ROHM, a Japanese-based semiconductor manufacturer, was the top detractor for the year, falling 34%. Share prices fell the most during the second quarter of 2012 after ROHM released fiscal year results that showed a year-over-year sales decline of approximately 11% and an operating profit decline of approximately 81%. Most of ROHM’s troubles revolve around its failure to expand its customer base outside of Japan. Historically ROHM’s management focused on Japanese consumer electronics companies because of proximity and ease of communication. However, ROHM’s new president and previous head of overseas sales, Satoshi Sawaura, has prioritized overseas expansion. We think that investing in overseas offices to get closer to clients is a very positive move. For example, ROHM’s backlog for chips used in automobiles has been growing, and the recent Thai floods caused more non-Japanese auto companies to approach ROHM for potential business. ROHM was sold from this highly concentrated Fund during the quarter, though it remained in the more diversified Oakmark International and Oakmark Global.
There was a flurry of trading activity during the quarter. In addition to ROHM, we sold our positions in Diageo, Nestle and SAP and added four new names to the portfolio. Since there are so many new names in the portfolio, we would like to familiarize our shareholders with the new holdings by providing an overview of each name below.
From Oakmark Global Select Fund Letter to Shareholders Third Quarter.