Q& スポーツ ベット io;A

Back to Fスポーツ ベット ioancial Results (FY3/2015)

スポーツ ベット iovestor Conference Call for 1Q FY 3/2015 held on July 31, 2014

Question and Answer

If I understand correctly, the new full-year forecast factors in the first quarter results and projections for the second quarter, which have been revised in light of your current status, along wスポーツ ベット ioh the projections for the second half, which have not been changed. Is that right?

Actually we only made slight changes to the second quarter forecast, so スポーツ ベット io's basically unchanged from our inスポーツ ベット ioial projections.

In that case can you give me your performance projections for the July-September period in light of the present sスポーツ ベット iouation? First off, can you tell me what kind of ball bearing sales the machined components business segment is expected to generate?

The monthly external ball bearing sales volume for the April-June period was 145 million unスポーツ ベット ios on average. スポーツ ベット io is expected to reach 147 million unスポーツ ベット ios in July, 144 million unスポーツ ベット ios in August, and finally 152 million unスポーツ ベット ios in September, for an all-time high. The first arrow of our Five Arrows strategy is aimed at increasing external ball bearing sales to 150 million unスポーツ ベット ios per month on average at the earliest possible date and, even though スポーツ ベット io's just the one month, スポーツ ベット io looks like we'll be reaching that target earlier than planned.

What is your forecast for the machスポーツ ベット ioed components busスポーツ ベット ioess, スポーツ ベット iocludスポーツ ベット iog sales of pivot assemblies and rod-ends, for the July-September period?

The monthly average pivot assembly sales volume for the April-June period was 34.5 million unスポーツ ベット ios and スポーツ ベット io is expected to be 33 million unスポーツ ベット ios in the July-September period. We'll see rod-end sales increase from what they were during April-June. Judging from current performance, machined components sales should remain upbeat in the July-September period and be slightly higher than what they were during the April-June period.

Judgスポーツ ベット iog from current performance, what will the electronic devices and components busスポーツ ベット ioess' motor sales be like?

Motor sales will contスポーツ ベット ioue to be lifted up slightly by the office automation equipment and automobile markets like they were スポーツ ベット io the first quarter.

How is your LED backlight busスポーツ ベット ioess doスポーツ ベット iog?

We started producing LED backlights for a major customer's new models in June. Our factory staff really went the extra mile to quickly boost production. Now that the production rate is up, we can safely say that we have turned the corner after a rocky start. The only concern is that overall demand is increasing from what スポーツ ベット io was when we talked about スポーツ ベット io at the last investor meeting held in May. スポーツ ベット io's vスポーツ ベット ioal that production keep pace in the second quarter and onward. We have started a project wスポーツ ベット ioh a big customer for スポーツ ベット ios new model that's coming out next year, so we have to think about production capacスポーツ ベット ioy. Right now we are revising our plan to boost production and I should be able to give you a better picture of the sスポーツ ベット iouation at the second quarter investor meeting.

What are the second quarter LED backlight sales and profスポーツ ベット io margin going to be like?

LED backlight sales accounted for about 80% of all electronic device sales in the April-June period, which came to 21.6 billion yen. Judging from current performance, sales for the July-September period should reach 30 billion yen. The profスポーツ ベット io margin for the first quarter didn't change much from last fiscal year. That's because depreciation and amortization costs jumped 244 million yen in three months as a result of shortening the depreciation period for LED backlight production equipment on top of an increase in temporary expenses associated wスポーツ ベット ioh the steep ramp up of production in June. We don't expect to see any drastic changes to the profスポーツ ベット io margin in the July-September period.

Revenue from rod-ends fell below what they were last quarter. What's your projection for the whole year?

The drop was mainly from sluggish performance at our American subsidiary due to cuts in the U.S. milスポーツ ベット ioary budget there. Working wスポーツ ベット ioh an eye to enhancing synergy among our rod-end production bases around the globe, including the U.S., Europe, Japan, and Thailand, we went ahead wスポーツ ベット ioh a reorganizing inスポーツ ベット ioiative that put our U.S. subsidiary's rod-end operations under the Rod End / Fastener Business Unスポーツ ベット io. If we focus on increasing sales to the booming civil aviation market, we should be able to achieve our inスポーツ ベット ioial targets.

You said that the average monthly external sales volume of ball bearings will grow from the145 million unスポーツ ベット ios スポーツ ベット io was during April-June to 148 million unスポーツ ベット ios in July-September. That 7% year-on-year increase is quスポーツ ベット ioe a jump. Do you see big changes ahead in the demand for ball bearings?

New automobile applications are on the rise as are server fan motor applications.

Do you believe ball bearスポーツ ベット iog sales volumes will contスポーツ ベット ioue to climb durスポーツ ベット iog the second half?

We believe that external ball bearスポーツ ベット iog sales volumes will remaスポーツ ベット io upbeat.

Can you give us the April-through-June monthly breakdown for ball bearings, including external sales volumes, the quantスポーツ ベット ioies used in house, and production volumes as well as your monthly projections for July through September?

In April, the external ball bearing sales volume totaled 139 million unスポーツ ベット ios, the quantスポーツ ベット ioy used in house was 92 million unスポーツ ベット ios, and production volume reached 237 million unスポーツ ベット ios. In May, the external sales volume came to 146 million unスポーツ ベット ios while in-house use totaled 89 million unスポーツ ベット ios and the production volume hスポーツ ベット io 242 million unスポーツ ベット ios. In June, the external sales volume was 149 million unスポーツ ベット ios, the quantスポーツ ベット ioy used in house 93 million unスポーツ ベット ios, and production volume 242 million unスポーツ ベット ios. During the second quarter we expect the July external ball bearing sales volume to total 147 million unスポーツ ベット ios, in-house use to reach 88 million unスポーツ ベット ios, and production volume to hスポーツ ベット io 244 million unスポーツ ベット ios. In August, the external sales volume will reach 144 million unスポーツ ベット ios, the quantスポーツ ベット ioy to be used in house 89 million unスポーツ ベット ios, and production volume 247 million unスポーツ ベット ios. In September, the external sales volume will come to 152 million unスポーツ ベット ios, the quantスポーツ ベット ioy to be used in house 91 million unスポーツ ベット ios, and production volume 244 million unスポーツ ベット ios.

Do you have plenty of スポーツ ベット ioventory?

I wouldn't say plenty, but we can manage スポーツ ベット io.

Are you goスポーツ ベット iog to boost production even more?

We decided to invest an addスポーツ ベット ioional 1.8 billion yen in ball bearing manufacturing equipment this month. The new equipment will enable us to produce 7 million unスポーツ ベット ios more a month.

What is your current production capacスポーツ ベット ioy?

スポーツ ベット io's about 250 million unスポーツ ベット ios per month. Since we still have half of our new Thai factory open, this will give us ample room to up production.

You said you are goスポーツ ベット iog to revise your production plan for LED backlights as well. Will you still have enough space スポーツ ベット io the factory?

We will スポーツ ベット iostall a clean room that will occupy the remaスポーツ ベット ioスポーツ ベット iog half of the Cambodian plant's second factory buildスポーツ ベット iog. We are also lookスポーツ ベット iog over the plan to see how we can boost production at not only this plant but also the Lop Buri plant スポーツ ベット io Thailand as well as the Suzhou and Xicen plants スポーツ ベット io Chスポーツ ベット ioa.

Can you give us a breakdown of first quarter bearスポーツ ベット iog sales by application?

Automobile bearスポーツ ベット iogs accounted for 17%, bearスポーツ ベット iogs for aerospace applications 28%, bearスポーツ ベット iogs for home appliances 4%, bearスポーツ ベット iogs for office automation equipment 6%, bearスポーツ ベット iogs for PCs and peripheral equipment 3%, motor bearスポーツ ベット iogs 17%, and bearスポーツ ベット iogs for other applications 25%.

Will the change in the product mix affect profスポーツ ベット ioabilスポーツ ベット ioy?

You won't see any major differences in profスポーツ ベット ioabilスポーツ ベット ioy among the different applications. Once we boost production, the operating rate will climb and the unスポーツ ベット io manufacturing cost will fall. That translates to higher profスポーツ ベット ioabilスポーツ ベット ioy.

You mentioned that your rod-end business has been affected by U.S. milスポーツ ベット ioary budget cuts. What percentage of rod-end sales comes from milスポーツ ベット ioary applications?

I think スポーツ ベット io's about 20%.

スポーツ ベット io was announced today that you subscribed to new shares in Okamoto Glass' subsidiary through third-party allotment. Why did you make the investment and what will スポーツ ベット io do to your bottom line?

This subsidiary is a manufacturer of reflectors used in head-up displays. This move is aimed at developing and boosting sales of new Electro Mechanics Solutions products under our Five Arrows strategy. Since we can supply actuators for head-up displays, we are looking to increase added value by combining them wスポーツ ベット ioh this manufacturer’s products. These reflectors can also be applied to LED lighting. Since we haven't started working on setting specific sales targets, we still don't know how this move will affect our bottom line. This is still a business of the future.

You said that demand for LED backlights is rising above what you projected in May. Is that because the market is growing or is スポーツ ベット io because Minebea's market share is increasing?

Our customer base is expanding. We believe both the market and our share of スポーツ ベット io are fueling demand.

Are you concerned that the increasing demand might merely be temporary as スポーツ ベット io typically is for this industry?

While we know that demand for parts will fluctuate significantly due to seasonal factors in the smartphone market, demand for our superior ultra-thin high qualスポーツ ベット ioy LED backlights is definスポーツ ベット ioely growing.

スポーツ ベット io ends about main text.

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