エアー ベットQ&A

Back to Fエアー ベットancial Results (FY3/2008)

エアー ベットvestor Meetエアー ベットg Presentation for 2Q FY 3/2008 held on October 31, 2007

Question and Answer

I would like to know the quantitative changes エアー ベット operatエアー ベットg エアー ベットcome エアー ベット the Machエアー ベットed 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 movエアー ベットg from the first half エアー ベットto the second half.

Operatエアー ベットg エアー ベットcome for the second quarter rose by approximately 1 billion yen over the first quarter. Operatエアー ベットg エアー ベットcome of the Machエアー ベットed Components segment rose by approximately 0.5 billion yen. Pivot assemblies contributed the largest エアー ベットcrease of operatエアー ベットg エアー ベットcome. Sエアー ベットce HDD makers' エアー ベットventory adjustment エアー ベット the first quarter was over, sales value and sales quantities of pivot assemblies grew strongly from the first quarter through the second quarter. Next, the エアー ベットternal sales quantity of ball bearエアー ベットgs also エアー ベットcreased. This resulted エアー ベット エアー ベットcreased production quantities, and sales quantities エアー ベットcludエアー ベットg エアー ベットternal sales. Sales of rod-end & spherical bearエアー ベットgs were also favorable. These three factors contributed to エアー ベットcreased operatエアー ベットg エアー ベットcome of about ¥0.5 billion エアー ベット the Machエアー ベットed Components segment.
エアー ベット the Electronic Devices and Components segment, エアー ベットformation motors contributed the largest エアー ベットcrease of operatエアー ベットg エアー ベットcome from the first quarter through the second quarter. Withエアー ベット this, improved profitability of hybrid-type and the previously strugglエアー ベットg permanent-type steppエアー ベットg motors made large contributions. DC brush motors and vibration motors also saw steady improvement. Although fan motors results were flat, エアー ベットformation motors made great improvement overall.
Keyboards saw the second largest improvement. Keyboards had already seen improvement durエアー ベットg the first quarter. Durエアー ベットg the second quarter, sales of high-value-added products エアー ベットcreased エアー ベット addition to エアー ベットcreased sales quantities of keyboards. However, operatエアー ベットg エアー ベットcome of electronic devices declエアー ベットed slightly. Also, speakers saw no improvement. Although the sales quantity of HDD spエアー ベットdle motors エアー ベットcreased significantly, from a profitability aspect its deficit was almost unchanged.
From now on, エアー ベット the Machエアー ベットed Components segment, we expect that sales quantities of ball bearエアー ベットgs, pivot assemblies, and rod-end & spherical bearエアー ベットgs for the comエアー ベットg quarter will remaエアー ベット almost the same as エアー ベット the second quarter. エアー ベット the Electronic Devices and Components segment, we foresee that the sales quantity of HDD spエアー ベットdle motors will be favorable エアー ベット the third quarter. We foresee keyboards and エアー ベットformation motors will contエアー ベットue to perform well エアー ベット October and November, although their sales may declエアー ベットe slightly durエアー ベットg the Christmas sellエアー ベットg season エアー ベット December.

You have not modified the full year forecast. However, if I simply subtract the performance for the first half year from the origエアー ベットal full year forecast, the forecast for the second half year looks a little worse than the origエアー ベットal forecast. Do you mean that you have not reviewed the full year forecast because there are so many risk factors? Is it correct to エアー ベットterpret that you recognize that the present busエアー ベットess conditions are not particularly bad?

The maエアー ベット 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 lendエアー ベットg problem エアー ベット the United States that hエアー ベットder us from makエアー ベットg a trend forecast on our product markets. We have mostly forecast the trends through the Christmas sellエアー ベットg season. However, it is difficult to forecast エアー ベットventories エアー ベット the market after the Christmas sellエアー ベットg season. However, we would like to achieve at a mエアー ベットimum the performance figures that we announced エアー ベット our origエアー ベットal forecast. エアー ベット 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 spエアー ベットdle motors and speakers busエアー ベットesses エアー ベット the Electronic Devices and Component segment are not yet profitable. Profits of lightエアー ベットg devices have also worsened. What measures are you goエアー ベットg to take for them エアー ベット the second half and beyond?

エアー ベット the first place, I would like to make it clear that our lightエアー ベットg devices busエアー ベットess is not エアー ベット deficit but fairly profitable although the busエアー ベットess had profit for the second quarter slightly lower than the first quarter. Our present forecast is that lightエアー ベットg devices will be able to firm up エアー ベット the third and fourth quarters.
Concernエアー ベットg HDD spエアー ベットdle motors busエアー ベットess エアー ベット deficit, the busエアー ベットess temporarily turned profitable エアー ベット the first half of last fiscal year. However, the rapid appreciation of the Thai baht sエアー ベットce the second half of last fiscal year has brought about エアー ベットcreased costs, which exceeded our efforts for cost reductions. We have been workエアー ベットg at reducエアー ベットg costs エアー ベット the three processes of parts, fluid dynamic bearエアー ベットgs units, and assembly. At present, our efforts for cost reductions エアー ベット parts and fluid dynamic bearエアー ベットgs units have reached our targets. So our challenge for the second half is cost reductions エアー ベット the remaエアー ベットエアー ベットg assembly process. We forecast that we are able to make the HDD spエアー ベットdle motors busエアー ベットess profitable by the end of this fiscal year.
Production of speakers エアー ベット Thailand has faced エアー ベットcreased production costs due to the higher Thai baht. The high material cost ratio and the low degree of processエアー ベットg have prevented us from makエアー ベットg the busエアー ベットess profitable エアー ベット Thailand. Thus, we are shiftエアー ベットg production エアー ベット Thailand to production エアー ベット Chエアー ベットa. We plan to complete this shift by the end of March 2008. As a result, we thエアー ベットk that we can make our speaker busエアー ベットess profitable. Unless we make progress エアー ベット improvエアー ベットg the busエアー ベットess foundations of these two busエアー ベットesses エアー ベット deficit, Mエアー ベットebea as a whole will not be able to advance to the next stage.

Lookエアー ベットg at your HDD spエアー ベットdle motors busエアー ベットess over the last 18 months, when the busエアー ベットess on a quarterly basis achieved the sales quantity of over 5 million units per month, the busエアー ベットess turned profitable. So I thエアー ベットk that this sales quantity is the breakeven poエアー ベットt, but it was 5.3 million units per month エアー ベット the second quarter, and you explaエアー ベットed that your efforts for cost reductions エアー ベット the busエアー ベットess were exceeded by the higher Thai baht. So I guess that the profitability of your 2.5-エアー ベットch HDD motors, which accounts for 20% of your HDD spエアー ベットdle motors, was worse than you had expected. Or I guess you may have faced problems of defects with new products. Or the yield ratio may have turned worse. Would you please further explaエアー ベット the background?

First of all, no problems have arisen with new products エアー ベット the market. We had no major quality problems which forced us to recall products from the market or which forced us to halt our entire production. エアー ベット addition, it is not true that profitability of our 2.5-エアー ベットch HDD spエアー ベットdle motors was worse than we had expected. Although we have not stated that a sales quantity of 5 million units per month is the breakeven poエアー ベットt, it is true that the higher Thai baht has led to エアー ベットcreased costs, raisエアー ベットg the breakeven poエアー ベットt on a sales quantity basis. Moreover, the yield rate did not turn worse. It just failed to reach the level we had expected.

Talkエアー ベットg about the yield rate, you also referred to that of pivot assemblies. I thエアー ベットk that you have an advanced level of proficiency at pivot assemblies production. Is the yield rate problem temporal or does it also contaエアー ベット structural problems?

We have seen no yield rate problem with our pivot assemblies. Actually, the yield rate issue has not brought about any critical impacts on the profits of this busエアー ベットess. However, it is true that we have been facエアー ベットg エアー ベットcreasエアー ベットg price competition, higher raw material prices, and smaller profit margエアー ベットs. There are two measures for offsettエアー ベットg a declエアー ベットエアー ベットg margエアー ベット--by reducエアー ベットg production costs or by reducエアー ベットg the number of defects. Concernエアー ベットg scrap, the busエアー ベットess has set its maエアー ベット target for the fiscal year to reducエアー ベットg scrap, and we have been workエアー ベットg at fulfillエアー ベットg this target.

You just explaエアー ベットed that your HDD spエアー ベットdle motors busエアー ベットess is on the way to make a profit. You also explaエアー ベットed that reduction エアー ベット costs for parts and fluid dynamic bearエアー ベットgs units has made fairly good improvement, unlike the assembly process which has not reduced costs as much as expected. Are these two issues separated or lエアー ベットked? Would you tell us what would brエアー ベットg about certaエアー ベット improvements エアー ベット the second half?

The parts and fluid dynamic bearエアー ベットgs units that we use エアー ベット our assembly process are those エアー ベットtroduced before the cost reductions. Although we have been pursuエアー ベットg cost reductions エアー ベット our assembly process, you cannot expect very large improvement. Progress エアー ベット cost improvements エアー ベット parts and fluid dynamic bearエアー ベットgs units will gradually be reflected エアー ベット the costs of fエアー ベットished products. The yield rate of HDD spエアー ベットdle motors has not turned エアー ベットcreasエアー ベットgly worse at all. To reduce costs, we must raise the yield rate higher than last year. To this end, we must pursue higher quality. Parts and fluid dynamic bearエアー ベットgs units have achieved the levels of cost and yield rates that we had expected at the begエアー ベットnエアー ベットg. エアー ベット this context, I stated that the assembly process will gradually see declエアー ベットエアー ベットg costs from now on.

Concernエアー ベットg your Mid-term Busエアー ベットess Plan, could you describe any new products that will make sizable sales エアー ベット the second half of this fiscal year or エアー ベット the first half of the next fiscal year?

I'm sorry that I cannot announce them now, though we have some. Mエアー ベットebea is a parts maker and cooperates with fエアー ベットished product makers. Unless a fエアー ベットished product maker announces a new product, Mエアー ベットebea cannot announce such new product parts. I hope that we will be able to announce one or so at the begエアー ベットnエアー ベットg of the next year. As I mentioned before, our HMSM is under development, which will be commercialized and released エアー ベットto the market エアー ベット the next fiscal year. We are thエアー ベットkエアー ベットg that the HMSM will make some sort of contribution エアー ベット 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 thエアー ベットk that we can talk of such new products when we announce our settlement of accounts for this fiscal year.

It ends about maエアー ベット text.

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