Fujikura Ltd · TSE:5803
Fujikura — H1 2018 Earnings Presentation
32 slides from Fujikura's earnings presentation, Oct 31, 2018
Slide 1: Progress on the 2020 Mid-term Business Plan
Progress on the 2020 Mid-term Business Plan Review of 1H FY2018 and Initiatives in 2H and beyond "Let’s transform ourselves, and bridge to the future! 2020 Mid-term" Fujikura Ltd. Masahiko Ito, President & CEO October 31, 2018
Slide 2: Continue to maintain & strengthen earning power
Continue to maintain & strengthen earning power Year 3 of the 2020 Mid-term Business Plan Important year for determining the success of the 2020 Mid-term Business Plan Goals to Achieve by FY2020 • Ratio of operating income to net sales: 7.0% or higher • Net sales: 900 billion yen • ROE: 10% or hig
Slide 3: Table of Contents
Table of Contents 1. Quality Management Issues and Governance Strengthening 2. Review of 1H FY2018 and Full-Year Forecast 3. 2020 Mid-term Business Plan -towards 2020 Mid-term Goals- 4. Return to Shareholders 2
Slide 4: 1. Quality Management Issues and Governance Strengthening
1. Quality Management Issues and Governance Strengthening 3
Slide 5: Improprieties in Quality Management (Survey and Findings by a Time Series)
(1) Improprieties in Quality Management (Survey and Findings by a Time Series) Date Description Started work on checking and confirming the entire quality management process for all products Oct. 2017 internally Dec. 2017 Reported on the results of the checks noted above 10 cases identified, report
Slide 6: Improprieties in Quality Management (Task Force for Measures)
(2) Improprieties in Quality Management (Task Force for Measures) Board of Directors Risk Requests investigation Management External Response President Committee Investigation Team Team Chair: President Reports on External law firm External law firm Members: investigation [Oversight] Members of the
Slide 7: Improprieties in Quality Management (Schedule from now on)
(3) Improprieties in Quality Management (Schedule from now on) 2018 2019 Response Lead Action Sep Oct Nov Dec Jan on Explanation to customers and response consideration Discuss with customers Individual individually response with Fujikura Investigate & respond customers (Self-checks) Implement indiv
Slide 8: Responding to Risk: Strengthen Governance
(4) Responding to Risk: Strengthen Governance Developed operational risks • Worsening profitability with European problems of the Automotive Electronics Business continuing from FY2017 • Loss outbreak in emerging nations EPC business (Brazil, Bangladesh), which is one of the factors of the downwar
Slide 9: 2. Review of 1H FY2018 and Full-Year Forecast
2. Review of 1H FY2018 and Full-Year Forecast
Slide 10: 1H FY2018 Financial Results
(1) 1H FY2018 Financial Results (Unit : Billion yen) FY2018 FY2017 FY2018 （Forecast on Sep.26） 2H FY2018 1H 2H Full Year 1H 1H Full Year Forecast Forecast Net Sales 359.7 380.2 740.0 363.6 356.3 720.0 360.0 720.0 Operating Income 17.5 16.8 34.3 14.2 15.7 30.0 14.0 30.0 Ratio of Operating Income to N
Slide 11: Review of 1H FY2018 and 2H Initiatives
(2) Review of 1H FY2018 and 2H Initiatives Review of 1H FY2018 Power System business: Huge operation loss of EPC business in emerging countries; continue to execute structural reform Optical fiber: Currently firm, but signs of a change in China and temporary decline in demand in North America
Slide 12: 3. 2020 Mid-term Business Plan - towards 2020 Mid-term Goals -
3. 2020 Mid-term Business Plan - towards 2020 Mid-term Goals -
Slide 13: Summary at the turnaround point of the 2020 Mid-term Business Plan
(1) Summary at the turnaround point of the 2020 Mid-term Business Plan Many issues were highlighted during the first half of the Mid-term Business Plan Overall: Governance Issues - Huge operation loss in Eastern European Automotive business in FY 2017, Quality impropriety issues and Huge operati
Slide 14: Path to the Goals of the 2020 Mid-term Business Plan
(2) Path to the Goals of the 2020 Mid-term Business Plan Strategic measures to close the gap between the present state and the goals of the 2020 Mid-term Business Plan Further strengthening of responding capability to business risk Ratio of Operating Income to Net Sales 7.0% Explanatory Risk ite
Slide 15: Strategy for Achieving the 2020 Mid-term Goals
(3) Strategy for Achieving the 2020 Mid-term Goals Execute strategy after having reduced risk sufficiently to achieve the 2020 Mid-term Goals. Strategy for Achieving Business Domain Mid-term Measures Risks the Mid-term Goals Execute structural reform of Stiffer competition from other Complete
Slide 16: Toward the 2020 Mid-term Goals: Core, New, Fusion
(4) Toward the 2020 Mid-term Goals Reviewing the current achievement of 2020 Mid-term Business Plan, we need to operate our business within the following 3 domains. ① Core business, ② New business (innovation), ③ Fusion businesses ① ③ ② Core business Core + New New business (fusion) (innovation) Tow
Slide 17: 3.1. Initiatives in Core Businesses
3.1. Initiatives in Core Businesses - towards 2020 Mid-term Goals -
Slide 18: Further Strengthening of Strategic Products - SWR/WTC
(1) Further Strengthening of Strategic Products- SWR/WTC* Develop optimal products that meet the different needs of customers for each region and use North America: Response to a growing FTTx and larger capacity Europe: Break into market by providing new WTC products adapted for local markets
Slide 19: Achieve Greater Differentiation Through Digital Innovation - Electronics Business
(2) Achieve Greater Differentiation Through Digital Innovation ‐Electronics Business High level response to meet increasingly higher technology and production requirements from major customers “Quality as framework of business management” + DX “Digital transformation” Innovation in digital manuf
Slide 20: Revision of the LCC Strategy for Automotive Products and Business Revitalization
(3) Revision of the LCC Strategy for Automotive Products and Business Revitalization Geographic strategy : Structure reform in Eastern Europe Shift production to right spot in North Africa Strengthen manufacturing capabilities in plants Strengthen tri-regional management and daily management m
Slide 21: 3.2. Initiative for New Business
3.2. Initiative for New Business Strengthen business creation by integrating core businesses and innovation
Slide 22: Fusion of core businesses and innovation and its initiatives
Fusion of core businesses and innovation and its initiatives Each business topics and its positioning Business reinvention is the fate of any company. Fujikura, a company continuously Fiber Laser grown in core businesses is facing the New Market Market Diversification "Innovation dilemma". Devel
Slide 23: (Topic 1) Response to new EV
Core + Innovation (Topic 1) Response to new EV Aiming at increasing value provided to customers by adding All Fujikura's solution to the core WH business Telecommunication Systems Power Systems WH business is a core technology regarding automobile power distribution, independently of the potenti
Slide 24: (Topic 2) Cable Maintenance & Diagnostic Service Business
(Topic 2) Cable Maintenance & Diagnostic Service Business Cable Business domain Identify existing business needs Contribute to “diagnostic services” Provision for cable deterioration in plants where it is difficult to secure electrical shutdown time, etc. Breakdown point detection probe LIND
Slide 25: (Topic 3) Initiatives in Medical Business
Core + Innovation (Topic 3) Initiatives in Medical Business Core technologies are “imaging” and “miniaturization” Endoscopic direct imaging technologies • Fujikura provides the technology for almost all types of imaging methods that involve insertion into small areas inside the body Thin CMOS im
Slide 26: (Topic 4) Entry into the millimeter-wave wireless market
Core + Innovation (Topic 4) Entry into the millimeter-wave wireless market Entering the dawn millimeter-wave wireless communication market • Areas in which mutual complement with existing FTTx businesses greatly expand opportunities of market entry and expansion • Technology superiority and positi
Slide 27: (Topic 5) Initiatives in Life-Assistance
Innovation (Topic 5) Initiatives in Life-Assistance Solving society’s problems by the IoT Business creation through PoC verification with local municipalities PoC: Proof of Concept Successful IoT experiment in protecting the elderly in Kimotsuki-cho, Kagoshima Verified the efficacy of a protec
Slide 28: Reform for Corporate Culture to Create Innovation
Innovation Reform for Corporate Culture to Create Innovation Being involved in the venture ecosystem Changing the internal corporate culture through open innovation • Received a Corporate Innovation Award from Plug and Play Japan, valuing our contributions as a member of the venture ecosystem •
Slide 29: 4. Return to Shareholders
4. Return to Shareholders F Fujikura CC
Slide 30: Basic Policy on Shareholder Return
(1) Basic Policy on Shareholder Return Distribution of profits while keeping balance in mind Focus on investment in growth businesses (the next areas of growth) Improving financial soundness (shareholders’ equity, D/E ratio) Flexible acquisition of treasury shares Increasing earnings per share
Slide 31: Becoming a promising company with strong earning power and reinvention
As a company creating customer value, we will become a promising company with a future with "strong earning power" and "power of strong reinvention"! 30
Slide 32: Contact: Investor Relation Group
Special Notes: Statements in this presentation that relate to future results and events (including statements regarding Fujikura’s revenue and earnings guidance) are based on Fujikura’s current expectations. Actual results in future periods may differ materially from those currently expected because