Tokyo – Spurred by increased unit volume in CD-Rs, but dogged by lower year-on-year prices, TDK still managed to eke out a small increase in its Recording Media & Systems segment during the first fiscal quarter. Sales reached $245.2 million, up 0.1 percent from the $244.8 million recorded in the year-ago first quarter.
Also contributing to higher sales in the Recording Media & Systems segment during the first quarter ended June 30 was the yen’s depreciation and the beginning of sales of recording equipment last fall. Negating these gains to a large extent were lower audiotape and videotape sales, due to decreased demand.
As a percent of TDK’s total sales, the Recording Media & Systems segment accounted for 21.7 percent in the first quarter, substantially up from 17.5 percent in the year-ago three months.
TDK sales to the Americas declined 10.7 percent in the first quarter, dropping to $221.1 million from $247.7 million in the same three months in 2000. Despite the sales dip, the Americas accounted for 19.6 percent of the company’s sales during the first quarter, up from 17.1 percent in the year-ago three months.
The decrease in sales to the Americas was attained despite higher sales in the Recording Media & Systems segment, which were fueled by sales of recording equipment launched last fall. Dragging down results were lackluster performances in the electronic materials and electronic devices categories of the Electronic Materials & Components segment.
A slowdown in the U.S. economy during the fourth quarter of this past fiscal year prompted inventory corrections at TDK’s customers in a broad range of product categories. This hampered sales in the electronic materials sector, which dropped 16.6 percent to $351.2 million in the first quarter, down from $420.9 million in the year-ago three months. TDK sells electronic materials into the mobile phone, PC and PC peripherals markets.
Due to falling demand of audio and video products, PCs, PC peripherals and communications products, TDK was hit hard in its electronic devices category, which suffered a 21.4 percent decline to $228.4 million in the first quarter, compared with $290.4 million in the last year’s first three months.
Recording devices sales, mainly for computers, dropped 33.5 percent to $262.7 million in the first three months, compared with $395.1 million in the year-ago first quarter.
With the deep fall in categories within the Electronic Materials & Components segment, TDK reported a company-wide 19.6 percent decline in sales during the first quarter, hitting $1.13 billion, down from $1.40 billion on the same quarter last year.
Overall net income plunged 90.6 percent to $9.7 million in the first three months, down from $102.7 million in the same period in 2000.
TDK has revised its projections, announced in May, for fiscal 2002, ending March 31, 2002. At present, TDK believes a second-half recovery, which was the basis for its May forecast, is extremely unlikely. Because of uncertainties for second-half projections, its revised forecast numbers for the year only incorporate new projections for the second quarter.
The company expects annual sales for the current fiscal year to be $5.16 billion, down 6.1 percent from fiscal 2001. This compares to $5.52 billion predicted this past spring.
Net income for fiscal 2002 is expected to be $168 million, down 52.3 percent from fiscal 2001. This compares to $228 million predicted in May.
In the Recording Media & Systems segment, TDK expects demand for CD-Rs and recording equipment to fall slightly short of May projections due to the economic slowdown.
In the Electronic Materials & Components segment, last May TDK expected there would be a gradual, across-the-board recovery for PCs, mobile phones and audio and video products from the second quarter onward, after these markets bottomed out in the first quarter.
However, no signs of such an upturn have materialized, said TDK, thus the company expects results in the Electronic Materials & Components segment for the first half of the current fiscal year to fall short of May projections.