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Toshiba Corp. (TOS)

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Tuesday 09 November, 2010

Toshiba Corp.

Consolidated Results for 1H a

RNS Number : 8495V
Toshiba Corporation
09 November 2010
 



FOR IMMEDIATE RELEASE

November 9, 2010

 

Toshiba Announces Consolidated Results

for the First Six Months and the Second Quarter

of the Fiscal Year Ending March 2011

 

TOKYO--Toshiba Corporation (TOKYO:6502) today announced its consolidated results for the first six months (April-September) and the second quarter (July-September) of fiscal year (FY) 2010, ending March 31, 2011.

 

1. Overview of Consolidated Results

All comparisons for the first six months and the second quarter of FY2010 are with the same periods a year earlier, unless otherwise stated.

 

(1) Overview of Consolidated Results for the First Six Months (April-September)

of FY2010

                                                                                                    (billion yen)


First six
months

of FY2010

Change from

first six months

of FY2009

Net sales

3,081.1

+184.4

Operating income (loss)

104.8

+102.7

Income (loss) from continuing operations, before income taxes and noncontrolling interests

68.7

+116.1

Net income (loss) attributable to shareholders of the Company [1]

27.8

+85.5

[1] "The Company" refers to Toshiba Corporation.

 

 

The global economy saw a gradual recovery during the six months to September 30, 2010, supported by economic stimulus packages in a number of countries. Most notably, the Chinese and other Asian economies continued their expansion, driven by domestic demand.

 

The Japanese economy showed signs of an upturn for most of the first half, reflecting the improvement in the global economy and the effect of economic stimulus packages, but started to slow in the latter part of the second quarter.

 

In these circumstances, Toshiba's consolidated net sales for the first six months of FY2010 were 3,081.1 billion yen (US$36,680.3 million), an increase of 184.4 billion yen from the same period of the previous year. The consolidated operating income was 104.8 billion yen (US$1,247.8 million), an improvement of 102.7 billion yen. These results mainly reflect a significantly improved performance in Electronic Devices, due to a healthy performance in the Semiconductor business, particularly demand expansion and price stability in NAND flash memories, and the return to profit of the LCD business.

 

Income (loss) from continuing operations before income taxes and noncontrolling interests improved by 116.1 billion yen to 68.7 billion yen (US$818.0 million), and the net income (loss) attributable to shareholders of the Company improved by 85.5 billion yen to 27.8 billion yen (US$331.1 million).

 

 

Consolidated Results for the First Six Months of FY2010 by Segment

                                                                                                                                 (billion yen)


Net Sales

Operating Income (Loss)



Change*



Change*

Digital Products

1,154.2


+138.6


+14%


11.8


+1.2


Electronic Devices

690.6


+80.3


+13%


65.5


+100.8


Social Infrastructure

1,014.4


-38.9


-4%


32.2


-7.4


Home Appliances

294.7


+9.8


+3%


0.2


+7.7


Others

178.3


+18.0


+11%


-5.8


-1.0


Eliminations

-251.1






0.9




Total

3,081.1


+184.4


+6%


104.8


+102.7


(* Change from the year-earlier period)

 

Digital Products:  Higher Sales and Higher Operating Income

The Digital Products segment saw overall sales increase. The Visual Products business, including TVs, reported a healthy performance, primarily in Japan. The PC business saw increased sales on higher shipments. The Storage Products business also saw higher sales, reflecting the acquisition of Fujitsu's hard disk drive business.

 

Segment operating income increased. The PC business and the Storage Products business posted lower operating income mainly due to higher materials prices in the first quarter of FY2010 and declines in sales prices, but the Retail Information Systems and the Office Equipment businesses reported healthy performances.

 

Electronic Devices:  Higher Sales and Significant Improvement in Operating Income (Loss) (Returned to Profit)

The Electronic Devices segment saw overall sales increase. Memories recorded a healthy performance, mainly reflecting demand expansion, especially for high grade mobile products such as smartphones, and price stability in NAND Flash memories. System LSIs and Discretes also posted solid performances.

 

Segment operating income (loss) improved significantly. The Semiconductor business recorded a significant profit, primarily as a result of higher sales and cost reductions in memories, and improvement in System LSIs from restructuring. The LCD business also improved significantly and secured profit.

 

Social Infrastructure:  Lower Sales and Lower Operating Income

The Social Infrastructure segment saw a decline in overall sales. The Power Systems and Industrial Systems business saw sales decline in spite of the solid performance of Nuclear Power Systems, and the IT Solutions business also saw lower sales, both reflecting a fall in orders during FY 2009 influenced by the global recession in FY2009.

 

Despite recording lower operating income as a result of the overall sales decline, primarily in the Power Systems and Industrial Systems business and the IT solutions business, the segment as a whole reported a solid performance.

 

Home Appliances:  Higher Sales and Improved Operating Income (Loss) (Returned to Profit)

The Home Appliances segment saw higher sales, due to a healthy performance by White Goods in Japan. This positive result mainly stemmed from the continuation of the eco-points program, the Japanese government's program to stimulate domestic demand. Lighting maintained the same sales level as in the same period of the previous year.

 

Segment operating income (loss) moved into the black on the large improvement in sales of White Goods and the effect of restructuring.

 

Others:  Higher Sales and Deteriorated Operating Loss

 

 



 

(2) Overview of Consolidated Results for the Second Quarter (July-September)

of FY2010

                                                                                                    (billion yen)


2Q of FY2010

Change from the 2Q of FY2009

Net sales

1,629.7

+46.7

Operating income (loss)

71.0

+34.5

Income (loss) from continuing operations, before income taxes and noncontrolling interests

58.7

+47.2

Net income (loss) attributable to shareholders of the Company [1]

27.3

+27.2

[1] "The Company" refers to Toshiba Corporation

 

Toshiba's consolidated net sales for the second quarter of FY2010 (July-September) were 1,629.7 billion yen (US$19,402.1 million), an increase of 46.7 billion yen from the same period of the previous year. Consolidated operating income climbed to 71.0 billion yen (US$845.5 million), an improvement of 34.5 billion yen against the same period of the previous year, largely as a result of a significantly improved performance in Electronic Devices, driven mainly by demand expansion and price stability in NAND flash memories.

 

Income from continuing operations before income taxes and noncontrolling interests improved by 47.2 billion yen to 58.7 billion yen (US$698.9 million), and net income attributable to shareholders of the Company improved by 27.2 billion yen to 27.3 billion yen (US$325.6 million).



Consolidated Results for the Second Quarter of FY2010

by Segment (July-September, 2010)

                                                                                                                                     (billion yen)


Net Sales

Operating Income (Loss)



Change*



Change*

Digital Products

572.4


+21.5


+4%


1.0


-1.6


Electronic Devices

358.6


+20.5


+6%


38.5


+31.9


Social Infrastructure

579.0


-7.1


-1%


33.3


+0.2


Home Appliances

156.2


+7.4


+5%


1.4


+4.3


Others

91.9


+5.1


+6%


-3.6


-1.2


Eliminations

-128.4






    0.4


   


Total

1,629.7


+46.7


+3%


71.0


+34.5


(* Change from the year-earlier period)

 

Digital Products:  Higher Sales and Lower Operating Income

The Digital Products segment saw overall sales increase. The Storage Products business felt the impact of price erosion, but the Visual Products business, including TVs, reported a healthy performance, primarily in Japan, and the PC business saw increased sales on higher shipments.

 

Segment operating income was lower. The PC business improved as a result of higher sales and decreases in materials prices and the Retail Information Systems and the Office Equipment businesses reported a healthy performance. However, the Storage Products business was influenced by lower sales.

 

Electronic Devices:  Higher Sales and Significant Increase in Operating Income

The Electronic Devices segment saw overall sales increase. Memories recorded a healthy performance, mainly reflecting demand expansion, especially for use in high-grade mobile products such as smartphones, and price stability in NAND Flash memories. System LSIs and Discretes also posted solid performances.

 

Segment operating income showed a marked improvement. The Semiconductor business recorded a healthy performance, mainly as a result of higher sales of memories and cost reductions. The LCD business also made considerable progress and secured a profit.

 

Social Infrastructure:  Flat Sales and Higher Operating Income

The Social Infrastructure segment saw flat sales with a recovery in orders.

 

The segment recorded slightly increased operating income. The IT solutions business and the Medical Systems business maintained high profit levels, and the Power Systems and Industrial Systems business and others saw higher operating income.

 

Home Appliances:  Higher Sales and Improved Operating Income (Loss) (Returned to Profit)

The Home Appliances segment reported higher sales. White Goods turned in a healthy performance and Lighting maintained sales at the same level as in the same period of the previous year.

 

Segment operating income (loss) moved into the black on the large improvement in sales of White Goods and the effect of restructuring.

 

Others:  Higher Sales and Deteriorated Operating Loss

 

Note:

Toshiba's Quarterly Consolidated Financial Statements are based on U.S. generally accepted accounting principles ("GAAP").

 

Operating income (loss) is derived by deducting the cost of sales and selling, general and administrative expenses from net sales. This result is regularly reviewed to support decision-making in allocations of resources and to assess performance. Some items that are classified as operating income (loss) under U.S. GAAP, such as restructuring charges and gains (losses) from the sales or disposal of fixed assets, may be presented as non-operating income (loss).

 

The Mobile Broadcasting business ceased operation at the end of FY2008, and the Mobile Phone business was transferred to a new company on October 1, 2010 and Fujitsu gained 80.1% shares of the new company. Their results are not incorporated into net sales, operating income (loss) or income (loss) from continuing operations, before income taxes and noncontrolling interests in the consolidated results. The businesses are classified as discontinued in the consolidated accounts, in accordance with ASC No.205-20, "Presentation of Financial Statements - Discontinued Operations". However, consolidated net income (loss) (consolidated net income (loss) attributable to shareholders of the Company) includes the operating results of the Mobile Broadcasting business and the Mobile Phone business. Prior-period data relating to the discontinued operations has been reclassified to conform with the current classification.

 

The Company changed the structure of its internal organization at the beginning of FY2010. Prior-period data relating to the consolidated segment information has been reclassified to conform with the current classification.

 

2. Financial Position and Cash Flows for the Second Quarter of FY2010

Total assets decreased by 160.0 billion yen from the end of March 2010 to 5,291.2 billion yen (US$62,989.9 million).

 

Shareholders' equity, or equity attributable to the shareholders of the Company, decreased to 772.8 billion yen (US$9,200.0 million), a decrease of 24.6 billion yen from the end of March 2010, in spite of the net income attributable to shareholders of the Company being 27.8 billion yen in the black. This reflects a deterioration in accumulated other comprehensive loss of 52.4 billion yen, due to a downturn in stock market prices and impacts from foreign currency exchange.

 

Total debt decreased by 23.5 billion yen from the end of March 2010 to 1,194.8 billion yen (US$14,223.6 million).

 

As a result of the foregoing, the shareholders' equity ratio at the end of September 2010 was 14.6%, the same level as at the end of March 2010, and the debt-to-equity ratio at the end of September 2010 was 155%, a 2-point deterioration from the end of March 2010.

 

Free cash flow was -18.5 billion yen, 89.0 billion yen worse than for the same period of the previous year. In spite of positive net income attributable to shareholders of the Company, working capital was lower than for the same period of the previous year, and this resulted in lower cash flows from operating activities.

 

Trend in main indices


Sept./E

2008

Mar./E

2009

Sept./E

2009

Mar./E

2010

Sept./E

2010

Shareholders' equity ratio

 (%)

15.8

8.2

13.5

14.6

14.6

Equity ratio

based on market value (%)

24.1

15.1

37.2

37.5

32.3

Cash flow to

interest-bearing debt ratio

-

-

3.9

3.4

7.9

Interest coverage ratio

 (multiples)

-

-

17.8

14.5

4.6

 

Shareholders' equity ratio: Shareholders' equity divided by total assets

Equity ratio based on market value: Market capitalization divided by total assets

Market capitalization was calculated by multiplying the closing stock price at the end of the relevant period by the number of shares issued, excluding shares owned by the Company.

Cash flow to interest-bearing debt ratio: Debt (average of beginning and end of the term) divided by net cash provided by operating activities

Interest coverage ratio: Cash flow from operating activities divided by interest payments

 

3. Performance Forecast for FY2010

Toshiba's business forecast for its consolidated results for the fiscal year 2010 remains unchanged from the projections announced on May 7, 2010, as it is necessary to carefully assess emerging trends in the business environment in the third quarter of fiscal year 2010 and after, such as concerns for worldwide recession and currency movements, and their impact on the Company.

 

4. Others

(1)    Changes in significant subsidiaries during the period (changes in Specified Subsidiaries ("Tokutei Kogaisha") involving changes in the scope of consolidation): None

(2)   Use of simplified accounting procedures, and particular accounting procedures in preparation of quarterly consolidated financial statements:

 

Income taxes

Interim income tax expense (benefit) is computed by multiplying income before income taxes and noncontrolling interests for the six months ending September 30, 2010 by a reasonably estimated annual effective tax rate for FY 2010, ending March 31, 2011. The estimated annual effective tax rate reflects a projected annual income before income taxes and noncontrolling interests and the effect of deferred taxes.

 

(3)   Change in principles, procedures and representations of accounting policies in preparation of quarterly consolidated financial statements:

         None

 

Disclaimer:

This report of business results contains forward-looking statements concerning future plans, strategies and the performance of Toshiba Group. These statements are based on management's assumptions and beliefs in light of the economic, financial and other data currently available. Furthermore, they are subject to a number of risks and uncertainties. Toshiba therefore wishes to caution readers that actual results might differ materially from our expectations. Major risk factors that may have a material influence on results are indicated below, though this list is not necessarily exhaustive.

·        Disputes including lawsuits in Japan and other countries;

·        Changes in political and economic conditions in Japan and abroad; unexpected regulatory changes;

·        Major disasters, including earthquakes and typhoons;

·        Rapid changes in the supply/demand situation in major markets and intensified price competition;

·        Significant capital expenditure for production facilities and rapid changes in the market;

·        Success or failure of alliances or joint ventures promoted in collaboration with other companies;

·        Success or failure of new businesses or R&D investment;

·        Changes in financial markets, including fluctuations in interest rates and exchange rates.

 

Note:

For convenience only, all dollar figures used in reporting fiscal year 2010 first six months and the second quarter results are valued at 84 yen to the U.S. dollar.

 

# # #

 

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