Briefing on Financial Results for 1st ... - Yokogawa Electricrecently by Yokogawa Control systems for eight Chevron refineries in North America and other regions Control systems for

0Oct. 31, 2007

Briefing onFinancial Results for1st Half of Fiscal Year 2007

Briefing onFinancial Results for1st Half of Fiscal Year 2007

1©Yokogawa Electric Corporation

FY07 1HFY06 1HResults

(0.3)

(2.3)

(1.2)

4.3

8.5

Difference〔Ｂ－Ａ〕

2.7

5.7

8.8

204.3

228.5

Results07/10/31 〔Ｂ〕

4.0

11.4

9.1

186.4

222.3

(1.3)3.0Net income

(5.7)8.0Ordinary income

(0.3)10.0Operating income

17.9200.0Sales

6.2220.0Orders

Comparison with

FY06 1H

Initial budget

07/5/10 〔Ａ〕

(Billion ¥)

FY07 1H Financial Results

2

Review of Financial Resultsof Control Business

FY07 1HRevisedbudget（7/26）

171.0171.0 179.4179.4

+8.4

Orders Sales Operating income

FY07 1HResults

147.0147.0 151.5151.5

+4.5

FY07 1HResults


17.017.0 16.516.5

-0.5

FY07 1HResults

(Billion ¥)


©Yokogawa Electric Corporation

3

Review of Financial Resultsof Measurement Business

31.031.0 30.930.9

-0.1

31.031.0 31.831.8

+0.8

(2.3)(2.3)

-2.3

00

(Billion ¥)



FY07 1HResults

FY07 1HResults


FY07 1HResults



4

Review of Financial Resultsof New and Other Businesses

18.018.0 18.218.2

+0.2

22.022.021.021.0

-1.0

(5.4)(5.4)

+1.6

(7.0)(7.0)

(Billion ¥)



FY07 1HResults

FY07 1HResults


FY07 1HResults



5

Analysis of FY07 1H Results

The R&D and SG&A expensereduction plan for the semiconductortester business has not producedsatisfactory results.

SG&A increased to reinforce humanresources for expansion of controlbusiness outside Japan.

1

2


6

Overview of Industrial Automation and Control Business

Growth was strong in Japan and other markets.

There was active investment in China and Indiafor energy related projects, reflecting increasedenergy demand and oil prices.

Continued high growth is expected in the future.Continued high growth is expected in the future.


7


Big project orders receivedrecently by Yokogawa

Control systems for eightChevron refineries in NorthAmerica and other regions

Control systems for thelargest petrochemicalproject in Thailand by theSiam Cement Group

Control systems fora Shell petrochemicalcomplex in Singapore

Control systems for thelargest coal-fired powerplant in Behar, India ・・・Other recent project orders


8


A new office was built in Singapore to reinforceinternational business headquarters functions.

Aiming for further business expansionAiming for further business expansion

Fields where orders and sales will continue to grow

New Singapore office building Technology Innovations Fair in the new office


9

Overview of Test and Measurement Business

ATE BusinessATE Business

In the second half, In the second half, we expect resumption ofwe expect resumption ofcustomerscustomers’’ investment activitiesinvestment activitiesand an increase in orders and sales.and an increase in orders and sales.

Although growth is expected,Although growth is expected,a significant increase in demanda significant increase in demandcannot be counted on.cannot be counted on.

Memory Test System

FPD Driver Test System


10

Overview of Test and Measurement Business

Communications and Measuring Instruments BusinessCommunications and Measuring Instruments Business

Communicationsand

Network Markets

Reinforce sales toReinforce sales toinformation applianceinformation applianceand automotive marketsand automotive markets

Mechatronicsand

Energy Markets

Semiconductorand

Electronics Markets

Aggressively expand ordersAggressively expand ordersand sales outside Japanand sales outside Japan

Introducing new products to meetthe requirements of targeted markets


11

Overview of New andOther Businesses

Photonics BusinessPhotonics Business

Inquiries from customers worldwide are increasing.Inquiries from customers worldwide are increasing.

Mass production begins in early 2008


12

Advanced Stage BusinessAdvanced Stage Business

This business is expected to have stable growth.This business is expected to have stable growth.

The business started smoothly and the productionsystem in the new factory has been firmly established.

Overview of New andOther Businesses


13

FY07 Revised Budget

FY07FY06

Results

(2.0)

(6.0)

(4.0)

-

5.0

Difference〔Ｂ－Ａ〕

12.0

24.0

31.0

450.0

475.0

Results07/10/31 〔Ｂ〕

12.6

29.6

29.3

433.4

456.5

(0.6)14.0Net income

(5.6)30.0Ordinary income

1.735.0Operating income

16.6450.0Sales

18.5470.0Orders

Comparison with FY06

Initial budget

07/5/10 〔Ａ〕

(Billion ¥)


14

FY07 Revised Budget by Segment


FY07 budget（7/26）






341.0

78.0

51.0

356.0

73.0

46.0

Control Measurement New & Others

322.0

76.0

52.0

332.0

71.0

47.0


475.0470.0 450.0 450.0

43.0

2.0

(10.0)

43.0

(2.0)(10.0)


31.035.0

(Billion ¥) (Billion ¥) (Billion ¥)

(+5.0)

(-5.0)

(-5.0)

(+15.0)

(-5.0)

(±0)

(-5.0)

(+10.0)

(-4.0)

(±0)

(-4.0)

(±0)


15

Strategy for Control Business

AssetManagement

ProductionManagement

Safety Excellence

Asset Excellence

Production Excellence

2005 2006 2007 2008 2009-2010

Lifecycle Excellence

PE launch VigilantPlantevolution

VigilantPlant& SE launch

AE launch

Safety Excellence (SE)

Asset Excellence (AE)

Production Excellence (PE)

VigilantPlantOperationalExcellencesolutioncompletion

VigilantPlant Roadmap

SafetyManage-ment

ProSafe-RS

FieldMate, PRM,InsightSuiteAEProSafe-RS onVnet/IP


16

Enhancement of Engineering InfrastructureEnhancement of Engineering Infrastructure

Reinforcement of Project ManagementReinforcement of Project Management

Introduction of ResourceManagement System

Introduction of KnowledgeManagement System

Monthly QCD(quality,cost, and delivery)Report

Reporting on progress,issues, and profits ofimportant projects to thepresident and officers

Strategy for Control Business


17

Strategy for Measurement / New and Other Businesses

Test and Measurement BusinessTest and Measurement Business

New and Other BusinessesNew and Other Businesses

Improving ATE business efficiencywhile aiming at optimum balancebetween sales and cost

Establishing photonics business massproduction system for quick launchat the beginning of 2008


18Oct. 31, 2007

Financial Results for1st Half of Fiscal Year 2007Financial Results for1st Half of Fiscal Year 2007

19

(Billion ¥)

DifferenceResultsRevised budget

Initialbudget

-0.2%1.3%1.5%1.5%ROS

(0.3)2.73.03.0Net income

-1.2%2.8%4.0%4.0%ROS

(2.3)5.78.08.0Ordinary income

-0.7%4.3%5.0%5.0%ROS

(1.2)8.810.010.0Operating income

4.3204.3200.0200.0Sales

8.5228.5220.0220.0Orders

<B－A>07/10/31 <B>07/07/26 <A>07/05/10

FY07 1H Financial Results


20

4.0

11.4

9.1

186.4

222.3

FY06 1H <A>

1.8

8.4

7.7

177.8

183.8

FY05 1H

2.7

5.7

8.8

204.3

228.5

FY07 1H <B>

-32.6%(1.3)Net income

-50.0%(5.7)Ordinary income

-3.3%(0.3)Operating income

9.6%17.9Sales

2.8%6.2Orders

Growth rate

<(B-A)/A>

Difference<B-A>

Comparison of FY07/06/05 1HFinancial Results


(Billion ¥)

21

4.3%

29.3%

9.9%

56.5%

100.0%

8.8

59.8

20.2

115.5

204.3

FY07 1H<B>

(0.3)

5.3

3.7

9.2

17.9

Difference<B-A>

-0.6%

0.1%

1.0%

-0.5%

-

4.9％9.14.3％7.7Operating income

29.2%54.529.9%53.2SG&A

8.9%16.58.5%15.2R&D expenses

57.0%106.357.1%101.6Cost of sales

100.0％186.4100.0％177.8Sales

FY06 1H<A>

FY05 1H


Comparison of FY07/06/05 1HFinancial Results by Expense Category

(Billion ¥)

22

Analysis of FY07 1H Operating Income

Increase in sales

Increase in sales

Cost reduction

Cost reduction

Increase in R&D

Increase in R&D

7.7Gross profit

17.9Sales

FY06 1H operating income FY07 1H operating income

Increase in SG&A

Increase in SG&A

(Billion ¥)

9.1

7.7(5.3)

8.8

1.0(3.7)


23

Quarterly Financial Results


29.3

433.4

456.5

Total

25.3

388.9

400.5

Total

FY07FY06FY05

(0.4)

83.5

112.1

1Q

9.2

120.8

116.4

2Q4Q3Q2Q1Q4Q3Q2Q1Q

16.4

135.4

117.9

1.2

75.7

98.8

9.2

106.9

91.8

10.5

116.8

111.6

(1.4)

69.6

110.7

16.6〔1.4〕

161.9〔22.1〕

124.5〔16.8〕

3.6

85.1

109.7

(1.5)

70.9

92.0

Operatingincome

Sales

Orders

(Billion ¥)

*

* In FY06 all subsidiaries outside Japan except those in China changed the fiscal year-end date from February 28 to March 31.Subsidiaries in China changed from December 31 to March 31. The one-time increase resulting from this change is shown in brackets.

24

2.7

2.3

5.0

2.0

1.4

5.7

4.7

1.6

8.8

FY07 1H

4.0

5.0

9.0

2.8

0.4

11.4

2.8

5.2

9.1

FY06 1H

3.0

4.0

7.0

(1.0)

8.0

(2.0)

10.0

FY07 1HRevised budget

(7/26)

Extraordinary expenses

Tax, etc.

Net income

Income before tax

Ordinary income

Extraordinary income

Non-operating expenses

Non-operating income

Operating income

Non-operating / ExtraordinaryIncome and Expenses


(Billion ¥)

25

Global Sales


Total

Control Measurement New & others

By Segment

97.2 109.9 94.8 109.7 90.5

80.6101.2

91.6

137.3

113.8

177.8

211.1186.4

247.0

204.3

Japan Outside Japan

55.371.5

57.2

19.216.015.1 20.322.218.2

72.9

109.5

94.3

17.126.316.7 1.6 1.5 2.8

36.342.331.8

21.923.721.0

151.5

181.0

128.2

Japan Outside Japan

51.2%

45.3%47.9%

49.1%

55.6% 55.7%

62.2%

47.1%52.5%

7.3%13.3%

6.3%

56.9%62.2%

60.5%

(Billion ¥) (Billion ¥)

05 1H 05 2H 06 1H 06 2H 07 1H 06 1H 06 2H 07 1H

（224.9）

（115.2）

*The numbers in brackets show the results without the increase from the fiscal year change by subsidiaries outside Japan.

06 1H 06 2H 07 1H 06 1H 06 2H 07 1H

26

Orders Sales

FY07 1H Budget and Results Comparisonfor Orders and Sales by Segment



165.0

35.0

20.0

171.0

31.0

18.0

179.4

30.9

18.2


143.0

35.0

22.0

147.0

31.0

22.0

151.5

31.8

21.0


220.0 220.0 228.5

200.0 204.3200.0 +4.3

+0.8

+4.5

-1.0

Initial budget(5/10)

Revised budget(7/26)

Results(10/31)

+8.5

-0.1

+8.4

+0.2



Results(10/31)

27

(Billion ¥)

Operating Income

FY07 1H Budget and Results Comparisonfor Operating Income by Segment


(Billion ¥)

16.0

1.0

(7.0)

17.0

0.0

(7.0)

16.5

(2.3)

(5.4)


10.010.0 8.8 -1.2

-2.3+1.6

-0.5



Results(10/31)

Initialbudget(5/10)

Revisedbudget(7/26)

Results(10/31)

Difference

Control 16.0 17.0 16.5 (0.5)

Measurement 1.0 0.0 (2.3) (2.3)

New & others (7.0) (7.0) (5.4) 1.6

Total 10.0 10.0 8.8 (1.2)

28

Orders Sales

FY07 1H Orders and Sales by Segment


(Billion ¥)

120.8

38.1

24.9

163.5

37.4

21.4

179.4

30.9

18.2


113.3

37.8

26.7

128.2

36.3

21.9

151.5

31.8

21.0


228.5

183.8

222.3204.3

186.4177.8

+6.2

-6.5

+15.9

-3.2 +17.9

-4.5

+23.3

-0.9

(Billion ¥)

FY051H

FY061H

FY071H

FY051H

FY061H

FY071H

29

(Billion ¥)

Operating Income

FY07 1H Operating Income by Segment


(Billion ¥)

8.7

0.3

(1.3)

12.9

(0.3)(3.5)

16.5

(2.3)

(5.4)


8.8

9.1

7.7

-0.3

-2.0

-1.9

+3.6

FY05 1H FY06 1H FY07 1H Difference

Control 8.7 12.9 16.5 3.6

Measurement 0.3 (0.3) (2.3) (2.0)

New & others (1.3) (3.5) (5.4) (1.9)

Total 7.7 9.1 8.8 (0.3)

FY051H

FY061H

FY071H

30

Assets Liabilities and Shareholders’ Equity

Trend of Balance Sheet


24.5 23.1 20.2 22.3

62.5 61.8 62.0 63.1

102.3 108.6 124.0 133.5

12.0 9.7 8.8 7.445.0 51.3 50.153.4

129.0 120.4134.5 132.6

42.2 32.138.8 27.7

0.30.30.30.3

400.3 407.3438.7 440.2

130.8 132.6 140.5 139.6

50.3 50.4 50.4 50.4

43.4 43.4 43.4 43.4

127.0 124.5140.2 132.4

61.3 51.959.6 69.9

5.0 4.6 4.7 4.6

417.8 407.3438.7 440.2

FY05 FY06 1H FY06 FY07 1H

Total asset turnover 0.95 1.00 1.01 1.06

Current ratio 209.1% 184.4% 157.7% 174.4%

FY05 FY06 1H FY06 FY07 1H

Interest-bearing debt ratio 14.7% 12.7% 13.6% 15.9%

Debt/equity ratio 27.3% 22.9% 25.5% 29.9%

Shareholders' equity 53.7% 55.6% 53.4% 53.0%

FY05 FY061H FY06 FY07

1H FY05 FY061H FY06 FY07

1H

Cash & timedeposits

Securities

Other currentassets

Inventories

Fixed assets

Investments

Deferredtax assets

(Billion ¥)

Notes/accountsreceivable

(Billion ¥)

Bank loans &bonds

Other liabilities

Paid in capital

Capital surplus

Retainedearnings

Minority interest

31

Trend of Cash Flow


8.111.3

18.9

8.2

(7.6)(10.4)

(18.3)

(27.4)

0.6

(19.2)

0.90.5

Operating CF Investment CF Free CF (Billion ¥)

FY05 1HFY04 1H FY06 1H FY07 1H

32

FY07 Revised Budget


-0.4%

(2.0)

-1.4%

(6.0)

-0.9%

(4.0)

-

5.0

Difference<Ｂ-Ａ>

FY07FY06

Results Comparisonwith FY06

Revisedbudget

07/10/31 <Ｂ>

Revisedbudget

06/7/26 <Ａ>

Initialbudget06/5/10

2.9%

12.6

6.8%

29.6

6.8%

29.3

433.4

456.5

2.7%

12.0

5.3%

24.0

6.9%

31.0

450.0

475.0

-0.2%3.1%3.1%ROS

(0.6)14.014.0Net income

-1.5%6.7%6.7%ROS

(5.6)30.030.0Ordinary income

0.1%7.8%7.8%ROS

1.735.035.0Operating income

16.6450.0450.0Sales

18.5470.0470.0Orders

(Billion ¥)

33

FY07 Revised Budget for Non-operating/Extraordinary Income and Expenses


Budget1H resultsResults1H results

2.72.3

5.0

2.0

1.4

5.7

4.7

1.6

8.8

FY07FY06

12.09.0

21.0

(3.0)

24.0

(7.0)

31.0

12.612.5

25.1

5.0

0.5

29.6

7.3

7.6

29.3

2.8Extraordinary expenses

4.05.0

9.0

0.4

11.4

2.8

5.2

9.1

Tax, etc.

Net income

Income before tax

Ordinary income

Extraordinary income

Non-operating expenses

Non-operating income

Operating income

(Billion ¥)

34

Orders Sales

FY07 Revised Budget for Orders andSales by Segment


(Billion ¥)

335.0

82.0

53.0

341.0

78.0

51.0

356.0

73.0

46.0


318.0

80.0

52.0

322.0

76.0

52.0

332.0

71.0

47.0


470.0 470.0 475.0450.0 450.0 450.0

(Billion ¥)

±0

-5.0

+10.0

+5.0

+15.0

-5.0

-5.0 -5.0

FY07 Initial (5/10)

FY07Revised (7/26)

FY07Revised (10/31)

FY07Initial (5/10)

FY07Revised (7/26)

FY07Revised (10/31)

35

Operating Income

FY07 Revised Budget for Operating Income by Segment


42.0

3.0

(10.0)

43.0

2.0

(10.0)

43.0

(2.0)(10.0)


35.0 35.031.0

176.6

42.1

27.8

180.5

39.2

26.0

Control Measurement New & others (Billion ¥)

FY07 2H

246.5 245.7

(Billion ¥)

-4.0

-4.0

±0

Orders Sales Operatingincome

FY07 Initial (5/10)

FY07Revised (7/26)

FY07Revised (10/31)

26.5

0.3

(4.6)

22.2

±0

36

329.4

78.3

48.8

313.5

77.9

48.3

356.0

73.0

46.0


475.0456.5 439.7

309.2

78.6

45.6

288.5

77.6

45.2

332.0

71.0

47.0


Orders Sales

FY07 Revised Budget for Orders and Salesby Segment (Comparison with FY06)


FY06Results

FY06Results ＊


+35.3

-4.9

+42.5

-2.3

FY07Revised budget

(10/31)

FY06Results

FY06Results ＊

FY07Revised budget

(10/31)

+38.7

-6.6

+45.5

+1.8

450.0411.3

433.4

*The numbers show the results without the increase from the fiscal year change by subsidiaries outside Japan.

37

(Billion ¥)

Operating Income

FY07 Revised Budget for Operating Incomeby Segment (Comparison with FY06)


(Billion ¥)

36.0

0.6

(7.3)

35.0

0.2

(7.3)

43.0

(2.0)(10.0)


FY06Result

FY06 *Result

FY07Budget

Difference

Control 36.0 35.0 43.0 8.0

Measurement 0.6 0.2 (2.0) (2.2)

New & others (7.3) (7.3) (10.0) (2.7)

Total 29.3 27.9 31.0 3.1

FY06Results

FY06Results ＊

FY07Revised budget

(10/31)

+3.1

-2.7

+8.0

-2.2

*The numbers show the results without the increase from the fiscal year change by subsidiaries outside Japan.

31.0

27.929.3

38

Trend of R&D Expenses

Trend of R&D Expenses


Trend of R&D Expenses by Segment

7.3

19.2

26.5 25.2 27.0 29.030.9

36.2

43.0

5.612.5

7.8

16.05.7

13.9

7.2

14.0

5.2

9.8

5.2

13.036.2

43.0

20.216.5


7.7% 7.3% 7.5%8.0% 8.4%

9.6%

6.2%

7.8%

FY01 FY02 FY03 FY04 FY05 FY06FY07

budgetFY061H

FY07 1H Results

FY07budget

Ando

(Billion ¥)(Billion ¥)

FY06

39

Trend of R&D Expenses,Depreciation, and CAPEX


0

10,000

20,000

30,000

40,000

R&D expenses Depreciation CAPEX

FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 1HResults

FY07Budget

(Million ¥)

Budget

FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 1H FY07

19,492 19,259 19,181 19,236 25,233 26,991 28,998 30,917 36,223 20,195 43,000

7.0% 6.1% 5.4% 6.2% 7.7% 7.3% 7.5% 8.0% 8.4% 9.9% 9.6%

11,031 13,197 13,190 13,964 14,298 13,445 14,331 15,124 16,483 10,888 25,000

3.9% 4.2% 3.7% 4.5% 4.3% 3.6% 3.7% 3.9% 3.8% 5.3% 5.6%

18,835 14,699 18,173 13,347 15,264 21,355 18,652 29,540 40,284 21,946 45,000

6.7% 4.7% 5.2% 4.3% 4.6% 5.7% 4.8% 7.6% 9.3% 10.7% 10.0%

R&D(Sales ratio)

Depreciation(Sales ratio)

CAPEX(Sales ratio)

Results

40

Trend of Stock Price


0

20

40

60

80

100

120

140

160

Yokogawa TOPIX 06/9=100

02/9 02/12 03/3 03/6 03/9 03/12 04/3 04/6 04/9 04/12 05/3 05/6 05/9 05/12 06/3 06/6 06/9 06/12 07/3 07/607/

10/2907/9

02/9 02/12 03/3 03/6 03/9 03/12 04/3 04/6 04/9 04/12 05/3 05/6 05/9 05/12 06/3 06/6 06/9 06/12 07/3 07/6 07/9 07/10/29

Yokogawa 765 737 788 927 1,070 1,548 1,544 1,455 1,276 1,372 1,452 1,371 1,772 2,010 2,095 1,631 1,552 1,887 1,806 1,654 1,398 1,451

TOPIX 921 843 788 903 1,019 1,044 1,179 1,190 1,104 1,139 1,180 1,177 1,412 1,650 1,728 1,587 1,611 1,681 1,714 1,775 1,617 1,606

02/9 02/12 03/3 03/6 03/9 03/12 04/3 04/6 04/9 04/12 05/3 05/6 05/9 05/12 06/3 06/6 06/9 06/12 07/3 07/6 07/9 07/10/29

Yokogawa 49 47 51 60 69 100 99 94 82 88 94 88 114 130 135 105 100 122 116 107 90 93

TOPIX 57 52 49 56 63 65 73 74 69 71 73 73 88 102 107 99 100 104 106 110 100 100

41

The information pertaining to our business plans and forecasts that

has been provided in this presentation and at analyst meetings contains

forward-looking statements that are based on our management’s current

knowledge and require the making of assumptions about future events.

As such, it cannot be guaranteed that these statements will not differ

materially from actual results.

Disclaimer


Briefing on Financial Results for 1st ... - Yokogawa Electricrecently by Yokogawa Control systems for eight Chevron refineries in North America and other regions Control systems for

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