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TRANSLATION
NOTICE: The following press release is an English translation of the Japanese language original.
This press release is made pursuant to the requirements under the listing rules of, and reported to,
the Tokyo Stock Exchange.
February 2, 2012
Company name: SUMCO Corporation
Representative: Yoichi Taguchi, President
(Code: 3436, TSE First Section)
Contact: Hiroshi Shibuya, General Manager
Public Relations & IR Department
(Tel: +81-3-5444-3915)
Announcement of Business Reorganization Plan
SUMCO Corporation (the “Company”) decided to execute the Business Reorganization Plan
(the “Plan”) at a meeting of its board of directors held on February 2, 2012 as below:
1. Background and Purpose of the Plan
In the first half of the fiscal year ended January 2012, the results of semiconductor silicon
wafer business surpassed the Company’s expectation made at the beginning of the fiscal year
due to the factors including unexpected increase in demand triggered by the Great East Japan
Earthquake.
However, the business environment drastically changed in the second half of the fiscal year, as
demand for silicon wafers plunged due to the global economic slowdown and substantial
decrease of semiconductor production. Along with continuous yen appreciation continuing at a
historic level, the Company is expecting to incur a significant loss in the fourth quarter of the
fiscal year ended January 2012.
The solar wafer business is also expected to incur a significant loss due to the sharp decline in
demand and continued price collapse since last spring.
Under these circumstances, the Company decided to build and execute the Plan, recognizing
the need of business reorganization that will enable profit generation even under the current
difficult business environment.
2. Key Themes of the Plan
The key measures of the Plan are as followings:
y
Withdrawal from the solar wafer business
y
Restructuring and consolidation of the semiconductor silicon wafer manufacturing
facility
y
Review of workforce allocation in relation to restructuring of the manufacturing
system
This material is prepared for the purpose of continuous disclosure to general shareholders and investors and will not
constitute an offer or solicitation of securities of the Company in any states or jurisdictions.
The estimate, expectation, forecast and other future information is prepared based on the information which is available
for the Company as of today and on certain assumptions and qualifications and the actual financial performance or result
may be substantially different from such future information contained in the material due to risk factors including domestic
and global economic conditions, trend of semiconductor market and foreign exchanges.
TRANSLATION
NOTICE: The following press release is an English translation of the Japanese language original.
This press release is made pursuant to the requirements under the listing rules of, and reported to,
the Tokyo Stock Exchange.
The Company will increase its corporate value by implementation of the above measures,
which will lead to stabilized supply of high quality silicon wafers, enhancement of ability to
respond to changes in business environment, and improvement of profitability driven by
concentrating business resources on the semiconductor silicon wafer business.
3. Impact on Financial Performance
As the Company expects to incur extraordinary loss of approximately 58.2 billion yen in
relation to execution of the Plan, the Company released the “Announcement of Expected
Extraordinary Loss and Revision of Financial Results Forecast” today. The Company forecasts
to recognize expenses of 10 billion yen in total by the end of the fiscal year ended January 2014
due to review of workforce allocation in relation to restructuring of the manufacturing system
and these expenses are not included in the extraordinary loss stated above.
This material is prepared for the purpose of continuous disclosure to general shareholders and investors and will not
constitute an offer or solicitation of securities of the Company in any states or jurisdictions.
The estimate, expectation, forecast and other future information is prepared based on the information which is available
for the Company as of today and on certain assumptions and qualifications and the actual financial performance or result
may be substantially different from such future information contained in the material due to risk factors including domestic
and global economic conditions, trend of semiconductor market and foreign exchanges.
IR Material
Business Reorganization Plan and
Revised Business Results Forecast
for FY2011
February 2
2, 2012
SUMCO Corporation
Notes Regarding the Forecasts
This material is prepared for the purpose of continuous
general shareholders and investors and will not
disclosure to g
constitute an offer or solicitation of securities of the Company in
any states or jurisdictions.
Th estimate,
The
ti t expectation,
t ti
forecast
f
t and
d other
th future
f t
information
i f
ti
is prepared based on the information which is available for the
Company as of today and on certain assumptions and
qualifications and the actual financial performance or result may
be substantiallyy different from such future information contained
in the material due to risk factors including domestic and global
economic conditions, trend of semiconductor market and foreign
exchanges.
h
2
Contents
■ Business Reorganization Plan (the “Plan”)
■ Key Measures of the Plan
1.
2.
3.
4.
5.
6.
6
Withdrawal from Solar Business
Business of Silicon Wafers for Semiconductors
Personnel Plan
Extraordinary Losses and Reversal of Deferred Tax Assets
Projected Impact of the Business Reorganization Plan
Developing
e e op g Co
Corporate
po ate Foundations
ou dat o s for
o Ensuring
su g Profitability
o tab ty u
under
de
Prolonged Market Stagnation
■ Impact on FY2011 Business Results
1
1.
2.
3.
Revised Business Results Forecast for FY2011
Balance Sheet Forecast
Planned Issuance of Preferred Stocks
■ Forecast of FY2012–2014 Business Results
1.
2.
3.
Forecast of FY2012 Business Results
y of Changes
g in Ordinaryy Profit
Analysis
Medium-term Forecast
■ Summary
3
Business
B
i
R
Reorganization
i ti Pl
Plan
(the “Plan”)
4
Business Reorganization Plan (the “Plan”)
■ FY2011 4Q Forecast
Net Sales
Operating Profit
Semiconductor
Solar
Ordinary Profit
Q4
Forecast
50.8
-5.4
-5.4
-1.8
18
-7.2
(Billion Yen)
FY2011
Forecast
248.0
1.0
1.6
-7.6
76
-6.0
z Semiconductor silicon wafer market experiencing inventory adjustments partly from flood in Thai, and
200mm or smaller wafer demand is structurally changing
z Demand for solar wafers continues to be sluggish and no sign of price improvement
z Earnings seriously impacted by challenging market conditions and continuing yen appreciation
■ Business Reorganization
g
Plan
z Withdrawal from the solar business
z Enhance profitability in order to enable profit generation even during market downcycle
z Enhance cost competitiveness to withstand appreciation of the yen and fierce competitive
environment
i
t
z Review of workforce allocation
Boost corporate value by implementation of the Plan to enable:
1 ) stabilized supply of high quality silicon wafers
1.)
wafers, and
2.) enhance ability to respond to changing business environment
5
Key Measures of the Plan
6
1. Withdrawal from Solar Business
■ Current conditions of solar energy cells market
▼ Price
of silicon wafers
for solar energy cells
▼
ソーラー用シリコンウェーハの価格推移
ソ
ラtrend
用シリコンウェ
ハの価格推移
100
80
Down 70% from
January 2011
60
40
Down 90%
from
September
2008
20
0
Ju
ul-08
Au
ug-08
Se
ep-08
Oc
ct-08
No
ov-08
De
ec-08
Ja
an-09
Feb-09
Ma
ar-09
Ap
pr-09
Ma
ay-09
Ju
un-09
Ju
ul-09
Au
ug-09
Se
ep-09
Oc
ct-09
No
ov-09
De
ec-09
Ja
an-10
Feb-10
Ma
ar-10
Ap
pr-10
Ma
ay-10
Ju
un-10
Ju
ul-10
Au
ug-10
Se
ep-10
Oc
ct-10
No
ov-10
De
ec-10
Ja
an-11
Feb-11
Ma
ar-11
Ap
pr-11
Ma
ay-11
Ju
un-11
Ju
ul-11
Au
ug-11
Se
ep-11
Oc
ct-11
No
ov-11
De
ec-11
Ja
an-12
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
z Demand slowdown triggered by revision of Feed-in Tariffs in Europe resulting
in excess supply and price collapse
Prices fell 70% compared to the end of FY2010 (January 2011)
z Solar related markets expected to grow, but difficult to expect significant
improvement of market condition due to structural excess supply
Concluded that continuation of this business is
no longer feasible
7
1. Withdrawal from Solar Business
■ Withdrawal from Solar Business
z Close Imari Solar Plant
z Dissolve consolidated subsidiary, SUMCO Solar Corp.
■ Posting a loss of 18.0
18 0 billion yen from business withdrawal
▼ Losses from business withdrawal
Contents
Impairment loss on fixed assets,etc
Write-down of inventories
Removal expenses,etc.
p
Extraordinary loss
Compensation income,etc.
Extraordinary
y gain
g
or loss
（Billion Yen）
Amount
-15.3
-8.8
-3.9
-28.0
10.0
-18.0
8
2-1. 300mm Wafer Business
‹
‹
‹
■
Reduce manufacturing capacity
Improve cost competitiveness
R
Respond
d to d
demand
d ffor lleading-edge,
di
d
ultra
l scaling
li products
d
Reduce manufacturing capacity
z Close
Cl
N
Nagasaki
ki Pl
Plant’s
t’ 300
300mm liline (t
(to b
be completed
l t d iin FY2012)
■ Improve cost competitiveness
z Concentrate production at Imari Plant and Taiwan FST
→ Restructuring of manufacturing system for lower fixed costs and scale merit
→ Concentrate on two leading manufacturing system to respond to demand
for leading-edge,
leading edge ultra scaling products
■ Cost and benefits
▼ Extraordinary loss
（Billion Yen）
Contents
Impairment loss on fixed assets
Amount
-10.3
Total
-10.3
▼ Impact of measures
Contents
Cost reduction
ep ec a o
Depreciation
Total
2012
0.0
3.0
3
0
3.0
（Billion Yen）
2013
3.8
0.8
0
8
4.6
2014
4.7
0.0
0
0
4.7
Total
8.5
3.8
3
8
12.3
9
2-2. 200mm Wafer Business
‹ Enhance cost competitiveness by further restructuring of
p
200mm wafer plants
‹ Integrated production of power semiconductors
■ Realign manufacturing system (to be completed in FY2013)
z Close Ikuno Plant and transfer production to Imari and Nagasaki Plants
z Build an integrated production system for power semiconductors
■ Cost and benefits
▼ Extraordinary loss
（Billion Yen）
Contents
Impairment loss on fixed assets
Amount
-4.3
Total
-4.3
▼ Impact of measures
Contents
Cost reduction
Depreciation
Total
2012
0.0
0.8
0.8
2013
1.5
0.6
2.1
（Billion Yen）
2014
2.6
0.4
3.0
Total
4.1
1.8
5.9
10
2-3. 150mm and Smaller Wafer Business
‹ Responding to structural demand change from
g of customers’ p
production lines
restructuring
■ Realign manufacturing system (to be completed in FY2013)
z Close the primary 150mm line at Imari Plant
z Improve cost competitiveness by consolidating manufacturing facilities to
Indonesia and Miyazaki
y
Plants
■ Cost and benefits
▼ Extraordinary
y loss
（Billion Yen）
Contents
Impairment loss on fixed assets
Amount
-1.2
Total
-1.2
▼ Impact
p
of measures
Contents
Cost reduction
Depreciation
Total
2012
0.0
0.2
0.2
（Billion Yen）
2013
0.9
0.2
1.1
2014
1.8
0.2
2.0
Total
2.7
0.6
3.3
11
3. Personnel Plan
■ Review workforce allocation targeting 15% of consolidated
,
workers))
workforce ((about 1,300
■ Cost and benefits
z Cost ((Extraordinaryy losses):
) Losses of about 10.0 billion yen
y through
g FY2013
z Benefit (Reduction in fixed costs): About 7.0 billion yen per year (compared to
FY2011)
▼ Cost
C
andd B
Benefit
fi
（Billion Yen）
2012
Cost (Extraordinary losses)
B
Benefit
fit (Reduction
(R d ti iin fi
fixed
d costs)
t )
2013
-5.0
17
1.7
2014～
-5.0
35
3.5
─
70
7.0
12
4. Extraordinary Losses and
Reversal of Deferred Tax Assets
■ Extraordinary losses: Consolidated basis: 50.0 billion yen;
Non-consolidated basis: 72.0 billion yen
z Expenses related to the Plan:
Consolidated basis: 48.2 billion yen; Non-consolidated basis: 22.8 billion yen
z Loss on valuation of stocks of subsidiaries and affiliates: 47.4 billion yen (valuation loss
related to SUMCO TECHXIV and others)
▼Extraordinary loss （Consolidated）
Category
Solar
300mm
200mm
150mm
Goodwill
Others
Total
Earthquake-related losses
and asset retirement obligations
Extraordinary loss
（Billion Yen）
Amount
-18.0
-10.3
10 3
-4.3
-1.2
-10.7
-3.7
-48.2
-1.8
-50.0
▼Extraordinary loss （Non Consolidated）
Category
Solar
300mm
200mm
150mm
Others
Total
Loss on valuation of stocks of
subsidiaries
subs
d a es a
and
da
affiliates
a es
Earthquake-related losses
and asset retirement obligations
Extraordinary loss
（Billion Yen）
Amount
-13.6
00
0.0
-4.3
-1.2
-3.7
-22.8
-47.4
-1.8
-72.0
■ Reversal of deferred tax assets
z Due to uncertain market conditions, will reverse all non-consolidated deferred tax assets,
13
amounting to 27.3 billion yen
5. Projected Impact of the Plan
■ Total impact expected to reach 24.7 billion yen
z Expected reductions over three-year period:
Cost reduction of 18.5 billion yen and decrease in depreciation of 6.2 billion yen
▼ Impact of measures
Contents
（Billion Yen）
2012
2013
2014
Total
Cost reduction
0.8
5.5
12.2
18.5
Depreciation
p
4.0
1.6
0.6
6.2
Total
4.8
7.1
12.8
24.7
14
6. Developing Corporate Foundations for Enabling
Profitability under Prolonged Market Stagnation
■ Profit levels compared to FY2011 4Q
▼ Profit trial calculation of 3years
Net Sales
Analysis of
Changes in
Ordinary
Profit
（Billion Yen）
2011
Q4 ×4
200.0
2012
Sales relations
Cost reduction
Depreciation
Total
Ordinary profit (before measures)
-21.6
Impact of Business Reorganization Plan
Additional cost reduction
Total
Ordinary profit (after measures)
2013
190.0
180.0
170.0
-10.0
-10
0
11.0
12.5
13.5
-10.0
-10
0
4.5
11.4
5.9
-10.0
-10
0
3.1
3.2
-3.7
-8.1
-2.2
-5.9
4.8
46
4.6
9.4
-21.6
2014
7.1
─
1.3
12.8
─
7.1
12.8
4.9
6.9
z Calculation assuming sales decline 10 billion yen a year for 3 years
(For medium-term profit/loss forecast, see slide 23)
z Calculation shows we are able to stay profitable even under prolonged market
downcycle
※ Depreciation charges include amortization of goodwill
15
Impact on FY2011 Business Results
16
1. Revised Business Results Forecast for
FY2011
■ Revised forecast for net income
z Will Post 48.2 billion y
yen in extraordinaryy losses related to the Plan
z Will reverse all non-consolidated deferred tax assets, amounting to 27.3 billion
yen, considering uncertain market conditions
▼ Revised Business Results Forecast for FY2011
Net Sales
Operating Profit
Ordinary Profit
（Billion Yen）
FY2011（Consolidated）
P i
Previous
R i d
Revised
Change
Forecast
Forecast
②－①
①
②
247 0
247.0
248 0
248.0
10
1.0
1.0
1.0
0.0
-6.0
-6.0
0.0
Extraordinary loss
Tax and Minority interests
Net Income
Exchange Rate Yen/US$
-1.8
-1.2
-9.0
-50.0
-29.0
-85.0
-48.2
-27.8
-76.0
79.6
79.6
0.0
FY2011
Forecast
（Non
Consolidated）
208.0
208
0
3.5
1.5
-72.0
-27.3
-98.0
17
2. Balance Sheet Forecast
＜Consolidated＞
（Billion Yen）
Cash and time deposit
Tangible and intangible fixed assets
Deferred tax asset
Other assets
Total Assets
Liabilities with interest
Other liabilities
Li bili i
Liabilities
Capital stock, Capital surplus
Retained earnings
Others
Net Assets
Shareholder's equity retio
D/E ratio
ti (gross)
(
)
D/E ratio (net)
End of Jan
End of Jan
2012
2011
Forecast
Forecast
②
①
53 8
53.8
25.0
25
0
291.8
215.0
31.9
5.0
184.2
195.1
561.7
440.1
264.8
236.5
80.8
78.3
345 6
345.6
314 8
314.8
203.3
203.3
1.8
-83.1
11 0
11.0
51
5.1
216.1
125.3
35.0%
13
1.3
1.1
Change
②－①
-28
28.8
8
-76.8
-26.9
10.9
-121.6
-28.3
-2.5
-30.8
30 8
0.0
-84.9
-5 9
-5.9
-90.8
＜Non
Consolidated＞
End of Jan
2012
Forecast
19 0
19.0
134.0
0.0
233.0
386.0
227.0
49.6
276 6
276.6
203.3
-96.5
26
2.6
109.4
24.6%
22
2.2
2.0
18
3. Planned Issuance of Preferred Shares
■ Purpose
z Requested companies including major shareholders to subscribe preferred
shares in order to strengthen financial position
Terms and conditions will be decided after consultation with the related
parties
■ Overview of Preferred Shares
z
z
z
z
Method of Issuance:
Type of Share:
Total Issue Price:
Expected Investors:
z Schedule:
Early March, 2012
Late April, 2012
Early May, 2012
Third Party Allotment
Preferred Shares
Up to 45.0 Billion Yen
Including Sumitomo Metal Industries, Ltd.,
and Mitsubishi Materials Corporation
Board resolution,
Execution of agreement
Resolution at the shareholders’ meeting
Issuance of the preferred shares
19
Forecast of FY2012–2014 Business Results
20
1. Forecast of FY2012 Business Results
▼Forecast of FY2012 Business Consolidated Results
FY2011
Revised
Forecast
①
248.0
1.0
-3.3
-3.7
-6.0
（Billion Yen）
FY2012
Forecast
230.0
15.0
-0.3
-3.7
11.0
②－①
-18.0
14.0
3.0
0.0
17.0
-50
50.0
0
-29.0
-85.0
-5
5.0
0
-3.0
3.0
45.0
45
0
26.0
88.0
Capital Expenditure (Acceptance baisis)
Depreciation charges
EBITDA Note1
27.3
52.0
52.4
15.2
34.1
50.4
-12.1
-17.9
-2.0
Exchange Rate Yen/US$
79.6
77.0
-2.6
Net Sales
Operating Profit
Non operating Gains Depreciation
and Loss
Others
Ordinary Profit
Extraordinary Loss
Tax and Minority interests
Net Income
②
Change
(Note1) EBITDA＝Operating profit＋Depreciation＋Amortization of Goodwill
21
2. Analysis of Changes in Ordinary Profit
■ Changes of Ordinary Profit
+ ¥17.0 Bn
Quantity
Quantity,
Product-mix
and Price
Including Impact of
measures 4.0
16.5
Including Impact of
measures 0.8
134
Depreciation
Foreign
Exchange
etc
etc.
-8.1
+ ¥17.0 Bn
16.0
FY2011
Ordinary Profit
Forecast
-6.0
-15.0
11.0
7.6
Cost
Reduction
Withdrawal from
Solar Business
※ Depreciation charges include amortization of goodwill.
FY2012
Ordinaryy Profit
Forecast
22
3-1. Forecast for Medium-term Profits/Losses
▼ Forecast for medium-term profits/losses
Net Sales
Operating Profit
Ordinary Profit
Extraordinary Loss
Net Income
Exchange Rate Yen/US$
（Billion Yen）
2011
248.0
1.0
-6.0
-50.0
-85.0
2012
230.0
15.0
11.0
-5.0
3.0
2013
230.0
36.0
32.0
-5.0
30.0
2014
230.0
49.0
45.0
0.0
38.0
79 6
79.6
77 0
77.0
80 0
80.0
80 0
80.0
▼ Analysis of Changes in Ordinary Profit
Sales relations
Cost reduction
Depreciation
Foreign exchange,others
Withdrawal from Solar Business
Total
( Impact of Business Reorganization Plan)
2011→2012 2012→2013 2013→2014
-15.0
0.0
0.0
16.0
8.7
10.7
16.5
9.0
2.2
-8.1
3.3
0.1
7.6
0.0
0.0
17.0
21.0
13.0
4.8
2.3
5.7
※ Depreciation charges include amortization of goodwill.
23
3-2. Forecast of Medium-term Cash Flow
▼ Forecast of Cash Flow
（Billion Yen）
2012
Net income before income tax and interest
Depreciation
Decrease (increase) in inventories
Others
Net cash provided by operating activities
Net cash provided by investing activities
Free cash-flow
6.0
※ 35.8
-22.4
14
1.4
20.8
-18.3
2.5
2013
27.0
26.8
-18.5
-3.1
31
32.2
-19.2
13.0
2014
45.0
24.6
-15.5
-1.1
11
53.0
-15.0
38.0
z Due to prolonged stagnation in market conditions, inventories based on longpeaking
g out around 2015
term contracts will continue to increase until p
z Inventory levels will thereafter decline to reach appropriate levels over medium
to long term
※ Depreciation charges include amortization of goodwill.
Ex.:P21 Depreciation 34.1 + Amortization of goodwill 1.7
24
Summary
Transforming to achieve sustainable growth by
improving responsiveness to changes in business environment
and enhancing profitability
Business Reorganization Plan
Solar
Decisions made on business
withdrawal
300 mm
Close Nagasaki Plant and strengthen
cost competitiveness
Respond to demand for leading-edge,
ultra scaling products
200 mm
Close Ikuno Plant
Develop highly efficient integrated
manufacturing system
150 mm
and
Smaller
Close Imari Plant
Reduce manufacturing capacity
P
Personnel
l
Goals for strengthening
corporate
t foundations
f
d ti
Enhance corporate
value by enabling
profitability even at
the bottom of the
silicon cycle and by
maintaining stable
supply of high quality
silicon wafers
Streamline the workforce by optimizing
the manufacturing system and improving
operational efficiency
25
SUMCO Group requests
Your Understanding and Support
We are determined to overcome all difficulties
to fully implement the Business
Reorganization Plan in order to rebuild
SUMCO
SU
CO into
to a bette
better company.
co pa y
We ask for your understanding and support.
26
Developing Technology to Create the Future
27