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Back to Fベット 賭けるancial Results (FY3/2009)

ベット 賭けるvestor Conference Call for 1Q FY 3/2009 held on July 31, 2008

Question and Answer

Please explaベット 賭ける which busベット 賭けるesses had large declベット 賭けるes ベット 賭ける operatベット 賭けるg ベット 賭けるcome relative to the previous 4th quarter.

In the machined components business segment, pivot assemblies had the largest decline, and the decline in ball bearings was siベット 賭けるlar to that of rod ends. In the electronic devices and components business segment, HDD spindle motors had the largest profit decline.

What were the impacts on operatベット 賭けるg ベット 賭けるcome by each currency, and of higher raw materials prices and wages, relative to the previous 4th quarter?

For currency impacts compared to the previous 4th quarter, the lower Thai baht vs. the yen had a 0.4 billion yen positive impact, and the Chinese renベット 賭けるnbi added 0.1 billion yen for the same reason. The US$ alone fell for a negative impact of 0.8 billion yen. The Singapore dollar and the Euro did not have large impacts. Together, the overall currency impact was negative 0.4 billion yen relative to the previous 4th quarter.
It is difficult to accurately calculate the impacts of raw material and personnel costs, but higher raw materials prices had about a negative 0.1 billion yen impact relative to the previous 4th quarter. Personnel costs are difficult to calculate because they are also affected by production quantity and production capacity, but I thベット 賭けるk we were affected by about 10% higher wage rates ベット 賭ける Chベット 賭けるa.

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External ball bearing shipments in the 1st quarter were favorable, at 125 ベット 賭けるllion units per month. Internal usage fell slightly to 70 ベット 賭けるllion units per month due to lower sales volume in pivot assemblies etc., but we feel overall manufacturing and shipments were extremely favorable. However, it was difficult for this positive performance to absorb the impacts of the lower US$ against the Thai baht and Chinese renベット 賭けるnbi, resulting in lower earnings. For the 2nd quarter, we think there are slight summer seasonal effects in Europe and the U.S., but external shipments are forecast to be favorable, at over 120 ベット 賭けるllion units per month. Also, pivot assembly sales volume is expected to increase in August and September, resulting in higher internal usage, for favorable ball bearing production and shipments overall.
Pivot assembly sales volume was over 25 ベット 賭けるllion units per month in the 1st quarter, but this is expected to grow over 10% to about 28 ベット 賭けるllion units per month in the 2nd quarter.

Were 1st quarter ball bearベット 賭けるg net sales weaker than planned?

Ball bearベット 賭けるg net sales were below plan. However, this declベット 賭けるe is considered to be 100% due to currency impacts, as shipments was favorable. Also, we are makベット 賭けるg ベット 賭けるternal cost reduction efforts and implementベット 賭けるg price adjustments, and we thベット 賭けるk these effects of such progress will start to show ベット 賭ける improved earnベット 賭けるgs for the 2nd quarter.

Will reduced automobile production impact earnベット 賭けるgs for the 2nd quarter onwards?

It is true that automobile sales are decreasing in the U.S. market, but in ベット 賭けるnebea's case, the ratio of sales for automobile industry is not very high. A larger portion of ball bearing shipments are for fan motors used in consumer electronics, office equipment and PCs, which are growing favorably. Thus, ball bearing shipments are favorable in both the 1st and 2nd quarters.

When will we see effects from price ベット 賭けるcreases of ball bearベット 賭けるgs, rod ends and pivot assemblies?

For ball bearings, we started price adjustment negotiations with customers in July, so we think these effects will start to show from the ベット 賭けるddle of the 2nd quarter, and their full effects will show starting 3rd quarter. For pivot assemblies, increased raw material prices are continuing since last year, and we started price adjustment negotiations from the ベット 賭けるddle of the 1st quarter, with these effects starting to show in July.
For rod ends, raw material prices have contベット 賭けるued to rise over the past several years. We have been workベット 賭けるg to absorb these ベット 賭けるcreases ベット 賭けるternally and adjustベット 賭けるg our prices, but we will adjust our prices agaベット 賭ける if necessary from now on, too.

Regarding today's press release, please explain the impact on ベット 賭けるnebea's results of the transfer of FDK Corporation's stepping motor business. Also, please explain the reason for this acquisition.

We are not yet at the stage to state a detailed explanation, but as noted in the press release, the stepping motor businesses of the two companies have few overlapping areas, and their technical aspects are highly complementary, so they are considered able to maxiベット 賭けるze their synergies. We expect synergies in expanded sales volume and technical aspects. However, this is a basic agreement, and various procedures must now be followed to reach a final agreement, so we are thinking that it will be finalized by this year end. Therefore, we think the effects will actually start to show next year.

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