Toshiba 2012 Annual Report Download - page 83

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TOSHIBA Annual Report 2012
With respect to the storage products business, in order to establish the integrated storage business corresponding to the
change in business environment, the Group consolidated the HDD business with the semiconductor business in July 2011.
With the use of the advantage of having the high-spec SSD and the high-capacity HDD, the Group plans to strengthen
the storage products business under which the HDD, SSD, and NAND flash memory are integrated.
(3) Business environment of the Social Infrastructure business
A significant portion of net sales in the Social Infrastructure business is attributable to national and local government
expenditures on public works and to capital expenditures by the private sector. The Group monitors trends in such capital
expenditures in conducting its business and also makes best efforts to cultivate new business and customers. However,
reductions and delays in spending on public works, low levels of private capital expenditures due to economic recession,
and exchange rate fluctuations may have a negative impact on this business.
Furthermore, this business involves the supply of products and services for large-scale projects on a worldwide basis.
Postorder changes in the specifications or other terms, delays, appreciation of material costs, changes to and stoppages
of plans for various reasons, including policy changes, natural and other disasters and other factors, may adversely and
substantially affect the progress of such projects. In addition, when the percentage of completion method is applied to
revenue recognition for long term construction contracts, the Group may reassess profits previously recorded as accrued
and record them as a loss, in the event that the expected profits from such projects do not meet original expectations or
projects are delayed or cancelled for some reason. Furthermore, it may not be possible to pass on to the customer or
others any additional costs incurred due to delays in the work process, and such costs may not be collected. In order to
deal with such cases, the Group makes every effort to grasp trends in markets and projects and to ensure thorough risk
management before and after accepting orders. In addition, whenever possible, the Group makes every effort to
appropriately avoid risk by making agreements with customers for advance payment or performance payments, as well
as other agreements on supplemental payments in the event of changes in specifications and delays in work. Although
difficulties may arise for the continuance of certain currently ongoing projects due to a change in the policies of fund
providers and other factors, the Group is making every effort to obtain other fund providers for such pending projects.
With respect to the nuclear power business, since the incident that occurred at the Fukushima Nuclear Power Plant,
there is a possibility that, to some extent, the project plans and orders obtained by the Group may be reconsidered. With
respect to the existing power plants, we will implement emergency safety measures for the purpose of resuming
operations and respond with permanent improvements in accordance with safety standards to be revised based on the
analysis of the incident above. In addition, taking into account the lessons learned from the incident above, upon
development of the nuclear power reactor with higher safety standards corresponding to the loss of all electric sources or
severe accident and next-generation small reactor, the Group is promoting the establishment of a low carbon mainstay
electric source. With respect to the new construction of power plants, it is necessary to incorporate revised future safety
standards, and the Group will determine its future development while confirming the status of customers in various
countries and regions. In overseas countries, construction of a new nuclear power plant started in the United States for
the first time in 34 years, and construction proceeds smoothly in China, as well.
There is a possibility that the steep appreciation of the yen and Japanese electric power companies' reduction of
investment in the electricity distribution fields resulted from the Great East Japan Earthquake will affect the Company's
electric power distribution system business. In response to this, by accelerating the global expansion of the electric power
distribution system business, including production, the Group plans to expand the business centered around emerging
economies.
(4) Business environment of the Home Appliances business
The Home Appliances business faces intense competition from many companies manufacturing and selling products
similar to those offered by the Group. In addition, the results of this business tend to be strongly affected by consumer
spending and trends in building and housing construction starts relative to the lighting and air-conditioning businesses.
Accordingly, the impact of the recession and price declines in recent years may lead to a deterioration in the results of this
business. Given this, the Group is making every effort to expand this business by developing it at the global level,
including in emerging economies that have a high growth rate, as well as by developing new products that are
environmentally friendly and that contribute to energy saving, such as new lighting systems.
(5) The Great East Japan Earthquake
There remains an impact of the Great East Japan Earthquake on the economy, and the businesses of the Group may be
affected due to the change in domestic demand. In addition, the shortage of electric power supply resulted from the
suspension of the operation of nuclear power plants and the rise in electricity costs due to the rise of fuel costs may affect
the business activities, including manufacturing operations, of the Group.
Regarding the power shortage, the Group expects to cooperate with the efforts to reduce power consumption by way
of establishing in-house power generation, and, in addition to our effort to seek for the adjustment of production and the
shifting and streamlining of the functions, the Group will forward the enhancement of energy saving, the introduction of
highly effective devices and the promotion of the adoption of LED lighting.