Panasonic IR Day 2013 · Profile of Automotive & Industrial Systems Company AIS Company ¥ 2.5...

Copyright (C) 2013 Panasonic Corporation All Rights Reserved.

May 30, 2013

Panasonic Corporation Automotive & Industrial Systems Company

President Yoshihiko Yamada

Automotive & Industrial Systems Company

Midterm Plan

Panasonic IR Day 2013

1

Notes: 1. This is an English translation from the original presentation in Japanese.

2. In this presentation, “fiscal 2014” or “FY2014” refers to the year ending March 31, 2014.

Contents

1. Company Profile

2. Midterm Plan

3. Measures for UnprofitableBusinesses

4. Growth Strategy

2


Contents

3

1. Company Profile

2. Midterm Plan


4. Growth Strategy

Company name Automotive & Industrial Systems Company

President Yoshihiko Yamada

Business scope

• Automotive business• Industrial business• Manufacturing business

Number of affiliated companies

Global: 152 (Japan) 35, (Overseas) 117

Profile of Automotive & Industrial Systems Company

AIS Company

¥ 2.5 trillion

AIS Company

¥ 2.5 trillionPanasonic Corporation

¥ 7.3 trillion

Positioning in Panasonic Corporation

FY2013Business results

4

Sales: ¥2,518 bil.

OP: ¥ 29.5 bil.

FCF: ¥ 8.1 bil.


Automotive & Industrial Systems Company (AIS Company)

Automotive Marketing & Sales Division

Industrial Marketing & Sales Division

Business Development Division Engineering Division

In charge of Automotive BusinessSenior Vice President

Masahisa Shibata

In charge of Manufacturing BusinessVice President

Katsuhiko Omoto

Automotive & Industrial Systems Company (Organization)

Au

tom

otive

Info

tain

me

nt S

yste

ms

B

us

ine

ss D

ivisio

n

Au

tom

otive

Elec

tron

ics B

usin

ess

Divis

ion

Au

tom

otive B

attery Bu

sin

ess D

ivisio

n

Pan

ason

ic Sto

rage B

attery C

o., L

td.

Po

rtable R

echarg

eable B

attery B

us

ine

ss D

ivisio

n

En

erg

y De

vice

Bu

siness D

ivision

Ca

pac

itor B

us

iness

Divis

ion

Prin

ted C

ircuit B

oard

Bu

siness D

ivision

Circu

it Co

mp

on

ents B

usin

ess Divisio

n

Elec

trom

ech

anica

l Co

mp

on

ents

Bu

sin

ess

Divis

ion

Electro

nic M

aterials Bu

siness D

ivision

Au

tom

ation

Co

ntro

ls Bu

siness D

ivision

Sem

icon

du

ctor B

usin

ess D

ivision

Pan

ason

ic Precisio

n D

evices Co

., Ltd

.

Op

tical Pick

Up

Bu

siness

Divisio

n

Pan

ason

icF

actory S

olu

tion

s Co

., Ltd

.

Pan

ason

ic Weld

ing

System

s Co

., Ltd

.

Pan

ason

ic Cycle T

echn

olo

gy C

o., L

td.

Pan

ason

ic Po

lyTech

no

log

yC

o., L

td.

Ex-PAS*Company

Ex-Energy Company Ex-Industrial Devices Company Ex-MS*Company

5

*PAS Company: Panasonic Automotive Systems CompanyMS Company: Manufacturing Solutions Company

President: Yoshihiko Yamada

In charge of Industrial BusinessSenior Vice President

Yoshio Ito

AIS Company’s Midterm Management Vision

Become a growth engine for Panasonic Group as a vanguard in B2B business. Establish a foundation for mid to long term growth and profit with setting

”automotive” and “industry” as core businesses.

Boldly accumulate resources and grow as an electronic system supplier

Boldly accumulate resources and grow as an electronic system supplier

Contribute to improve values of factories and social infrastructures

with creating a foundation for long-term profit

Contribute to improve values of factories and social infrastructures

with creating a foundation for long-term profit

Establish a foundation for short-term profits by setting package

solutions and others as a core business

Establish a foundation for short-term profits by setting package

solutions and others as a core business

ICT fieldICT field

Automotive fieldAutomotive field Industrial fieldIndustrial field

6


Characteristics of AIS CompanyOwn “core technologies ” ranging from materials, devices to systems.

* Core technologies: “electronic materials,” “thin film MEMS,” “electrochemical,” “optical and precision processing,” “mounting,” and “welding and processing” technologies

Ability to provide B2B solutions covering a “wide variety of business fields.”

7

*

Contents

8

1. Company Profile

2. Midterm Plan


4. Growth Strategy


Midterm Management TargetAim to grow and expand profits with mainly focusing on the 3 fields of

Automotive, Industry and ICT.

FY13 FY14 FY16FY15

Sales and Operating profit ratio

[Yen: billions]

[Yen: billions]

Auto-motive

Industrial

ICT

Others

Free Cash Flow

•Sales: 2.7 trillion yen, Operating profit ratio: 5.0%•FCF: 265 billion yen (Cumulative amount between FY14 - FY16 )

FY2016

2,518 2,540 2,610 2,700

8.1

65.0

90.0

110.0

FY13 FY14 FY16FY15

1.2%

3.0%4.0%

5.0%

9

Profit Improvement Plan

Operating profit (FY13 → FY16) Sales composition by business profitability

[NOTE] The number in circle below shows the number of business divisions.

Loss

0 - 5%

[OP ratio]

XX%

XX%

X%

32%14%

37%55%

18%

31% 31%

82%

FY13 FY14 FY16

In FY15, return all business divisions to be profitable. In FY16, 13 business divisions will generate operating profit ratio of more than 5%.

Improve profitability by 106.5 billion yen with returning loss-making businesses to be profitable.

10

⑥

⑤

⑦

④

⑧

⑥

⑤

⑬

*Unprofitable business divisions in FY13: Semiconductor, Portable Rechargeable Battery, Automotive Battery, Panasonic Precision Devices, Optical Pick Up, Printed Circuit Board

29.5

[Yen: billions]

FY13 FY16

+32.4+32.4

FY14

+53.6+53.6

*1

*1. Other business divisions improve their profitability *2. Investment on new business, etc.

*1 *2

Un

pro

fitable

Bu

siness d

ivision

s Im

pro

ve p

rofitab

ility

Un

pro

fitable

Bu

siness d

ivision

s Im

pro

ve p

rofitab

ility

76.0

136.0

+106.5

5% or more


Contents

11

1. Company Profile

2. Midterm Plan


4. Growth Strategy

Reduction in

fixed costs

•Reorganization of sites in Japan

6 sites → 3 sites

•Expand in key areas (power and industrial fields, etc.)

Portable Rechargeable Battery :Profit Improvement Plan

Drastically reduce fixed costs and shift resources to other fields which can leverage our strengths.

Transfer

business

12

•Expand local material procurement ratio in overseas

40% (FY13) → 60% (FY14) → 95% target (FY16)

[Sales Composition]

28% (FY13) → 40% (FY16)

Stream

lining

-10.0

6.3

18.5[Yen: billions]

FY13 FY14 FY16

FY13 → FY16Profit improves by 28.5 billion yen

-12.8

+8.5

+11.4

+1.9

+18.7

+16.3

Price

d

eclines

Red

uctio

n in

fix

ed

co

sts

Tra

ns

fer

bu

siness

Stream

linin

gan

d o

thers

Red

uctio

n in

fix

ed

co

sts

+12.2

Price d

eclines

+25.4

-28.2+3.6

Stream

linin

g an

d

oth

ers

Tra

ns

fer

bu

siness


High-capacitance technology and control technology to maximize characteristics of batteries.→ Aim to grow businesses which can

generate 40 billion yen in power and industrial fields in FY16.

Power storage systems (e.g.)

Steadily capture the growing market of thin-type products→ Utilize OEM and expand with

asset-light strategy.

Cylindrical types: distinguish with profitability.

Portable Rechargeable Battery :Concrete Measures

Expand in power and industrial fields by exerting our strengths in high-capacitance, high-reliability and control technologies.

ICT

Ke

y areas

13

FY13 FY16Power control ECU

Power control element

Battery moduleOthers

[Yen: billions] 266.3285.0

Notebook PCsMobile phones

TabletsSmartphones

Electric bicycles, etc.

Power & Industrial

Optical Business:Profit Improvement Plan

Reduce fixed costs with expanding production outsourcing and reorganizing sites in and outside of Japan.

Downsize optical pick up and optical disc drive businesses for personal computers, and transfer into new business area.


Reduction in

fixed costs

• Expand production outsourcing (optical pick up and optical disk drives)

•Reorganization of sites in and outside of Japan Concentrate operations into Kumamoto factory, and close Vietnam factory.

Transfer business

•Utilize optical and precision processing technologies.

FY13Operating

profit

FY13 FY16FY14

14

FY14Operating

profit

Expand sequentially

later on.

FY1319%

FY1430%→

Precision processing products

• Ink jet• Thermoelectric

conversion parts,and others

Optical application products

• 3D sensor• Micro projector,

and others

FY13 → FY14 FY14 → FY16

Existing

Newabout 50%

Improved by 6.2 billion yen

Improved by 4.9 billion yen

Price

d

eclines

Red

uctio

n in

fix

ed

co

sts

Tran

sfer bu

siness

Price d

eclines

Red

uctio

n in

fixed co

sts

Tran

sfer b

usin

ess

<Sales composition>

FY16Operating

profit

→


Printed Circuit Board :Profit Improvement Plan

Reduce fixed costs by downsizing production in Japan and expanding overseas production.

Transfer into new areas of core materials and semiconductor package print board.

FY13 → FY16Profit improves by JPY 11.0 billion

FY16Operating

profit

15

Reduction in

fixed costs

Transfer business

•Reorganization of production sites inand outside of Japan6 sites → 3 sites

•Expand overseas production ratio

30% (FY13) → 80% (FY14) → 85% (FY16)

•Expand high-value-added products

FY13 FY16FY14

Existing

Core materials

Semiconductor package

Newabout 50%

•Increase the ratio of overseas materials.45% (FY13) → 60% (FY14) → 80% (FY16)

Stream

-lining

FY13 → FY14 FY14 → FY16Improved by

9.3 billion yen Improved by

1.7 billion yen

<Sales composition>

FY13Operating

profitT

ransfer b

usin

ess

Stream

linin

g an

d

oth

ers

Stream

linin

g an

d o

the

rs

Price d

eclines

Price

d

eclines

Red

uctio

n in

fix

ed

co

sts

FY14Operating

profit

• Shifting from AV field to high-value-added automotive and industrial fields.

Semiconductor :Profit Improvement Plan

Strengthen corporate capability by thoroughly reducing fixed costs.Improve marginal profit by transfer into new areas such as automotive and

industrial fields.

-3.3

6.8

+2.9

+2.6

[Yen: billions]

FY13 FY14 FY16

+4.5


Reduction in fixe

d costs

• Investment control and effect of impairment loss

• Reduction in labor cost• Reorganization of production sites

in Japan

Transfer business

16

-20.5

+4.3

-4.3

<Sales composition>Price d

eclines

Mo

ving

into

new

areas

Stream

linin

g an

d o

the

rs

Re

du

ction

in fixed

costs

+17.2

+10.1

Tran

sfer bu

siness

Stream

linin

g an

d o

the

rs

+5.6

Price d

eclines

-5.4

Red

uctio

n in

fix

ed

co

sts

+17.1

Automotive & Industrial

FY16

180 bil. yen

FY13

184 bil. yen38% 55%

ICT

AV

ICT

AV


AutomotiveNeeds: light, durable for long time

use, safe

IndustrialNeeds: low-heat (highly efficient),

small-size and light

White LED

DCDC power supply

Battery control LSI

Automotive camera

Image sensor

GaN RF

GaN power

Motor driver

Server Small-sized base station

Security camera

Display control LSI

•DCDC power supply IC / Battery control LSI

•Motor driver IC

•FeRAM / ReRAM microcomputer (IC card)

•Display control LSI

•Automotive camera module

•Medical / Monitor image sensor

•GaN RF (base station wireless module)•GaN Power (power supplies for

automotive and server)•White LED (automotive / generic lighting)

Low power consumption

Imaging

Compound Semiconductor

Semiconductor :Concrete Measures

Apply property of micro-fabrication and large-diameter processes to analogs and compounds.- Maximize our strengths in low power consumption, imaging and compound technologies.

17

GaN power

Contents

18

1. Company Profile

2. Midterm Plan


4. Growth Strategy


2.0

Automotive Field :Challenge to Generate 2 trillion yen Sales

Through collaborating with Panasonic Group as well as utilizing external resources, challenge to a new business field which is totally different from existing business fields.

FY13 FY16 FY19

1.01.2

Proactively utilize external resources

Challenge in new business areas through collaboration and M&A, etc.

Maximize collaboration with Panasonic Group companies

Offer comfortable space with a cockpit system.

Utilize the expertise of Tier-1 and expand sales

with system, devices and materials.

“Stop being Japan-oriented”

Build up a business by focusing mainly in US and Europe and exploit new customers.

19

Expansion of existing areas

Unconventionalchallenges

[Yen: trillions]

Capture E

urope and US

customers

and new foreign custom

ers

FY16→FY19

Automotive Field :New Business Creation

Leverage strengths, grow up by new businesses centering around “comfort,” “sense of security and safety,” and “electrically powered” areas.

Co

mfo

rtS

ecurity

and

safety

Challenge to system development involving operation control.

+300 bil. yen

AUPEO!

16→19+200

bil. yen

20

In addition to multimedia field, expand to “run, stop and turn”field.

•Utilize the sensing devices (automotive camera, ultra-sound sensor).

Electrically p

ow

ered

Propose a system combined with strong batteries•For no idling and HEV. 16→19

Develop a small-sized and highly-efficient integrated power supply system.•Integrate battery charger and inverter.

Expand cockpit business fields.

•From module to system

Develop a cloud service business.

+300 bil. yen


Grasping the needs of automation and manpower saving, contribute to customers worldwide.

Expand energy-saving devices in the FEMS (Factory Energy Management System) field.

Industrial Field:ex.) Expand “Manufacturing Solutions”

FY13 FY14 FY16

Sales plan ofmanufacturing business

”Manufacturing solutions”

Renewal supportRenewal

support

Delivery / Installation adjustment

Support to improve productivity and

quality

OperationsupportOperation

support Manufacturing consulting

Upgrading

Intro-duction supportIntro-

duction support

Produc-tion site

Operation status

Manufacturing process at customers

21

Energy saving

supportEnergy saving

support

180

[Yen: billions]

190220

Disposal of facilities

ICT Field: Selection and ConcentrationExpand sales of high-share and high-profit products.

- Strengthen the communications infrastructure field and expand our share in mobile terminal market.

Measures of main products

Conductive polymer capacitors

Multi-layer circuitboard materials

Mobile connectors

FY13 FY14 FY16

Sales plan

[Yen: billions]

High share and high profit products*

*Total sales of conductive polymer capacitors, mobile connectors, multi-layer circuit board materials, light touch switch, graphite sheet, noise-related components

Expand sales for China and Asia markets

Expand sales for new customers including China emerging makers

22

530 520 510

36%41%

46%

New business development for servers and base stations

Strength: Conductive polymer technology

→ No. 1 market share (over 50%)for IT equipment power supply smoothing application

Strength: Precision cutting processing technology

→ No. 1 market share (35%) for mobile terminal

Strength: Resin design technology → No. 2 market share (10%) for

high-end application

%: Sales composition


Formation for New Business Creation

• Create a business across business division boundaries. → Complement a divisional system. • Concentrate and specialize to create a business → Accelerate a shift to growth areas.

in 3 years.• AIS Company’s President concurrently serves → Bold and swift management

as the Division Director. judgment

23

Key activities

Combine

Expand

Accelerate

Offer a business proposal across business divisions, AIS Company and PC Group.

Break away from a product unit selling and overly self-sufficient business approach. Embrace a business opportunity in the form of system and services.

Make a proposal of R&D SEEDs to market.

Operations

Six-zone global operations with a workforce of 400 employees

China

Jun., ‘13

Taiwan

Jun., ‘13

Japan

Apr., ‘13

North America

Apr., ‘13Europe

Sep., ‘13

India

Sep., ‘13

Create a “new business” which can generate 10% sales of AIS Company’s total sales in FY16.

Newly set up “Business Development Division” in April 2013. (involving members from Business planning, Marketing and Engineering)

Solution

New business model

Exploit next

Concrete Example

Power supply system for small-sized base station

24

Changes

in market 3G → 4G

<Macro-cell(sound

Communication)><small cell (data communication)>

Accelerate to shift from conventional macro-cell to small-cell

Cell radius: a few km Cell radius: a few hundreds meters

Solution

Solar power generation

DC/DC converter with MPPT

AC/DC converter

Small-cell base station

Power control unit

Storage battery unit

Leverage the strength of next generation of power devices.

Small-size with highly-efficient GaN

Differentiate with power control

[Service business]• Deterioration

diagnosis and remote controlWind power

generation

Grasp the changes in market and propose a solution covering system to services


25

Disclaimer Regarding Forward-Looking StatementsThis presentation includes forward-looking statements (within the meaning of Section 21E of the U.S. Securities Exchange

Act of 1934) about Panasonic and its Group companies (the Panasonic Group). To the extent that statements in this presentation do not relate to historical or current facts, they constitute forward-looking statements. These forward-looking statements are based on the current assumptions and beliefs of the Panasonic Group in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause the Panasonic Group's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Panasonic undertakes no obligation to publicly update any forward-looking statements after the date of this presentation. Investors are advised to consult any further disclosures by Panasonic in its subsequent filings under the Financial Instrument and Exchange Act of Japan (the FIEA) and other publicly disclosed documents. .

The risks, uncertainties and other factors referred to above include, but are not limited to, economic conditions, particularly consumer spending and corporate capital expenditures in the United States, Europe, Japan, China, and other Asian countries; volatility in demand for electronic equipment and components from business and industrial customers, as well as consumers in many product and geographical markets; currency rate fluctuations, notably between the yen, the U.S. dollar, the euro, the Chinese yuan, Asian currencies and other currencies in which the Panasonic Group operates businesses, or in which assets and liabilities of the Panasonic Group are denominated; the possibility of the Panasonic Group incurring additional costs of raising funds, because of changes in the fund raising environment; the ability of the Panasonic Group to respond to rapid technological changes and changing consumer preferences with timely and cost-effective introductions of new products in markets that are highly competitive in terms of both price and technology; the possibility of not achieving expected results on the alliances or mergers and acquisitions including the business reorganization after the acquisition of all shares of Panasonic Electric Works Co., Ltd. and SANYO Electric Co., Ltd.; the ability of the Panasonic Group to achieve its business objectives through joint ventures and other collaborative agreements with other companies; the ability of the Panasonic Group to maintain competitive strength in many product and geographical areas; the possibility of incurring expenses resulting from any defects inproducts or services of the Panasonic Group; the possibility that the Panasonic Group may face intellectual property infringement claims by third parties; current and potential, direct and indirect restrictions imposed by other countries over trade, manufacturing, labor and operations; fluctuations in market prices of securities and other assets in which the Panasonic Group has holdings or changes in valuation of long-lived assets, including property, plant and equipment and goodwill, deferred tax assets and uncertain tax positions; future changes or revisions to accounting policies or accounting rules; as well as natural disasters including earthquakes, prevalence of infectious diseases throughout the world, disruption of supply chain and other events that may negatively impact business activities of the Panasonic Group. The factors listed above are not all-inclusive and further information is contained in the most recent English version of Panasonic’s securities reports under the FIEA and any other documents which are disclosed on its website.

In order to be consistent with generally accepted financial reporting practices in Japan, operating profit (loss) is presented in accordance with generally accepted accounting principles in Japan. The company believes that this is useful to investors in comparing the company's financial results with those of other Japanese companies. Under United States generally accepted accounting principles, expenses associated with the implementation of early retirement programs at certain domestic and overseas companies, and impairment losses on long-lived assets are usually included as part of operating profit (loss) in the statement of income.

Panasonic IR Day 2013 · Profile of Automotive & Industrial Systems Company AIS Company ¥ 2.5...

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Transcript of Panasonic IR Day 2013 · Profile of Automotive & Industrial Systems Company AIS Company ¥ 2.5...