Toshiba Corporation Consolidated Results for the 1Q of FY2013 (5553K)

TIDMTOS

RNS Number : 5553K

Toshiba Corporation

31 July 2013

FOR IMMEDIATE RELEASE

July 31, 2013

Toshiba Announces Consolidated Results

for the First Quarter of Fiscal Year Ending March 2014

TOKYO--Toshiba Corporation (TOKYO: 6502) today announced its consolidated results for the first quarter (April-June) 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

(Yen in billions)

 
                                                      Change from 
                                     1Q of FY2013    1Q of FY2012 
----------------------------------  -------------  -------------- 
 Net sales                                1,390.6          +121.7 
----------------------------------  -------------  -------------- 
 Operating income (loss)                     24.3           +12.8 
----------------------------------  -------------  -------------- 
 Income (loss) before 
  income taxes and noncontrolling 
  interests                                  17.4           +32.1 
----------------------------------  -------------  -------------- 
 Net income (loss) attributable 
  to shareholders of the 
  Company ([1])                               5.3           +17.4 
----------------------------------  -------------  -------------- 
 

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

The global economy remained uncertain during the first quarter. On the positive side, the US economy was on a solid recovery track, and the EU economy seemed to have hit bottom. On the other hand, however, China's growth slowed after adopted a tight credit policy. Southeast Asian countries also suffered declines in growth rates, due to China's slowing economy and a downturn in exports to Japan. In Japan itself, economic recovery was slow. The yen depreciation, driven by bold monetary and economic policies, did not stimulate exports and pushed up import prices. This led to an uptick in the long-term interest rates, contrary to the intentions of the Bank of Japan.

In these circumstances, Toshiba Group's net sales increased by 121.7 billion yen to 1,390.6 billion yen (US$14,046.4million). Although the Digital Products segment saw reduced sales, the Electronic Devices and Social Infrastructure segments recorded significant increases. Consolidated operating income was 24.3 billion yen (US$245.9million), an increase of 12.8 billion yen. Although the operating incomes of the Digital Products and Home Appliances segments deteriorated because of the weak yen, the Electronic Devices segment saw a significant rise in income. Thanks to significant growth in the Electronic Devices segment and yen depreciation, income before income taxes and noncontrolling interests increased by 32.1 billion yen to 17.4 billion yen (US$175.8million), and net income attributable to shareholders of the Company increased by 17.4 billion yen to 5.3 billion yen (US$53.6million).

Consolidated Results for the First Quarter FY2013 by Segment

(Yen in billions)

 
                                 Net Sales           Operating Income 
                                                          (Loss) 
-----------------------  ------------------------  ------------------- 
                                       Change*                 Change* 
-----------------------  --------  --------------  ---------  -------- 
 Digital Products           334.5     -4.9    -1%      -16.3     -13.0 
-----------------------  --------  -------  -----  ---------  -------- 
 Electronic Devices         411.5   +103.8   +34%       47.9     +38.5 
-----------------------  --------  -------  -----  ---------  -------- 
 Social Infrastructure      540.3    +40.1    +8%        1.1      -6.9 
-----------------------  --------  -------  -----  ---------  -------- 
 Home Appliances            144.9     +3.3    +2%       -6.0      -6.1 
-----------------------  --------  -------  -----  ---------  -------- 
 Others                      69.6    -11.2   -14%       -1.6      +0.8 
-----------------------  --------  -------  -----  ---------  -------- 
 Eliminations              -110.2        -      -       -0.8         - 
=======================  ========  =======  =====  =========  ======== 
 Total                    1,390.6   +121.7   +10%       24.3     +12.8 
-----------------------  --------  -------  -----  ---------  -------- 
 

(* Change from the year-earlier period)

Note: Prior-period performance on consolidated segment information has been reclassified to conform with the current classification.

Digital Products: Lower Sales and Deteriorated Operating Income (Loss)

The Digital Products segment saw a decrease in overall sales. The Retail Information Systems and Office Equipment businesses reported increased sales on positive effects from the acquisition of the Retail Store Solutions business from International Business Machines Corporation ("IBM"). Even though the Visual Products business, which includes LCD TVs, is on path for recovery in Japan, it also recorded a decrease on slumping sales in the United States and Europe. The PC business saw sales drop on reduced sales volume, reflecting a shift in demand to smartphones and tablets.

The overall operating loss of the Digital Products segment increased. While the Retail Information Systems and Office Equipment businesses reported solid performances, the Visual Products business experienced mixed results, with an upturn in Japan due to the effects of restructuring and rises in sales prices, but a downturn in Europe and other regions. The PC business recorded a loss due to a fall-off in demand and the impact of yen depreciation.

Electronic Devices: Higher Sales and Higher Operating Income

The Electronic Devices segment reported considerably higher sales. The Storage Products business maintained sales close to the level of the year-earlier period, while the Semiconductor business saw a substantial increase in sales. Discretes and System LSIs recorded drops in sales on reduced demand, while Memories saw considerably higher sales on increased sales volume. The consolidation of NuFlare Technology, Inc. also contributed to the rise in the segment's overall sales.

The overall operating income of the Electronic Devices segment increased sharply. Although Storage Products, Discretes and System LSIs saw lower operating income, Memories recorded an upswing on increased sales. The consolidation of NuFlare Technology, Inc. also contributed to the rise in the segment's overall income.

Social Infrastructure: Higher Sales and Lower Operating Income

The Social Infrastructure segment saw an increase in overall sales thanks to the continued healthy performance of the Nuclear Power Systems business in overseas markets and growth in the photovoltaic power generation and automotive areas. The Elevator and Building Systems business and the Medical Systems business also reported sales gains.

The overall segment operating income declined but remained in the black. Photovoltaic Systems, Elevator and Building Systems and Medical Systems reported solid performances. Thermal & Hydro Power Systems performed well but recorded a drop in operating income.

Home Appliances: Higher Sales and Deteriorated Operating Income (Loss)

The Home Appliances segment recorded an increase in overall sales as the White Goods business recovered from the impacts of the 2011 floods in Thailand and reported a sales increase.

The overall operating loss of the Home Appliances segment deteriorated. While the Industrial Air-Conditioner business remained steady, the White Goods business recorded lower operating income due to yen depreciation.

Others:Lower Sales and Improvement in Operating Income (Loss)

While overall net sales decreased, operating income improved, reflecting the May 2013 sale of all shares of Toshiba Finance Corporation.

Note:

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.

Financial Position and Cash Flows for the First Quarter of FY2013

Total assets increased by 12.8 billion yen from the end of March 2013 to 6,112.8 billion yen (US$61,745.3 million).

Shareholders' equity, or equity attributable to the shareholders of the Company, was 1,075.3 billion yen (US$10,861.5 million), an increase of 41.0 billion yen from the end of March 2013, despite a dividend payment. This reflects a rise in net income (loss) attributable to shareholders of the Company and a significant improvement in the accumulated other comprehensive income, due to the acceleration in yen depreciation and ensuing upturn in the stock market since the end of 2012.

Total interest-bearing debt decreased by 40.0 billion yen from the end of March 2013 to 1,431.6 billion yen (US$14,460.5 million).

As a result of the foregoing, the shareholders' equity ratio at the end of June 2013 was 17.6%, a 0.6-point increase from the end of March 2013, and the debt-to-equity ratio at the end of June 2013 was 133%, a 9-point decrease from the end of March 2013.

Free cash flow was -29.2 billion yen (US$-295.4 million), 63.5 billion yen higher than the same period of the previous year.

Performance Forecast for FY2013

Toshiba Group's business projections for its consolidated results for the fiscal year 2013 remain unchanged from the projections announced on May 8, 2013.

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 three months ending June 30, 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 had 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 quarter results are valued at 99 yen to the dollar.

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