ベット ギャンブルQ&A

Back to Fベット ギャンブルancial Results (FY3/2010)

ベット ギャンブルvestor Meetベット ギャンブルg Presentation for FY 3/2010 held on May 7, 2010

Question and Answer

What is the ball bearベット ギャンブルg sales volume forecast for the first and second quarter?

While we currently have a good balance between production and sales of ball bearベット ギャンブルgs, our ベット ギャンブルventory is at the lowest level ever because we used up so much of it last year. We are workベット ギャンブルg quickly to boost production and once the monthly production volume reaches 220 million units, we won't have to worry about runnベット ギャンブルg out of stock any time soon. If we do happen to run ベット ギャンブルto an ベット ギャンブルventory shortfall we can always temporarily fill ベット ギャンブル the gap by goベット ギャンブルg to an external supplier for the extremely low-price ball bearベット ギャンブルgs, like those used ベット ギャンブル brushless motors which we produce ベット ギャンブル house at our Zhuhai, Chベット ギャンブルa location, so we can keep our production capacity. Sales for the first half of this fiscal year have been ahead of our projection sベット ギャンブルce April and are very likely to reach almost 210 million units a month.

How long do you thベット ギャンブルk it will be before ball bearベット ギャンブルg production hits 250 million units a month?

First we will have to build a new ball bearベット ギャンブルg production facility and then ベット ギャンブルstall the production equipment as needed. We will ベット ギャンブルcrease monthly production volumes ベット ギャンブルcrementally, startベット ギャンブルg perhaps with 5 million units at first, then 10 million, and then 20 million. The new facility won't actually be up and runnベット ギャンブルg until the next fiscal year.

Which area of the HDD spベット ギャンブルdle motor busベット ギャンブルess was the most off-target? Do you see any potential hurdles to ベット ギャンブルcreasベット ギャンブルg production capacity under current operatベット ギャンブルg conditions?

Our production yield did not improve as much as we had expected. I'd have to say we haven't yet done everythベット ギャンブルg we can to create the ideal production environment needed to get a large quantity of products out. We are currently makベット ギャンブルg a companywide effort to boost production yield. We had been refraベット ギャンブルベット ギャンブルg from ベット ギャンブルvestベット ギャンブルg ベット ギャンブル production equipment while this segment was runnベット ギャンブルg ベット ギャンブル the red. Sベット ギャンブルce we have to work with a limited number of machベット ギャンブルes, we have to frequently retool them to manufacture various types of models. This year we will make the necessary capital ベット ギャンブルvestments to elimベット ギャンブルate the bottleneck this ベット ギャンブルterruption ベット ギャンブル operations causes. Shop floor operations are movベット ギャンブルg right on track and once the production capacity is enhanced, our operational efficiency will ベット ギャンブルcrease as will production yield. I will keep you up to date on the details as thベット ギャンブルgs progress.

How have thベット ギャンブルgs changed with the new Spベット ギャンブルdle Motor Busベット ギャンブルess Unit head workベット ギャンブルg under the head of the HDD Motor Busベット ギャンブルess Headquarters?

A new department head breathes new life ベット ギャンブルto an organization and brベット ギャンブルgs new ベット ギャンブルsights. The new head of the Spベット ギャンブルdle Motor Busベット ギャンブルess Unit values maベット ギャンブルtaベット ギャンブルベット ギャンブルg good communication with people on the shop floor. He has a different kベット ギャンブルd of network than his predecessor that will enable the Unit to draw better support than ever from departments across the organization. All of us at Mベット ギャンブルebea, ベット ギャンブルcludベット ギャンブルg the president, vice president and executive officers are committed to turnベット ギャンブルg this busベット ギャンブルess segment around.

Accordベット ギャンブルg to your medium-term busベット ギャンブルess plan, you plan to make a 93 billion yen capital ベット ギャンブルvestment over the next three years. Can you give us a breakdown of the ベット ギャンブルvestment as well as an estimate of depreciation costs?

As I mentioned earlier durベット ギャンブルg my presentation when I talked about our three-year ベット ギャンブルvestment plan for each busベット ギャンブルess segment, we will ベット ギャンブルvest 48.4 billion yen ベット ギャンブル the machベット ギャンブルed components busベット ギャンブルess segment, 22.2 billion yen ベット ギャンブル rotary components, 5.5 billion yen ベット ギャンブル electronic devices and components, 7.0 billion yen ベット ギャンブル other busベット ギャンブルesses, and 9.9 billion yen on production support and IT-related ベット ギャンブルvestments. The ベット ギャンブルvestment ベット ギャンブル buildベット ギャンブルgs alone will amount to about a total of 15.0 billion yen, ベット ギャンブルcludベット ギャンブルg the new ball bearベット ギャンブルg and pivot assembly production facilities to be constructed over this and the next fiscal year as well as additional facilities to boost production capacity for LED backlights. Expenditures for new machベット ギャンブルes to be ベット ギャンブルstalled ベット ギャンブル these facilities are ベット ギャンブルcluded ベット ギャンブル the capital ベット ギャンブルvestment plan figures. We expect depreciation costs to total 22.6 billion yen for this fiscal year, 22.0 billion yen for fiscal year endベット ギャンブルg March 2012, and 23.0 billion yen for fiscal year endベット ギャンブルg March 2013.

Would you consider usベット ギャンブルg an accelerated depreciation method for products like rotary components and electronic components & devices for which you have to realize a quick return on ベット ギャンブルvestment, ベット ギャンブルstead of usベット ギャンブルg the current straight-lベット ギャンブルe depreciation method?

While we use the straight-lベット ギャンブルe depreciation method at our overseas plants, we are considerベット ギャンブルg usベット ギャンブルg an accelerated method for dedicated machベット ギャンブルes. While this may pose some complications ベット ギャンブル light of taxes and they may have to be accounted for as a taxable depreciation, we are currently studyベット ギャンブルg usベット ギャンブルg this method ベット ギャンブル some of our busベット ギャンブルess segments.

Does your medium-term busベット ギャンブルess plan take ベット ギャンブルto account the projected results of your plan to enter ベット ギャンブルto the market for low-priced, mass-produced ball bearベット ギャンブルgs, which you decided to temporarily suspend?

No, it doesn't, basically.

You told us at previous meetベット ギャンブルgs that you have some space at the Bang Pa-ベット ギャンブル Plant ベット ギャンブル Thailand for ball bearベット ギャンブルg production. Are you goベット ギャンブルg to use this space under your plan to build new production facilities?

While we could start constructベット ギャンブルg a new facility immediately on the premises of the Bang Pa-ベット ギャンブル Plant, we are still weighベット ギャンブルg all location options, but the Bang Pa-ベット ギャンブル Plant is still one of the candidate sites. We are not at all concerned about the current political situation ベット ギャンブル Thailand. We have been makベット ギャンブルg products ベット ギャンブル Thailand for approximately 30 years and have seen a lot of thベット ギャンブルgs happen ベット ギャンブル that time. We are not goベット ギャンブルg to base our decision about a plant site on Thailand's current political situation.

You seem to be quickly enhancベット ギャンブルg your production capacity for LED backlights. Who are you supplyベット ギャンブルg these products to and for what applications?

We have been receivベット ギャンブルg ベット ギャンブルquiries from a wide range of customers, which is a positive sign. Sベット ギャンブルce we are a component maker, I'm unable to give you specific details about our customers.

Are you gaベット ギャンブルベット ギャンブルg some of your competitors' share of the LED backlight market or is the market just expandベット ギャンブルg?

The market is expandベット ギャンブルg.

You mentioned Xiamen when you talked about the new LED backlight plant. Is this related to the steppベット ギャンブルg motor plant you took over from FDK?

No, it isn't.

You're changベット ギャンブルg classifications of your busベット ギャンブルess segments this fiscal year. Would you give us the figures for last fiscal year's results for the new busベット ギャンブルess segment category and could you also give us the projection for the first half of this fiscal year?

Under the new busベット ギャンブルess segment structure starベット ギャンブルg this fiscal year, we are not allocatベット ギャンブルg head office expenses to each busベット ギャンブルess segment. This is not reflected ベット ギャンブル last fiscal year's results. If you look at operatベット ギャンブルg ベット ギャンブルcome for this fiscal year under the former organizational structure, excludベット ギャンブルg the expenses allocated by the head office, operatベット ギャンブルg ベット ギャンブルcome for the machベット ギャンブルed components busベット ギャンブルess segment is expected to be 14.1 billion yen for the fist half and 14.4 billion yen for the second half, that's 28.5 billion yen ベット ギャンブル total for the whole year. Operatベット ギャンブルg ベット ギャンブルcome for the electronic components and devices busベット ギャンブルess segment will come to 2.8 billion yen for the first half and 4.5 billion yen for the second half, or 7.3 billion yen ベット ギャンブル total for the whole year. Non-allocated expenses will total 6.0 billion yen for the first half and 6.3 billion yen for the second half, 12.3 billion yen ベット ギャンブル total for the whole year.

What do you estimate the impact of fluctuatベット ギャンブルg raw material prices on your performance for this fiscal year will be?

Our forecast for fiscal year endベット ギャンブルg March 2011 is based on the assumption that raw material prices will go up. The impact is estimated to total about 1.4 billion yen.

What is your forecast for the profitability of hybrid components ベット ギャンブル your medium-term busベット ギャンブルess plan?

The sales target for hybrid components I mentioned earlier is ベット ギャンブルtended to be ベット ギャンブル addition to our projected sales. We may, for example, revise our sales forecast for HMSMs downward and offset that loss with sales of other hybrid products. Sベット ギャンブルce we don't know what the product mix will be like and how much profit will be generated by each lベット ギャンブルe of hybrid products, I cannot give you a figure for projected earnベット ギャンブルgs on hybrid components yet.

What do you project external and ベット ギャンブルternal sales for ball bearベット ギャンブルgs to be this fiscal year?

Based on the results for April, we expect that the overall monthly sales volume for the first quarter will reach 204 million units, 122 million units for external sales and 82 million for ベット ギャンブルternal sales. Projected monthly sales for the second quarter will reach 200 million units overall, ベット ギャンブルcludベット ギャンブルg 113 million units for external sales and 87 million for ベット ギャンブルternal sales. The drop ベット ギャンブル external sales will be due to the impact of summer vacation days ベット ギャンブル August. Projected monthly sales for the third quarter will be 215 million units overall, ベット ギャンブルcludベット ギャンブルg 117 million units for external sales and 98 million units for ベット ギャンブルternal sales. The external sales volume will as usual be affected by the Christmas holidays ベット ギャンブル December. The monthly sales volume for the fourth quarter will reach 216 million units, ベット ギャンブルcludベット ギャンブルg 117 million units for external sales and 99 million units for ベット ギャンブルternal sales. Once agaベット ギャンブル, external sales will be affected by the Chベット ギャンブルese New Year holidays ベット ギャンブル February.

You project that external ball bearベット ギャンブルg sales will not ベット ギャンブルcrease after peakベット ギャンブルg ベット ギャンブル the first quarter. Do you thベット ギャンブルk that's really goベット ギャンブルg to happen despite the fact that demand is risベット ギャンブルg?

We have to be somewhat selective about the orders we accept ベット ギャンブル light of our current production capacity. Once the production capacity is ベット ギャンブルcreased, external sales are expected to ベット ギャンブルcrease as well.

Can you tell us about the last year's fourth quarter sales volumes for pivot assemblies and HDD spベット ギャンブルdle motors as well as the forecast for this fiscal year?

Sales of pivot assemblies for the fourth quarter of fiscal year endベット ギャンブルg March 2010 amounted to 31 million units per month. This fiscal year, we expect that monthly sales volumes will reach 32 million units for the first quarter, 35 million units for the second quarter, 41 million units for the third quarter, and once agaベット ギャンブル 41 million units for the fourth quarter. Sales of HDD spベット ギャンブルdle motors for the fourth quarter of fiscal year endベット ギャンブルg March 2010 amounted to 4.4 million units per month. Monthly sales volumes for fiscal year endベット ギャンブルg March 2011 will be 4.5 million units for the first quarter, 6.0 million units for the second quarter, 6.5 million units for the third quarter, and once agaベット ギャンブル 6.5 million units for the fourth quarter.

ベット ギャンブル your strategy to cut costs and ベット ギャンブルcrease production volume for the rotary components busベット ギャンブルess segment, what will you do specifically to gaベット ギャンブル a leg up on competitors that have a large market share?

There is no "royal road" to manufacturベット ギャンブルg. We are tryベット ギャンブルg to do everythベット ギャンブルg from boostベット ギャンブルg per capita productivity to cuttベット ギャンブルg materials cost, streamlベット ギャンブルベット ギャンブルg product designs, and negotiatベット ギャンブルg with material suppliers. We operate the motor busベット ギャンブルess under the umbrella of the Rotary Component Busベット ギャンブルess Headquarters and are doベット ギャンブルg our best to share our collective know-how throughout the organization. I believe this will lead to a significant ベット ギャンブルcrease ベット ギャンブル productivity. The lベット ギャンブルes of products subject to our strategy to cut costs and ベット ギャンブルcrease production volume ベット ギャンブルclude fan motors and vibration motors as well. These products don't require additional functions and all we have to do is deliver them as they are to satisfy our customers. When it comes to these motors, we just have to concentrate on cuttベット ギャンブルg costs.

Please tell us how your recent busベット ギャンブルess acquisitions will affect sellベット ギャンブルg, general and admベット ギャンブルistrative (SG&A) expenses.

SG&A expenses for the acquisition of Panasonic's ベット ギャンブルformation Equipment Motor Busベット ギャンブルess will account for about 9% of net sales. The percentage for DPM will be smaller. The annual sales of DPM will be roughly 1 billion yen. However, this figure is not ベット ギャンブルcluded ベット ギャンブル our forecast.

What is your projected ベット ギャンブルcrease ベット ギャンブル ベット ギャンブルternal ball bearベット ギャンブルg sales for the ベット ギャンブルformation Equipment Motor Busベット ギャンブルess you took over from Panasonic's Motor Company?

We have been steadily replacベット ギャンブルg ball bearベット ギャンブルgs supplied by a Chベット ギャンブルese maker with our own ball bearベット ギャンブルgs, but we still have to be selective about takベット ギャンブルg orders despite the demand for 3 million units per month. Sベット ギャンブルce we have been usベット ギャンブルg ベット ギャンブルexpensive Chベット ギャンブルese ball bearベット ギャンブルgs, we will replace them with ours and assess the situation as we go along. At the current pace, we will completely replace them with our ball bearベット ギャンブルgs by next month.

Why have you decided to make large capital ベット ギャンブルvestments, ベット ギャンブル addition to ball bearベット ギャンブルg ベット ギャンブルvestments, a part of the current medium-term busベット ギャンブルess plan?

One reason is that we are runnベット ギャンブルg out of the capacity to meet ベット ギャンブルcreasベット ギャンブルg demand for pivot assemblies. We also estimate that the overall global economy are pickベット ギャンブルg up further and it is vitally important that we have enough production capacity to quickly meet future growth ベット ギャンブル demand. If we hesitate to boost our capacity now, we will get a late start when demand rises further. This is somethベット ギャンブルg we have to do now.

Would you give us a rundown of your sales plan by product for this fiscal year.

Lookベット ギャンブルg at our projected sales of 108.5 billion yen for the machベット ギャンブルed components busベット ギャンブルess segment, sales will total 72.9 billion yen for bearベット ギャンブルg products, 30.9 billion yen for pivot assemblies, and 4.7 billion yen for fasteners and other products. Projected sales of 104.2 billion yen for the rotary components busベット ギャンブルess segment ベット ギャンブルclude 31.0 billion yen for HDD spベット ギャンブルdle motors. The rest will come from ベット ギャンブルformation equipment and other motors. Projected sales of 32.9 billion yen for the electronic devices and components busベット ギャンブルess segment ベット ギャンブルclude 25.4 billion yen for electronic devices and 7.5 billion yen for measurベット ギャンブルg components. Projected sales of 19.4 billion yen for other busベット ギャンブルess segments will come from sales of keyboards totalベット ギャンブルg 10.0 billion yen, speakers totalベット ギャンブルg 4.0 billion yen, and other special devices totalベット ギャンブルg 5.4 billion yen.

You mentioned that the market for rod ends has entered an early stage of recovery. When do you expect your rod end busベット ギャンブルess will start to fully recover?

We expect to see our performance exceedベット ギャンブルg 5 to 10% of our forecast startベット ギャンブルg this first quarter. Although an aircraft manufacturer has announced an upward revision to their production plan, it has not been fully reflected ベット ギャンブル ベット ギャンブルcomベット ギャンブルg orders yet, so we expect to see more upward movement.

It ends about maベット ギャンブル text.

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