Nihon Dempa Kogyo Co., Ltd. · TSE:6779
Nihon Dempa Kogyo — H1 FY2006 Earnings Presentation
55 slides from Nihon Dempa Kogyo's earnings presentation, Nov 7, 2006
Slide 1: Consolidated semiannual financial statement as of September, 2006
Consolidated semiannual financial statement as of September, 2006 Date: November 7, 2006 Place: TSE Arrows NIHON DEMPA KOGYO CO.,LTD 0
Slide 2: Contents
Contents 1. “Aiming for the No.1 Brand” 2. “Consolidated semiannual financial statement as of September, 2006” 1
Slide 3: Aiming for the No.1 Brand
Crystal Bridge to the Future “Aiming for the No.1 Brand”
Slide 4: Aiming for the No.1 Brand
“Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence Activities in each market 3
Slide 5: NDK's philosophy
NDK’s philosophy Contributing to the prosperity of society and world peace through our service to customers Global environmental conservation and human happiness Increasing borderless No.1 Brand economic activities Realizing CS No.1 Supplier 4
Slide 6: NDK management policy
NDK management policy 1 NDK is aware of her mission and responsibility as the top manufacturer in the world, leading the crystal products 2 NDK provides high quality service to customer while staying ahead of the marketplace. industry. 3 Core-Mission NDK is seeking an easier-to-use and more stable o
Slide 7: The successful expansion of crystals in every field
The successful expansion of crystals in every field ◆ Kinds of frequencies 622MHz ＜Optical＞ 100MHz ＜Base station＞ Crystal is necessary48MHz ＜USB＞ to provide “frequency” in every field. 26MHz 2７MHz ＜Image＞ 25MHz ＜GSM＞ 19.2MHz ＜Audio＞ 14.318MHz ＜PLL＞ 4MHz ＜PC＞ ＜Tuner＞ Oscillation source = “Providing f
Slide 8: The successful expansion of crystals in every field: high speed network society
The successful expansion of crystals in every field <In the high speed network society> High precision & stable crystal devices are essential for stable & high speed networks such as optical communications. 7
Slide 9: The successful expansion of crystals in every field: ubiquitous society
The successful expansion of crystals in every field <In the ubiquitous society> In the electronics society with the spread of miniaturization & wireless technologies, high reliability & miniaturized crystal devices are essential. DSC Flat-TV DVD Mobile Phone 8
Slide 10: Aiming for the No.1 Brand
“Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence * Absorbing market fluctuations * Polarization of Sales Styles * Structure of gaining a profit from CS100% Activities in each market 9
Slide 11: Absorbing fluctuations
Levelization instead of Absorbing fluctuations matching the peak demand Capacity A A A B B B C C C Demand Absorbing fluctuation of Maintaining stable fluctuation big customer A customer B & C in a big through as usual. customer A levelization & stock 10
Slide 12: Aiming for the No.1 Brand
“Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence * Absorbing to market fluctuations * Polarization of sales styles * Structure of gaining a profit from CS100% Activities in each market 11
Slide 13: Polarization of Sales Styles <1>
Polarization of Sales Styles <1> A case of the Finance Industry Concierge Sales Net Sales Giving advice on life Providing all services planning in addition through web site to financial products • Providing necessary • Updating web site information by identifying for mutual efficiency needs through
Slide 14: Polarization of Sales Style <2>
Polarization of Sales Style <2> Implementation at NDK Further improvement! Retention Sales Net Sales Providing market & Quick search & supply product information of necessary in a timely manner products/samples Absolute confidence: Utilized as a tool “Crystal is NDK!” Relationship for the customer b
Slide 15: Aiming for the No.1 Brand
“Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence * Absorbing market fluctuations * Polarization of sales styles * Structure of gaining a profit from CS100% Activities in each market 14
Slide 16: Towards CS100%
Towards CS100% Product New product development beyond needs Product’s value Necessary Product CS Value added condition Value added of CS Quality cost Quality cost = ¥0 Thorough production Payment Payment innovation activity Distribution cost Distribution cost Completion Stock cost Potential Costs To
Slide 17: Development of products beyond needs <1>
Development of products beyond needs <1> Pursuing high precision ◆ High precision & stability products & stability that support stable networks. <622MHzVCXO> • High frequency For optical (622MHz: Fundamental mode) communication • Low phase noise networks 600MHz band • Excellent freq-temp characteris
Slide 18: Development of product beyond needs <2>
Development of product beyond needs <2> Pursuing miniaturization ◆ Trend of miniaturization in the ubiquitous society Crystal unit: History of miniaturization New ct New ct du du pro pro 17
Slide 19: TPS at a parts manufacturer
TPS at a parts manufacturer Toyota Production System：To challenge aggressively! Final product manufacturer Parts manufacturer - Condition of zero - Defects are likely to defective parts occur in processes * The process is complicated. - Simple process. Setting of Setting of standard time is standard
Slide 20: Flow creation in TPS
<What NDK aims for> Flow creation in TPS Most stable state in “Qty”, “Speed” & “Quality”. Quality ◆ Analogy of water flow in “Flow creation” <Natural flow> <Maintained flow> <Controlled flow> Natural flow has Make the flow stable by Stable control of the flow congestion and is unstable. maintaining
Slide 21: Creation of streams (Further leap)
Creation of 4 streams (Further leap) Further leap toward the top! Perfect stream Accurate stream Target cleared Strong stream Main stream Stream creation in the entire SCM Supplier NDK Customer 20
Slide 22: Aiming for the No.1 Brand
“ Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence Activities in each market * Industry trends & market share * Activities in the existing market & new business 21
Slide 23: Industry trend (1): production volume of crystal devices
Industry trend (1) Trend of the production volume of crystal devices 80 73 Optical product → ←Crystal filter 70 64 ←Clock oscillator 59 ←Oscillator for industrial use 60 53 Volume (100 million) 生 産 51 47 ←Crystal units for consumer 50 数 45 量 40 37 ←Crystal units for automotive （ 34 33 electronics 億
Slide 24: Industry trend (2): production value of crystal devices
Industry trend (2) Trend of the production value of crystal devices 3,000 2,817 2,500 2,389 2,172 2,178 2,182 ← Optical product 生 2,034 ←Crystal filter 1,908 Volume (100 million) 産 2,000 1,884 1,719 ←Clock oscillator 金 1,724 ←Oscillator for 額 industrial use 1,500 （ 億 ←Crystal units for 円 1,000 consu
Slide 25: Industry trend (3): unit price of crystal devices
Industry trend (3) Trend of the unit price of crystal devices 200 171 170 159 147 142 150 126 119 113 104 100 100 50 97 98 99 00 01 02 03 04 05 測 予06 Projection 06 *Although QIAJ has been compiling data on “SAW device” since ’02, we do not include the ‘SAW device” figures. This is because during com
Slide 26: Aiming for the No.1 Brand
“Aiming for the No.1 Brand” NDK’s philosophy and core mission NDK’s core competence Activities in each market * Industry trends & market share * Activities in the existing market & new business 25
Slide 27: FY2006 Projected Sales (Consolidated)
FY2006 Projected Sales (Consolidated) (Unit: 100 million yen) 800 700 Others 8% 600 8% Fixed radio 10% 18% communications 500 9% 17% Auto 18% 400 18% AV/OA 30% 28% Mobile 300 26% 29% 200 40% 38% 38% 100 35% 0 March 2004 March 2005 March 2006 March 2007 Result Result Result Projection Sales 559 607 6
Slide 28: Trend of the fixed radio communications market
Trend of the fixed radio communications market Projection of shipment for Mobile phone base stations (Worldwide) (K pcs) 900 800 700 600 500 WCDMA CDMA 400 GSM 300 200 100 0 '04 '05 '06 '07 '08 '09 '10 Source: CSFB <Market trends> • Spread of mobile phone in emerging markets (BRICs etc) => Increase
Slide 29: Trend of mobile communications market
Trend of mobile communications market ■Projected demand for mobile phones by geographic area Unit: Million pcs 単位：百万台 1,400 1,170 1,200 1,113 1,014 Ultr a High-End 1,000 913 High-End 778 800 Midl-End 600 Entr y Ultr a Low- 400 End(Under $40) 200 Estimation by NDK 0 NDK推定 2005 2006 2007 2008 2009 <Ma
Slide 30: Trend of the Mobile Communications Market
Trend of the Mobile Communications Market ■ Additional functions that use crystal devices GPS RF ID (Felica,etc) Baseband Clock Camera PLL TV/Radio Tuner RF Memory Card USB Bluetooth 29
Slide 31: Trend of the AV Market
Trend of the AV Market ■ Rapid increase of new applications in addition to existing base applications Million/year 百万台/年 AV市場セ Trend ット別台数動向 of volume in AV market by product (%) Growth rate of volume in AV market 700 その他 Others 250% PDP-TV PDP-TV 600 LCD-TV ﾌﾟﾛｼﾞｪｸｼｮﾝ- Projection TV TV ﾃﾞｼﾞﾀﾙ放送 200
Slide 32: Trend of the OA Market
Trend of the OA Market ■High growth rate in applications for miniaturized devices Trend of volume in OA market by product Trend of growth rate in OA market by product (%) K pcs Others 200% 2,500,000 Projector 180% PDA COPY 160% 2,000,000 Cable modem BLUETOOTH 140% LBP CRT monitor 120% 1,500,000 Note
Slide 33: Trend of the Automotive Market
Trend of the Automotive Market ■ New applications of car electronics (Million （百万台） units) X-by-Wire 600 CCD Camera Sensor 500 Bluetooth Car Navigation 400 Door Module 300 Immobilizer 200 ESC(VSC) ECU RKE 100 TPMS Sensor 0 既存用途 Existing CY2005 CY2006 CY2007 CY2008 applications 出所：富士ｷﾒﾗ総研・矢野経済 Source
Slide 34: CHITOSE technical center
CHITOSE technical center: Development of world’s No.1 technologies and launch of new business •Partial operation starting from development of original “Only One” product & fundamental technologies (1) Synthesizer for digital terrestrial broadcasting (Ultra low noise) noise * Completed development of
Slide 35: Consolidated Half-year Statement as of September, 2006
Consolidated Half-year Statement as of September, 2006
Slide 36: Business Organization Structure
Business Organization Structure 35
Slide 37: Financial Highlights (Consolidated)
Financial Highlights (Consolidated) 36
Slide 38: Sales by Customer-Based Geographic Area
Sales by Customer-Based Geographic Area 37
Slide 39: Sales breakdown by market segment (Consolidated)
Sales breakdown by market segment (Consolidated) 38
Slide 40: Sales breakdown by product segment (Non-Consolidated)
Sales breakdown by product segment (Non-Consolidated) 39
Slide 41: Trend of Annual Results (Consolidated)
Trend of Annual Results (Consolidated) 40
Slide 42: Trend of Half-year Results (Consolidated)
Trend of Half-year Results (Consolidated) 41
Slide 43: Trend of Quarterly Results (Consolidated)
Trend of Quarterly Results (Consolidated) 42
Slide 44: Trend of Cost to Net Sales (Consolidated)
Trend of Cost to Net Sales (Consolidated) 43
Slide 45: Capital Expenditures (Consolidated)
Capital Expenditures (Consolidated) 44
Slide 46: R&D Expenses (Consolidated)
R&D Expenses (Consolidated) 45
Slide 47: Shareholders' equity (Consolidated)
Shareholders' equity (Consolidated) 46
Slide 48: Trend of Profitability (Consolidated)
Trend of Profitability (Consolidated) 47
Slide 49: Per Share Data (Consolidated)
Per Share Data (Consolidated) 48
Slide 50: Stock Information
Stock Information 3 Aggregate market value(¥Million) | ii Closing price(¥) } 6,000 5,000 | 4,000 3,000 Closing price(¥) 2,000 1,000 19,921 3,000 1,987 2.160 2.270 5.350 62,271 41,244 43,043 45,230 106,580 Aggregate market value (¥Millions) IY NIK Peet nee ele eyture 49
Slide 51: Summary of cash flow (Consolidated)
Summary of cash flow (Consolidated) 50
Slide 52: Trend of Free Cash flow & Net Income (Consolidated)
Trend of Free Cash flow & Net Income (Consolidated) 51
Slide 53: Business Forecast of FY2006 (Consolidated)
Business Forecast of FY2006 (Consolidated) 52
Slide 54: Dividends
Dividends Annual closing Crystal Bridge to the Future Half-year closing (Forecast) (2007/3/31) (Result) (2006/3/31) Cash dividends per share ¥16 Half-year closing ¥8 Annual Closing ¥8 Amount of Dividends 318 (Unit: Million yen] Dividends ratio of 0.9% Shareholders’ equity hy NIK 53
Slide 55: Thank you for your attention
Thank you for your attention We are grateful for your continuous support 【Note】 Statements made in this presentation with respect to our current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about our future performance. Th