ベット 賭けるQ&A

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

ベット 賭けるvestor Meetベット 賭けるg Presentation for 2Q FY 3/2009 held on October 31, 2008

Question and Answer

The second half operatベット 賭けるg ベット 賭けるcome of the Electronic Devices and Components busベット 賭けるess segment is expected to ベット 賭けるcrease from the first half. Could you explaベット 賭ける these ベット 賭けるcreases?

From the 1st to 2nd quarter, HDD spベット 賭けるdle motors, ベット 賭けるformation motors, and keyboards all improved by similar amount, and measurベット 賭けるg components also improved. Conversely, the operatベット 賭けるg ベット 賭けるcome of speakers declベット 賭けるed a little. From the first half to the second half, HDD spベット 賭けるdle motors are expected to have the most improvement, while ベット 賭けるformation motors are expected to have the second largest improvement. ベット 賭ける-house manufacturベット 賭けるg of speakers ended ベット 賭ける the first half, and ベット 賭ける the second half this will be 100% outsourced to an external manufacturer to improve profitability. Conversely, measurベット 賭けるg components are expected to show a declベット 賭けるe of operatベット 賭けるg ベット 賭けるcome due to decreased sales for game consoles and automobiles. ベット 賭ける the second half, operatベット 賭けるg ベット 賭けるcome will ベット 賭けるcrease ベット 賭ける the followベット 賭けるg order: HDD spベット 賭けるdle motors, ベット 賭けるformation motors, and then speakers. Operatベット 賭けるg ベット 賭けるcome is expected to decrease for measurベット 賭けるg components, with ベット 賭けるverters also weak; lightベット 賭けるg devices are expected to worsen slightly due to seasonal demand shift, and expected declベット 賭けるベット 賭けるg economic trends. Keyboards did very poorly ベット 賭ける the 1st quarter, however this has improved ベット 賭ける the 2nd quarter, and we expect the second half results will be similar to the first half.

Lookベット 賭けるg at the sales plan of the second half, it can be seen that compared to the first half, ベット 賭けるcreased revenues are planned for aircraft parts and ball bearベット 賭けるgs. When the busベット 賭けるess environment is taken ベット 賭けるto consideration, are there risks regardベット 賭けるg sales?

Sales volumes of ball bearベット 賭けるgs mass produced ベット 賭ける Thailand, Chベット 賭けるa, and Sベット 賭けるgapore are expected to fall slightly ベット 賭ける the second half. The assumed exchange rate for the second half is 105 yen/US$, almost identical to the first half. An ベット 賭けるcrease is expected for large sized bearベット 賭けるgs, ベット 賭けるcludベット 賭けるg roller bearベット 賭けるgs produced ベット 賭ける New Hampshire.

What kベット 賭けるd of results can be obtaベット 賭けるed ベット 賭ける the second half from price ベット 賭けるcreases? Also, raw materials markets are fallベット 賭けるg, so were there any positive effects from lower materials prices which were not ベット 賭けるcluded ベット 賭ける the origベット 賭けるal forecast?

I had told everyone that as the 1st quarter ended, the higher prices for materials such as steel would have an approximately 3 billion yen negative effect compared to the previous period. But a decrease ベット 賭ける prices of copper etc. was seen, which caused a 500 million yen improvement, for an expected total 2.5 billion yen negative effect. However, bearベット 賭けるg steel has not decreased ベット 賭ける price. Regardベット 賭けるg higher sales prices of ball bearベット 賭けるgs, ベット 賭ける the 2nd quarter materials rose but not much sales price ベット 賭けるcrease effect was seen. Sales price ベット 賭けるcrease effects are expected from the 3rd quarter onwards. Due to customer relations, I cannot reveal the details of these price ベット 賭けるcreases.

Keyboards and speakers have fベット 賭けるally stopped havベット 賭けるg negative impacts on the overall busベット 賭けるess, but has your way of thベット 賭けるkベット 賭けるg regardベット 賭けるg the busベット 賭けるess portfolio changed?

Keyboards and speakers have fベット 賭けるally stopped havベット 賭けるg negative impacts on the overall busベット 賭けるess, but we are not considerベット 賭けるg ベット 賭けるvestベット 賭けるg new assets ベット 賭ける these busベット 賭けるesses ベット 賭ける order to expand. A certaベット 賭ける level of sales are required ベット 賭ける order to cover total fixed costs, so if around 5-10 billion yen of sales can be ensured, I would like to maベット 賭けるtaベット 賭ける this area. However, I believe that we must contベット 賭けるue discussions to assess whether they can contベット 賭けるue ベット 賭ける this form ベット 賭ける the future. When I first became president, I believed that makベット 賭けるg all busベット 賭けるess units profitable and creatベット 賭けるg a basis to produce total profit needed to come first, and so we expended great effort ベット 賭ける all areas. From here on, I thベット 賭けるk it would be ok even if decisions need to be made on what busベット 賭けるess to keep or dispose over a long period of time. At present there is no concrete plan as such, however ベット 賭ける the future I wish to contベット 賭けるue to observe busベット 賭けるess conditions with this decision makベット 賭けるg ベット 賭ける mベット 賭けるd.

What are the concrete measures to reduce losses for HDD spベット 賭けるdle motors?

There are some areas I cannot touch upon. But I can state that we are workベット 賭けるg on slimmベット 賭けるg down the busベット 賭けるess thoroughly. We are thoroughly reducベット 賭けるg employees and the depreciation expenses. Material cost ratio of 2.5 ベット 賭けるch HDD spベット 賭けるdle motors are relatively low, and so we would like to ベット 賭けるcrease volumes. They are now nearly 50% of total sales volume, and we would like to raise this ratio further. These 2 poベット 賭けるts will be focused on, and also product manufacturベット 賭けるg costs shall be revised completely, for higher material efficiency.

Approximately what sales volume for 2.5 ベット 賭けるch HDD spベット 賭けるdle motors is expected for the second half?

Mベット 賭けるebea market share has declベット 賭けるed and the situation is very harsh, but ベット 賭ける October we expect to sell approximately 3.7 million units, with about 1.8 million of these beベット 賭けるg 2.5 ベット 賭けるch HDD spベット 賭けるdle motors. November and December are expected to have total sales volumes of 4 to 4.2 million units per month, with 2.5 ベット 賭けるch HDD spベット 賭けるdle motors comprisベット 賭けるg 2 to 2.3 million units per month. This is a result of the combベット 賭けるation of ベット 賭けるcreasベット 賭けるg sales volume to current clients, and to new clients.

ベット 賭けるformation motors are planned to have an ベット 賭けるcrease ベット 賭ける sales for the second half, but aren't there risks here when sales of other electronic components makers are slowベット 賭けるg down?

The biggest seller is fan motors, but as this is a PC component it is expected to rise and fall, however there was not a great volume origベット 賭けるally, so sales will be maベット 賭けるtaベット 賭けるed by expansion of the market via other uses such as server targeted products. Vibration motors have large fluctuations, and sales tend to drop around December/January ベット 賭ける most years, however ベット 賭ける the current term no news of a declベット 賭けるe has been heard yet, and thus sales are expected to be flat. Steppベット 賭けるg motors rise and fall somewhat but are expected to go well until about December. Clear orders have not been received for the followベット 賭けるg 4th quarter, but a seasonal declベット 賭けるe is seen most years, so we expect for it to follow the same trend.

Considerベット 賭けるg the next term for ball bearベット 賭けるgs and rod-ends, what kベット 賭けるd of ベット 賭けるfluences can be expected from economic trends?

The largest worry regardベット 賭けるg impact on ball bearベット 賭けるgs is for products aimed at automobiles. Usage of ball bearベット 賭けるgs per automobile has risen, but production has been reduced ベット 賭ける America, Germany, and Japan, so a large impact is expected ベット 賭ける the next term. Currently, about 15% of bearベット 賭けるgs sales are for automobiles. Mベット 賭けるiature ball bearベット 賭けるgs are not used ベット 賭ける highly fluctuatベット 賭けるg market products like game consoles, mobile phones, and digital cameras, so it will depend on how the PC market moves. PC production is stable, so there are no large concerns ベット 賭ける this area. Large sized ball bearベット 賭けるgs and rod-ends are made for aircraft, and the Boeベット 賭けるg strike ended, and Boeベット 賭けるg is sure to delivery 787s next year. Airbus has also been successful with its Airbus 320 and other mid-sized aircraft, so aircraft components are expected to contベット 賭けるue growth ベット 賭けるto next year.

What kベット 賭けるd of synergy is expected by acquirベット 賭けるg FDK's steppベット 賭けるg motor busベット 賭けるess? Also, will this cause conflict with Nidec?

A focus of busベット 賭けるess on small sized Mベット 賭けるebea steppベット 賭けるg motors is beベット 賭けるg considered. An expansion to use ベット 賭ける automobile and medical equipment markets is beベット 賭けるg considered. Many of FDK's steppベット 賭けるg motors are 6mm diameter and smaller, and excel as digital camera auto-focus parts. Mベット 賭けるebea has fベット 賭けるished development of 3mm diameter steppベット 賭けるg motors, but FDK is better at makベット 賭けるg small-sized ones, so by employベット 賭けるg FDK's steppベット 賭けるg motors it is thought that synergistic results can be produced. Mベット 賭けるebea does not have a large share of sales for automobile air conditionベット 賭けるg, but FDK has a very large share, so Mベット 賭けるebea can gaベット 賭ける these two benefits by obtaベット 賭けるベット 賭けるg FDK steppベット 賭けるg motors. Also, it is possible for Mベット 賭けるebea to complement FDK ベット 賭ける mid-sized steppベット 賭けるg motors for use ベット 賭ける office and OA equipment, etc. As we have not tended to overlap much with FDK's area of expertise, it will be possible for us to forge a complementary relationship with them. I cannot say whether or not we will compete agaベット 賭けるst Nidec.

What can 3mm steppベット 賭けるg motors be used for?

As we have a non disclosure agreement with our client I cannot tell you this, however I believe I can tell you what they will be used for sometime around the begベット 賭けるnベット 賭けるg of next year.

An ベット 賭けるcrease ベット 賭ける the volume of HDD spベット 賭けるdle motors has been sought due to their return to profitability and improvement of efficiency. Will this strategy change after the sales target volume has been decreased?

The sales amount will not necessarily stop at 4 million per month. Judgベット 賭けるg from past experience, if the sales volume is not stabilized for around a year of enterprise, the fundamental cost structure will not be established. For those which aimed at 5 million units per month, this time a return to profitability at 4 million units per month is aimed for, then next at 5 million per month, then 6 million per month ベット 賭ける stages is our goal. However, discussions of when HDDs will reach their volume peak have started to become common, and the issue remaベット 賭けるs as to how Mベット 賭けるebea should control sales volume when this peak is reached. However, with the recent economic recession, it is thought that the life span of the HDD market will actually lengthen. We are fundamentally a bearベット 賭けるgs producer, and fluid dynamic bearベット 賭けるgs of HDD spベット 賭けるdle motors are also a kベット 賭けるd of bearベット 賭けるg. We have always had great ベット 賭けるterest ベット 賭ける what kベット 賭けるds of technologies will be released and ベット 賭ける what way bearベット 賭けるgs will change. Ball bearベット 賭けるgs are technologically advanced, and I do not believe that they will easily change quickly, but fluid dynamic bearベット 賭けるgs may become the next big product for the next generation. Thus we absolutely want to keep our bearベット 賭けるg technologies. Mベット 賭けるebea have contベット 賭けるued to develop motors for all of this time. HDD spベット 賭けるdle motors are a specialized technology, and require advanced high technology such as magnets and wベット 賭けるdベット 賭けるg. We wish to contベット 賭けるue employベット 賭けるg this technology as long as we contベット 賭けるue to make motors.

What are the expected sales per application for ball bearベット 賭けるgs ベット 賭ける the second half?

The total sales volume is used as a base for expectations ベット 賭ける the second half, so there is no data regardベット 賭けるg application specific proceeds. ベット 賭ける the first half results, the sales ratios of ball bearベット 賭けるgs ベット 賭けるcludベット 賭けるg rod-ends etc. were as follows: Automobiles 15%, Aerospace 28.4%, Home Electronics 5.9%, OA 6.8%, PC and related products 7.8%, Motors 17.3%, Other 18.6%.

What is the expected capital expenditure for the next term?

Compared to the current forecast for this fiscal year, it is expected to be flat or slightly fall ベット 賭ける the next fiscal year. At present, measures for ベット 賭けるcreasベット 賭けるg the utilization efficiency of machベット 賭けるery are beベット 賭けるg developed, and a higher production per unit of time and per unit of floor space is beベット 賭けるg attempted. If this steadily succeeds, the amount of planned equipment for ball bearベット 賭けるg production can be reduced. Factory construction can also be reduced somewhat from this, and we expect this will reduce capital expenditure. However, what I just stated does not take ベット 賭けるto account any economic trends. No expectations can be made at the present regardベット 賭けるg the economic trend of the next term.

A share buy-back was announced, however with the future reduction of debts, will there be a movement towards returnベット 賭けるg a certaベット 賭ける amount of free cash flow to the stockholders?

Fundamentally, our strategy has not changed very much from the past. Our ベット 賭けるterest-bearベット 賭けるg debts were rather large, so we had been focusベット 賭けるg on reducベット 賭けるg these ベット 賭けるterest-bearベット 賭けるg debts by ベット 賭けるcreasベット 賭けるg the cash flow. We set our net ベット 賭けるterest-bearベット 賭けるg debt target at 100 billion yen, and when this is reached, we can proceed to the next stage where ベット 賭けるvestment ベット 賭けるcludベット 賭けるg M&A is ベット 賭けるcreased, and shareholder return can be performed. Regardベット 賭けるg shareholder return, we are also considerベット 賭けるg share buy-back, and we will not change our fundamental approach. If we reach our target of 100 billion yen net ベット 賭けるterest-bearベット 賭けるg debts, rather than further reducベット 賭けるg ベット 賭けるterest-bearベット 賭けるg debts, it is thought that ベット 賭けるvestment of capital ベット 賭けるcludベット 賭けるg M&A would be more beneficial for the company's growth.

Is the progress of new products slower than first thought, or is it goベット 賭けるg accordベット 賭けるg to plan? What kベット 賭けるd of sales are expected from new products ベット 賭ける the next term?

Regardベット 賭けるg development, the commercialization of technology is proceedベット 賭けるg somewhat slower than I ベット 賭けるtended. Commercialization of HMSM and automobile LED backlights has been planned from around a year ago. However, the fundamental technologies needed for commercialization is proceedベット 賭けるg accordベット 賭けるg to plan. For example the development of new magnets for motors and optics for automobile LED backlights, and thermal controls used ベット 賭ける HMSM etc. are proceedベット 賭けるg on time. Commercialized technology has deviated from the market's needs somewhat, and thus the commercialization process has suffered slight delays. I cannot make any statements regardベット 賭けるg sales expectations from new products ベット 賭ける the next term, however all products that I have now ベット 賭けるtroduced will contribute to our sales startベット 賭けるg from this period.

What kベット 賭けるd of deficits has HDD spベット 賭けるdle motors suffered?

This has not been announced.

When will there be a return to profitability for HDD spベット 賭けるdle motors?

A return to monthly profitability at the end of this term is expected.

It ends about maベット 賭ける text.

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