FY2015 1st Half Results and Annual Forecastsglobal-sei.com/ir/library/pdf/20151113ceo_e.pdf · Operating Profit (1.0) 5.5 1.8 13.0 +2.8 +7.5 FY2015 Original Plan FY2015 Revised Plan

FY2015 1st Half Results and Annual Forecasts

2015/11/13

©2015 Sumitomo Electric Industries, Ltd. All Rights Reserved 2/21

1. FY2015 1st Half Results

1. FY2015 1st Half PL

2. Factors of Increase or Decrease in OP

3. Sales and OP by Segment

4. Overseas Sales Ratio

5. FY2015 1st Half BS

2. FY2015 Forecasts

1. FY2015 Forecasts(PL)

2. Sales and OP by Segment

3. FY2015 Challenges and Strategies

4. Capital Investment by Region

5. R&D

3. FY2015 1st Half Topics

1. Contract Award for 400kV DC Submarine Power Cable Project in Europe

2. Submarine Power Cable PJ Progress and Strategy

4. Dividend

INDEX


1. FY2015 1st Half Results


1-1. FY2015 1st Half Results

FY2014

1H

FY2015

1H

FY2015

1HGrowth Difference

\bn Actual① Plan② Actual③ ③－① ③－②

Net Sales 1,310.5 1,450.0 1,439.4 +128.9 (10.6)

Operating Profit 47.9 55.0 52.9 +5.0 (2.1)

Non-Operating Income/Expense 11.6 8.0 9.3 (2.3) +1.3

Ordinary Income 59.5 63.0 62.2 +2.7 (0.8)

Gain on Sales of Investment

Securities47.0 3.0 (44.0)

Gain on Step Acquisitions 5.8 0.0 (5.8)

Restructuring Expenses (8.3) (1.3) +7.0

Settlement/ Surcharge (4.9) (2.6) +2.3

Extraordinaly Others (1.3) (1.8) (0.5)

Income before Income Taxes 97.8 59.5 (38.3)

Net Income Attributable to

Non-Controlling Interests(19.2) (23.7) (4.5)


Owners of Parent78.6 30.0 35.8 (42.8) +5.8

(33.0) +6.6

Sales, OP and ordinary income all increased as compared with the same period of the previous year, but did not reach the plan.


1-2. Factors of Increase or Decrease in OP OP increased due to cost reduction etc., despite price down, increase in depreciation for future growth and shortage of sales volume increase.

FY2014 1H

Actual

FY2015 1H

Actual

(3.7%)

¥52.9bn

(3.7%)

¥47.9bn

R&D

Forex gain (※)

(39.5) (17.0)

+5.6

+5.9

+34.3

(4.1)

Original Plan

Achievement rate:66%

[to Original Plan]

Achievement rate:36%

[to Original Plan]

(19.4)

(35.5) (13.0)

+9.8

(18.2)

+0.6

＋12.5

+25.4 ＋17.4

+26.2

+33.4

＋11.6

(Semiannual)2014 1H⇔2015 1H

(Annual)

Revised Plan

(Annual)

Price down

Depreciation

and others

Sales volume increase

(%):OP Rate

Cost reduction

※Average Rate

FY2014 1H FY2015 1H

USD 103.01 121.87

EUR 138.90 135.11


1-3. Sales and OP by Segment Though OP decreased in Environment and Energy, and Industrial Materials

and Others, it increased in other 3 segments as compared with the same

period of the previous year and the plan.

\bn Sales OP Sales OP Sales OP Sales OP Sales OP

Automotive 711.0 36.0 750.0 35.5 765.5 37.1 +54.5 +1.1 +15.5 +1.6

Infocommunications 77.2 (1.2) 90.0 (1.0) 84.2 1.8 +7.0 +3.0 (5.8) +2.8

Electronics 126.7 (0.5) 170.0 6.5 163.7 7.0 +37.0 +7.5 (6.3) +0.5

Environment and

Energy278.6 3.4 340.0 1.5 308.5 (0.7) +29.9 (4.1) (31.5) (2.2)

Industrial Materials

and Others156.9 10.4 170.0 12.5 157.3 7.9 +0.4 (2.5) (12.7) (4.6)

Total 1,310.5 47.9 1,450.0 55.0 1,439.4 52.9 +128.9 +5.0 (10.6) (2.1)

※Differences between the aggregate of all segments and Total are eliminations.

Difference

③－②

GrowthFY2014 1H FY2015 1HFY2015 1H

Plan②Actual① ③－①Actual③

©2015 Sumitomo Electric Industries, Ltd. All Rights Reserved

7/21

1-4. Overseas Sales Ratio

8,212 7,58110,708

11,436 11,152

13,76815,004

7,211

38.0%

38.4%

43.8% 45.6%

48.6%

55.2%

58.3%

61.1%

0%

10%

20%

30%

40%

50%

60%

0

3,500

7,000

10,500

14,000

17,500

21,000

FY2008 FY2009 FY2010 FT2011 FY2012 FY2013 FY2014 FY2015 1H

Sales(M$) Ratio(%)

Consolidated overseas sales increased steadily except around times of Lehman shock

Overseas Sales Ratio (%: Right axis)

Overseas Sales (US M$: Left axis)


8/21

1-5. FY2015 1st Half BS FY2013 FY2014 FY2015 1H

￥bn Actual Actual Actual

Current Assets 1,203.6 1,415.6 1,390.2

Non-Current Assets 1,351.2 1,510.2 1,470.1

Current Liabilities 740.4 809.9 822.7

Non-Current Liabilities 434.5 469.0 429.1

(Interest Bearing Debt) (534.6) (550.8) (534.7)

Shareholders' Equity 1,089.3 1,190.9 1,210.3

Accumulated Other

Comprehensive Income100.3 240.2 191.8

Non- Controlling Interests 190.3 215.7 206.4

Total Assets 2,554.8 2,925.8 2,860.3 　

Shareholders' Equity Ratio 46.6% 48.9% 49.0%

Debt/Equity Ratio 0.45 0.38 0.38

FY2013

Actual

FY2014

Actual

FY2015

Revised Plan

Operating Income /

Invested Assets(ROA)※6.6% 6.5% 6.9%

Return on Equity(ROE) 5.9% 9.1% 6.3%

FY2015

Original Plan

6.8%

6.2%

※Operating Income / Invested Assets(ROA) ＝ Operating Income

Total Assets－Interest-Free Liabilities


2. FY2015 Forecasts


2-1. FY2015 Forecasts(PL)

FY2015 forecasts remain unchanged as ¥3,050bn sales, ¥150bn OP, ¥175bn ordinary

income, ¥90bn net income. (Presuppositions in FY2015 2H ¥115/USD, ¥130/EUR)

FY2014 Growth Difference

￥bnActual

①

1H

Plan

2H

Plan

Annual

Plan②

1H

Actual

2H

Plan

Annual

Plan③

③－① ③－②

Net Sales 2,822.8 1,450.0 1,600.0 3,050.0 1,439.4 1,610.6 3,050.0 +227.2 ー

Operating Profit 134.5 55.0 95.0 150.0 52.9 97.1 150.0 +15.5 ー

Non-Operating Income/Expense 26.1 8.0 17.0 25.0 9.3 15.7 25.0 (1.1) ー

Ordinary Income 160.6 63.0 112.0 175.0 62.2 112.8 175.0 +14.4 ー

Net Extraordinary Income/Loss 6.4 (2.7)

Income before Income Taxes 167.0 (33.0) (52.0) (85.0) 59.5 (58.6) (85.0) (44.2) ー


Non-Controlling Interests(47.2) (23.7)


Owners of Parent119.8 30.0 60.0 90.0 35.8 54.2 90.0 (29.8) ー

FY2015 Original Plan FY2015 Revised Plan


2-2. Sales and OP by Segment FY2015 OP is forecasted to be ¥150bn, the same as the original plan, due to

increase in Infocommunications, despite decrease in Automotive incorporating

Sumitomo Riko’s decrease and Industrial Materials and Others.

￥bn Sales OP Sales OP Sales OP Sales OP Sales OP

Automotive 750.0 35.5 1,540.0 88.0 765.5 37.1 1,535.0 85.0 (5.0) (3.0)

Infocommunications 90.0 (1.0) 200.0 5.5 84.2 1.8 205.0 13.0 +5.0 +7.5

Electronics 170.0 6.5 340.0 12.5 163.7 7.0 325.0 12.5 (15.0) +0.0

Environment and

Energy340.0 1.5 760.0 16.5 308.5 (0.7) 740.0 16.5 (20.0) +0.0


and Others170.0 12.5 350.0 27.5 157.3 7.9 345.0 23.0 (5.0) (4.5)

Total 1,450.0 55.0 3,050.0 150.0 1,439.4 52.9 3,050.0 150.0 +0.0 +0.0

※Differences between the aggregate of all segments and Total are eliminations.

Annual PlanAnnual Plan1H Plan

FY2015 Original Plan FY2015 Revised Plan

1H Actual

Difference


12/21

2-3. FY2015 Challenges and Strategies(1)

Automotive

Infocommunications

Electronics

◆Acceleration of sales promotion of access network equipment in domestic and overseas markets

◆Start up and sales promotion of new products, such as aluminum harnesses, electric components enabling advanced electronic control of cars

◆Early development of dynamic force and acceleration of synergistic effect of the company purchased by Sumitomo Riko

◆Further sales promotion to non-Japanese customers (Big 3 and others)

◆Sales promotion of high value added products, such as GaN device for mobile base station, 100G optical device, optical fiber for submarine cable

◆Further reinforcement of global production & sales systems for FPC, Electronic wires, Fine polymer

◆Frontage expansion and profitability improvement by accelerated development of new products

\bn 1H Annual 1H Actual Annual 1H Annual

Operating Profit 35.5 88.0 37.1 85.0 +1.6 (3.0)

FY2015 Original Plan FY2015 Revised Plan Difference


Operating Profit (1.0) 5.5 1.8 13.0 +2.8 +7.5



Operating Profit 6.5 12.5 7.0 12.5 +0.5 +0.0



◆ Profitability improvement of Power cable business

◆Industrialization promotion by accelerated development and demonstration of Redox Flow Battery

◆Further reinforcement of global production and sales system for Hard Metal and Sintered Parts

13/21

◆Reinforcement of core technology and sales promotion of new products by innovation

Environment and Energy


and Others

◆Structural enhancement and profitability improvement for A.L.M.T. ・Intensive cost reduction of semiconductor heat sink, Reinforcement of global production and sales system

・Acceleration of expansion to emerging market, Further promotion to aircraft, precision processing areas

・Acceleration of cost reduction and structural improvement, Global (Europe, Middle East, Pan-Pacific region including Southeast Asia) sales promotion ・Jan 2016～ Integration of organization (JPS to become wholly owned manufacturing subsidiary, Merger of Accessary business) ⇒ Reinforcement of development and cost reduction, Speed up ・Reinforcement of solution proposal in new energy market coordinating with Sumitomo Densetsu, Nissin Electric


Operating Profit 1.5 16.5 (0.7) 16.5 (2.2) +0.0



Operating Profit 12.5 27.5 7.9 23.0 (4.6) (4.5)


2-3. FY2015 Challenges and Strategies(2)


14/21

2-4. Capital Investment by Region

32.2 32.4 25.4 25.8

9.8 8.5

10.5 12.7

6.3 4.9 6.0

6.9

9.4 12.1 13.5

16.7

17.0 13.7 17.2 12.1

74.7 71.6 72.6 74.2

0

10

20

30

40

50

60

70

80

90

FY2012 FY2013 FY2014 FY2015E

12.2 15.1 13.0 18.9 0.1

0.2

0.2 0.6 0.4 0.8

1.8

12.9 15.5 14.0

20.9

0

10

20

30

FY2012 FY2013 FY2014 FY2015E

10.2 13.0 12.4

15.1 1.3

0.3 0.2

0.3 0.8

0.5 0.4

0.6 2.0 2.4 1.8 2.4 14.3 16.2 14.8

18.4

0

5

10

15

20

FY2012 FY2013 FY2014 FY2015E

22.3 27.7 24.8 24.2

1.0

0.5

2.9 0.5 14.2 6.1 8.5

16.3

3.0 6.1 6.4

11.3 5.5 7.1 4.2

4.2

46.0 47.5 46.8

56.5

0

10

20

30

40

50

60

FY2012 FY2013 FY2014 FY2015E

Europe and others

Asia

Americas

Japan (¥bn)

Capital investment in FY2015 is planned to be ¥170bn in total

(¥bn)

(¥bn)

(¥bn)

Automotive

Infocommunications

Environment & Energy



2-5. R&D

FY2014 ¥105.6bn

R&D expenses in FY2015 are estimated to be ¥105bn, which are the same level as the last year’s record high

62.1

12.6

4.6

12.6

7.6

64.4

15.2

3.9

14.2

7.9

FY2013 ¥99.5bn

FY2015E ¥105.0bn

Automotive 65.0

Infocommunications 16.0

Electronics 3.0


7.5

Environment & Energy 13.5

Trial/Basic Research/New

Technology


3. FY2015 1st Half Topics


3-1. Contract Award for 400kV DC Submarine Power Cable Project in Europe

Contract was awarded by NEMO Link, a JV company between National Grid in UK and ELIA in Belgium, for high-voltage DC submarine power cable project connecting the two countries in Jun 2015.

●Approx. 140km (Submarine portion 130km) ●Highest voltage (400kV) DC XLPE(Cross-linked polyethylene) insulated cable in operation in the world

●Start of production of cable in Apr 2016, completion of installation in 2019

DC400kV XLPE Cable

Cable Installation Route

In Aug 2015 contract was awarded by Hokkaido Electric Power Company for 250kV DC XLPE underground power cable between Hokkaido and Honshu.

～Overwhelming superiority in DC XLPE cable technology to other companies～

17/21


18/21

Progress of PJs Awarded

Strategy

Power Cable PJs in Southeast Asia

●Supply record of NEMO, Montenegro PJs ●Superior technical advantages in both DC XLPE and MI cables

●San Francisco Bay 230kV AC XLPE cable, Submarine 15km, Completion of installation in Aug 2015.

3-2. Submarine Power Cable PJ Progress and Strategy

●Italy-Montenegro 500kV DC MI(*) cable, 115km, Start of production in Aug 2014, Smooth progress. Expected shipment in the next year.

(*)Mass Impregnated Paper Insulated Cable: High viscosity insulation oil impregnated paper enables long distance power transmission without fueling equipment needed, otherwise, for OF(Oil Filled) cable.

●Securing additional orders in high demand European Market (next generation power interconnections among Europe/ off-shore wind power).

●Aiming at top market share of submarine power cable in Pan-Pacific region such as Southeast Asia etc. and Middle East.


4. Dividend


Dividend

4 56 7

10 11

79 9 10 10

12

17

45

78

10 7

9

10 1010

12

18

18

2

0

5

10

15

20

25

30

35

40

FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015E

Intermediate dividend payment

Year end dividend payment

Memorial dividend payment

¥17/share

¥13/share

¥10/share

¥8/share

¥20/share

¥18/share

¥16/share

¥20/share

¥19/share

¥22/share

¥19/share

¥30/share

FY2015 annual dividend is planned to be ¥35/share, increased further by ¥5/share from the previous year.

34.29 48.01 76.43 100.22 112.74

Net Income per Share (Yen) 21.78 36.19 89.02 74.21

Dividend Payout Ratio

23.3% 20.8% 17.0% 17.0% 17.7% 82.6% 21.3% 25.6%

¥/share

47.85

41.8% 44.2%

84.15

26.1% 19.9%

151.00

20/21

113.47

30.8%

¥35/share


Notes on Perspective Information

This presentation material contains various outlook and perspective information derived from our own presumptions and judgments based on currently available information on conditions and prospects of each market and economic circumstances such as currency exchange rate fluctuations. All figures and statements with respect to the future performances, projections, and business plans of Sumitomo Electric and its affiliated companies are constituted by those outlook and perspective information. Factors that could cause actual results to differ materially include, but not limited to: 1. Market and economic conditions in the United States, Europe, Japan and other Asian countries, especially increases and decreases in personal consumption and capital expenditures. 2. Fluctuations of currency exchange rates, especially between the Japanese yen and the U.S. dollar, the euro and Asian currencies. 3. The ability of Sumitomo Electric and its affiliated companies to cope with rapid technological development. 4. Changes in financial, management, environmental and other presumptions. 5. Current and future laws and regulations in foreign countries involving trade and other activities. 6. Changes in the market value of securities owned by Sumitomo Electric and its affiliated companies. There are possibilities that actual sales and profits may be different materially from those described in this material. Sumitomo Electric and its affiliated companies are not obliged to update or make public any future performances, projections or business plans after releasing this material.

Documents

FY2015 1st Half Results and Annual Forecastsglobal-sei.com/ir/library/pdf/20151113ceo_e.pdf · Operating Profit (1.0) 5.5 1.8 13.0 +2.8 +7.5 FY2015 Original Plan FY2015 Revised Plan