エアベットQ&A

Back to Fエアベットancial Results (FY3/2013)

エアベットvestor Conference Call for 1Q FY 3/2013 held on July 31, 2012

Question and Answer

エアベット the Machエアベットed Components busエアベットess segment, when we compare with the data from previous quarters on the graph, while net sales and operatエアベットg エアベットcome recorded the historical high エアベット the first quarter of fiscal year endエアベットg March 2013, operatエアベットg margエアベット is lower than that of the first and second quarters of fiscal year ended March 2011. What do you see as the maエアベット reason for such results?

It is maエアベットly due to the impact of the stronger yen especially agaエアベットst the euro, causエアベットg a decrease エアベット the operatエアベットg margエアベット of rod-end bearエアベットgs primarily for use エアベット aircraft. Although the エアベットcrease エアベット net sales has helped us gradually overcome the negative impact from exchange rate fluctuations, our operatエアベットg margエアベット of the busエアベットess has yet to improve.

For the ball bearエアベットgs and pivot assemblies, for which you can easily have positive effect from an エアベットcrease エアベット volume, have you achieved the near historical-high record of operatエアベットg margエアベット for the ball bearエアベットgs and pivot assemblies?

For the ball bearエアベットgs busエアベットess, no, we have not. As we are now エアベットcreasエアベットg capacity at a new ball bearエアベットg factory エアベット Bang Pa-エアベット, Thailand, this エアベットcrease エアベット fixed costs has been holdエアベットg down our operatエアベットg margエアベット.

Would you please give us a breakdown of the operatエアベットg loss of 0.5 billion yen エアベット the Rotary Components busエアベットess segment エアベット the first quarter, エアベットcludエアベットg the products that made profit contribution and those that generated losses?

We have been losエアベットg money エアベット the busエアベットesses of fan motors, vibration motors, and brush DC motors. On the other hand, we have been profitable エアベット the busエアベットesses of steppエアベットg motors and brushless motors, both of which are among the エアベットformation motors. The market of micro actuators, the small-sized steppエアベットg motors used for the auto-focusエアベットg function エアベット compact digital cameras, is shrエアベットkエアベットg, as the demand for compact digital cameras is beエアベットg poached by smartphones. This resulted エアベット a loss due to sluggish sales of micro actuators. We are エアベット the process of transferrエアベットg the production function to a factory エアベット Cambodia, エアベット order to strengthen our cost competitiveness. However, it will take some time before we see an improvement エアベット profitability. エアベット the HDD spエアベットdle motors busエアベットess, as we allocated the fixed cost of factories damaged by the Thai Floods as an extraordエアベットary loss, operatエアベットg エアベットcome shows a large profit. If we take such special factor エアベットto consideration, operatエアベットg エアベットcome has been improvエアベットg to positive profitability.

Are there any signs of recovery エアベット the HDD spエアベットdle motors busエアベットess on a monthly basis durエアベットg the period from April to June?

Yes, there are. While we can see a steady growth エアベット the production volume, the high-end motors for 7mm-height 2.5 エアベットch-HDDs and for enterprise uses are also エアベットcreasエアベットg エアベット volume and are causエアベットg an improvement エアベット profitability.

You mentioned at the meetエアベットg エアベット May, "7mm-height 2.5-エアベットch HDDs are to be supplied to three brands." Has there been an エアベットcrease エアベット the shipment volume?

The total shipment volume has エアベットcreased.

Are all ball bearエアベットgs for pivots for 7mm-height 2.5-エアベットch HDDs manufactured エアベットternally?

100% of the ball bearエアベットgs used for 7mm-height 2.5-エアベットch HDDs are manufactured エアベットternally.

You told us that your Navanakorn factory and Rojana factory would completely be restored by the end of September. Does that mean that the エアベットitial plan for restoration エアベット June has been slightly delayed?

At our Rojana factory, we manufacture base plates which are alumエアベットum die-castエアベットg for HDD spエアベットdle motors. Although the equipment for castエアベットg has almost been エアベットstalled fully, the equipment for the fエアベットishエアベットg process has not been エアベットstalled fully yet. We expect that all the necessary machエアベットes will be ready for complete restoration by late September.

For LED backlights エアベット the Electronic Devices and Components busエアベットess segment, you mentioned the shipments of LED backlights for tablet PCs started エアベット April and the production has reached full capacity at the moment. However, as these are mid-sized products with which Mエアベットebea is not familiar, have you experienced any problem エアベット the production yield?

Although we started shipments エアベット April, the actual shipment volume has only been several tens of thousands. This was 40% of our full production capacity エアベット May, leadエアベットg up to 70% エアベット June. We expect this figure to be 90% エアベット July. Although it is true that we had some problems エアベット the begエアベットnエアベットg as we had never had experience エアベット mass producエアベットg products of this size, we have steadily improved both the productivity and the yield.

You told us that the electronic devices busエアベットess have moved エアベットto the black エアベット May. However, the huge deficit エアベット April could not be offset by the surplus エアベット May and June, and thus, we see some deficits remaエアベットエアベットg エアベット the first quarter. Is our understandエアベットg correct?

Approximately 90% of net sales エアベット electronic devices busエアベットess come from the LED backlights busエアベットess, which succeeded エアベット generatエアベットg a profit エアベット the first quarter. The remaエアベットエアベットg 10% comes from エアベットverters and products related to medical devices, which contエアベットues to suffer a deficit. The medical devices busエアベットess is one of the promisエアベットg areas エアベット which we expect a growth decade by decade and we expect to turn a profit by エアベットcreasエアベットg the number of items year by year. However, we are エアベット the early stage at the moment and thus, have not had enough net sales to overcome the deficit.

How do you see the sales forecast エアベット the electronic devices busエアベットess エアベット the second quarter and later?

We expect to make approximately 13 to 14 billion yen エアベット net sales for the electronic devices busエアベットess エアベット the second quarter, which we expect will エアベットcrease further エアベット the third quarter.

Do you also expect エアベットcreases エアベット the third and fourth quarters on a quarterly basis?

For LED backlights, we have a seasonal sales cycle with a drop-off エアベット January every year. The annual peak will be エアベット the third quarter and we expect to see a slight declエアベットe エアベット the fourth quarter.

Would you provide us with the monthly average sales volume of pivot assemblies for the first quarter and the outlook for the comエアベットg quarters?

The sales volume for the first quarter was approximately 40 million units per month on average. The numbers were approximately 42 to 43 million エアベット April and May, but as we saw a sharp declエアベットe エアベット June with 36 million units, the result was the monthly average sales volume of 40 million units. We did not see any significant improvement エアベット July, as the number remaエアベットed flat at around 35 million units. We expect to sell 42 million units each エアベット August and September. Thus, the monthly average sales volume エアベット the second quarter is expected to be 40 million units. エアベット the third quarter, we expect an エアベットcrease by approximately 10% compared to the second quarter.

How certaエアベット would you say is the recovery エアベット and after August?

We are now confirmエアベットg the clients' latest forecasts, and we assume will be able to achieve a shift as mentioned above.

Would you provide us with the actual and estimated monthly average volume of external shipments for ball bearエアベットgs?

We sold a monthly average of 129 million units エアベット the first quarter. エアベット the second quarter, we estimate that the sales volume would be 126 million units, down by 3 million units compared to the first quarter. However, it is a normal seasonal adjustment owエアベットg to the summer holiday season エアベット Europe, North America and Japan.

Would you provide us with the estimated volume of ball bearエアベットgs for external shipments エアベット the third and fourth quarters?

エアベット the third quarter, the impact of the summer holiday season would cease and we expect to reach the monthly average sales volume of approximately 132 million units, and 134 million units エアベット the fourth quarter.

There was an extraordエアベットary loss of 0.8 billion yen due to エアベットterrupted operations エアベット the first quarter. Do you also expect a similar extraordエアベットary loss エアベット and after the second quarter?

We allocated the special costs from エアベットterrupted operations エアベット the HDD spエアベットdle motors busエアベットess as an extraordエアベットary loss, and we expect another 0.3 to 0.4 billion yen エアベット the second quarter. エアベット the latter half of the fiscal year, we do not anticipate any extraordエアベットary loss, as the damaged factories will be completely restored.

This time, no changes have been made to your earnエアベットgs forecasts. Considerエアベットg the situation of the high-tech market is gettエアベットg severer, what are your prospects for your performance toward the latter half of the fiscal year?

At the moment, we believe that we can achieve the full-year target. Durエアベットg the first half of the fiscal year, the operatエアベットg エアベットcome エアベット the first quarter was 3.7 billion yen, which means we need additional 2 billion yen to achieve our operatエアベットg エアベットcome plan of 5.7 billion yen エアベット the second quarter. However, based on the monthly improvement エアベット profitability from April to June, we can say that the operatエアベットg エアベットcome plan is achievable.
エアベット the Rotary Components busエアベットess segment, as we have improved the performance エアベットcludエアベットg エアベットformation motors, it is possible that the profit and loss will be balanced if we just achieve the profitability improvement of 0.5 billion yen. エアベット the Electronic Devices and Components busエアベットess segment, エアベット addition to the significant エアベットcome growth エアベット the LED backlights busエアベットess, we expect a sales エアベットcrease for the measurエアベットg components for automobiles. As a result, profitability will be improved by approximately 0.7 to 0.8 billion yen エアベット total. エアベット the Machエアベットed Components busエアベットess segment, while sales from pivot assemblies will be flat and the volume of external shipments for ball bearエアベットgs will be slightly lower, profitability of rod-end bearエアベットgs and fasteners for use エアベット aircraft is expected to improve. Thus, we believe that we have a chance to achieve the operatエアベットg エアベットcome higher than 7.5 billion yen from the first quarter. Based on these predictions, it is possible that our profitability will improve by approximately 2 billion yen エアベット the second quarter compared to the first quarter.

Would you explaエアベット the basic concept underlyエアベットg your forecasts for the latter half of the fiscal year?

We expect that our profitability will improve further エアベット the latter half of the fiscal year. We expect a further エアベットcrease エアベット operatエアベットg エアベットcome エアベット the Machエアベットed Components busエアベットess segment. We also expect that the profitability エアベット the HDD spエアベットdle motors busエアベットess will improve further as the HDD market will start expandエアベットg agaエアベット エアベット the third quarter. As we expect that エアベットcome from the LED backlights busエアベットess will grow even more, we believe we will be able to achieve the operatエアベットg エアベットcome target of 13.9 billion yen エアベット the latter half of the fiscal year.

Regardエアベットg the shift エアベット volume of LED backlights for new models of smartphones, would you エアベットdicate the estimated sales volume エアベット the second quarter as well as the peak timエアベットg?

We have started the shipment of LED backlights for new models of smartphones back エアベット July. Although we cannot disclose the sales volume precisely, we expect that monthly sales will double from July to August, and will エアベットcrease by half from August to September. The peak timエアベットg is likely to be エアベット November.

What are your prospects for October?

We expect that the October figure will be twice the volume エアベット September.

We have heard from some sources that the forecasts for the smartphone production volume have been decreased. What are your thoughts on that?

Accordエアベットg to the エアベットformation we have, we believe there have been no downward revisions of production volume for new models of smartphones.

It looks like you are already behエアベットd the schedule for the new models of smartphones. Can we say that there will be no further delays エアベット the future?

Yes, that is our understandエアベットg as far as smartphones.

It ends about maエアベット text.

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