Hitachi Management Discusses F4Q12 Results - Earnings Call Transcript

Hitachi, Ltd. (HIT)

F4Q12 Earnings Call

May 11, 2012 12:00 AM ET

Executives

Toyoaki Nakamura – Representative Executive Officer, EVP and Executive Officer

Presentation

Unidentified Company Representative

Now we would like to move to the meeting of Financial Results for the year ended March 31, 2012. First let us introduce members who are present here today: Mr. Toyoaki Nakamura, Executive Vice President and Executive Officer, Mr. Toshiaki Kuzuoka, Senior Vice President and Executive Officer, Mr. Yoshihito Kitamatsu, General Manager-Finance Department One.

So in accordance to this PowerPoint presentation, I’d like to have Mr. Nakamura to make presentation.

Toyoaki Nakamura

So let me explain the consolidated financial results for fiscal 2011 using the PowerPoint presentation. If you can turn the page to 1-2, consolidated statement of operations. Revenues were ¥9.665.8 billion. This was 104% year-on-year and we came up with the revised forecast on March 15, and it was 102% compared to that forecast. And operating income, ¥412.2 billion and this was up ¥33.2 billion and there was a drop in profits because of the earthquake and flooding in Thailand. But compared to the forecast, there was an improvement of ¥12.2 billion.

For net other income, we had this dry business and small and mid-sized display business was transferred and there was a gain. So ¥145.4 billion and ¥157.7 billion year-on-year and ¥55.4 billion compared to the forecast. And net income attributable to Hitachi Ltd. was ¥347.1 billon, up ¥108.3 billion year-on-year an improvement of ¥67.1 billion compared to the forecast. And two consecutive years, we posted record high net income. And there were great impacts on the great East Japan earthquake and floods in Thailand in fiscal year 2011 and revenues minus ¥320 billion, operating income, ¥95 billion, and net income or bottom line, ¥80 billion in negative impacts were posted.

And let’s turn to the next page. You can see the graphical representation of major factors with changes in operating income year-over-year. There was a great impacts from lower sales prices and effects of foreign exchange movements. But this was somewhat offset by material procurement cost cutting and improved capacity utilization. But there was an impact of the earthquake and flooding of ¥20 billion. So as a result, we ended up with operating income of ¥412.2 billion.

And let’s turn to 1-6, major factors year-on-year change in net income attributable to Hitachi Limited. Excluding impacts from the earthquake, there was a drop of operating income of ¥12.2 billion. And there was gain on securities and others of ¥143.1 billion and there was an improvement in equity in net earnings of affiliated companies. And there was also negative impacts from continued structural reforms and tax rate revision impact of minus ¥8 billion. And so there was an increased burden of income taxes. So, we ended up with the net income attributable to Hitachi Limited of ¥347.1 billion.

And 1-7, revenues by market. Japan, ¥5.5344 billion or 105% year-over-year, outside Japan, it was 102% year-over-year which is not that much growth as compared to the domestic market, and this was mainly because of the 90% year-over-year in China, so the overseas ratio was 43% which was the same as fiscal year 2010.

Let me now talk about consolidated balance sheets in 1-8 and 1-9. Total assets, ¥9.4185 billion up ¥232.8 billion year-on-year and there was a recovery from Great East Japan Earthquake and demand of reconstruction was captured and there was a recovery in demand for automotive systems and storage solutions were growing, and as a result, accounts receivable increased.

And then interest bearing debts, because of the gain on Hard Disk Drive business transfer, the borrowings were repaid so interest bearing debt was reduced by ¥125 billion. So, total Hitachi Limited stockholders’ equity was ¥1.7717 billion up ¥331.9 billion because of the record high net income and total Hitachi Limited stockholders’ equity ratio was 18.8%, or 3.1 points improvement and D/E ratio 0.865 times so 0.17 points improvement.

As for consolidated statements of cash flow, the cash flow from operating activities was ¥447.1 billion surplus. But because of the accounts receivable increase, it was dropped year-on-year and free cash flow was ¥251.5 billion and we were able to exceed the target of ¥100 billion substantially.

As for the summary of financial statements by Financial and Non-Financial Services, in terms of balance sheet, Manufacturing Services and others was 20.5%. In total, it was 18.8%. But in Manufacturing Services and others, the stockholders’ equity ratio was more than 20%, and D/E ratio, debt equity ratio was 0.56 times which is a significant improvement year-on-year. And free cash flow was ¥213.1 billion in surplus. And in 1-11, talking about capital expenditures for internal use assets, ¥377.2 billion or 38% increase year-over-year. And this was the investment that was started for expanded production.

And as for R&D expenditures, ¥412.5 billion or a 4% increase year-over-year and the percentage of revenues was 4.3% which was slightly up from the year before.

With regard to revenues by business segment, in terms of revenues, the Information and Telecommunication Systems, 107% year-over-year. Construction Machinery, 106%; Automotive Systems, 110% and all the way down, Others, because of the effects from the acquisition of Vantec Corporation. It was 124%. So in eight segments, we have seen growth in revenues.

Read the rest of this transcript for free on seekingalpha.com

More from Stocks

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Market Can't Handle the Wild Ride: Cramer's 'Mad Money' Recap (Thursday 5/24/18)

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Replay: Jim Cramer on North Korea, Oil Prices, Apple and Carnival Corporation

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Canopy Growth: First Cannabis Firm on the NYSE Fails to Generate Buzz

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Video: This Startup Connects Buyers and Sellers of Legal Marijuana

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit

Dow, S&P 500 and Nasdaq Tumble After Trump Calls Off North Korea Summit