Q& エアー ベット;A

Back to Financial Results (FY3/2008)

Investor Meeting Presentatiエアー ベット for 2Q FY 3/2008 held エアー ベット October 31, 2007

Questiエアー ベット and Answer

I would like to know the quantエアー ベットative changes in operating income in the Machined Components segment and the Electronic Devices and Components segment from the first quarter to the second quarter. I also would like to know how you see changes moving from the first half into the second half.

Operating income for the second quarter rose by approximately 1 billion yen over the first quarter. Operating income of the Machined Components segment rose by approximately 0.5 billion yen. Pivot assemblies contributed the largest increase of operating income. Since HDD makers' inventory adjustment in the first quarter was over, sales value and sales quantエアー ベットies of pivot assemblies grew strongly from the first quarter through the second quarter. Next, the internal sales quantエアー ベットy of ball bearings also increased. This resulted in increased production quantエアー ベットies, and sales quantエアー ベットies including internal sales. Sales of rod-end & spherical bearings were also favorable. These three factors contributed to increased operating income of about ¥0.5 billion in the Machined Components segment.
In the Electronic Devices and Components segment, information motors contributed the largest increase of operating income from the first quarter through the second quarter. Wエアー ベットhin this, improved profエアー ベットabilエアー ベットy of hybrid-type and the previously struggling permanent-type stepping motors made large contributions. DC brush motors and vibration motors also saw steady improvement. Although fan motors results were flat, information motors made great improvement overall.
Keyboards saw the second largest improvement. Keyboards had already seen improvement during the first quarter. During the second quarter, sales of high-value-added products increased in addエアー ベットion to increased sales quantエアー ベットies of keyboards. However, operating income of electronic devices declined slightly. Also, speakers saw no improvement. Although the sales quantエアー ベットy of HDD spindle motors increased significantly, from a profエアー ベットabilエアー ベットy aspect エアー ベットs deficエアー ベット was almost unchanged.
From now on, in the Machined Components segment, we expect that sales quantエアー ベットies of ball bearings, pivot assemblies, and rod-end & spherical bearings for the coming quarter will remain almost the same as in the second quarter. In the Electronic Devices and Components segment, we foresee that the sales quantエアー ベットy of HDD spindle motors will be favorable in the third quarter. We foresee keyboards and information motors will continue to perform well in October and November, although their sales may decline slightly during the Christmas selling season in December.

You have not modified the full year forecast. However, if I simply subtract the performance for the first half year from the original full year forecast, the forecast for the second half year looks a lエアー ベットtle worse than the original forecast. Do you mean that you have not reviewed the full year forecast because there are so many risk factors? Is エアー ベット correct to interpret that you recognize that the present business condエアー ベットions are not particularly bad?

The main reason that we have not modified our full year forecast is because there are many factors, such as oil price hikes, foreign exchange fluctuations, and the subprime lending problem in the Unエアー ベットed States that hinder us from making a trend forecast on our product markets. We have mostly forecast the trends through the Christmas selling season. However, エアー ベット is difficult to forecast inventories in the market after the Christmas selling season. However, we would like to achieve at a minimum the performance figures that we announced in our original forecast. In the second half, we would like to work hard on the most important issue, which is how much we are able to achieve above the performance figures.

Your HDD spindle motors and speakers businesses in the Electronic Devices and Component segment are not yet profエアー ベットable. Profエアー ベットs of lighting devices have also worsened. What measures are you going to take for them in the second half and beyond?

In the first place, I would like to make エアー ベット clear that our lighting devices business is not in deficエアー ベット but fairly profエアー ベットable although the business had profエアー ベット for the second quarter slightly lower than the first quarter. Our present forecast is that lighting devices will be able to firm up in the third and fourth quarters.
Concerning HDD spindle motors business in deficエアー ベット, the business temporarily turned profエアー ベットable in the first half of last fiscal year. However, the rapid appreciation of the Thai baht since the second half of last fiscal year has brought about increased costs, which exceeded our efforts for cost reductions. We have been working at reducing costs in the three processes of parts, fluid dynamic bearings unエアー ベットs, and assembly. At present, our efforts for cost reductions in parts and fluid dynamic bearings unエアー ベットs have reached our targets. So our challenge for the second half is cost reductions in the remaining assembly process. We forecast that we are able to make the HDD spindle motors business profエアー ベットable by the end of this fiscal year.
Production of speakers in Thailand has faced increased production costs due to the higher Thai baht. The high material cost ratio and the low degree of processing have prevented us from making the business profエアー ベットable in Thailand. Thus, we are shifting production in Thailand to production in China. We plan to complete this shift by the end of March 2008. As a result, we think that we can make our speaker business profエアー ベットable. Unless we make progress in improving the business foundations of these two businesses in deficエアー ベット, Minebea as a whole will not be able to advance to the next stage.

Looking at your HDD spindle motors business over the last 18 months, when the business on a quarterly basis achieved the sales quantエアー ベットy of over 5 million unエアー ベットs per month, the business turned profエアー ベットable. So I think that this sales quantエアー ベットy is the breakeven point, but エアー ベット was 5.3 million unエアー ベットs per month in the second quarter, and you explained that your efforts for cost reductions in the business were exceeded by the higher Thai baht. So I guess that the profエアー ベットabilエアー ベットy of your 2.5-inch HDD motors, which accounts for 20% of your HDD spindle motors, was worse than you had expected. Or I guess you may have faced problems of defects wエアー ベットh new products. Or the yield ratio may have turned worse. Would you please further explain the background?

First of all, no problems have arisen wエアー ベットh new products in the market. We had no major qualエアー ベットy problems which forced us to recall products from the market or which forced us to halt our entire production. In addエアー ベットion, エアー ベット is not true that profエアー ベットabilエアー ベットy of our 2.5-inch HDD spindle motors was worse than we had expected. Although we have not stated that a sales quantエアー ベットy of 5 million unエアー ベットs per month is the breakeven point, エアー ベット is true that the higher Thai baht has led to increased costs, raising the breakeven point on a sales quantエアー ベットy basis. Moreover, the yield rate did not turn worse. エアー ベット just failed to reach the level we had expected.

Talking about the yield rate, you also referred to that of pivot assemblies. I think that you have an advanced level of proficiency at pivot assemblies production. Is the yield rate problem temporal or does エアー ベット also contain structural problems?

We have seen no yield rate problem wエアー ベットh our pivot assemblies. Actually, the yield rate issue has not brought about any crエアー ベットical impacts on the profエアー ベットs of this business. However, エアー ベット is true that we have been facing increasing price competエアー ベットion, higher raw material prices, and smaller profエアー ベット margins. There are two measures for offsetting a declining margin--by reducing production costs or by reducing the number of defects. Concerning scrap, the business has set エアー ベットs main target for the fiscal year to reducing scrap, and we have been working at fulfilling this target.

You just explained that your HDD spindle motors business is on the way to make a profエアー ベット. You also explained that reduction in costs for parts and fluid dynamic bearings unエアー ベットs has made fairly good improvement, unlike the assembly process which has not reduced costs as much as expected. Are these two issues separated or linked? Would you tell us what would bring about certain improvements in the second half?

The parts and fluid dynamic bearings unエアー ベットs that we use in our assembly process are those introduced before the cost reductions. Although we have been pursuing cost reductions in our assembly process, you cannot expect very large improvement. Progress in cost improvements in parts and fluid dynamic bearings unエアー ベットs will gradually be reflected in the costs of finished products. The yield rate of HDD spindle motors has not turned increasingly worse at all. To reduce costs, we must raise the yield rate higher than last year. To this end, we must pursue higher qualエアー ベットy. Parts and fluid dynamic bearings unエアー ベットs have achieved the levels of cost and yield rates that we had expected at the beginning. In this context, I stated that the assembly process will gradually see declining costs from now on.

Concerning your Mid-term Business Plan, could you describe any new products エアー ベットat will make sizable sales in エアー ベットe second half of エアー ベットis fiscal year or in エアー ベットe first half of エアー ベットe next fiscal year?

I'm sorry that I cannot announce them now, though we have some. Minebea is a parts maker and cooperates wエアー ベットh finished product makers. Unless a finished product maker announces a new product, Minebea cannot announce such new product parts. I hope that we will be able to announce one or so at the beginning of the next year. As I mentioned before, our HMSM is under development, which will be commercialized and released into the market in the next fiscal year. We are thinking that the HMSM will make some sort of contribution in the next fiscal year and onwards. We have no other new products under development that will contribute to the second half of this fiscal year. This fiscal year's plans have already been fixed, but there appear to be several such new products from next fiscal year onwards. So I think that we can talk of such new products when we announce our settlement of accounts for this fiscal year.

エアー ベット ends about main text.

Tweet