TECO Electric & Machinery Co., Ltd3Q 07 Business Review : TECO Electric & Machinery Co., Ltd 3Q 07 Business Review


Safe Harbor Statement: Safe Harbor Statement This Presentation contains certain forward-looking statements that are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Except as required by law, we undertake no obligation to update any forward – looking statements, whether as a result of new information, future events or otherwise.


Agenda: Agenda Company Profile Quarterly Update Development Strategies Appendix


TECO at A Glance: TECO at A Glance Established 1956 Headquarter Taipei, Taiwan Employee 3,000 apprx. Sales and Service Branches Over 15 international branches covers markets of Taiwan, China, Japan, South-East Asia, North America, Mexico, West Europe and South America Manufacturing Facilities Taiwan, China, USA, Philippine, Malaysia, Indonesia, Vietnam 2006 Revenue NT$ 26.8 BN (US$ 801 MN apprx.) Capital NT$ 19.2 BN (US$ 573 MN apprx.) TECO Headquarter Nankang Software Park, Taipei, Taiwan


Global Manufacturing and Sales Network: Global Manufacturing and Sales Network Taiwan China USA Texas Australia Thailand Singapore Malaysia Indonesia India England Spain Italy Germany Philippine Korea Japan South Africa Canada Netherlands Vietnam Saudi Arabia Mexico New Zealand


Core Business: Core Business Global Leading Provider of Industrial Products and Services Most comprehensive product and service offerings Industrial Motors System Automation Construction and Engineering Service Commercial Air-conditioning Service Brand Name Owner of Quality Home Appliances Household Air-conditioner Home Convenience e.g. Fridge, Washer, Dryer, …etc. Home Entertainment - e.g. TV, DVD player,…etc Others - e.g. Smart Card System


Revenue Breakdown by Business Lines: Revenue Breakdown by Business Lines


Motors – Where We Build Our Business: Motors – Where We Build Our Business High efficiency motor High voltage three-phase motor Vertical Motors Rolled Steel Frame Motors Aluminum Motors Gear motors Eddy Current Motors Crane Motors Wound Roter Induction Motors Motors (1/4Hp ~ 100,000Hp) Inverter Duty Motors


TECO – Motor Industry Giant: TECO – Motor Industry Giant Two 60,000HP synchronous motors supplied to start existing 83,000HP motors in Propulsion wind Tunnel 8,177 HP, 34 pole synchronous horizontal ball mill motor provided for Zimbabwe refinery expansion


A Synonym for Quality Appliances : A Synonym for Quality Appliances Air Conditioner Home Convenience Home Entertainment Home Appliances


Domestic Market Share – Home Appliance: Domestic Market Share – Home Appliance % Data Source: Company estimates


TECO – The Engineering COmpany: TECO – The Engineering COmpany Leader in Motor Industry Establish motor manufacturing business in 1956 Experienced management with proven execution track record Largest motor provider in Taiwan and third largest mid-to-high voltage motor vendor in the world Strong Brand Name Recognition in the Industry Premium brand name recognized by as quality products Most Comprehensive Industrial Products and Services Full spectrum of industrial products (e.g. motors from 1/4 to 100,000 hp, inverters, compressors, controllers, …etc) Standard vs. Customized product orders Dedicated RD facility to Address Customer Needs Full engineering integration planning and consulting capability Highly Vertical Integrated Manufacturing Capability Flexible business model to provide innovalue Global manufacturing and service sites to serve customers Global Sales and Service Network


Agenda: Company Profile Quarterly Update Development Strategies Appendix Agenda


3Q 07 Operation Highlight: 3Q 07 Operation Highlight Net Revenue decrease 7.2% over 2Q 07 Gross profit decrease 14.7% compared to 2Q 07 Operating profit decrease 47.0% over 2Q 07 Non-Operating income increase 6.8% over 2Q 07 Non-Operating expense decrease 6.6% over 2Q07 Net income decrease 4.4% to 979.3 million from 1,024.4 million in 2Q07 EPS report 0.53 in 3Q07 compared to 0.55 in 2Q07


9M 07 P&L ~ QoQ: 9M 07 P&L ~ QoQ * Unrealized / realized inter-company profit included. ** Cumulated effect of changes in accounting principles included.


Revenue Breakdown by Business Lines: Revenue Breakdown by Business Lines


Operating Revenue with Gross Margin: Operating Revenue with Gross Margin * * Gross Profit/Operating Revenue ** Gross profit includes unrealized / realized inter-company profit


Operating Income with Operating Margin: Operating Income with Operating Margin * * Operating Income/Operating Revenue


Operating Expense with Cost Income Ratio: Operating Expense with Cost Income Ratio * * Operating Expense/Gross Profit ** Gross profit includes unrealized / realized inter-company profit


Breakdown of non operating income: Breakdown of non operating income


Overseas Operating Results : Overseas Operating Results


Industrial Products Revenue Breakdown - by Products: 9M 07 2006 Industrial Products Revenue Breakdown - by Products


Motor Business Revenue Breakdown - by Geography: 9M 07 2006 Motor Business Revenue Breakdown - by Geography


Home Appliance Revenue Breakdown - by Products: 9M 07 2006 Home Appliance Revenue Breakdown - by Products


Home Appliance Revenue Breakdown by Distribution Channel : Note: Based on domestic sales Home Appliance Revenue Breakdown by Distribution Channel 9M 07 2006


Agenda: Company Profile Quarterly Update Strategy Focus Appendix Agenda


Strategy Focus: Strategy Focus Further Expanding Motor Business Exploring emerging market, eg. Vietnam, Mexico…. Cost down through product redesign Looking for new business domain which applicable Speeding up capacity expansion Restructuring Home Appliance Business Adjusting portfolio of product offering Accelerating new product launch Cost down through finished good outsourcing and SKD manufacturing Continually disposing non-core investment


Agenda: Company Profile Quarterly Update Development Strategies Appendix Agenda


Income Statement Highlights: * Unrealized / realized inter-company profit included. ** Cumulated effect of changes in accounting principles included. Income Statement Highlights


Balance Sheet Highlights: Balance Sheet Highlights


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