Renesas announces growth strategy to enhance corporate value

JAPAN: Renesas Electronics Corp. has been implementing a range of measures to strengthen its earnings base and financial foundation, as outlined in press releases issued on July 3, 2012 and September 28, 2012, respectively titled “The Direction of Various Measures to Establish Robust and Profitable Structure”, and “The Progress of Various Measures to Establish Robust and Profitable  Structure”.

In working to strengthen the company’s earnings base, since the merger on April 1, 2010 Renesas has been pursuing integration synergies, and building on its dominant number one position worldwide in the microcontroller (MCU) market by optimizing our business portfolio and streamlining the manufacturing structure among a range of other such measures.

Steady implementation of these measures has produced tangible results, including an approximate 20 percent reduction in fixed costs in the last two years.

However, after considering the impact of the 2011 Great East Japan Earthquake, along with the impact of global economic uncertainty, Renesas determined that further measures were necessary to respond to dramatic changes in the global economic circumstances and domestic operating environment. Accordingly, following an announcement on July 3, 2012, Renesas has been implementing additional business and structural measures, centered on an early retirement incentive program and significant restructuring of domestic production sites.

The early retirement incentive program, as outlined in Renesas’ announcement of October 16, 2012, received 7,446 applications, and all applicants retired as of October 31. The restructuring of domestic production sites has been proceeded as planned, including an agreement to transfer Renesas High Components (Aomori Factory) to AOI ELECTRONICS Co. Ltd as announced on October 12, 2012.

Renesas intends to continue efforts to create a lean organization and management structure, and under the current management framework the company is planning to pursue further rationalization initiatives to boost competitiveness, including further optimization of the personnel structure.

In terms of strengthening the company’s financial foundation, on September 28, 2012 Renesas announced new financing totaling 97 billion yen from major shareholders and main banks. Renesas also entered into an agreement for a syndicated loan totaling 161.1 billion yen, arranged by the main banks, which allows the company to convert short-term debt to long-term debt and secure stable long-term funding. Through these initiatives Renesas has secured sufficient funding for the foreseeable future to enable implementation of ongoing structural reforms.