of Consolidated Sales by Business Category（million yen）

FY3/2012(Actual)
Net sales
Segment income

FY3/2012(Plan)Net sales

Pct.

Segment income

Changes

Pct.

AmountPct.

166,468

72.4%

171,500

74.6%

5,032

3.0%

2,021

97.8%

2,000

133.3%-21-1.0%

Informationequipment

49,36021.5%

42,00018.3%-7,360-14.9%-533-25.8%-500-33.3%

33

6.2%

3,854

1.7%

4,000

1.7%

146

3.8%

402

19.4%

-250

-16.7%-652 -162.2%

10,173

4.4%

12,500

5.4%

2,327

22.9%

319
229,856
2,067

15.4%
100.0%
100.0%

250
230,000
1,500

16.7%
100.0%
100.0%

-69
144
-567

-21.6%
0.1%-27.4%

Other
Total

（million yen）

Segment income

229,856 230,000

Electtronic
components

Software

Net sales

2,067
1,500

Summary■ Electronic components (Development, manufacture and sale of semiconductors, general electronic components and otherproducts, electronic manufacturing service (EMS), and other activities)
Forecast higher sales because of expected growth in sales of in-vehicle electronic components and semiconductors and in EMS sales mainlyfor office and air conditioning equipment.

■ Information equipment (Sales of PCs, PC peripherals, photograph and imaging products, original-brand products, and other products)
Forecast lower sales primarily because of the downturn in personal computer sales and the negative impact of changes in sales anddistribution channels for memory-card products sold at large consumer electronics stores and specialty shops.

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【Reference】Comparison of Consolidated Sales by Business Category（million yen）

FY3/2012(Actual)AmountFY3/2013(Plan)

Pct.

AmountChangesPct.

（million yen）
229,856

230,000

Amount Pct.

Information equipment

44,27619.3%

49,000

21.3%

4,724

10.7%

EMS

62,65527.3%

70,000

30.4%

7,345

11.7%

Semiconductors

59,30325.8%

58,00025.2%-1,303-2.2%

Generalelectronic
components

30,35613.2%

24,00010.4%-6,356-20.9%

Others33,26414.5%

29,00012.6%-4,264-12.8%

Total

229,856

100.0%

230,000

100.0%

144

0.1%

Summary
Information equipment: Sales up 4,724 million yen (+10.7%) due to expected growth in sales of personal computers and peripherals
EMS: Sales up 7,345 million yen (+11.7%) due to EMS growth outside Japan
Semiconductors: Sales down 1,303 million yen (-2.2%) mainly because of declining orders for semiconductors used in digital consumer electronics products
and amusement devices
General electronic components: Sales down 6,356 million yen (-20.9%) mainly because of declining orders for electronic components used in digital consumer
electronics products and amusement devices
Others: Sales down 4,264 million yen (-12.8%) mainly because of lower sales of game software and application software and delays in the launch of products
by customers

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Forecast for FY3/2013
Selling,General and Administrative Expenses（million yen）

Packing and freight

R&D
OthersTotal selling expenses

Depreciations
Rent
Personnel expenses

OthersTotal administrative
Total SG&A expenses

FY3/2012
FY3/2013(Actual)(Plan)
ChangesAmountPct.
Amount
Pct.
2,450
9.3%
2,337
8.9%
-113
576
2.2%
418
1.6%
-158
1,159
4.4%
1,298
5.0%
139
4,185
15.8%
4,053
15.5%
-132
731
2.8%
592
2.3%
-139
2,025
7.7%
2,056
7.8%
31
14,24953.9%
14,379
54.9%
130
5,247
19.8%
5,120
19.5%
-127
22,25284.2%
22,14784.5%-105
26,438100.0%
26,200100.0%-238（million yen）
26,43826,200

Summary
Selling expenses: Forecast a decrease in R&D expenditures due to completion of product engineering at SI ELECTRONICS
Administrative expenses: Forecast a decrease in depreciation expenses due mostly to completion of depreciation of certain fixed assets

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topics
1. Unprofitable companies and countermeasures
2. KAGA ELECTRONICS Group growth strategy
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Unprofitablecompanies and countermeasures
業績不振子会社の再建(Million yen)
会社名

KAGA COMPONENTS

FY3/201０
Net income

-519
-86

KAGA HIGHTECH-8SI ELECTRONICS

ADM

CyberFront

Total

FY3/201１
Net income

14
30
-72

FY3/2012
Net income-1,028-145-577

FY3/201３
Net income（Previous
forcast)）

-194
63
246

FY3/201３Net
Net income（Actualresults）-207

StatusNamed new management team in FY3/12, executed restructuring program including
voluntary early retirement and started realigning overseas factories to improve
operations. Benefits are slowly appearing and the company is expected to become
profitable in the next fiscal year.

Plan to start mass production of the Y3 video display processor for
19 amusement devices, the company’s main product, in the next fiscal year.
Conducting sales activities aimed at enlarging sales channels.

-1,011

-106

-98

-22

30

-145

-

-268

-295

129

-387

-719

-394

-2,067274-1,731

Named new management team in FY3/13 and started rebuilding process but
performance declined due to weak demand for this company’s products. Aiming for arecovery by improving efficiency (through reorganization, reforms, etc.) and adding new
products.
Company is shifting from consumer products to the industrial equipment,
medical/health care and automobile sectors, but performance is weak due to softdemand in the industrial equipment sector and intense competition. Announced
voluntary early retirement program and started restructuring measures on November
12, 2012 in order to rebuild operations.
Named an executive with experience in the entertainment industry as the company’schairman and conducted a sweeping review of operations but performance is still weak.
Plan to determine new direction for the company by the end of December 2012.

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©©2012KAGA ELECTRONICS Group growth strategy◆Operating environment in the electronics industry
デジタル家電の需要低迷により、大手家電メーカーの業績不振など今のエレクトロニクス業界は厳しい状況が続いていますが、自動車・通信・医療・環境などの事業分野においてますますエレクトロニクス化がcaused by soft demand for digital devices. However, the activities of electronics trading companies are becoming broader as
進み、エレクトロニクス商社の活動の幅が広がります。加賀電子グループも競争が激しいエレクトロニクス
these
companies target the automobile, communications, environment, medical and other growing market sectors.
業界のなか、勝ち残るため成長分野への事業活動に注力していきます。

Conditions in Japan’s electronics industry are difficult because of the poor performance of major home appliance manufacturers

KAGA ELECTRONICS Group initiatives to drive earnings growth① In-vehicle devices ② Wireless andother communications③ Environmental products ④ Globalization(with focus on Asia )16©© 2010All Rights
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KAGA ELECTRONICS Group growth strategy①In-vehicle devices
Sales of hybrid and electric vehicles are increasing as a means of fighting global warming and reducing
air pollution. Growing use of electronics in these vehicles is raising demand for electronic components
and semiconductors in the automobile industry. To be a winner in this market, the KAGA ELECTRONICS Groupis focusing sales activities on the in-vehicle market in order to expand this business domain.
Growth potential is significant in the automotive sector becauseglobal sales of in-vehicle semiconductors
are expected to grow from about 1,850 billion yen in 2012 to about 3,270 billion yen in 2020
(Yano Research Institute forecast).

＜KAGA ELECTRONICS Group Initiatives＞➢KAGA ELECTRONICS
A dedicated Car Electronics Sales Team was established 7 years ago in order to focus on sales activities in thismarket. The team is producing results. Sales are increasing in the current fiscal year mainly because of higher
orders for car navigation HDD and semiconductors and growth in EMS sales. (FY3/12 ¥5 billion – FY3/13
forecast ¥7 billion)➢AD DEVICE (Trading company selling Toshiba semiconductors)
On July 1, AD DEVICE absorbed AS Device, a semiconductor and storage company affiliated with Toshiba thathas much expertise in the in-vehicle market. Growth of sales channels to automakers is raising sales.(FY3/12¥10 billion – FY3/13 forecast ¥15 billion)
KAGA ELECTRONICS Group in-vehicle sales: FY3/12 ¥15 billion – FY3/13 forecast ¥22 billion

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KAGA ELECTRONICS Group growth strategy②Wireless and other communications
As the market shifts from ordinary cellphones to smartphones, semiconductor manufacturers are looking ahead to thenext-generation of wireless communications. The KAGA ELECTRONICS Group sells semiconductors for mobile
communication devices and is entering new markets to target opportunities created by the upcoming use of wirelesscommunications in products other than mobile communication devices.
Sales growth in semiconductor
market sectors
Source：HIS iSuppli
無線分野＜KAGA ELECTRONICS Group Initiatives＞
Increase sales to communications carriers,
increase sales of communication modules➢Semiconductors, sound ICs, etc. for memories andother products used by Japanese portable device manufacturers➢ LTE mobile routers, LTE modules, USB modules, STB and other products
KAGA ELECTRONICS Group wireless/communications sales: FY3/12 ¥5 billion – FY3/13 forecast ¥10 billion18©© 2010All Rights
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KAGA ELECTRONICS Group growth strategy③Environmental Business

Environmental

The environmental business has been growing consistently in Japan. Two reasons are the need to conserve
electricity due to the power shortage following the Great East Japan Earthquake and sales of electricity using
the feed-in tariff system. The KAGA ELECTRONICS Group regards this as a key growing market andestablished a sales team specializing in this market.
Growth of LED Lamp Sales in Japan(Source: Fuji Keizai Research Institute)（Hundred million yen）

Growth of Solar Power Systems in Japan(Source: Yano Research Institute)・・・（Hundred million yen）

・・・

＜KAGA ELECTRONICS Group Initiatives＞
Make the group a source of total support extending from proposals for the use of LED lamps andsolar power systems to the supply and installation of this equipment and after-sales services.

➢Install LED lighting systems at convenience stores and large stores➢Proposal-based sales of solar power systems to businesses that sell electricity
KAGA ELECTRONICS Group environmental sales: FY3/12 ¥1 billion – FY3/13 forecast ¥7 billion

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KAGA ELECTRONICS Group growth strategy④Globalization (with focus on Asia ) especially in Asia
Japan’s manufacturing sector is hollowing out as production is moved to other countries.
The result is even more interest in Asia, where manufacturing costs are low. KAGA ELECTRONICS isestablishing bases and increase its workforce in Southeast Asia, where economic growth is particularly strong,in order to enlarge business operations.

では英語として意味が不明となります
Economic Growth Rates of Major Asian（Source ：IMF）
Countries
11.0

Japan
日本

China
中国

India
インド

（％）

ASEAN520112012

2013年（P）

9.0

Japan

-0.7

2.4

1.5

7.0

China

9.2

8.0

8.5

5.0

India

7.1

6.1

6.5

3.0

ASEAN5

4.5

5.4

6.1

1.0

（Note） ASEAN5 is Indonesia, Malaysia, Philippines,
Thailand and Vietnam

-1.0

2011年
2011

2012年
2012

2013年（予）2013(P)

China
India

ThailandiIndonesia,
Philippines,
Malaysia,＜ KAGA ELECTRONICS Group Initiatives＞➢ Strengthen operations in China, India, Southeast Asia and other growing markets➢ Offer ideas for moving production to low-cost overseas regions to Japanese customers that have notyet shifted production offshore➢ Establish relationships with prominent overseas companies as suppliers and sales agents➢ Differentiate services by distributing electronic components and products as well as providing added value
through an electronics manufacturing service (EMS), vender managed inventory (VMI) and other services

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KAGA ELECTRONICS Group growth strategy◆China➢KAGA (DALIAN) ELECTRONICS: Opened Qingdao Office (July)EMS for Japanese companies accounts for the majority of the KAGA ELECTRONIC Group’s operations in China.
The group aims to use Qingdao as a base for increasing sales of electronic components and semiconductors in China,
including sales of semiconductors (microprocessors and other devices) for refrigerators and air conditioners made bymajor Chinese home appliance manufacturers.

➢KAGA (H.K.) ELECTRONICS
KAGA (H.K.) ELECTRONICS has grown for many years as the primary base for the EMS business.
Now this company has established an electronic components and semiconductors section in response torising demand in the kitting business. Sales are increasing due to growth of the EMS business and the launchof the electronic components/semiconductors business.
Sales of KAGA (H.K.) ELECTRONICS
FY3/12 ¥12 billion (EMS ¥12 billion) – FY3/13 forecast ¥21 billion (EMS ¥19 billion, Components/semiconductors ¥2 billion)◆India➢ KAGA DEVICES INDIA
Established in Bangalore in July 2011 by KAGA DEVICES CO., LTD.
The company is promoting sales of semiconductors and electronic components to not only to Japanese
but also foreign manufacturers of air conditioners and refrigerators.
Sales activities also include uninterruptible power supply devices, parts for solar lanterns and other products

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2012 KAGAKAGA ELECTRONICS
ELECTRONICS CO.,LTD
CO.,LTD All
Rights Reserved.
Reserved.

KAGA ELECTRONICS Group growth strategy◆Thailand➢KAGA ELECTRONICS (THAILAND)
Closed the Ayutthaya factory following the October 2011 flood
Opened the new Amata Nakorn factory in February 2012 and now expanding productionlines in response to customers’ requests. (FY3/12 ¥12 billion – FY3/13 forecast ¥13 billion)※Other activities
Strengthening the in-vehicle business – Plan to set up a sales force exclusively forelectronic components and semiconductors to increase sales of these products to reinforce
sales of these products to automobile manufacturers◆Indonesia and Philippines➢Indonesia Liaison Office
Sales activities involving primarily kitting that target Japanese manufacturers ofaudio products, automobiles and other products. This office also works on establishing
new relationships with Japanese and Indonesian companies.

フィリピン

インドネシア➢Philippines Liaison Office
Sales activities involving primarily kitting that target Japanese manufacturers of home appliances, office equipment and otherproducts. As in Indonesia, this office also works on establishing new relationships with Japanese and Philippine companies.

◆Other activities➢ Cambodia, Myanmar, Laos: Conducting a study concerning the use of these countries as new EMSmanufacturingbases in Asia
➢ United States: Considering setting up a base in Detroit to start a U.S. in-vehicle business➢ Considering starting operations in Brazil, where more economic growth is anticipated along with the upcoming
FIFA World Cup and Olympics

22©© 2010All Rights
2012 KAGAKAGA ELECTRONICS
ELECTRONICS CO.,LTD
CO.,LTD All
Rights Reserved.
Reserved.

New business
Collaboration as a sales partner with SICOXS, manufacturer of SiC
substrates for nextnext-generation power semiconductors
Main applications: Power conditioners for solar panels,
DC/DC converters for electric/plug-in
hybrid vehicles, and others

Example of downsizing

Conventional power
conditioner

This substrate increases power conversion efficiency
while reducing size and weight.
Name ： SICOXS CORPORATION
Established： June 1, 2012

Sample power
conditioner using an SiC
substrate

Representative： Mitsuharu Kato
Activities: Manufacture and sale of SiC (silicon carbide)
substrates, outsourced processing for SiC
semiconductor parts, and other activities23© 20102012 KAGAKAGA ELECTRONICS
ELECTRONICS CO.,LTD©
CO.,LTDAll
All Rights
Rights Reserved.
Reserved.

Contact: Public Relations Department
3-12-8 Sotokannda,Chiyoda-ku,Tokyo 101-8629
TEL:03-4455-3131
FAX:03-3254-7132
E-mail： webmaster@taxan.co.jp
http://www.taxan.co.jp
24©© 2010All Rights
2012 KAGAKAGA ELECTRONICS
ELECTRONICS CO.,LTD
CO.,LTD All
Rights Reserved.
Reserved.