Taiyo Yuden : Earnings Release Conference with notes(695KB)

Consolidated Financial Results

Year ended March 31, 2024

Tomomitsu Fukuda

Chief of Management Planning Headquarters

May 8, 2024

©TAIYO YUDEN 2017

Financial Summary

FYE March 2024

Net sales increased 1% Y/Y. Sales of products for use in communication equipment and automobiles increased. By product, sales of inductors and integrated modules & devices increased.

Operating profit declined 72% Y/Y. Profit decreased due to the effect of selling prices resulting from changes in the customer mix and the lower capacity utilization effect associated with inventory adjustments.

Net sales slightly exceeded the expected level in the February forecast. Operating profit was lower than expected because the capacity utilization effect fell short of the plan.

Earnings Forecast for FYE March 2025

Net sales are projected to increase 9% Y/Y to ¥350.0 billion and operating profit is projected to increase 120% Y/Y to ¥20.0 billion.

TAIYO YUDEN will pay an annual dividend of 90 yen per share in FYE March 31, 2025, the same as in FYE March 31, 2024.

©TAIYO YUDEN 2017		2

Financial Summary for FYE March 2024

Net sales increased 1% Y/Y with higher sales of products for use in communication equipment and automobiles.

By product, sales of inductors and integrated modules & devices increased.

Operating profit decreased 72% Y/Y.

Profit decreased as the effect of selling prices resulting from changes in the customer mix due to demand fluctuations, the lower capacity utilization effect associated with inventory adjustments, and other factors pushed profit down. Compared to the forecast as of February, although net sales were higher than expected, operating profit did not reach the expected level because the capacity utilization effect fell short of the plan.

Earnings Forecasts for FYE March 2025

TAIYO YUDEN forecasts net sales of 350.0 billion yen, up 9% Y/Y, and operating profit of 20.0 billion yen, up 120%.

TAIYO YUDEN will pay a dividend of 90 yen per share in FYE March 2025, the same as in FYE March 2024.

Summary of Consolidated Financial Results (Y/Y)

¥ in million	FYE Mar 31, 2023	FYE Mar 31, 2024		Change Y/Y
Net sales	319,504	100.0%	322,647	100.0%		3,143	1.0%
Operating profit	31,980	10.0%	9,079	2.8%		(22,900)	(71.6)%
Ordinary profit	34,832	10.9%	13,757	4.3%		(21,074)	(60.5)%
Profit attributable to	23,216	7.3%	8,317	2.6%		(14,898)	(64.2)%
owners of parent
Yen/USD	134.20 yen	143.32 yen			9.12 yen
average exchange rate			depreciated
Impact of exchange rate	Net sales +13.1 billion yen, operating profit +8.5 billion yen
fluctuation	*Including the impact of currencies other than US dollars
R&D expenses		12,678		13,696		1,017	8.0%
Capital investment		50,489		92,201		41,711	82.6%
Depreciation expenses		34,903		39,391		4,488	12.9%
©TAIYO YUDEN 2017								3

The financial results for FYE March 2024 recorded net sales of 322.6 billion yen and operating profit of 9.1 billion yen.

Since the yen depreciated to US$1:¥151 level at the end of the fiscal year, foreign exchange gain of 4.0 billion yen was recorded as non-operating income, resulting in ordinary profit of 13.8 billion yen.

Moreover, profit attributable to owners of parent was 8.7 billion yen due to 1.0 billion yen in extraordinary losses, including loss on sale and retirement of non- current assets.

The average exchange rate during FYE March 2024 was US$1:¥143 level, a depreciation of ¥9 from the previous fiscal year.

The impact from this was an increase of 13.1 billion yen in net sales and 8.5 billion yen in operating profit.

R&D expenses were 13.7 billion yen, up 1.0 billion yen Y/Y. Capital investment was 92.2 billion yen.

This was an increase of 41.7 billion yen Y/Y due to the construction of new plants in China and Malaysia to expand capacity for large sized multilayer ceramic capacitors (MLCCs) used in automobiles and IT infrastructure/industrial equipment where demand is expected to grow.

Depreciation expenses were 39.4 billion yen, up 4.5 billion yen Y/Y.

Factors behind Operating Profit in FYE March 2024

Operating profit (FYE Mar 2023)

32.0

			Operating
			profit
		Currency	(FYE Mar
Effect from		fluctuations	2024)
	+8.5	9.1
cost reductions
+2.0
(2.1)	(2.9)
Effect from	Changes in
capacity	fixed costs
utilization

(28.4) Impact of selling price

©TAIYO YUDEN 2017		4

The main factor for decrease in operating profit Y/Y was the effect from selling price.

Although the moderate pace of price reductions continued for products used in automobiles, there was a bigger impact due to changes in the customer mix associated with prolonged inventory adjustments in the IT infrastructure/industrial equipment market and a recovery in demand in the smartphone market, and other factors, resulting in a 28.4 billion yen decrease in profit.

Other factors for decrease in operating profit were the 2.9 billion yen increase in fixed costs and the 2.1 billion yen effect from capacity utilization.

The effect from capacity utilization includes the impact of changes in sales volume, changes in inventory, and improvement in product mix.

Although sales volume increased in FYE March 2024, the reduction in inventory was a factor for decrease in profit.

Company-wide inventory as of March 31, 2024 decreased 8.0 billion yen from March 31, 2023 on the actual basis excluding exchange rates and the portion with no effect on operating profit.

The 8.5 billion yen effect of exchange rates due to the depreciation of the yen and the 2.0 billion yen impact of lower costs were factors for increase in profit. However, operating profit declined significantly Y/Y to 9.1 billion yen.

Financial Results by Product Classification (Y/Y)

¥ in million	FYE Mar 31, 2023	FYE Mar 31, 2024	Change Y/Y
Capacitors	208,115	65.1%	205,829	63.8%	(2,285)	(1.1)%
Inductors	52,866	16.5%	55,566	17.2%	2,700	5.1%
Integrated modules &	32,581	10.2%	34,934	10.8%	2,353	7.2%
devices
Others	25,941	8.1%	26,317	8.2%	375	1.4%
Total net sales	319,504	100.0%	322,647	100.0%	3,143	1.0%

©TAIYO YUDEN 2017		5

Financial Results by Product Classification (Y/Y)

■ Capacitors

((1.1)% Y/Y)

Although sales increased for products used in communication equipment and automobiles, sales decreased for use in consumer products, information equipment, and IT infrastructure/industrial equipment.

■ Inductors

(+5.1% Y/Y)

Sales increased for products used in information equipment such as memory modules, communication equipment, and automobiles.

• Integrated modules & devices (+7.2% Y/Y)

Sales of communication devices (FBAR/SAW) for use in smartphones increased, but sales of various modules decreased.

	■ Others	(+1.4% Y/Y)
	Sales of aluminum electrolytic capacitors for use in
	automobiles increased.
■ Capacitors ■ Inductors ■ Integrated modules & devices	■ Others
©TAIYO YUDEN 2017			6

Net sales of capacitors were 205.8 billion, down 1% Y/Y.

Although sales of products for use in communication equipment, such as smartphones, and automobiles, where greater use of electronic component is advancing, increased, sales of products for use in information equipment and IT infrastructure/industrial equipment, where market inventory adjustments have continued, and consumer products decreased.

On the other hand, net sales of inductors were 55.6 billion yen, up 5% Y/Y. While sales of products for use in information equipment, such as memory modules, communication equipment, primarily smartphones, and automobiles increased, sales of products for use in consumer products and IT infrastructure/industrial equipment decreased.

Net sales of integrated modules & devices were 34.9 billion yen, up 7% Y/Y. Sales of communication devices (FBAR/SAW) increased with a recovery in demand for use in Chinese smartphones, which had been sluggish until the previous fiscal year.

Meanwhile, sales of circuit modules, where TAIYO YUDEN is implementing business selection and concentration, declined.

Communication devices accounted for 75-80% of integrated module & device sales.

Net sales of others were 26.3 billion yen, up 1% Y/Y, due to the increase in sales of aluminum electrolytic capacitors by our subsidiary ELNA for use in automobiles.

Sales by Market Sector

Consumer products

• Game console

• Smart watch

• Wireless earphones

				Information
				equipment
			•	Tablet device
			•	PC
			•	HDD, SSD
			Communication
				equipment
			•	Smartphone
				Automotive
			•	ADAS
			•	Meter cluster
			•	ECU
			IT infrastructure/
				Industrial
				equipment
			•	Base station
				communication
				device
			•	Server
			•	Security camera
		*Estimated by the company
©TAIYO YUDEN 2017				7

Composition of sales classified by market sector for use in communication equipment increased 6 percentage points Y/Y to 31%, due to the recovery of demand in China and other factors.

Sales of capacitors, inductors, and aluminum electrolytic capacitors for use in automobiles increased. As a result, composition of sales for use in automobiles increased to 30%, up 2 percentage points Y/Y.

On the other hand, composition of sales for use in IT infrastructure/industrial equipment, which includes servers and base station communication equipment, decreased to 18%, down 6 percentage points Y/Y, due to the delayed recovery in demand in this market sector.

There were no major changes in the composition of sales as sales for use in information equipment, such as laptop PCs and tablets, were 14%, and sales for consumer products such as games and smart watches were 7%.

Forecast of Consolidated Performance

Year ending March 31, 2025

©TAIYO YUDEN 2017

Full-Year Forecast

¥ in million	FYE Mar 31, 2024	FYE Mar 31, 2025	Change Y/Y
forecast
Net sales	322,647	100.0%	350,000	100.0%	27,353	8.5%
Operating profit	9,079	2.8%	20,000	5.7%	10,921	120.3%
Ordinary profit	13,757	4.3%	16,500	4.7%	2,743	19.9%
Profit attributable to	8,317	2.6%	11,000	3.1%	2,683	32.2%
owners of parent
Yen/USD	143.32 yen	145.00 yen		1.68 yen
average exchange rate		depreciated
R&D expenses		13,696		15,000	1,304	9.5%
Capital investment		92,201		70,000	(22,201)	(24.1)%
Depreciation expenses		39,391		45,000	5,609	14.2%
©TAIYO YUDEN 2017							9

For FYE March 2025, we project net sales of 350.0 billion yen, up 9% Y/Y.

We forecast operating profit of 20.0 billion yen, ordinary profit of 16.5 billion yen, and profit attributable to owners of parent of 11.0 billion yen. The assumed exchange rate for the financial results forecasts is US$1:¥145.

We project R&D expenses of 15.0 billion yen, up 1.3 billion yen.

We forecast capital investment of 70.0 billion yen, a significant decrease from FYE March 2024, when expenses for construction of new plants were recorded. We expect depreciation expenses will be 45.0 billion yen, up 5.6 billion yen.

Factors behind Operating Profit in FYE March 2025

Effect from

capacity utilization

+54.6

		Operating
		profit
Operating profit	Effect from	(FYE Mar 2025)
20.0
(FYE Mar 2024)	cost	Currency
9.1	reductions
fluctuations
	+3.0
	+1.5

(18.0)

Changes

(30.2)in fixed costs Impact of

selling price

©TAIYO YUDEN 2017		10

The major factor for increase in operating profit in FYE March 2025 will be the effect from capacity utilization.

We anticipate an increase in sales volume and an improvement in the sales mix due to the recovery of demand, and an increase in TAIYO YUDEN's inventories. We expect these items will all be factors for increase in profit by 54.6 billion yen. The 3.0 billion yen impact of lower costs and the 1.5 billion yen impact from exchange rates will also be a factor for increase.

On the other hand, a factor for decrease in profit will be the impact of selling price.

We assume price declines when comparing the same items will remain at roughly the same pace as last year, and expect the impact associated with the increase in sales volume will be a 30.2 billion yen decrease in profit.

Another factor for decrease in profit is an 18.0 billion yen increase in fixed costs from FYE March 2024 due to increases in depreciation and R&D expenses associated with growth investment and higher costs for labor, electricity, and other expenses arising from the expansion in production.

As a result, operating profit is expected to increase 10.9 billion yen to 20.0 billion yen.

Inventory as of March 31, 2025 is planned to be approximately 10.0 billion yen higher than the level as of March 31, 2024.