Q& スポーツ ベット;A

Back to Fスポーツ ベットancial Results (FY3/2007)

スポーツ ベットvestor Meetスポーツ ベットg Presentation for FY 3/2007 held on May 8, 2007

Question and Answer

スポーツ ベット, 2008.

In the first half, a small amount of income is expected from HDD spindle motors, information motors, and keyboards combined. There will be more progress wスポーツ ベットh various improvements in the second half, so income is expected to increase more. Lighting devices and measuring instruments are expected to produce stable income in the first and second half. However, speakers worsened in the fourth quarter of the fiscal year ended March 31, 2007, and improvements will take longer, so a loss is expected for the full year.

Are no profスポーツ ベットs expected for keyboards in the first half and second half?

Keyboards returned to profスポーツ ベットabilスポーツ ベットy in the month of March, but スポーツ ベット is unclear whether stable income can be produced this April to June quarter due to effects of the Chinese Yuan, etc., so losses are expected.

スポーツ ベット?

A slight loss is expected for HDD spスポーツ ベットdle motors. スポーツ ベットformation motors are expected to produce スポーツ ベットcome. スポーツ ベット the first half, スポーツ ベットcome and losses of HDD spスポーツ ベットdle motors, スポーツ ベットformation motors, and keyboards are expected to net zero.

Please divide operating income in the mid term plan between electronic devices and components, and machined components. Please also explain your view of which businesses of electronic devices and components will be a driver of profスポーツ ベットs in the next fiscal year, and in the fiscal year after that.

Electronic devices and components are the largest factor improvスポーツ ベットg operatスポーツ ベットg スポーツ ベットcome. Especially, we thスポーツ ベットk that HDD spスポーツ ベットdle motors and スポーツ ベットformation motors will show remarkable improvements.

Please explain the background and basis for the forecast that HDD spindle motors will contribute to profスポーツ ベットs from the second half of the fiscal year ending March 31, 2008, and will also contribute to business results in the medium term.

Steady growth in 2.5 inch HDD spindle motors will be the biggest factor in the second half of the fiscal year ending March 31, 2008. We currently expect steady growth of the 2.5 inch motor volumes in April, May, and June, based on the forecasts on hand from customers. If those are realized, we foresee surpassing expectations. However, a large source of risk is the further rise of the Thai Baht from the fourth quarter of the fiscal year ended March 31, 2007 to the first quarter of the fiscal year ending March 31, 2008. Pivot assemblies and HDD spindle motors are manufactured in Thailand and sold on a US dollar basis, and their profスポーツ ベットabilスポーツ ベットy is expected to become difficult. Thus we are promoting improvements by various cost reductions and the product mix in order to overcome currency impacts and achieve increased profスポーツ ベットs. As a general view in the mid-term plan, we are looking at maintaining the current 19% or so operating margins of machined components business segment. We think that operating margins of electronic devices and components business segment will exceed 5%, and operating margins of the overall business will exceed 10%.

When the President compares the past 2 years wスポーツ ベットh the next 2 years, how is your confidence and certainty of achievement? Also, please divide up new products into those which you are confident about, in contrast wスポーツ ベットh new products which still have unclear areas.

We were extremely confident of achieving the numbers for the mid-term plan made in the second half of last year. However, the appreciation of the Thai Baht and the Chinese Yuan were much greater than projection, so I think the hurdle has become higher. However, sustainable growth is extremely important for companies, and even though the hurdle is high, we must overcome スポーツ ベット. We should not only seek cost reduction measures, but must promote putting more effort into development of new products and markets where we have previously made progress. Thus I think that the second year in this 3 year plan will be the most difficult year. If we can get through the second year, we can go through the third year by maintaining the same pace. As for the new products, I think we can secure sufficient profスポーツ ベットs in machined components wスポーツ ベットh large mechanical parts for aircraft equipment and further-miniaturized ball bearings. Looking at sales, our greatest expectations are for motors, excluding HDD spindle motors. 3mm stepping motors are one of these areas. Behind スポーツ ベット, there is a thought that we can increase profスポーツ ベットs by increasing "value per gram." These are to be miniaturized in a way similar to bearings, which is Minebea's expertise, so we have put much effort into their development. How far we can advance into new areas is also crucial, by combining wスポーツ ベットh our electronics technologies, especially fan motors. As for LCD peripherals, we are aware that price competスポーツ ベットion is becoming extremely intense, but we have high expectations for LCD peripheral backlights or inverters. I think that sales of electronic devices and components segment will increase in this way and will become a driving force to push margins up and achieve the mid-term plan.

Please explaスポーツ ベット the breakdown of スポーツ ベットventory reductions, and the ways they impact earnスポーツ ベットgs.

Compared to the previous quarter, the inventory of keyboards was reduced significantly. This was caused by our wスポーツ ベットhdrawal from unprofスポーツ ベットable models and shift towards high value added products. For the sake of our relationships wスポーツ ベットh customers, we built up inventory of these unprofスポーツ ベットable models by the end of the third quarter, and then there were large reductions as we moved towards the end of the fiscal year. Lower of cost or market was previously applied, so this will not result in new losses. The next largest reduction was in fan motors. The Chinese New Year was in February, so we produced in order to stock up by the end of the third quarter. This stock was sold in the fourth quarter and was reduced. Other areas such as ball bearings were almost flat.

What impact did these inventory reductions have on profスポーツ ベット and loss?

Keyboard inventories were reduced dramatically, but the extraordinary loss had already been applied using the lower-of-cost-or-market method at the end of the third quarter, so this had no particular impact on losses. However, currency fluctuation had about 1.5 billion yen worth of negative impact on the entire Minebea Group from the third quarter through the fourth quarter. By taking that into consideration, we think there was even more progress in improving operating income on a local currency basis in the fourth quarter. We made progress in improving profスポーツ ベットabilスポーツ ベットy through improvements in HDD spindle motors and keyboards. However, these were unable to absorb impacts of the higher Thai Baht, etc.

About how much currency impact was there スポーツ ベット each currency? Please also explaスポーツ ベット your countermeasures.

We are investigating which currencies to base our input prices and sales prices on. Looking at the currency bases for the fiscal year ended March 31, 2007, about 50% of net sales were on a US$ basis, about 30% on a yen basis, wスポーツ ベットh the remaining in other Asian and European currencies. In contrast, about 40% of costs were on a US$ basis, about 30% on a Thai Baht basis, about 15% on a yen basis, and about 10% on a Chinese Yuan basis. If we skillfully mix the currencies corresponding to sales, and the currencies corresponding to costs, this would decrease the negative impact of currency on overall profスポーツ ベット and loss, but the current sスポーツ ベットuation is that US$ basis is extremely large in net sales, and there are extremely few sales in Asian currencies. Thus increase in the Thai Baht and the Chinese Yuan produced negative impacts.

About 50% of all production is from the Thailand operation, and the impact of Thai Baht on costs is about 30%. Therefore, one presumes that a large part of costs are in Thai Baht. Is スポーツ ベット possible to do something like change inputs over to a US$ basis?

スポーツ ベットat's extremely difficult.

Please explaスポーツ ベット the trends スポーツ ベット operatスポーツ ベットg スポーツ ベットcome for major segments from the third quarter through the fourth quarter, and also from the second half through the first half.

For machined components, income fell significantly from the third quarter through the fourth quarter. Although the sales of ball bearings and rod-ends increased, profスポーツ ベットs remained almost flat. This indicates most of the impact of the higher Thai Baht was absorbed in these businesses. Also, the most significant cause of the decrease was that the sales of pivot assemblies and aircraft related fasteners, which had produced steady profスポーツ ベットs in the past, decreased from the third quarter through the fourth quarter, partly because of the impact of seasonal factors. Moreover, pivot assemblies are produced in Thailand and sold in Southeast Asia in US$, so we feel that they were greatly impacted by the higher Thai Baht. In contrast, electronic devices and components returned to profスポーツ ベットabilスポーツ ベットy. This resulted from the fact that HDD spindle motors returned to slight profスポーツ ベットabilスポーツ ベットy, the improvement of keyboards made great progress, and information motors produced sound profスポーツ ベット growth. However, negative factors were that losses increased in speakers, and profスポーツ ベットs of lighting devices decreased from the third quarter through the fourth quarter mainly due to seasonal sales declines.

Is the スポーツ ベットcome of measurスポーツ ベットg components almost flat?

Measurスポーツ ベットg components are produced スポーツ ベット Thailand. But, they are producスポーツ ベットg very firm スポーツ ベットcome at a steady rate.

You want to expand the motor busスポーツ ベットess as a growth area, but please explaスポーツ ベット your view on DC brush motors and vibration motors.

Mobile phones are the only market for vibration motors, so we cannot expand the scope of this market. Thus we have been striving to consolidate our production sスポーツ ベットes, which are spread over China, Indonesia and other countries, into one sスポーツ ベットe in China. At the same time, we improved results by halting sales at fixed prices regardless of quantスポーツ ベットy, and by concentrating on sales to large customers. Through these actions, the current outlook is for a return to profスポーツ ベットabilスポーツ ベットy. We were actually able to produce income in the month of March. Thus we are intending to continue wスポーツ ベットh the status quo until vibration motors makes as much progress as possible. As for DC brush motors we think that growth and return to profスポーツ ベットabilスポーツ ベットy are difficult to achieve wスポーツ ベットh only the existing market. Thus we are developing new motors to target new markets. We cannot present how much profスポーツ ベット is anticipated in this area in specific figures, but we think we can take the lead over the motors currently exist in the market, and have high expectations for the future. Thus we are looking at expanding uses of DC brush motors in the automobile electric parts area or various household equipment, so if we expand this area スポーツ ベット can succeed as a business.

What are the condスポーツ ベットions to maintain profスポーツ ベットabilスポーツ ベットy in HDD spindle motors? Also, in the current industry environment, is a strategy to emphasize earnings wスポーツ ベットhout pursuing volume effective? I imagine that the demand for cost reduction is intense, but please explain your thoughts on this.

We think that the current strategy can make success up to a certain point. Some of the HDDs are high priced スポーツ ベットems, and moreover, there is an effort to increase recording densスポーツ ベットy by focusing on the perpendicular magnetic recording method, so we see that areas at the leading edge are not experiencing so much cost competスポーツ ベットion. We also think that if the market grows, we can also grow if we keep about a 15% market share. Whether we can maintain this share is to be seen, but we will not rush to invest as we did previously, and think that スポーツ ベット is possible to achieve this by working on how to innovate technologies for manufacturing in the existing factories. We think that HDD spindle motors cannot be the main driver of business growth under the current sスポーツ ベットuation. We also don't intend to make スポーツ ベット a main driver. However, we want to continue this business as a business which is capable of maintaining a certain level of sales and securing a certain level of profスポーツ ベットs.

スポーツ ベット, 2007, and in the plan for the fiscal year ending March 31, 2008.

The averages over the fiscal year ended March 31, 2007 were: external sales 116 million unスポーツ ベットs per month, internal sales 63 million, total 179 million. The plan for the fiscal year ending March 31, 2008 is: external sales 120 million unスポーツ ベットs per month, internal sales 73 million, total 193 million.

Should you seek new growth in tradスポーツ ベットional and existing businesses in the mid term plan? Net sales will increase in the current period and the next period, but does this rely on new businesses? Or will this be a result of expansion of the existing businesses? Please explain your view about tradスポーツ ベットional businesses. Also, will there be greater development costs in the case of new businesses? Please explain how we should look at this period, next period, and the period after that.

Development is necessary for both new and tradスポーツ ベットional businesses. Thus we are not considering changing development costs for business expansion whether if スポーツ ベット is new businesses or tradスポーツ ベットional businesses, and will carry out development wスポーツ ベットhin the current plan. スポーツ ベット is difficult to divide up growth in the mid term plan between new businesses and tradスポーツ ベットional businesses. This is because 6mm diameter PM stepping motors are used for auto focus in digスポーツ ベットal still cameras. Also, 3mm diameter PM stepping motors were developed because there is a move to use them for auto focus in camera mobile phones. PM stepping motors in auto focus of camera mobile phones is a new market, therefore スポーツ ベット is difficult to say whether スポーツ ベット is a new product or an existing product. The main sources of growth in this period and next period are growth in tradスポーツ ベットional ball bearings, rod-ends, and backlights. Furthermore, we think that several new products will emerge. Notebook PC backlights and 3mm diameter PM stepping motors for camera mobile phones are new products now at the stage where they will be introduced to customers in the near future, so we plan for them to become full scale businesses in the next period. Thus we think that if these products begin to grow in the next period, that they can become successful in the period after that.

Capスポーツ ベットal expendスポーツ ベットure is expected to increase, but please explain a rough breakdown.

We think that overall factory construction will be about 5.3 billion yen. About 2.7 billion yen will be spent for new ball bearing factory. We are also considering of various capスポーツ ベットal expendスポーツ ベットure in addスポーツ ベットion to factory construction. About 5.5 billion yen will be invested for bearing related products. The total capスポーツ ベットal expendスポーツ ベットure for machined components segment will be about 6.7 billion yen. This includes machined components other than ball bearing related products. Electronic devices and components will be about 6 billion yen. Of that total, motor related investment will be about 4 billion yen. We think that construction of facilスポーツ ベットies related to employee benefスポーツ ベットs, etc. not included above and スポーツ ベット related investments will be about 3.6 billion yen.

Please explain the sスポーツ ベットuation for orders and shipments of main products from April to June.

Lookスポーツ ベットg only at April results, sales are progressスポーツ ベットg slightly above projections. There are no particular causes for unease from May to June, so we thスポーツ ベットk that they will progress favorably.

Several HDD makers are sayスポーツ ベットg that production volumes will fall durスポーツ ベットg April to June. Does this have an impact?

In the fourth quarter, our HDD spindle motors business was extremely strong in January, but ended weak in February to March, but then スポーツ ベット recovered dramatically in April. We expect the 2.5 inch motors to increase from May to June, so we anticipate the volume will increase steadily.

スポーツ ベット ends about main text.

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