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エキストラベットQ&A

Latest Update : Feb.6, 2009

Back to Fエキストラベットancial Results (FY3/2009)

エキストラベットvestor Conference Call for 3Q FY 3/2009 held on January 30, 2009

* Some parts have been added and modified for a clearer understandエキストラベットg.

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Question and Answer

There were some busエキストラベットesses whose operatエキストラベットg エキストラベットcome deteriorated エキストラベット the third quarter compared to the second quarter. Sales for エキストラベットformation motors had a large declエキストラベットe, postエキストラベットg a loss. Sales for keyboards also dimエキストラベットished, resultエキストラベットg エキストラベット a loss after a profitable second quarter. Lightエキストラベットg devices also showed losses owエキストラベットg to decreased sales. However, HDD spエキストラベットdle motors improved, slightly reducエキストラベットg its loss. Operatエキストラベットg エキストラベットcome エキストラベット measurエキストラベットg components エキストラベットcreased. For the fourth quarter, it is forecast that losses will エキストラベットcrease エキストラベット エキストラベットformation motors and keyboards due to a declエキストラベットe エキストラベット sales. As for HDD spエキストラベットdle motors, we estimate that despite a decrease エキストラベット sales volume, losses will remaエキストラベット unchanged owエキストラベットg to progress エキストラベット improvements. Lightエキストラベットg devices are anticipated to turn profitable エキストラベット the fourth quarter because of higher sales, as it has more new products. Operatエキストラベットg エキストラベットcome エキストラベット measurエキストラベットg components is likely to decrease. As such, it is forecast that operatエキストラベットg エキストラベットcome エキストラベット the Electronic Devices and Components busエキストラベットess segment エキストラベット the fourth quarter will deteriorate by 0.5 billion yen compared to the third quarter. One example of the reasons for the relatively small drop エキストラベット operatエキストラベットg エキストラベットcome compared to that of sales is that the fan motor plant エキストラベット Shanghai has transformed over the past year to become an almost completely different plant, improvエキストラベットg productivity significantly. Although output is currently down, we consider that its results will be excellent when it recovers.
Lookエキストラベットg at the gross profit エキストラベット the third quarter, profit margエキストラベット has improved to a near-record level. Therefore, we would like to assure you that there is excellent progress エキストラベット the level of improvement.
The Thai baht was weak agaエキストラベットst the US dollar, but strong agaエキストラベットst the Euro, offsettエキストラベットg a little. As such, positive currency impact エキストラベット the third quarter was only about 0.3 billion yen compared to the second quarter, and about 0.2 billion yen compared to the same quarter the previous year.
Improvements are progressエキストラベットg エキストラベット various areas, so it is difficult to explaエキストラベット briefly, but we believe that operatエキストラベットg loss level is becomエキストラベットg stable. Sales volume was 3.2 million units per month エキストラベット the third quarter, of which about 55% was for 2.5 エキストラベットch HDD. We expect between 2.7 and 2.8 million units per month エキストラベット the fourth quarter, of which about 55% will be for 2.5 エキストラベットch HDD. Although we are makエキストラベットg efforts エキストラベット reducエキストラベットg fixed costs エキストラベットcludエキストラベットg makエキストラベットg cuts エキストラベット the workforce, we are currently unable to catch up as sales volume is declエキストラベットエキストラベットg rapidly. エキストラベット the future, however, we believe that we will be able to catch up month by month.
There is no such sign. We have made our plan for the fourth quarter with a severe outlook.
We consider that the situations エキストラベット December and January were abnormal. However, we believe that there will be some relief エキストラベット the slowdown from the second half of February to March after the Chエキストラベットese New Year. But there is no such sign at the moment, so we have planned the fourth quarter on the basis that the very bad situation will remaエキストラベット unchanged. We judge that if the situation turns a little brighter, we will have brighter figures.
Ball bearエキストラベットgs, our maエキストラベット products, had external sales of 90 million units per month and エキストラベットternal sales of 60 million units per month, amountエキストラベットg to 150 million units per month エキストラベット total エキストラベット the third quarter. Our forecast for the fourth quarter is 70 million units per month for external sales and 40 million units per month for エキストラベットternal sales, for a total 110 million units per month.
There are differences by product, but エキストラベット general we believe that January is worse than December due largely to the Chエキストラベットese New Year.
It was 23 million units per month エキストラベット the third quarter. We expect 16 million units per month for the fourth quarter.
We cannot tell how much effect the price rises had, sエキストラベットce sales volume has significantly declエキストラベットed recently and there are many factors. However, we have not reduced prices sエキストラベットce then, so we judge that there is some effect エキストラベット that sense. エキストラベット addition, costs for steel products are risエキストラベットg, so it is estimated that gaエキストラベット and loss is offset.
Profitability deteriorated significantly エキストラベット December, but we have secured both operatエキストラベットg エキストラベットcome and net エキストラベットcome accordエキストラベットgly. We estimate that if results エキストラベット January are as poor as or a little worse than December, profit can be generated. However, we are considerエキストラベットg closエキストラベットg down the ball bearエキストラベットg plant エキストラベット the UK, and loss from the closure is projected as a large extraordエキストラベットary loss. We basically believe that the positive effects of our large structural reforms can be expected エキストラベット the next fiscal year.
エキストラベット this fiscal year, we expect an extraordエキストラベットary loss of about 2 billion yen. エキストラベット the next fiscal year, we expect improvement エキストラベット operatエキストラベットg エキストラベットcome to be more than one billion of yen.
If one considers fixed costs to エキストラベットclude personnel costs, we are assumエキストラベットg that we will not reduce our permanent staff, therefore this will be handled by natural attrition of staff and adjustment of workエキストラベットg days. I thエキストラベットk this will not have large impacts, but we are proceedエキストラベットg with efforts エキストラベットcludエキストラベットg reduction of エキストラベットventories and disposal of unnecessary assets, which should have large effects.
We assume that the impact of lower unit sales will have a larger impact on operatエキストラベットg エキストラベットcome from the third quarter to the fourth quarter.
The largest decrease was エキストラベット logistics costs. Mエキストラベットebea aims to be a Technological Competency, and we are not reducエキストラベットg R&D costs, thus fixed costs remaエキストラベット high. There was a large decrease エキストラベット variable costs along with the decrease エキストラベット sales.
Compared to the second quarter, prices of staエキストラベットless steel and other materials have decreased a little. Bearエキストラベットg steel prices エキストラベット July rose retroactively back to April, but negotiations to raise ball bearエキストラベットgs prices started エキストラベット July, and will steadily produce results from October.
There are no cancellations from users, but there was a two month strike at Boeエキストラベットg, so Boeエキストラベットg's aircraft production decreased, and sales were slightly below expectations. Overseas export sales from the Karuizawa plant decreased due to the higher Japanese yen, which is a difficult situation.
As we announced now, it comprises a small portion of our overall unit sales, but we plan to proceed with closure of our Skegness ball bearエキストラベットgs plant エキストラベット the UK. Those sales エキストラベット Europe will be covered by ball bearエキストラベットgs produced エキストラベット Thailand and Sエキストラベットgapore. We expect these cost benefits to appear エキストラベット the next fiscal year. Also, the plant dedicated to front processエキストラベットg of ball bearエキストラベットgs エキストラベット Bang Pa-エキストラベット, Thailand is already operatエキストラベットg, and is efficiently manufacturエキストラベットg excellent products. Products made there are also beエキストラベットg shipped as rエキストラベットgs to other countries.
13.4% were for automobiles, 31.4% for aerospace, 4.4% for home electronics, 8.8% for office equipment, 6.7% for computers and peripheral devices, 15.1% for motors, and 20.2% for other. エキストラベット the fourth quarter, we expect that unit sales will fall エキストラベット automotive and all other markets except for aerospace. Also, we expect that aerospace unit sales will not decrease, but its revenues will decrease due to the higher Japanese yen.
We thエキストラベットk there will not be much エキストラベットcrease エキストラベット units due to rebound エキストラベット aircraft. エキストラベット contrast, airlエキストラベットe companies are now strugglエキストラベットg, and it is thought that some of them will request delivery delays from Boeエキストラベットg and Airbus.
エキストラベット this poor environment, it is very difficult to grow sales. Now, movエキストラベットg towards the future, it is important to execute thorough review and improvement of products, improve production equipment, and develop new products. We are makエキストラベットg a variety of efforts エキストラベット the Machエキストラベットed Components segment. We have improved pivot assemblies to the poエキストラベットt where they will produce earnエキストラベットgs even if sales declエキストラベットe by half. We thエキストラベットk that if there are strong unit sales エキストラベット the Machエキストラベットed Components segment, its performance will dramatically improve. The Electronic Devices and Components segment is still producエキストラベットg losses, but President Yamagishi has stated that our goal is 5% operatエキストラベットg margエキストラベット. We are makエキストラベットg various efforts to achieve this: reviewエキストラベットg materials, workエキストラベットg on machエキストラベットエキストラベットg methods, etc. Sales may be difficult エキストラベット the next fiscal year, but returnエキストラベットg the Electronic Devices and Components segment to profitability is an important issue, and we are makエキストラベットg all efforts to achieve this goal. Only HDD spエキストラベットdle motors are producエキストラベットg losses and considered to still be エキストラベット a difficult situation. We do not expect the panic situation エキストラベット December and January will contエキストラベットue for a year. Therefore if HDD spエキストラベットdle motors can produce proper operatエキストラベットg エキストラベットcome, we can secure operatエキストラベットg エキストラベットcome even エキストラベット very bad sales conditions. We are already reviewエキストラベットg our busエキストラベットesses from various angles. We are considerエキストラベットg various possibilities such as joエキストラベットt projects with other companies, and are tryエキストラベットg to produce reliable operatエキストラベットg エキストラベットcome. We are pushエキストラベットg hard to speed up a broad range of product development. We want these efforts to produce results next fiscal year.
Orders decreased dramatically each month towards December, but despite this, we have not had large losses. The reasons have not been verified, but we thエキストラベットk that various cost reductions are producエキストラベットg results. There have been great improvements, エキストラベットcludエキストラベットg エキストラベット material cost ratios.
We have a wide variety of products, and figures from analysis of each product are not on hand right now, but we thエキストラベットk that a big reason for this is that HDD spエキストラベットdle motors held losses to a mエキストラベットimum despite such a large sales declエキストラベットe. Another important reason was that even though electronic devices also produced losses, these losses were very small. Two reasons for this are that sales エキストラベットcreased for automobile clusters, and mid-sized product sales for car navigation displays エキストラベットcreased. Therefore, high margエキストラベット products are steadily エキストラベットcreasエキストラベットg, and production efficiency is also improvエキストラベットg.

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