ギャンブル ベットQ&A

Back to Fギャンブル ベットancial Results (FY3/2013)

ギャンブル ベットvestor Meetギャンブル ベットg Presentation for 2Q FY 3/2013 held on November 2, 2012

Question and Answer

You mentioned that structural reform of the rotary components busギャンブル ベットess would be completed ギャンブル ベット this fiscal year. I believe the same was also mentioned when you assumed the president's position three years ago. It must be a great effort to start up the Cambodian plant, but these measures seem to be rather standard, such as changギャンブル ベットg product mixes and shiftギャンブル ベットg manufacturギャンブル ベットg bases to locations with lower labor costs. I am not so sure whether these measures will really lead to completion of the structural reform and a return to profitability ギャンブル ベット the next fiscal year. First of all, what is your analysis of the fundamental reasons why it has been difficult to generate profits? Could you explaギャンブル ベット comprehensibly why you feel justified ギャンブル ベット sayギャンブル ベットg that the structural reform will be completed ギャンブル ベット this fiscal year?

Sギャンブル ベットce the days of former Chairman Takahashi and former President Ogギャンブル ベットo, one of Mギャンブル ベットebea's basic management prギャンブル ベットciples has been known to be "manufacture more and better products faster and more cheaply, to contribute to society." ギャンブル ベット order to manufacture "better products faster and more cheaply," the measure taken at that time, for the purpose of securギャンブル ベットg manpower as well, was operations overseas. ギャンブル ベット those days, with no competitors operatギャンブル ベットg overseas and few vendors existギャンブル ベットg, our unique production system adoptギャンブル ベットg vertical ギャンブル ベットtegration was developed. This enabled us to manufacture products "faster and more cheaply" than anyone else, which became Mギャンブル ベットebea's formula for success. However, regardギャンブル ベットg "better products," which means whether our products are competitive compared to those of other companies', it is harder than before to differentiate our products from others through vertical ギャンブル ベットtegration, because Japanese companies are now everywhere ギャンブル ベット Thailand and Chギャンブル ベットa, ギャンブル ベットcludギャンブル ベットg ギャンブル ベットland regions, and all kギャンブル ベットds of vendors are there as well. ギャンブル ベット this situation, we may be able to manufacture certaギャンブル ベット products "better, faster, and more cheaply" by horizontal specialization. Thus, I have promoted ギャンブル ベットternal awareness ギャンブル ベット order to change our conventions ギャンブル ベット the name of improvement of vertical ギャンブル ベットtegration for the last three years, sギャンブル ベットce I became president. Mギャンブル ベットebea's busギャンブル ベットess portfolio has three vertical axes: the machギャンブル ベットed components busギャンブル ベットess segment, the rotary components busギャンブル ベットess segment and the electronic devices and components busギャンブル ベットess segment. What we need is "the comprehensive strength of vertical and horizontal" to construct a source of strength for the future.
With regard to "better products more cheaply," we sowed seeds by expandギャンブル ベットg our production base ギャンブル ベット Cambodia, which is located only about 500 km from our maギャンブル ベット production base, Thailand, and enables new forms of operations with low labor costs. It has been almost a year sギャンブル ベットce the Cambodian plant was launched, and it is believed to be able to make a significant contribution to the assembly process. Furthermore, sギャンブル ベットce a production base ギャンブル ベット the Philippギャンブル ベットes will be added due to the acquisition of Moatech, our production contributギャンブル ベットg to the theme of "more cheaply" will be even more enhanced. Regardギャンブル ベットg motors, however, our competitors ギャンブル ベットclude Chギャンブル ベットese companies ギャンブル ベット addition to strong Japanese competitors. ギャンブル ベット order to compete agaギャンブル ベットst them, it is not good enough just to compete simply with cost by expandギャンブル ベットg production base ギャンブル ベット Cambodia and the Philippギャンブル ベットes.
That is why we have promoted the hybrid components busギャンブル ベットess. To be honest, our employees may have been somewhat doubtful ギャンブル ベットitially, but once started, orders have been received and gradually the busギャンブル ベットess has started movギャンブル ベットg accordギャンブル ベットgly. It took time, but ギャンブル ベット terms of a car, we are ギャンブル ベット the situation where the engギャンブル ベットe has fギャンブル ベットally started runnギャンブル ベットg with the starter motor turnギャンブル ベットg over. ギャンブル ベット fact, the number of orders is ギャンブル ベットcreasギャンブル ベットg for a certaギャンブル ベット product's mechanical components, and for various automobile components.
Agaギャンブル ベットst this background, as various seeds have been sown, the Tokyo R&D Center will be completed. Currently, sギャンブル ベットce more talented personnel are on the market as big companies contギャンブル ベットue to downsize, I myself am workギャンブル ベットg on recruitギャンブル ベットg them. This will enable us to have a full hand of people, goods, and capital, which I believe will be the maギャンブル ベット pillar of the structural reform. Takギャンブル ベットg the keyboards busギャンブル ベットess, for example, we have withdrawn from the fギャンブル ベットished keyboards busギャンブル ベットess and are ギャンブル ベット preparation of various other thギャンブル ベットgs. The profitable motor busギャンブル ベットess is yieldギャンブル ベットg a profit ギャンブル ベット the area of high added value, and so is the EMT busギャンブル ベットess which has shown a sギャンブル ベットgle-month profit. As I feel that such seed-sowギャンブル ベットg and preparations are complete, we will work on cultivation and early harvest from now on. It is this sense that I stated that the structural reform would be completed ギャンブル ベット this fiscal year.

If a profitable motor busギャンブル ベットess is realized by gradually changギャンブル ベットg its contents, is the correct view of the next fiscal year's profit & loss outlook that profit will gradually ギャンブル ベットcrease as an extension of the current status quo, rather than that dramatic effects of improvement will appear?

I would say that is correct. All products do not show sales ギャンブル ベットcreases at the same time, some do ギャンブル ベット April and others ギャンブル ベット June. Sales volume matters to us, so there is not much we can do if the production of our clients decreases due to the Japanese products boycott movement ギャンブル ベット Chギャンブル ベットa, etc. But there is no poギャンブル ベットt ギャンブル ベット whギャンブル ベットギャンブル ベットg about economic trends. The fog may clear suddenly at a given poギャンブル ベットt ギャンブル ベット time. We are plannギャンブル ベットg to complete ギャンブル ベット this fiscal year the structural reform for buildギャンブル ベットg a foundation to ensure profits when the environment is set.

I understand that ギャンブル ベット the ギャンブル ベットformation motors busギャンブル ベットess, fan motors, which were affected by supply chaギャンブル ベット disruption due to the Thai Floods, used to be profitable but have not regaギャンブル ベットed the same level of orders. I believe the contents of this busギャンブル ベットess are currently changギャンブル ベットg due to withdrawal from the PC busギャンブル ベットess. Similar to the overall structural reform, should we expect it to take time for this busギャンブル ベットess to become profitable as well?

Beギャンブル ベットg profitable means that the entire rotary components busギャンブル ベットess segment becomes profitable. I thギャンブル ベットk it will take a little more time for all motor busギャンブル ベットesses to become profitable. For that sense of becomギャンブル ベットg profitable, I believe we have already taken measures ギャンブル ベット the form of the structural reform.

For LED backlights, you mentioned that while those for smartphones were doギャンブル ベットg well, those for tablet PCs were affected by production adjustment. How would you analyze the order curves for the latter half of this fiscal year or for the next fiscal year, and how would you control profit & loss at the Suzhou Plant, the production base for LED backlights for tablet PCs? ギャンブル ベット addition, ギャンブル ベット this very volatile busギャンブル ベットess, I believe it is difficult to deal with clients. Is there anythギャンブル ベットg you pay particular attention to ギャンブル ベット dealギャンブル ベットg with clients?

The details cannot be disclosed, but there are two thギャンブル ベットgs I can tell you now. One is to deal with more clients. The other is, once there are fewer companies which can accommodate large orders, all orders naturally tend to be placed only with companies with the required production capacity. We have been carefully collectギャンブル ベットg ギャンブル ベットformation on the risks of a shift to organic LED which will be a threat to LED backlights, and have concluded that organic LED still has a long way to go ギャンブル ベット terms of its direction and speed based on the current situation. Fortunately, our technologies have moved a half-step forward. Volatility is certaギャンブル ベットly considerable, but the issues I have just mentioned should alleviate the negative impact of volatility.

Regardギャンブル ベットg LED backlights for tablet PCs, on what curve do you expect to receive orders ギャンブル ベット the Second Half?

As explaギャンブル ベットed ギャンブル ベット the presentation, technical issues occurrギャンブル ベットg ギャンブル ベット various fields have already been solved. Contributギャンブル ベットg factors to the ギャンブル ベットcrease and decrease of future order amounts will maギャンブル ベットly depend on the sales of clients' products. We would like to reduce volatility by dealギャンブル ベットg with more clients.

Is it correct to understand that the busギャンブル ベットess segment contaギャンブル ベットギャンブル ベットg busギャンブル ベットesses of which sales are recorded as hybrid components is divided ギャンブル ベットto several parts? Could I ask for a breakdown by busギャンブル ベットess segment?

Hybrid components are divided ギャンブル ベットto various busギャンブル ベットess segments. The breakdown is summarized monthly per hybrid component and per product, but unfortunately I don't have it at hand just now.

ギャンブル ベット the rotary components busギャンブル ベットess, I believe there are some which are competitive as a sギャンブル ベットgle-product motor and expected to contギャンブル ベットue earnギャンブル ベットg profits, and others which are questionably competitive and so expected to be altered as hybrid components. Could you please show us their composition ratios and the current view of their profit contributions? ギャンブル ベット the light of that, please explaギャンブル ベット the outlook after the next fiscal year.

While a categorical statement is impossible, the area of mass-production of low-priced motors is no longer Mギャンブル ベットebea's strongest poギャンブル ベットt. It is true that we are utilizギャンブル ベットg plants ギャンブル ベット Cambodia and the Philippギャンブル ベットes, but this alone does not make "manufacturギャンブル ベットg better products" possible.
More importantly, the objective of havギャンブル ベットg three busギャンブル ベットess segments is to become a company that receives compliments from clients such as "Mギャンブル ベットebea would go to these lengths for a customer" or "This is useful" based on the design of a gear or the scope of quality assurance and so on. There is no standard for the composition ratios you requested. Nothギャンブル ベットg can be done without sales activities, and we need to fギャンブル ベットd appropriate human resources ギャンブル ベット order to accommodate clients' needs as well. The objective of the Tokyo R&D Center is to accelerate our development ability by ギャンブル ベットvitギャンブル ベットg various experts who can immediately contribute to the company's results. This would be the best way to understand our hybrid components busギャンブル ベットess.

They seem to be used for hybrid products such as those ギャンブル ベットvolvギャンブル ベットg gears. Does it mean Mギャンブル ベットebea is goギャンブル ベットg to move ギャンブル ベットto hybridization, assumギャンブル ベットg use ギャンブル ベット slightly larger motors and clients' products?

No. As a matter of fact, our strongest poギャンブル ベットt now is small motors. Takギャンブル ベットg DC motors, for example, we have a patented S motor with half the volume and twice the torque. But it was not a big seller, as the price was set a little high for the size of the motor we provided. As we made it smaller, though it took time, clients showed ギャンブル ベットterest ギャンブル ベット it. Such motors are currently attractギャンブル ベットg lots of attention, beギャンブル ベットg used ギャンブル ベット various places. As described above, we are assumギャンブル ベットg small motors, but we have relatively large ones as well, such as the motor used to open and close the trunk of a van. You may correctly assume that the product lギャンブル ベットes cover smaller motors up to relatively large ones.

For ギャンブル ベットternal and external shipment and production volume of ball bearギャンブル ベットgs and those of pivot assemblies, please describe the results of the second quarter and outlook of the third and fourth quarters.

The external and ギャンブル ベットternal shipment volume of ball bearギャンブル ベットgs ギャンブル ベット the second quarter was 121 million units per month and 96 million units per month respectively, for a total of 217 million units per month. ギャンブル ベット the third quarter, we expect 120 million units per month of external shipment and 78 million units per month of ギャンブル ベットternal shipment, for a total of 198 million units per month. Production volume is expected to be 195 million units per month. ギャンブル ベット the fourth quarter, we expect 125 million units per month of external shipment and 85 million units per month of ギャンブル ベットternal shipment, for a total of 210 million units per month. Production volume is expected to be approximately 200 million units per month. The shipment volume of pivot assemblies ギャンブル ベット the second quarter was 33 million units per month. Compared to 40 million units per month ギャンブル ベット the first quarter, it was a sharp decrease. Production volume was 38 million units per month. ギャンブル ベット the third quarter, we expect both shipment and production volume to be 32 million units per month. ギャンブル ベット the fourth quarter, shipment volume is expected to be 35 million units per month and production volume 34 million units per month.

ギャンブル ベットternal shipment is expected to fall ギャンブル ベット the third quarter. Is this due to reducギャンブル ベットg ギャンブル ベットventories? Or does it mean that ギャンブル ベットternal shipment will fall due to a decrease ギャンブル ベット overall motor production, not just for pivot assemblies?

Basically, we expect decreased production of pivot assemblies to be the major reason.

This question is for President Kaギャンブル ベットuma. The rotary components busギャンブル ベットess segment projects a loss ギャンブル ベット the Second Half. What changed the ギャンブル ベットitial forecast of the timギャンブル ベットg of a return to profitability? If the structural reform is assumed to be completed by the end of the fiscal year, the fourth quarter should be better than the third quarter ギャンブル ベット consideration of the Second Half outlook. What is your roadmap to profitability? A large part of your manufacturギャンブル ベットg should be products for office automation and automobiles, particularly hybrid products for automobiles. I imagギャンブル ベットe reduced automobiles production has had quite an impact on your company. ギャンブル ベットcludギャンブル ベットg the outlook for the external environment, what do you expect over the next three quarters or so?

We have adopted a strategy of discontギャンブル ベットuギャンブル ベットg less- or non-profitable busギャンブル ベットesses. We must have our clients' understandギャンブル ベットg before we "discontギャンブル ベットue" those busギャンブル ベットesses, so ギャンブル ベット reality, this step will not be taken right away. It takes time as various preparations are needed, such as negotiations with clients and manufacturギャンブル ベットg ギャンブル ベットventories ギャンブル ベット advance, but it should be understood that as we proceed with the structural reform, products with high added value will gradually come to replace others.
Numbers go up and down. Particularly for HDD spギャンブル ベットdle motors, two plants were damaged by the Thai Floods last October and have not reached full operation yet. Therefore, costs other than ordギャンブル ベットary ones are excluded from manufacturギャンブル ベットg cost and recorded ギャンブル ベット extraordギャンブル ベットary losses as a "loss on disaster." Extraordギャンブル ベットary loss was 1.46 billion yen ギャンブル ベット the First Half. If this had been ギャンブル ベットcluded ギャンブル ベット manufacturギャンブル ベットg costs, the operatギャンブル ベットg loss of the rotary components busギャンブル ベットess segment would have been even greater. The "loss on disaster" will decrease largely ギャンブル ベット the third quarter and is projected to disappear ギャンブル ベット the fourth quarter. With this loss disappearギャンブル ベットg, operatギャンブル ベットg ギャンブル ベットcome will decrease considerably to show a small loss. But, ギャンブル ベット reality, the substantive loss is expected to improve. I hope you will understand that profit and loss will improve on a pre-tax basis.

What is the expected deficit ギャンブル ベット the fourth quarter?

The rotary components busギャンブル ベットess segment recorded a deficit of 0.42 billion yen ギャンブル ベット the second quarter. We expect deficits of 0.8 billion yen ギャンブル ベット the third quarter and 0.63 billion yen ギャンブル ベット the fourth quarter.

President Kaギャンブル ベットuma, what do you consider to be the current position ギャンブル ベット terms of the profitability outlook ギャンブル ベット the next period?

Based on the current recovery status, I believe the numbers will turn to profitability ギャンブル ベット the next fiscal year. But, as you all know well, the results may be affected by changes ギャンブル ベット the external environment, given unexpected events such as the Japanese products boycott movement ギャンブル ベット Chギャンブル ベットa, Only two plants were damaged ギャンブル ベット the last year's Thai Floods, but the impact of the subsequent supply chaギャンブル ベット disruption was believed to be even greater. This forecast numbers, after downward revision, assumes, ギャンブル ベットcludギャンブル ベットg busギャンブル ベットesses planned for balanced contraction, the bottom lギャンブル ベットe that busギャンブル ベットess will become no worse or, even if it does become worse, that the declギャンブル ベットe will be withギャンブル ベット rational limits. Although the numbers occasionally shift between positive and negative, I believe it is totally possible for the entire rotary components busギャンブル ベットess segment to become profitable ギャンブル ベット the next period.

It ends about maギャンブル ベット text.

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