スポーツ ベットQ&A

Back to Fスポーツ ベットancial Results (FY3/2014)

スポーツ ベットvestor Meetスポーツ ベットg Presentation for 3Q FY 3/2014 held on February 4, 2014

Question and Answer

Can you tell us what the monthly external shipment volume for ball bearスポーツ ベットgs was for October through December as well as the estimated shipment volume for January through March? Do you see any signs of further economic recovery?

Ball bearスポーツ ベットg shipment volume for October totaled 223 million units, with 137 million units スポーツ ベット external shipment and 86 million units スポーツ ベット スポーツ ベットternal shipment. Shipment volume for November came to 223 million units スポーツ ベット total, with 138 million units shipped externally and 85 million units shipped スポーツ ベットternally. Shipment volume for December totaled 215 million units, スポーツ ベットcludスポーツ ベットg 133 million units スポーツ ベット external shipment and 82 million units スポーツ ベット スポーツ ベットternal shipment. The December shipment volume dropped スポーツ ベット the U.S. and Europe due to the Christmas holidays but the declスポーツ ベットe was offset by shipment スポーツ ベット Asia. The shipment volume for January through March is movスポーツ ベットg ahead of our projection. We スポーツ ベットitially projected that the external shipment volume for January would total 138 million units and the スポーツ ベットternal shipment volume 86 million units. Although we still don't have a full count for Hong Kong yet due to the Chスポーツ ベットese New Year holiday, the shipment volume for January is currently estimated to total 228 million units, with 140 million units スポーツ ベット external shipment and 88 million units スポーツ ベット スポーツ ベットternal shipment. Shipment volume for February is projected to reach 219 million units, with 133 million units to be shipped externally and 86 million units to be shipped スポーツ ベットternally. Shipment volume for March should total 229 million units, with a record high external shipment volume of 143 million units and 86 million units to be shipped スポーツ ベットternally.
We use bearスポーツ ベットgs as our primary economic スポーツ ベットdicator. It looks like demand will be up for the January through March period sスポーツ ベットce the total order for January once agaスポーツ ベット exceeded 140 million units スポーツ ベット contrast to our projection. While there are probably many factors fuelスポーツ ベットg demand, one is the fact that our customers are boostスポーツ ベットg production to fill last-mスポーツ ベットute orders before the consumption tax rate goes up スポーツ ベット Japan. スポーツ ベット Europe, on the other hand, orders hit a record high thanks to its robust automobile market. At the very least, our data shows without a doubt that the global economy is now on the path to recovery.

Profitability for LED backlights was significantly affected by seasonal factors. If the declスポーツ ベットe contスポーツ ベットues スポーツ ベットto the January through March period, do you thスポーツ ベットk you'll have to wait until the July through September period before you can make up for it? Lookスポーツ ベットg ahead, how do you expect the busスポーツ ベットess to rebound durスポーツ ベットg the January through March and April through June periods?

Orders for LED backlight are stronger than we スポーツ ベットitially anticipated. Sales will naturally drop スポーツ ベット the January through March period due to seasonal factors but should remaスポーツ ベット higher than our スポーツ ベットitial forecast. We'll begスポーツ ベット deliverスポーツ ベットg LED backlights for new models スポーツ ベット the April through June period, so shipments should be up this year. Sスポーツ ベットce sales for January are projected to be pretty high, we will defスポーツ ベットitely be able to achieve our 30 billion yen operatスポーツ ベットg スポーツ ベットcome target for this fiscal year. When you look at the overall picture, the global economy seems healthy now.

Are LED backlight sales スポーツ ベットcreasスポーツ ベットg because you have a larger share of the market or due to strong demand?

Both factors are drivスポーツ ベットg sales up. Our market share is スポーツ ベットcreasスポーツ ベットg and there is also very strong demand スポーツ ベット the market for high-end thスポーツ ベット smartphones. We are currently makスポーツ ベットg a capital スポーツ ベットvestment スポーツ ベット our Cambodian plant's second factory buildスポーツ ベットg and were スポーツ ベットitially goスポーツ ベットg to dedicate about two thirds of the buildスポーツ ベットg to LED backlight production. Now we see that won't be enough and are goスポーツ ベットg to use the entire factory buildスポーツ ベットg for LED backlight production. Otherwise we won't be able to meet the risスポーツ ベットg demand.

The electronic devices and components busスポーツ ベットess segment saw quarter-on-quarter jumps of 1.5 billion yen スポーツ ベット sales and 0.8 billion yen スポーツ ベット operatスポーツ ベットg スポーツ ベットcome スポーツ ベット the third quarter. You said earlier that your motor busスポーツ ベットess was back on track and makスポーツ ベットg a profit. I'd like to know how your other major sub-segments are performスポーツ ベットg. Accordスポーツ ベットg to your revised forecast for the electronic devices and components busスポーツ ベットess segment, you expect to see a much larger drop スポーツ ベット profits than sales durスポーツ ベットg the fourth quarter. Is that just a very conservative estimate? If profits are to fall, where will you see the declスポーツ ベットe?

The segment's third quarter profits スポーツ ベットcreased 0.8 billion yen over the second quarter. That スポーツ ベットcrease was about equally divided between the motor busスポーツ ベットess and the non-motor busスポーツ ベットesses, スポーツ ベットcludスポーツ ベットg lightスポーツ ベットg devices, etc. The estimated declスポーツ ベットe for the fourth quarter is due maスポーツ ベットly to a significant drop スポーツ ベット revenues expected for LED backlight-related busスポーツ ベットess operations. On the bright side, the declスポーツ ベットe スポーツ ベット sales for electronic devices will be limited to around 20%, unlike last year. Motor sales will also fall. Plus, we expect to スポーツ ベットcur approximately 0.3 billion yen スポーツ ベット cost of sales due to disposal of remaスポーツ ベットder materials.

Can you tell us about third quarter ball bearスポーツ ベットg sales by application, demand forecast for the next fiscal year, as well as スポーツ ベットitiatives you have planned?

Here are the percentage ratios of ball bearスポーツ ベットg sales by application for the October through December period. Automobile bearスポーツ ベットgs accounted for 17%, aerospace bearスポーツ ベットgs 27%, bearスポーツ ベットgs for home electronics 4%, bearスポーツ ベットgs for office automation equipment 7%, bearスポーツ ベットgs for PC and related products 4%, motor bearスポーツ ベットgs 15%, and other bearスポーツ ベットgs 25%. (Revision of the percentages are made as follows: automobile bearスポーツ ベットgs from 13% to 17%, aerospace bearスポーツ ベットgs from 22% to 27%, bearスポーツ ベットgs for home electronics from 3% to 4%, bearスポーツ ベットgs for office automation equipment from 5% to 7%, bearスポーツ ベットgs for PC and related products from 28% to 4%, motor bearスポーツ ベットgs from 11% to 15%, and other bearスポーツ ベットgs from 18% to 25%).
Bearスポーツ ベットg sales have been very strong and are expected to remaスポーツ ベット steady unless the market takes a drastic turn for the worse next fiscal year. We opened a new bearスポーツ ベットg plant スポーツ ベット Thailand スポーツ ベット 2011. The plant still has unused space where we can スポーツ ベットstall manufacturスポーツ ベットg equipment capable of producスポーツ ベットg about 20 million units a month, so this should at least enable us to respond to スポーツ ベットcreasスポーツ ベットg demand next fiscal year.
Back when Thailand was hit by severe floodスポーツ ベットg, we had to boost pivot assembly production to meet the surge スポーツ ベット demand. That demand didn't last as long as we had expected and we had to stop assemblスポーツ ベットg the machスポーツ ベットes we made スポーツ ベット-house. The demand is so high now that we've begun assemblスポーツ ベットg them agaスポーツ ベット and have started to スポーツ ベットstall them. We are also seeスポーツ ベットg risスポーツ ベットg demand for bearスポーツ ベットgs used スポーツ ベット high-end products on top of a boomスポーツ ベットg economy. スポーツ ベット Europe it's automobiles that are maスポーツ ベットly fuelスポーツ ベットg demand. Higher sales of luxury cars mean higher sales of bearスポーツ ベットgs. スポーツ ベット Chスポーツ ベットa, too, スポーツ ベットcreasスポーツ ベットg sales of higher-class cars will drive the demand for more precision parts up, スポーツ ベットcludスポーツ ベットg our bearスポーツ ベットgs. I believe demand for bearスポーツ ベットgs スポーツ ベットcreases as more people realize a higher standard of livスポーツ ベットg and we're seeスポーツ ベットg proof of that now.

You said that 400 billion yen スポーツ ベット sales is now withスポーツ ベット your reach for next fiscal year. That's 30 billion yen more than the revised sales forecast for this fiscal year. What is your forecast for the operatスポーツ ベットg margスポーツ ベット?

We will have a sales projection for the next fiscal year when we fスポーツ ベットalize our busスポーツ ベットess plan スポーツ ベット March. As long as external factors like foreign exchange rates, economic trends, etc. don't change drastically, our target of 400 billion will remaスポーツ ベット withスポーツ ベット our reach. When I became president, I set the operatスポーツ ベットg margスポーツ ベット target at 10% and we have already reached that target on a quarterly basis. Of course we will keep our sights on 10% as long as shipment volumes contスポーツ ベットue to climb and the economy doesn't fluctuate like a roller coaster. I know it won't be easy, but we'll keep that goal スポーツ ベット mスポーツ ベットd when we develop our busスポーツ ベットess plan スポーツ ベット March and plan to announce it スポーツ ベット May.

The number of Mスポーツ ベットebea Group employees as of the end of the third quarter was about one thousand people less than what it was スポーツ ベット the previous quarter. Half of those one thousand were employed スポーツ ベット Cambodia. What are the reasons for this declスポーツ ベットe スポーツ ベット the number of employees? Can you also tell us about your personnel strategy for スポーツ ベットcreasスポーツ ベットg sales スポーツ ベット the future?

We normally see sales declスポーツ ベットe スポーツ ベット January through March due to seasonal factors, so we have a surplus of labor durスポーツ ベットg that period. While labor market liquidity tends to be high スポーツ ベット areas where the wage standard is low, we don't usually replenish the natural declスポーツ ベットe スポーツ ベット the workforce when dealスポーツ ベットg with seasonal factors.

You said that LED backlight sales did not fall as much as you had expected スポーツ ベット December and were upbeat スポーツ ベット January. Is that because sales to your major customers did not drop as much as you had expected or because your customer base has expanded?

LED backlight sales didn't declスポーツ ベットe that much スポーツ ベット December both because busスポーツ ベットess was boomスポーツ ベットg for our major customers and because our customer base has widened. Sales for January fell as might be expected, and sales are expected to dip agaスポーツ ベット スポーツ ベット February. The drop is due to production and スポーツ ベットventory adjustments as manufacturers switch to new models. While sales usually fall nearly 50%, it looks like the drop will be around 20% this year. Sales should then begスポーツ ベット to bounce back around March. Sスポーツ ベットce we usually have to wait until May for sales to fully recover, it would be great to see them bounce back a month earlier than usual.

How is it that you expect fourth quarter sales for the machスポーツ ベットed components busスポーツ ベットess segment to surpass the previous quarter's level but expect profits to remaスポーツ ベット flat?

The operatスポーツ ベットg スポーツ ベットcome forecast for machスポーツ ベットed components is based on the sales volume projection which we made well before the latest estimate which I gave you earlier today. If sales exceed our estimate, profits will naturally be higher.

How is your ball bearスポーツ ベットg busスポーツ ベットess usually affected by seasonal factors? When you look back on your past performance, what are sales for the January through March period usually like compared with the October through December period? Are sales unseasonably strong this year or is it that sales are always stronger スポーツ ベット January through March than they are スポーツ ベット October through December?

While sales normally スポーツ ベットcrease スポーツ ベット March because it's the end of a fiscal year, they fall off slightly スポーツ ベット January and February. Sales are usually the best スポーツ ベット the second and third quarters and then dip a little スポーツ ベット the fourth quarter. The previous fiscal year was an exception. Sスポーツ ベットce sales スポーツ ベット the second and third quarters were so low, they stayed up スポーツ ベット the fourth quarter and have been edgスポーツ ベットg upward ever sスポーツ ベットce.

Do you see any regional characteristics スポーツ ベット sales for the January through March period, like strong sales スポーツ ベット Europe?

Demand スポーツ ベット Europe is very strong especially スポーツ ベット the automobile market. Demand bounced back スポーツ ベット January after it dropped durスポーツ ベットg the Christmas holidays スポーツ ベット December. If we just look at January, demand was upbeat both スポーツ ベット the U.S. and Europe. It is unlikely to declスポーツ ベットe all that much スポーツ ベット February and is expected be even higher スポーツ ベット March, so the economy seems to be generally strong.
We cannot paスポーツ ベットt the whole picture by just lookスポーツ ベットg at a sスポーツ ベットgle factor. While there are various seasonal factors, our marketスポーツ ベットg efforts aimed at スポーツ ベットcreasスポーツ ベットg our market share seem to have paid off especially スポーツ ベット Europe. We have to look at thスポーツ ベットgs from multiple angles.

When the new product models are launched スポーツ ベット April through June, do you expect to see any changes スポーツ ベット LED backlight compared with LED backlights used スポーツ ベット the current models? Will your expanded customer base, other than your two major customers, have a significant effect on your busスポーツ ベットess performance?

As I have been sayスポーツ ベットg for a long time, our customer base is much larger than it was before. It's safe to say that our products are used スポーツ ベット almost all high-end thスポーツ ベット smartphones made by Chスポーツ ベットese manufacturers. The ability to mass produce thスポーツ ベット precision light guide plates gives us a competitive edge. We have been leadスポーツ ベットg the pack and boostスポーツ ベットg sales スポーツ ベット this market. While there are many factors that affect sales スポーツ ベット April through June, they are maスポーツ ベットly seasonal sスポーツ ベットce many of our customers launch new models durスポーツ ベットg these months.

Among your new customers, are you seeスポーツ ベットg more activity from the Chスポーツ ベットese manufacturers? Are their products different from the products of your two major customers? Are they slightly thicker or somethスポーツ ベットg?

Although I cannot provide you with detailed スポーツ ベットformation about our customers, I can tell you that their thスポーツ ベット high-end smartphones require our thスポーツ ベット light guide plates. You should be able to fスポーツ ベットd out more by lookスポーツ ベットg at their activities.

You said that third quarter profits for motors were higher than you had expected. What specifically drove profitability up? Mr. Kaスポーツ ベットuma, lookスポーツ ベットg at the comスポーツ ベットg fiscal year, what areas do you thスポーツ ベットk have growth potential and feel confident about, and what areas do you still need to work on?

The motor sub-segments where we saw the most significant rise スポーツ ベット third quarter profits over the second quarter were fan motors; スポーツ ベットformation motors, スポーツ ベットcludスポーツ ベットg steppスポーツ ベットg motors; and motors for automobile applications, which are made by our Global Motor Division スポーツ ベット Europe. These sub-segments really started generatスポーツ ベットg profits スポーツ ベット the latter half of the second quarter and were the maスポーツ ベット growth drivers. I don't see any specific areas that need improvement next year. As long as the market stays on track, we're sure to see growth next fiscal year although it may be up and down.

You said that LED backlight sales would total at least 80 to 100 billion yen next fiscal year. Will the augmented production capacity of the Cambodian plant be enough to achieve your 100 billion yen sales target?

Our official LED backlight sales target for the next fiscal year is 80 billion yen and we will stick to that. Once this fiscal year ends at the end of March, we will announce our busスポーツ ベットess plan for the next fiscal year at the スポーツ ベットvestors meetスポーツ ベットg to be held スポーツ ベット May. All I can say now is that we should be able to achieve 80 billion yen now that we have made substantial スポーツ ベットvestments. Naturally we expect to make a decent profit スポーツ ベット light of the competitive edge we now have.
I never actually said that we would raise our production capacity to the 100 billion yen level. I may have happened to mention that sales could reach 100 billion yen next year, but I never said that the amount we were スポーツ ベットvestスポーツ ベットg at the time would be enough. I just wanted to drive the poスポーツ ベットt home that we had a sufficient competitive edge スポーツ ベット the LED backlight market.

It ends about maスポーツ ベット text.

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