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Financial Reports for the Six Months Ended
September 30, 2004 (Consolidated) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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November
10, 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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1.
Consolidated Financial Highlights (April 1, 2004 through September 30,
2004)
2.
Consolidated Financial Forecast (April 1, 2004 through March 31,
2005)
Notes: Net income per
share (Diluted): 71.89yen Caution: The above forecasts have been made based
on information available as of the release date of this material, and
actual business results may vary from forecasted figures due to a number
of subsequent factors. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Our group of Companies is comprised of 34 subsidiaries and 7 affiliates as at September 30, 2004. The Group is primarily engaged in the manufacture and sales of automotive components, communication media components and technical ceramics. Outline of the position concerning business is as following:
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NGK Spark Plug Co.,
Ltd. | |||||||||||||||||||||||||||||||||||||||||||||
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NGK Spark Plug Co.,
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Other Subsidiaries and
Affiliates: |
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NGK Spark Plugs (U.S.A.) Holding, Inc. |
(U.S.A.) |
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Nittoku Unyu Co., Ltd. |
(Japan) |
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Nittoku Alpha Service Co., Ltd. |
(Japan) |
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Tokai Taima Kogu Co., Ltd. |
(Japan) |
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Other three companies |
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As a technology-driven company that preempts market needs, NGK Spark Plug aims to be a leading company that is highly trusted by customers and the society, by adding new values and providing excellent product quality requested by the epoch. It is NGK Spark Plug’s fundamental policy to maximize corporate value and meet the shareholders’ expectations. To this end, NGK Spark Plug devotes every effort in offering working environment in which each employee can make full use of his/her personality and capability, and strives to move forward constantly in a swift manner.
Our basic dividend policy is to maintain stable payouts and meet shareholders’ expectations, while, at the same time, ensure that dividends are in line with business performance, payout ratio, and outlook of future business. It is also our recognition that aggressive investment in R&D and capital equipment in the growing area of business is indispensable in order to maintain and enhance competitive market advantage that ensures shareholders’ value for the future. To this end, we plan to retain earnings as well.
We, as the NGK Spark Plug Group, have been striving to bring up our business performance through aggressive marketing activities enhanced by manufacturing and sales synergies, leveraging its global production and distribution network as well as competitive product lines.
As a result, the Company’s posted record-high consolidated results during six months ended September 30,2004 as follows:
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% Change
from the previous year | |
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Net Sales |
122,306 |
million yen |
Up |
8.3% |
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Operating Income |
14,097 |
million yen |
Up |
37.7% |
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Ordinary Income |
15,822 |
million yen |
Up |
54.3% |
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Net Income |
9,439 |
million yen |
Up |
49.9% |
Regarding Spark Plugs, oversea business resulted strong in North America and Europe. Shipment quantity for factory installation in new cars, especially precious-metal plugs, increased due to strong vehicle production at domestic manufactures. Regarding automotive sensors such as the oxygen sensors, total shipment quantity declined slightly, dragged down by reduced production at U.S. automakers who are our major customers despite steady demands from the domestic and European markets where the number of vehicle application increased. Affected by exchange rates shifted to weaker U.S. dollar, Automotive Components Business posted net sales of 76,316 million yen, up 1.2% over the corresponding period of the previous year, and operating income of 13,362 million yen (down 4.6%).
As a result of the expansion of digital consumer electronics market as well as strong demand for PC’s and mobile phones, shipments of MPU packages and communication media device packages increased significantly. Sales of cutting tools increased as well, mainly for the uses of metal processing in the automotive components and precision machinery industries. In the area of fine ceramics, orders received for capital investment related uses increased in line with the economic recovery, and sales for medical uses resulted strong as well. As a result, Communication Media Components and Technical Ceramics Businesses posted net sales of 44,737 million yen, up 23.1% over the corresponding period of the previous year. Regarding profitability, an improvement of capacity utilization due to strong demand for ceramic IC packages and an improvement of process yield for organic IC packages supported favorable outcome, resulting operating income of 734 million yen.
Net sales in other businesses totaled 1,286 million yen, up 4.4% over the corresponding period of the previous year, while operating income was 0 million yen (down 71.4%).
In Japan, net sales were 105,277 million yen, up 9.6% over the corresponding period of the previous year, and operating income was 10,858 million yen (up 59.8%). The detail of each business is as following:
In the Automotive Components Business, shipment quantity increased. However net sales decreased slightly due to the weak U.S. dollar. The Communication Media Components Business took an upturn toward strong recovery.
In North America, net sales were 37,440 million yen, up 4.0% over the corresponding period of the previous year, and operating income was 1,059 million yen (up 0.8%). The detail of each business is as following:
In the Automotive Components Business, shipment quantity declined slightly due to the slump at major U.S. automakers. The Communication Media Components Business improved due to an increase in shipment quantity of IC packages for MPU.
In Europe, net sales were 24,774 million yen, up 8.8% over the corresponding period of the previous year, and operating income was 1,200 million yen (up 3.4%). This result was due to solid performance in each business.
In other regions, net sales were 10,890 million yen, up 28.6% over the corresponding period of the previous year, and operating income was 856 million yen (up 3.2%). This result was due to strong performance in Latin America and Oceania, partially offset by some initial cost of NGK Spark Plug (Shanghai) Co., Ltd.
Regarding the fiscal year ending March 31,2005, while domestic automobile production is expected to continue to grow firmly, slowdown of the digital home electronics, mobile phone, and PC markets, all of which supported favorable semiconductor production, and influence in manufacturing and logistic cost increases due to a steep rise of raw material prices particularly crude oil, remain as uncertainty. In addition, the exchange rate that is shifting to weaker U.S. dollar does not allow optimism, as the NGK Spark Plug Group has a large portion of export sales.
Under these circumstances, we forecast consolidated net sales of 240,000 million yen, up 4.9% over the corresponding period of the previous year, ordinary income of 26,500 million yen (up 38.3%), net income of 16,000 million yen (up 43.9%). These forecasts assume exchange rates of 105 yen=US$1, and 130 yen=1 euro for the second half of fiscal year ending March 31,2005.
In light of the results in the interim period, NGK Spark Plug has decided to pay the interim cash dividends of 6 yen per share, adding a special dividend of 0.5 yen per share to the ordinary dividend of 5.5 yen, and projects that year-end cash dividends will also be 6 yen per share, increased by 0.5 yen from the previous announcement. Accordingly, total cash dividends applicable to the fiscal year ending March 31,2005 will be 12 yen per share (ordinary dividend of 11 yen, plus special dividend of 1 yen per share).
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Disclaimer regarding Forward-Looking
Statements. This document contains forward-looking statements. These statements are based on internal projections and estimates and should not be interpreted as representation that quantitative or qualitative objectives therein will be fulfilled. |
Cash and cash equivalents decreased 12,522 million yen (down 26.0%) compared with the previous fiscal year-end, to 35,699 million yen at September 30,2004. This is mainly due to an increase of net cash used for investing activities such as placements on fixed-term deposit and purchases of securities, which exceeded increases of net cash provided from operating activities that generated a net income increase and from financing activities in which we raised funds by issuing the Euro-Yen convertible bonds.
Net cash provided by operating activities increased 7,080 million yen compared with the corresponding period of the previous year (up 62.5%) to 18,400 million yen primarily due to an increase of net interim income amounted to 14,953 million yen and to a decrease in payment of income tax of 1,320 million yen.
Net cash used in investing activities increased 23,272 million yen (up 139.7%) to 39,930 million yen primarily due to an increase in placements on fixed-term deposit of 16,929 million yen and purchases of investment securities of 3,405 million yen.
Net cash provided by financial activities amounted to 9,110 million yen. This is mainly due to an increase in proceeds of 17,000 million yen from the issuance of the Euro-Yen convertible bond partially offset by a decrease in net proceeds from short- term borrowings of 4,691 million yen.
Supplemental information for cash
flows
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March 31, 2003 |
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September 30, 2003 |
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March 31, 2004 |
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September 30, 2004 |
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Equity Ratio: |
63.4% |
|
64.4% |
|
69.1% |
|
66.6% |
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Equity ratio based on market price ratio: |
60.4% |
|
68.8% |
|
72.5% |
|
79.7% |
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Repayment period: |
1.6year |
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- |
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1.4year |
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- |
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Interest coverage ratio: |
29.8times |
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22.5times |
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23.7times |
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62.6times |
Notes: 1. Equity ratio:
shareholders’ equity / total assets
Equity market price ratio:
issued common stock stated at market price / total
assets
Repayment period: interest
bearing debt / cash flows from operating activities
Interest coverage ratio:
(cash flows from operating activities + interest paid) / interest
paid.
2. Each ratio is calculated
based on the figures in the consolidated financial statements.
3. Market price is calculated
based on closing price at the end of period multiplied by the number of shares
outstanding at the end of period, excluding treasury
stock.
4. Cash flows provided by
operating activities are the amount of operating cash flows in the consolidated
statements of cash flows. Interest-bearing debt includes short-term borrowings,
current portion of long-term debt, and long-term debt in the consolidated
balance sheets. Additionally, interest paid is the amount of interest paid in
the consolidated statements of cash flows.
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(Yen in
millions) | |||||||
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September
30 |
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March
31 | |||||
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|
2004 |
|
2003 |
|
2004 | |||
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Assets |
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|
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|
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Current
assets: |
|
|
|
|
|
|
|
|
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Cash and Time
deposit |
63,024 |
|
|
54,168 |
|
|
47,579 |
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Notes and accounts
receivable, trade |
43,210 |
|
|
43,173 |
|
|
41,054 |
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Securities |
12,563 |
|
|
10,271 |
|
|
11,670 |
|
|
Inventories |
41,317 |
|
|
43,710 |
|
|
42,223 |
|
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Deferred tax
assets |
7,125 |
|
|
7,726 |
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|
7,035 |
|
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Other current
assets |
6,726 |
|
|
6,255 |
|
|
6,033 |
|
|
Allowance for doubtful
accounts |
(281) |
|
|
(440) |
|
|
(290) |
|
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Total current assets |
173,685 |
54.4% |
|
164,866 |
52.7% |
|
155,306 |
52.1% |
|
|
|
|
|
|
|
|
|
|
|
Fixed
assets: |
|
|
|
|
|
|
|
|
|
Tangible assets: |
|
|
|
|
|
|
|
|
|
Building and
structures |
37,274 |
|
|
40,114 |
|
|
38,464 |
|
|
Machinery and
equipment |
31,935 |
|
|
34,783 |
|
|
32,890 |
|
|
Other tangible
assets |
19,712 |
|
|
19,042 |
|
|
19,320 |
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Total tangible assets |
88,921 |
27.9% |
|
93,939 |
30.1% |
|
90,674 |
30.4% |
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|
|
|
|
|
|
|
|
|
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Intangible
assets: |
|
|
|
|
|
|
|
|
|
Software |
146 |
|
|
125 |
|
|
154 |
|
|
Consolidated
goodwill |
- |
|
|
20 |
|
|
3 |
|
|
Total intangible assets |
146 |
0.0% |
|
146 |
0.0% |
|
157 |
0.1% |
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|
|
|
|
|
|
|
|
|
|
Investment
and other assets: |
|
|
|
|
|
|
|
|
|
Investments
securities |
53,605 |
|
|
49,633 |
|
|
49,044 |
|
|
Other
assets |
2,902 |
|
|
4,149 |
|
|
2,923 |
|
|
Allowance for doubtful
accounts |
(81) |
|
|
(129) |
|
|
(112) |
|
|
Total investment and other assets |
56,426 |
17.7% |
|
53,653 |
17.2% |
|
51,855 |
17.4% |
|
|
|
|
|
|
|
|
|
|
|
Total fixed assets |
145,494 |
45.6% |
|
147,739 |
47.3% |
|
142,688 |
47.9% |
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
319,180 |
100.0% |
|
312,606 |
100.0% |
|
297,994 |
100.0% |
|
|
|
|
|
|
|
|
|
|
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(Yen in
millions) | ||||||||
|
|
September
30 |
|
March
31 | |||||
|
|
2004 |
|
2003 |
|
2004 | |||
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable,
trade |
18,944 |
|
|
20,384 |
|
|
17,183 |
|
|
Short-term
borrowing |
8,329 |
|
|
11,997 |
|
|
14,458 |
|
|
Bonds due within one
year |
10,000 |
|
|
- |
|
|
10,000 |
|
|
Convertible bonds due
within one year |
- |
|
|
19,930 |
|
|
- |
|
|
Income taxes
payable |
6,139 |
|
|
4,402 |
|
|
3,432 |
|
|
Other Current
liabilities |
17,485 |
|
|
16,484 |
|
|
17,842 |
|
|
Total current liabilities |
60,898 |
19.1% | ||||||