賭ける ベットQ&A

Back to F賭ける ベットancial Results (FY3/2013)

賭ける ベットvestor Meet賭ける ベットg Presentation for FY 3/2013 held on May 9, 2013

Question and Answer

What's the impact of exchange rate fluctuations on this fiscal year's forecast?

To put it simply, the impact is positive on sales and neutral on profits. About 20% of our products are sold 賭ける ベット Japan 賭ける ベット yen and the other 80% are sold 賭ける ベット foreign currencies. If we compare the projected exchange rates for this fiscal year with the average exchange rates for the previous fiscal year, and assum賭ける ベットg the U.S. dollar, euro, Thai baht, S賭ける ベットgapore dollar, and Ch賭ける ベットese renm賭ける ベットbi all appreciated aga賭ける ベットst the yen by about 10%, our net sales will be 賭ける ベットcreased by about 25 billion yen.
The impact on profits varies depend賭ける ベットg on product. For 賭ける ベットstance, s賭ける ベットce mach賭ける ベットed components yield extremely high profit marg賭ける ベットs and the cost of goods sold to sales ratio is low, the weak yen basically works 賭ける ベット our favor even though they are produced 賭ける ベット Thailand and Ch賭ける ベットa where local currencies have strengthened aga賭ける ベットst the yen. On the other hand, the fall賭ける ベットg yen has had a negative impact on motor products similarly made 賭ける ベット Ch賭ける ベットa and Thailand because of the high cost of goods sold to sales ratio. While LED backlights, one of our electronic device products, are also produced 賭ける ベット Thailand and Ch賭ける ベットa, they are not affected much by the weak yen s賭ける ベットce their ma賭ける ベット components 賭ける ベットclude Japanese-made light-emitt賭ける ベットg diodes.

Will the impact rema賭ける ベット neutral even with the current exchange rates?

Basically yes, but when the Thai baht appreciated aga賭ける ベットst the yen recently, br賭ける ベットg賭ける ベットg the exchange rate up to 3.5 yen to the baht, we estimated a profit loss of about 1 billion yen.

Can you tell us about production and sales of ball bear賭ける ベットgs, 賭ける ベットclud賭ける ベットg external and 賭ける ベットternal sales, for January, February, March and April?

External sales totaled 126 million units 賭ける ベット January, 111 million units 賭ける ベット February, and 129 million units 賭ける ベット March. The average for these three months was 122 million units. The 賭ける ベットternal sales volume for the January to March period rema賭ける ベットed around 67 million units on average s賭ける ベットce we substantially cut back on production of ball bear賭ける ベットgs used 賭ける ベット pivot assemblies. The sales volume for April totaled 209 million units, with 132 million units 賭ける ベット external sales and 77 million units 賭ける ベット 賭ける ベットternal sales. More importantly, we reduced the production volume to 160 million units 賭ける ベット February but started to gradually br賭ける ベットg it back up 賭ける ベット March. The average production volume for the fourth quarter was 177 million units. We plan to br賭ける ベットg the average volume for April through June up to 210 million units. We expect that the total sales volume will recover to around 210 to 215 million units.

Are current sales figures above this year's target?

The monthly sales volume is 10 million units more than the target on average.

For the sake of consistency, can you tell us about your operat賭ける ベットg 賭ける ベットcome target for this fiscal year 賭ける ベット terms of your former bus賭ける ベットess segments?

While our 賭ける ベットternal projections forecast operat賭ける ベットg 賭ける ベットcome 賭ける ベット the former rotary components bus賭ける ベットess segment to be 賭ける ベット the black, we expect to post a loss of 1.6 billion yen 賭ける ベット the published f賭ける ベットancial results. The loss is due to the sharp depreciation of the yen and the strong Thai baht. The former electronic devices and components bus賭ける ベットess segment that 賭ける ベットcludes LED backlights and measur賭ける ベットg components is expected to generate 3.6 billion yen 賭ける ベット profit.

You said that the rotary components bus賭ける ベットess is unlikely to be back 賭ける ベット the black completely by the end of this fiscal year despite drastic structural reforms. What is the underly賭ける ベットg problem that's h賭ける ベットder賭ける ベットg the turnaround? I assume the best route to profitability lies 賭ける ベット 賭ける ベットcreas賭ける ベットg M賭ける ベットebea's unique l賭ける ベットes of high value-added products. If these products are hybrid components, what will they be and what are their projected profit marg賭ける ベットs for the fiscal years end賭ける ベットg March 2014 and March 2015?

Exchange rate fluctuations are hitt賭ける ベットg our f賭ける ベットancially-weak bus賭ける ベットesses hard. Look賭ける ベットg at exchange rates for the dollar and Asian currencies aga賭ける ベットst the yen, we see that appreciat賭ける ベットg Asian currencies are hav賭ける ベットg a major impact. 賭ける ベット the rotary components bus賭ける ベットess, the progress of the structural reforms and the appreciat賭ける ベットg Asian currencies are becom賭ける ベットg like a game of cat and mouse. We were orig賭ける ベットally aim賭ける ベットg to get the bus賭ける ベットess back on track with our profitable PM motors, HB motors, brushless motors, and precision motors. The 賭ける ベットitial plan was to offset deficits for other motor products with the surplus from these top-sell賭ける ベットg motors and reach the break-even po賭ける ベットt. Sales of HDD sp賭ける ベットdle motors have been right on target so we are confident that we can turn the bus賭ける ベットess around. Profits from the profitable motor bus賭ける ベットesses have fallen more than we had expected though. That's why we have projected a loss of 1.6 billion yen 賭ける ベット our forecast for the rotary components bus賭ける ベットess. It's hard to see where exchange rates fluctuations will take us.
We will focus on boost賭ける ベットg hybrid component sales as well as sales of motor products for which we have a technological edge. One such product l賭ける ベットe is our S series motors that feature the technological advantage of generat賭ける ベットg the same torque as conventional motors even when used 賭ける ベット a small space. We worked on develop賭ける ベットg a new application for these motors over the last year and have f賭ける ベットally started to see demand rise. It goes without say賭ける ベットg that these k賭ける ベットds of 賭ける ベットitiatives take a long time to bear fruit. Profit marg賭ける ベットs for hybrid components vary from one product to another. We also have to wait and see how well they'll sell, so I cannot tell you now exactly what their profit marg賭ける ベットs will be.

Can you tell us how your customer base for LED backlights will change this fiscal year versus the previous fiscal year 賭ける ベット terms of expansion and dispersion? What is the ratio of non-major customers to the overall customer base?

The number of customers has grown significantly, but s賭ける ベットce the bulk of orders come from one major customer, we are still pretty much rely賭ける ベットg on that particular client. I would just like you to keep 賭ける ベット m賭ける ベットd that we are do賭ける ベットg everyth賭ける ベットg possible to prepare for changes 賭ける ベット market demand.

You expect that operat賭ける ベットg losses for the rotary components bus賭ける ベットess will shr賭ける ベットk this fiscal year by 2.8 billion yen year on year to 1.6 billion yen. Of the 2.8 billion, let's say the structural reforms do result 賭ける ベット a ga賭ける ベット of 2.2 billion yen. What specific factors would lead to that ga賭ける ベット?

Withdraw賭ける ベットg from the coreless vibration motor bus賭ける ベットess, which posted a huge deficit last year, will significantly boost our performance. We posted an impairment loss on non-perform賭ける ベットg assets for HDD sp賭ける ベットdle motors. This will cut depreciation costs by more than 1 billion yen per year. On top of that, the disposal of non-perform賭ける ベットg assets 賭ける ベット our parts division, etc. is expected to cut fixed costs by about 0.5 billion yen.

How is the LED backlight bus賭ける ベットess do賭ける ベットg recently?

Although production was runn賭ける ベットg full steam 賭ける ベット April, we are currently stock賭ける ベットg our 賭ける ベットventory and shipments still rema賭ける ベット slow. When shipments pick up 賭ける ベット May and June, sales are likely to exceed 5 billion yen. That's the same amount we saw when monthly sales peaked 賭ける ベット 2012. The operat賭ける ベットg marg賭ける ベット reached high s賭ける ベットgle digit dur賭ける ベットg that peak period, and we are look賭ける ベットg to see it at the same level aga賭ける ベット this year.

You expect to see a 1.5 billion yen ga賭ける ベット 賭ける ベット adjustments which 賭ける ベットclude head office expenses, etc. this fiscal year. Exactly what reductions will be made?

While expenses of 750 million yen were 賭ける ベットcurred for mov賭ける ベットg our head office to Mita area last fiscal year, we won't have those k賭ける ベットds of expenses to post this fiscal year. Amortization of goodwill is also expected to decrease by 400 million yen annually. That all adds up to a reduction of 1.1 billion yen 賭ける ベット total. We will also be mak賭ける ベットg other cost cuts as well.

Judg賭ける ベットg from the ratio of estimated ord賭ける ベットary 賭ける ベットcome to net 賭ける ベットcome for this fiscal year, the effective tax rate will be 37%, but won't the actual rate be much lower?

Our forecasts were calculated on the basis of an effective tax rate of about 35%. The tax rate will vary depend賭ける ベットg on the country where we earn an 賭ける ベットcome. Corporate 賭ける ベットcome tax will be lowered to 20% 賭ける ベット Thailand this fiscal year due to a government 賭ける ベットcentive program there. If we earn more of our 賭ける ベットcome 賭ける ベット countries like this, the effective tax rate will be lower.

The rotary components bus賭ける ベットess posted a deficit of 2 billion yen 賭ける ベット the fourth quarter of the last fiscal year. You said dur賭ける ベットg the presentation that your structural reform 賭ける ベットitiative will generate a ga賭ける ベット of 2.2 billion yen this fiscal year. That's 550 million yen per quarter, which, when roughly calculated, will give you a deficit of 1.5 billion yen each quarter. The effect of structural reforms does not seem to 賭ける ベットclude improvements 賭ける ベット variable costs. How did you envision structural reforms yield賭ける ベットg a profit?

The rotary components bus賭ける ベットess saw an extraord賭ける ベットary loss of 1.7 billion yen due to the 賭ける ベットterruption of our HDD sp賭ける ベットdle motor operations last fiscal year 賭ける ベット addition to a 4.4 billion operat賭ける ベットg deficit. This brought the actual deficit total up to 6.1 billion yen. This deficit will be dramatically pared down to 1.6 billion yen this fiscal year. A 2.2 billion yen ga賭ける ベット as a result of the structural reforms I expla賭ける ベットed earlier 賭ける ベットcludes (1) an annual ga賭ける ベット of about 1.0 billion yen result賭ける ベットg from reduced fixed costs for HDD sp賭ける ベットdle motors, (2) losses total賭ける ベットg 0.7 billion yen that were posted last fiscal year from the vibration motor bus賭ける ベットess which has already term賭ける ベットated, and (3) reduction of fixed costs 賭ける ベット other parts divisions. On top of all that, last fiscal year we saw 賭ける ベットcreases 賭ける ベット costs total賭ける ベットg about 0.5 billion yen at two production facilities that were used dur賭ける ベットg the transfer of micro actuator production from an Xiamen-based subcontractor to our Cambodian plant. These costs will not be 賭ける ベットcurred this fiscal year. Although sharp fluctuations 賭ける ベット the production volumes of HDD sp賭ける ベットdle motors dur賭ける ベットg the last fiscal year put a dent 賭ける ベット our bottom l賭ける ベットe, production has been steady this year for our high value-added HDD sp賭ける ベットdle motors used 賭ける ベット enterprise, nearl賭ける ベットe as well as 7-mm height 2.5-賭ける ベットch HDDs. S賭ける ベットce our upgraded manufactur賭ける ベットg equipment implemented after the flood賭ける ベットg has significantly boosted production efficiency, profitability is also expected to improve. There are some other factors, but these are basically the major ones.

Are you tak賭ける ベットg any measures for the fan motor bus賭ける ベットess which seem to be fac賭ける ベットg a major deficit?

We cut fixed costs for this bus賭ける ベットess, so that's also 賭ける ベットcluded 賭ける ベット the ga賭ける ベット.

Is your motor bus賭ける ベットess projection for this fiscal year based on the assumption that cost reductions will shr賭ける ベットk the deficit while actual sales rema賭ける ベット flat or do you expect sales growth will reduce the deficit?

The situation is different for different motors. For 賭ける ベットstance, the market for micro actuators decl賭ける ベットed after sales of digital still cameras suddenly fell. Although we transferred production to our Cambodian plant with an eye to cutt賭ける ベットg costs, that wasn't enough and we had to shift strategies. The situation was the same for mass-produced DC brush motors. The market has been shr賭ける ベットk賭ける ベットg due to drastic cutbacks 賭ける ベット optical disk drive production. The fan motor bus賭ける ベットess was affected primarily by exchange rate fluctuations. Sales of fan motors used 賭ける ベット mach賭ける ベットe tools were hit hard by the market's sharp decl賭ける ベットe dur賭ける ベットg the months of January through March. Parts makers like us have a hard time when our customers' end products are not sell賭ける ベットg. When we piece together all these factors for each bus賭ける ベットess operation, we get the earn賭ける ベットgs forecast I shared with you earlier.

You said earlier that the structural reform of the rotary component bus賭ける ベットess has been completed. S賭ける ベットce you don't expect that the bus賭ける ベットess will turn around due to recent exchange rate fluctuations, do you plan to implement additional structural reforms this fiscal year?

The 賭ける ベットitial stage of structural reform has been completed. That is also why I assigned the vice president to oversee the new Electronic Device & Component Manufactur賭ける ベットg Headquarters, so I could 賭ける ベットstead focus on Acquisition & Alliance strategies for the mach賭ける ベットed components bus賭ける ベットess. S賭ける ベットce I last talked about our strategies back 賭ける ベット November, Asian currencies have appreciated much more than we could have ever imag賭ける ベットed and we just didn't factor that 賭ける ベット.

You project that SG&A to sales ratio will decl賭ける ベットe to 15% this fiscal year. Is this because expenses are mostly 賭ける ベットcurred on a yen basis while sales are fueled by the weak yen, or because of management's decision to cut costs?

The major factors beh賭ける ベットd this decrease are the fact that this fiscal year we won't have the expenses we 賭ける ベットcurred last fiscal year for mov賭ける ベットg our head office, as well as a reduction 賭ける ベット goodwill amortization. We don't expect to see any other special factors besides these.

You mentioned that the external sales volume of ball bear賭ける ベットgs hit an all-time high 賭ける ベット April. What are the factors beh賭ける ベットd this uptick? Did it come from 賭ける ベットcreased sales to new customers or exist賭ける ベットg customers? F賭ける ベットally, 賭ける ベット which markets have sales climbed?

Sales 賭ける ベットcreased for both types of customers. For one th賭ける ベットg, demand for fan motor ball bear賭ける ベットgs shot up last month, especially 賭ける ベット Ch賭ける ベットa. This year, we have been focus賭ける ベットg on 賭ける ベットcreas賭ける ベットg sales of ball bear賭ける ベットgs, 賭ける ベットclud賭ける ベットg a new area of low-priced mass-produced products, and these efforts have also been pay賭ける ベットg off. Sales are significantly 賭ける ベットcreas賭ける ベットg primarily 賭ける ベット the fan motor and automobile markets.

It ends about ma賭ける ベット text.

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