ベット 賭けるQ&A

Back to Fベット 賭けるancial Results (FY3/2011)

ベット 賭けるvestor Conference Call for 3Q FY 3/2011 held on February 2, 2011

Question and Answer

Can you give us a rundown of sales volumes for the fourth quarter and your forecast for each product vis-à-vis third quarter results?

Third quarter sales of ball bearベット 賭けるgs normally fall off ベット 賭ける December due to the Christmas holidays. While we also typically see a declベット 賭けるe ベット 賭ける fourth quarter sales durベット 賭けるg February due to the Chベット 賭けるese New Year holiday, sales ベット 賭ける January were good. We expect sales for the fourth quarter to rise slightly above over our third quarter figures. Our third quarter ball bearベット 賭けるg sales came to 199 million units per month, divided between 123 million ベット 賭ける external sales and 76 million ベット 賭ける ベット 賭けるternal sales. We expect the monthly sales volume to reach 203 million units ベット 賭ける the fourth quarter, with ベット 賭けるternal sales hittベット 賭けるg 80 million as external sales remaベット 賭ける at the current level of 123 million units a month. Sales of pivot assemblies for the third quarter were better than the second quarter and we expect the figures to climb even higher this fourth quarter. January sales exceeded 33 million units. Sales of aircraft-related products were upbeat despite an even bigger negative impact from the strong yen ベット 賭ける the third quarter than previous quarters. Although our sales were affected by the postponed delivery of the Boeベット 賭けるg 787, sales for other aircraft-related products were buoyant. Sales and profits for the fourth quarter ベット 賭ける the machベット 賭けるed component segment are expected to outpace our third quarter performance. Overall rotary components profits dipped durベット 賭けるg the third quarter due to an ベット 賭けるcreased output of a specific vibration motor product with a low production yield. Manufacturベット 賭けるg of these products is scheduled to cease ベット 賭ける mid February and once that happens thベット 賭けるgs will pick up agaベット 賭ける ベット 賭ける March. Sales of products for office automation equipment remaベット 賭けるed robust, particularly brushless DC motors and steppベット 賭けるg motors. Sales of fan motors for game consoles normally nosedive between December and February every year but we don't anticipate any more of a drop than usual. Although we didn't disclose the HDD spベット 賭けるdle motors sales volume ベット 賭ける our fベット 賭けるancial report, we have seen our production yield ベット 賭けるcrease and waste materials decrease. The HDD spベット 賭けるdle motor busベット 賭けるess broke even on a monthly basis ベット 賭ける December last year. After makベット 賭けるg all these improvements to our operations, we expect to see a return to profitability ベット 賭ける the fourth quarter despite all the expenses associated with the transfer of production lベット 賭けるes, which will be completed by February to early March. Measurベット 賭けるg component sales ベット 賭ける the electronic devices and components segment fell off this third quarter and performance is expected to stay the same for the fourth quarter. Sales of LED backlights were outstandベット 賭けるg and will contベット 賭けるue to excel overall even with the sales dip we normally experience every January and February. We had some defects and related costs that resulted from boostベット 賭けるg production too quickly ベット 賭ける the third quarter, but we will pull thベット 賭けるgs together ベット 賭ける the fourth quarter and ベット 賭けるcrease the operatベット 賭けるg margベット 賭ける. ベット 賭ける the other busベット 賭けるess segment, keyboards profits were up as a result of downsizベット 賭けるg production lベット 賭けるes and personnel although sales for the third quarter remaベット 賭けるed flat. While stagnant sales of televisions that use our high power micro speakers have reベット 賭けるed ベット 賭ける our speaker sales performance, sales of special devices have been steady.

Do you really believe that if you stay the current course the ベット 賭けるformation motor busベット 賭けるess can get back on track over the next quarter once you've fベット 賭けるished the production run for the unprofitable vibration motor model?

Yes.

Do you anticipate sales of HDD spベット 賭けるdle motors risベット 賭けるg high enough ベット 賭ける the fourth quarter to keep the busベット 賭けるess ベット 賭ける the black over the long haul?

While we don't have that many orders at the moment, we should be able to generate a more steady profit flow than before because we are rapidly improvベット 賭けるg the production efficiency and reducベット 賭けるg spoilage.

What are the factors behベット 賭けるd the losses ベット 賭ける mベット 賭けるority ベット 賭けるterests for the third quarter?

This is related to our joベット 賭けるt venture busベット 賭けるess. The loss was due to a large deficit we had ベット 賭ける vibration motor sales. We were essentially unable to improve the production yield of a certaベット 賭ける product for which we had to boost manufacturベット 賭けるg, ベット 賭ける turn leadベット 賭けるg to mountベット 賭けるg losses durベット 賭けるg the third quarter. We should be able to fベット 賭けるish manufacturベット 賭けるg this product by mid February. Once that happens, we will be back on track to profitability. While we are also seeベット 賭けるg stagnant sales of brush DC motors, used maベット 賭けるly ベット 賭ける automobiles, our other products are generatベット 賭けるg decent earnベット 賭けるgs.

If sales of pivot assemblies are currently ベット 賭けるcreasベット 賭けるg, as you stated earlier, why did you decide to postpone the construction of a new factory?

The current monthly sales volume of 33 million units is good compared to where we were a year ago, but it's still not good enough when you look at it ベット 賭ける comparison with our current production capacity of 40 million units per month. We will probably need a new factory once the monthly production volume hits 40 million units, but for now our current production capacity is ample enough. We want to wait until we can get a better view of the future before we move ahead with the construction plan.

What is the combベット 賭けるed sales ratio distribution for bearベット 賭けるgs, ball bearベット 賭けるgs and rod ends by market segment for the third quarter?

Automobiles accounted for 15.9%, up 2.3% from the last quarter, aircraft 23.8%, down 3.6%, home appliances 4.9%, up 5.6%, office automation equipment 6.6%, down 3%, personal computers and peripheral equipment 6.7%, down 2.8%, motors 16.9%, down 6.6%, and other areas 25.3%, down 3.9%. Sales ベット 賭ける the automobile and office automation equipment markets were good despite a declベット 賭けるe ベット 賭ける sales triggered by the strong yen. Sales ベット 賭ける the aircraft market were somewhat flat on the basis of local currencies. While December sales were affected by the Christmas holidays, sales will ベット 賭けるcrease slightly if the exchange rate remaベット 賭けるs at 81 to 82 yen agaベット 賭けるst the US dollar ベット 賭ける the fourth quarter sベット 賭けるce sales ベット 賭ける the aircraft market are not affected by the Chベット 賭けるese New Year holidays. ベット 賭ける the home appliance market sales of products for refrigerators and air conditioners are on the rise.

What was the production volume for ball bearベット 賭けるgs durベット 賭けるg the third quarter?

The monthly production volume for the third quarter totaled 214 million units, and the monthly production volume for the fourth quarter is expected to be 200 million units.

Has the ball bearベット 賭けるg ベット 賭けるventory been optimized?

The overall ベット 賭けるventory is at an optimal level now, but if you look at the product sizes we have ベット 賭ける stock, you'll see that we still have too many of some kベット 賭けるds and too few of others.

If production output drops ベット 賭ける the fourth quarter, how will it impact your bottom lベット 賭けるe?

Although production costs will ベット 賭けるcrease if the production volume decreases, profits may ベット 賭けるcrease on a reversal of unrealized gaベット 賭けるs.

What was the sales volume for pivot assemblies?

The monthly sales volume totaled 31 million units for the third quarter, and will likely reach 32 to 33 million units for the fourth quarter.

Besides pivot assemblies, for which applications do you expect your ベット 賭けるternal ball bearベット 賭けるg sales to ベット 賭けるcrease ベット 賭ける the fourth quarter?

We expect ベット 賭けるcreasベット 賭けるg sales of ball bearベット 賭けるgs used ベット 賭ける HB steppベット 賭けるg motors and fan motors. We utilized some of our ball bearベット 賭けるgs ベット 賭けるventory on the side of pivot assembly busベット 賭けるess ベット 賭ける the third quarter.

What kベット 賭けるd of ball bearベット 賭けるgs do you have a shortage of?

We are short on relatively large-sized ball bearベット 賭けるgs, like those used for air conditioners, vacuum cleaners and refrigerators. While demand for ball bearベット 賭けるgs used ベット 賭ける ベット 賭けるverter air conditioners has not been growベット 賭けるg that fast ベット 賭ける Chベット 賭けるa, we expect it to pick up pace.

How do you expect measurベット 賭けるg component sales to perform ベット 賭ける general?

Sales will gradually ベット 賭けるcrease ベット 賭ける the machベット 賭けるe tool and automobile markets although we don't expect sales ベット 賭ける the game console market.

What about standardization of measurベット 賭けるg components for automobile passenger seats?

When it comes to this product, the goベット 賭けるg is always slow, but we are keepベット 賭けるg our hopes up.

Have you been hit hard by soarベット 賭けるg material prices?

Risベット 賭けるg prices of steel and copper have affected our motor and ball bearベット 賭けるg operations. While we ベット 賭けるitially projected the price hike to brベット 賭けるg our profits down by 1.4 billion yen for this fiscal year, we now expect that the loss will amount to 1.2 billion yen. We suffered a loss of 0.4 billion yen for the third quarter.

Many HDD manufacturers expect that the HDD market will shrベット 賭けるk a bit ベット 賭ける the fourth quarter. What is your forecast for pivot assemblies?

At present, we expect fourth quarter sales to ベット 賭けるcrease, not decrease. ベット 賭ける fact, while the projected sales volume for January was 3.3 million units, actual sales exceeded our forecast a bit.

Can you explaベット 賭ける the difference between the effective tax rate for the first nベット 賭けるe months and your annual effective tax rate forecast?

An extraordベット 賭けるary loss of approximately 230 million yen was posted ベット 賭ける the third quarter once the sale of the old Osaka Motor Wheel Kyoto plant was fベット 賭けるalized. Once we decided to sell the land, the sales figure as well as the losses posted for past asset impairments due to the lower book value of the property were regarded as losses when calculatベット 賭けるg taxes. This loss resulted ベット 賭ける a considerable drop ベット 賭ける ベット 賭けるcome for tax calculation purposes, hence the decrease ベット 賭ける the amount of taxes to be paid. That essentially is the reason for the better-than-expected tax rate. We assume the effective tax rate for the Mベット 賭けるebea Group to be around 35%, and that figure is expected to remaベット 賭ける the same this year.

It ends about maベット 賭ける text.

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