JAPAN PURE CHEMICAL CO., LTD. Financial Report for The Second Quarter Ended September 30, 2014 Financial Results Review of the Second Quarter of FY2014 Electronic Components Industry The production of electronic components was strong in anticipation of the launch of new high-end smartphones, while the industry was also supported by the production of smartphones intended for China. The electrification of automobiles was accelerated, and the growing demand for on-board electronic components also served as a tailwind. Despite the rebound to the last-minute demand before the consumption tax hike in Japan and the slowdown in overseas economy, the brisk demand remained for electronic components and semiconductors, and general conditions were favorable for the industry. JPC’s Financial Review Sales of hard gold plating chemicals for micro-connectors used in high-end smartphones and automobiles were strong due to our technological superiority. With the increased demand for pure gold plating chemicals for the wire bonding of memory substrates, the decreasing trend reversed into a slightly increasing trend. Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 2 Review of the Second Quarter Financial Results of FY2014 (millions of yen,%) FY2013 Period First Half (April 2013September 2013) FY2014 First Quarter Second Quarter First Half (April 2014September 2014) Year-onyear change FY2014 Forecast *2 Change from previous year’s results Net sales 5,013 2,339 2,743 5,082 1.4 9,600 4.5 Operating income 545 315 281 597 9.5 1,050 8.1 Ordinary income 572 343 287 630 10.2 1,100 7.3 Net income 380 240 182 422 11.3 720 7.4 64.90 41.37 31.26 72.26 11.9 123.64 7.7 Net income per share *1 *1 The Company executed a 100-for-1 stock split with respect to its ordinary shares effective April 1, 2014. Net income per share was thus calculated assuming that said stock split had taken place at the beginning of the previous fiscal year. *2 The Company revised its financial forecast as of October 14, 2014. Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 3 Historical metal prices Prices of copper, tin and nickel ■ Copper (yen/g) ■ Tin Prices of gold and palladium ■ Gold ■ Nickel ■ Palladium 5,000 7.00 (yen/g) 4,500 6.00 4,000 Prices as of September 30, 2014 Gold 4,305/g Palladium 2,855/g 5.00 3,500 3,000 4.00 2,500 3.00 2,000 1,500 2.00 1,000 1.00 500 0.00 07/3 0 07/9 08/3 08/9 09/3 09/9 10/3 10/9 11/3 11/9 12/3 12/9 13/3 Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 13/9 14/3 14/9 4 Sales by Final Product and Region Others Lead Frames Connectors & Micro-switches Printed Circuit Boards & Semiconductor Substrates 3,000 2,000 1,000 0 1Q 2Q 3Q 4Q 1Q 2Q FY2010 3Q 4Q 1Q 2Q FY2011 3Q 4Q 2Q FY2012 3Q 4Q FY2013 Sales by Region (Export) Export Sales (millions of yen) 1Q Taiwan 2Q FY2014 Korea Export Ratio 1,500 1Q Singapore・Malaysia Others China 60 1,200 50 900 40 30 600 20 300 10 0 0 1Q 2Q 3Q FY2010 4Q 1Q 2Q 3Q FY2011 4Q 1Q 2Q 3Q 4Q 1Q FY2012 Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 2Q 3Q FY2013 4Q 1Q 2Q Export Ratio (% to Total Sales) Sales (millions of yen) Sales by Final Product FY2014 5 Operating Income(5 years) (millions of yen) FY2010 FY2011 FY2012 FY2014 FY2013 300 250 200 150 100 50 0 -50 Apr May Jun Jul Aug Sep Oct Nov Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. Dec Jan Feb Mar 6 SGA & Operating Income SGA(A) (millions of yen) Operating Income(B) SGA(A)/Gross Profit(A+B) 700 600 (%) 65 64.5 382 389 366 341 342 500 60 350 334 316 310 261 299 315 267 50.2 52.1 47.3 400 40.8 38.1 300 46.1 39.8 39.8 42.5 271 45.0 45.4 41.4 281 55 47.2 50 153 235 229 45 47.4 40 42.4 41.4 35 37.1 200 30 100 25 225 239 235 226 242 247 223 211 239 258 247 237 249 259 244 279 232 251 0 20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY2010 FY2011 FY2012 Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. FY2013 FY2014 7 New Product Lineup Electroless plating Electrolytic plating Plating methods Applications New products in and before 2012 New products in and after 2013 Pure gold plating (more than 99.99%) The series of TEMPERESIST Used for wire bonding of IC packages Hard gold plating (Alloy of gold and cobalt) The series of OROBRIGHT Used for contacts such as connectors. BAR(NI) BAR7 was developed for fine pitch connectors. Electrolytic palladium plating The series of PALLABRIGHT Used for lead frames NANO2 compatible to ultra-thin PPF plating. Immersion gold plating The series of IM-GOLD Used for ACF connection and soldering of mobile substrates IB2, CN-I compatible to smart phone. Electroless Ni/IB2X, OM Auto catalytic gold plating The series of NEO GOLD Intended for MPU packages such as servers and desktop PCs. NEO GOLD V(PN) HY-GOLD CN Auto catalytic palladium plating The series of NEO PALLABRIGHT Intended for CSP packages such as smart phone. NEO PALLABRIGHT 2 Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 8 New Product Development and Sales Expansion New Product Development and Sales Expansion Policy 1. Product development and sales expansion compatible with the recent trend for gold saving 2. Entry into markets that promise significant growth 3. Use of unique proprietary technology We will engage in product development and sales expansion by promoting the three projects that meet the above requirements. Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 9 Project 1 Gold Saving Plating for On-board Connectors Project 1 The use of electrolytic hard gold plating (BAR7) has become widespread in mobile terminals. Further sales expansion of BAR7 is expected, as certain connecter manufacturers also have strengths in the automotive field. Additionally, the tightening of environmental regulations and the need for driving safety support have accelerated the electrification of automobiles, and on-board components are on an increasing trend. The automotive field also holds high expectations for the gold saving effects of BAR7 and product improvements are being made so that the products can meet various requirements including reduced cost and durability. Application: From connectors for mobile terminals to on-board connectors Expected Effect: Expanded application of BAR7 Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 10 Project 2 ENIG Process Intended for Chinese Market Project 2 China produces more than 50% of the world’s printed circuit boards and the ENIG (Electroless Nickel/ Immersion Gold) process has become widespread. Meanwhile, Chinese customers had request for a total ENIG process, which had been a challenge for our company in terms of expanding its sales. Acidic Degreasing → Microetching → Acid Cleaning → Activation Pretreatment Chemicals from a Partner → Acid Cleaning Electroless Nickel Plating → Electroless Nickel (Partner) → Electroless Gold Plating Electroless Gold Application: Mother boards for mobile terminals Expected Effect: Expansion of market share by proposing a total ENIG process Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 11 Project 3 Direct EPIG Process on Copper Project 3 Direct EPIG (Electroless Palladium/ Immersion Gold) process on copper for nextgeneration smartphones has been newly developed. The process, by omitting the electroless nickel, has enabled wiring with higher density. Gold (Au) Palladium (Pd) Nickel (Ni) 0.05~0.1μm 0.05~0.1μm 1~5μm Gold (Au) Palladium (Pd) 0.05~0.1μm 0.05~0.1μm Copper (Cu) Wiring Copper (Cu) Wiring ENEPIG Process Direct EPIG Process on Copper Application: CSP (Chip Size Package) for mobile terminals Expected Effect: Promising market, as it uses more semiconductors than PCs Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 12 Cautionary Statements about Projections The materials used in the preparation of forecasts of results and predictions are based upon predicted trends in the industries related to the Company's operations. Accordingly, economic conditions both in Japan and overseas, fluctuations in exchange rates and other factors may influence forecasts of results. The predictions and forecasts made are based upon the information available as of September 2014. There are a number of factors that cannot be predicted with certainty that may have an influence on these forecasts, including market conditions, competitors’ actions, the performance of newly introduced products and services, and the global IT market and related markets. Accordingly, actual results may vary significantly from the forecasts presented in this document. The copyright of this document belongs to Japan Pure Chemical Co., Ltd. Reproduction, copying, or redistribution of this document is strictly prohibited without the written permission of the Company. For Further Information TEL. +81-3-3550-1048 FAX. +81-3-3550-1006 Corporate Planning Division [email protected] http://www.netjpc.com Copyright © 2014 JAPAN PURE CHEMICAL CO., LTD. All rights reserved. May not be copied or reprinted without prior written approval. 13
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