Toshiba Corporation Consolidated Results for 9 Months and 3Q of FY2013 (8637Y)

TIDMTOS

RNS Number : 8637Y

Toshiba Corporation

30 January 2014

This is the translation of an announcement submitted to the Tokyo Stock Exchange.

FOR IMMEDIATE RELEASE

January 30, 2014

Toshiba Announces Consolidated Results

for the First Nine Months and Third Quarter

of Fiscal Year Ending March 2014

TOKYO -- Toshiba Corporation (TOKYO: 6502) today announced its consolidated results for the first nine months (April-December) and the third quarter (October-December) of fiscal year (FY) 2013, ending March 31, 2014. All comparisons in the following are based on the same period a year earlier, unless otherwise stated.

Overview of Consolidated Results for the First Nine Months of FY2013

(April-December, 2013)

(Yen in billions)

 
                                     First nine months      Change from 
                                         of FY2013        first nine months 
                                                              of FY2012 
----------------------------------  ------------------  ------------------- 
 Net Sales                                     4,588.8               +545.8 
----------------------------------  ------------------  ------------------- 
 Operating income (loss)                         153.3                +55.0 
----------------------------------  ------------------  ------------------- 
 Income (Loss) before 
  income taxes and noncontrolling 
  interests                                       91.0                  0.0 
----------------------------------  ------------------  ------------------- 
 Net income (loss) attributable 
  to shareholders of 
  the Company ([1])                               38.7                -15.8 
----------------------------------  ------------------  ------------------- 
 

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

The overall recovery of the world economy remained slow, hindered by many challenges such as fund outflows from and weakening currencies in the emerging economies in the wake of the tightening of Round 3 of Quantitative Easing (QE3) policy, as well as the soaring unemployment rates in the EU. The U.S. economy maintained a solid upturn regardless of tighter QE3 policy and financial problems. After China reframed economic policy in July, its economy picked up again and remained healthy. The EU economy bottomed out in early spring and continued a gradual recovery. The economy of Southeast Asia also started a gradual recovery, thanks to an increase in exports to the U.S., EU and China. The Japanese economy continued its slow recovery on an increase in consumption spurred by rising stock prices, a last-minute rise in demand before an increase in the consumption tax, and a package of emergency economic measures initiated by the government.

In these circumstances, Toshiba Group's net sales increased by 545.8 billion yen to 4,588.8 billion yen (US$43,702.8 million) with all five of its major business segments recording higher sales, most notably Electronic Devices & Components segment. Consolidated operating income increased by 55.0 billion yen to 153.3 billion yen (US$1,460.4 million), the highest ever for an April-December period.

While the Lifestyle Products & Services segment deteriorated and the Energy & Infrastructure segment saw a decrease in operating income, the Community Solutions, Healthcare Systems & Services and Electronic Devices & Components segments recorded higher operating incomes. The operating income of the Lifestyle Products & Services segment improved considerably in the third quarter against the second quarterand the Electronic Devices & Components segment achieved record operating income for an April-December period.

Despite a temporary increase in expenditure in the non-operating profit and loss account, income before income taxes and noncontrolling interests was 91.0 billion yen (US$866.7 million), the same level as a year earlier, owing to the excellent performance of the Electronic Devices & Components segment. Net income attributable to shareholders of the Company decreased by 15.8 billion yen to 38.7 billion yen (US$368.3 million) due to higher income taxes.

Consolidated Results for First Nine Months of FY2013 by Segment

(April-December, 2013)

(Yen in billions)

 
                                           Net Sales           Operating Income 
                                                                    (Loss) 
                                                 Change*                 Change* 
---------------------------------  --------  --------------  ---------  -------- 
 Energy & Infrastructure            1,178.6    +77.9    +7%        4.3     -49.9 
---------------------------------  --------  -------  -----  ---------  -------- 
 Community Solutions                  915.8   +132.2   +17%       16.2      +2.2 
---------------------------------  --------  -------  -----  ---------  -------- 
 Healthcare Systems & Services        268.9    +13.9    +5%       14.4      +1.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Electronic Devices & Components    1,313.5   +351.3   +37%      168.6    +113.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Lifestyle Products & Services        968.2    +14.0    +1%      -41.4     -12.5 
---------------------------------  --------  -------  -----  ---------  -------- 
 Others                               347.7     -3.2    -1%       -8.9      -0.5 
---------------------------------  --------  -------  -----  ---------  -------- 
 Eliminations                        -403.9        -      -        0.1         - 
=================================  ========  =======  =====  =========  ======== 
 Total                              4,588.8   +545.8   +14%      153.3     +55.0 
---------------------------------  --------  -------  -----  ---------  -------- 
 

(* Change from the year-earlier period)

Energy & Infrastructure: Higher Sales and Lower Operating Income

The Energy & Infrastructure segment saw overall sales increase. Although the Nuclear Power business in Japan and the Thermal & Hydro Power Systems business saw lower sales, the overall Social Infrastructure business recorded growth, reflecting higher sales in the Solar Photovoltaic Systems, Railroad Systems and Automotive Systems businesses.

The segment as a whole saw lower operating income. The Solar Photovoltaic Systems business reported higher operating income, reflecting higher sales. The Thermal & Hydro Power Systemsbusiness performed well but recorded lower operating income. The overseas Nuclear Power Systems business deteriorated.

Community Solutions: Higher Sales and Higher Operating Income

The Community Solutions segment saw overall sales increase. The Retail Information Systems and Office Equipment business reported significantly increased sales on positive effects from a business acquisition and other factors. The Disaster Prevention Systems, Water & Environmental Systems, Elevator & Building Systems, Lighting and Commercial Air-Conditioners businesses also saw sales increases.

The segment as a whole saw higher operating income. While the Water & Environmental Systems and Lighting businesses saw deterioration in operating income, the Retail Information Systems and Office Equipment business reported considerably higher operating income reflecting higher sales, and the Elevator & Building Systems and Commercial Air-Conditioners businesses also recorded improved operating income.

Healthcare Systems & Services:Higher Sales and Higher Operating Income

The Healthcare Systems & Services segment saw overall sales increase. Healthcare systems, especially computerized tomography (CT) systems, recorded higher sales on higher unit sales in emerging economies and in the overseas service sector.

The segment as a whole saw higher operating income on higher sales in emerging economies and the overseas service sector.

Electronic Devices & Components: Higher Sales and Higher Operating Income

The Electronic Devices & Components segment as a whole reported considerably higher sales. In the Semiconductor and Storage business, the Memories business saw significantly higher sales on increased sales volume. The Storage Products business also recorded higher sales, especially in 3.5-inch hard disk drives (HDDs).

The segment as a whole saw a considerable rise in operating income and recorded its highest ever third-quarter result. The Discrete and System LSIs businesses deteriorated and the Storage Products business saw lower operating income. However, the Memories business recorded a notable upswing, maintaining high profitability. The consolidation of NuFlare Technology, Inc. also contributed to the rise in the segment's overall income.

Lifestyle Products & Services: Higher Sales and Deteriorated Operating Income (Loss)

The Lifestyle Products & Services segment saw overall sales increase. The Visual Products business, which includes LCD TVs, saw sales decrease due to a shift in focus to limited and clearly defined sales areas, while the PC and White Goods businesses recorded higher sales.

The segment as a whole saw deteriorated operating income (loss). The Visual Products business saw a considerable improvement and positive operating income in the third quarter, due to positive effects from restructuring, higher sales prices and a focus on limited and clearly defined sales areas that lifted the result for the period as a whole. The White Goods business had to contend with a weaker yen throughout the period but secured operating income in the third quarter through efforts to strengthen product lines and measures to deal with the weaker yen. The PC business felt the impacts of the cost of inventory clearance and yen depreciation. The overall deterioration in segment results reflected the influence of the first six months, the April-September period.

Others:Lower Sales and Deteriorated Operating Income (Loss)

The Others segment as a whole saw sales decrease despite higher sales in the IT Solutions business, reflecting the May 2013 sale of all shares of Toshiba Finance Corporation.

Overview of Consolidated Results for the Third Quarter of FY2013

(October-December, 2013)

(Yen in billions)

 
                                         3Q         Change from 
                                      of FY2013     3Q of FY2012 
----------------------------------  -----------  ----------------- 
 Net Sales                              1,549.6             +192.5 
----------------------------------  -----------  ----------------- 
 Operating income (loss)                   47.7              +18.1 
----------------------------------  -----------  ----------------- 
 Income (Loss) before 
  income taxes and noncontrolling 
  interests                                39.1               -9.2 
----------------------------------  -----------  ----------------- 
 Net income (loss) attributable 
  to shareholders of the 
  Company ([1])                            17.2              -12.2 
----------------------------------  -----------  ----------------- 
 

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

Consolidated net sales increased by 192.5 billion yen to 1,549.6 billion yen (US$14,758.0 million), with all of the five major segments seeing an increase in net sales. Most notably, the Electronic Devices & Components segment recorded a significant increase in sales. Consolidated operating income was 47.7 billion yen (US$455.0 million), an increase of 18.1 billion yen. While the Energy & Infrastructure segment saw deteriorated operating income, the Community Solutions and Healthcare Systems & Services segments saw higher operating income, the Electronic Devices & Components segments saw considerably higher operating income, and the Lifestyle Products & Services segment saw a significant improvement. Income before income taxes and noncontrolling interests decreased by 9.2 billion yen to 39.1 billion yen (US$372.5 million). Net income attributable to shareholders of the Company decreased by 12.2 billion yen to 17.2 billion yen (US$163.3 million).

Consolidated Results for the Third Quarter of FY2013 by Segment

(October-December, 2013)

(Yen in billions)

 
                                           Net Sales           Operating Income 
                                                                    (Loss) 
                                                 Change*                 Change* 
---------------------------------  --------  --------------  ---------  -------- 
 Energy & Infrastructure              395.5    +43.1   +12%       -9.0     -22.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Community Solutions                  316.0    +44.7   +17%        7.7      +1.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Healthcare Systems & Services         83.1     +5.6    +7%        4.4      +0.9 
---------------------------------  --------  -------  -----  ---------  -------- 
 Electronic Devices & Components      422.4    +89.3   +27%       54.8     +26.8 
---------------------------------  --------  -------  -----  ---------  -------- 
 Lifestyle Products & Services        356.8    +28.4    +9%       -4.7     +12.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Others                               110.7     +0.7    +1%       -5.5      -1.3 
---------------------------------  --------  -------  -----  ---------  -------- 
 Eliminations                        -134.9        -      -        0.0         - 
=================================  ========  =======  =====  =========  ======== 
 Total                              1,549.6   +192.5   +14%       47.7     +18.1 
---------------------------------  --------  -------  -----  ---------  -------- 
 

(* Change from the year-earlier period)

Energy & Infrastructure: Higher Sales and Deteriorated Operating Income (Loss)

The Energy & Infrastructure segment saw overall sales increase. While the Nuclear Power Systems business saw lower sales, the Solar Photovoltaic Systems and Automotive Systems businesses recorded sales growth, resulting in an increase in overall sales in the Social Infrastructure business.

The segment as a whole saw deteriorated operating income (loss). The Solar Photovoltaic Systems business saw higher operating income on higher sales. The Nuclear Power Systems business saw deteriorated operating income (loss). The Thermal & Hydro Power Systems business performed well but recorded lower operating income.

Community Solutions: Higher Sales and Higher Operating Income

The Community Solutions segment saw overall sales increase. The Retail Information Systems and Office Equipment business reported a sales increase on positive effects from a business acquisition. The Disaster Prevention Systems, Lighting and Commercial Air-Conditioners businesses also reported an increase in sales.

The segment as a whole saw higher operating income, reflecting higher operating income on higher sales in the Retail Information Systems and Office Equipment business and steady performance in the Elevator and Building Systems business.

Healthcare Systems & Services: Higher Sales and Higher Operating Income

The Healthcare Systems & Services saw overall sales increase due to higher sales on higher unit sales of not only mainstay CT systems but also X-ray and other systems, plus higher sales in the overseas service sector.

The segment as a whole saw higher operating income, reflecting higher operating income on higher sales in emerging economies and the overseas service sector.

Electronic Devices & Components: Higher Sales and Higher Operating Income

The Electronic Devices & Components segment reported considerably higher sales. In the Semiconductor and Storage business, the Memoriesbusiness saw considerably higher sales on increased sales volume. The Storage Products business also recorded higher sales.

The segment as a whole saw a sharp rise in operating income. While the Storage Products business saw lower operating income, the Memoriesbusiness recorded a considerably higher operating income, maintaining high profitability.

Lifestyle Products & Services: Higher Sales and Improved Operating Income (Loss)

The Lifestyle Products & Services segment saw overall sales increase. While the Visual Products business, which includes LCD TVs, saw sales decrease due to a shift in focus to limited and clearly defined sales areas. PC sales were brisk in the North America and the White Goods business was profitable on the timely introduction of new products.

The Lifestyle Products & Services segment as a whole saw a considerable improvement in operating income (loss). The PC business deteriorated on the cost of inventory clearance and yen depreciation. The Visual Products business saw a considerable improvement and secured operating income due to the effects of restructuring, higher sales prices and a shift in focus to limited and clearly defined sales areas. The White Goods business was profitable due to efforts to strengthen product lines and measures to deal with the weaker yen.

Others:Higher Sales and Deteriorated Operating Income(Loss)

Notes

Toshiba Group'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. Certain operating expenses such as restructuring charges and gains (losses) from sale or disposition of fixed assets are not included in it.

Following the acquisition of the Retail Store Solutions business of IBM of the United States in July 2012, the Company completed the allocation of the cost of the acquisition to assets and liabilities, according to Accounting Standards Codification ("ASC") 805 "Business Combinations", in the current fiscal year. Results for FY2012 have been revised to reflect this change.

The HDD and SSD businesses are referred to as the Storage Products business.

Qualitative data herein are compared with the same period of the previous year, unless otherwise noted.

Financial Position and Cash Flows for the first nine months of FY2013

Total assets increased by 374.7billion yen from the end of March 2013 to 6,474.7billion yen (US$61,664.0 million).

Shareholders' equity, or equity attributable to the shareholders of the Company, was 1,221.3 billion yen (US$11,631.4 million), an increase of 187.0 billion yen from the end of March 2013. This reflects a significant rise in net income (loss) attributable to shareholders of the Company and an improvement in accumulated other comprehensive loss due to the easing of yen appreciation toward the end of the period.

Total interest-bearing debt increased by 91.8 billion yen from the end of March 2013 to 1,563.4billion yen (US$14,889.4million), reflecting an increase in capital requirements to meet with increased orders in the Energy & Infrastructure segment and an increase in strategic investments in future growth areas.

As a result of the foregoing, the shareholders' equity ratio at the end of December 2013 was 18.9%, a 1.9-point increase from the end of March 2013, and the debt-to-equity ratio was 128%, a 14-point decrease from the end of March 2013.

Free cash flow was -121.3billion yen (US$-1,155.3million), 137.6 billion yen higher than the same period of the previous year.

Performance Forecast for FY2014

Toshiba Group's business projections for its consolidated results for the fiscal year 2013 remain unchanged from those announced on October 30, 2013.

Other

(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 nine months ending December 31, 2013 by a reasonably estimated annual effective tax rate for FY 2013, ending March 31, 2014. The estimated annual effective tax rate reflects a projected annual income (loss) before income taxes and noncontrolling interests and the effect of deferred taxes.

   (3)   Change in accounting policies: 

The Company and its domestic subsidiaries mainly used the declining-balance method for the depreciation of tangible fixed assets until March 2013. From April 1, 2013 onward, the straight-line method has been used instead.

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. Since Toshiba Group is promoting business under various market environments in many countries and regions, they are subject to a number of their 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.

-Major disasters, including earthquakes and typhoons;

-Disputes, including lawsuits, in Japan and other countries;

-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 political and economic conditions in Japan and abroad; unexpected regulatory changes;

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

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

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

Note

For convenience only, all dollar figures used in reporting fiscal year 2013 first nine months and the third quarter results are valued at 105 yen to the dollar.

More details are available in the attachement.

http://www.rns-pdf.londonstockexchange.com/rns/8637Y_-2014-1-30.pdf

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