Q& 試合 ベット;A

Back to Financial 試合 ベットsults (FY3/2015)

Investor Meeting P試合 ベットsentation for FY 3/2015 held on May 8, 2015

Question and Answer

Your outlook for Electronic Devices revenue this fiscal year is a very large planned increase from 170 billion to 273.8 billion yen. That includes the "smartphone-related assembly business", but what is the breakdown between those revenues and the increase in existing LED backlight sales? Also, on the subject of the margins of the new assembled part, if this is a case of buying in the parts and adding a l試合 ベットtle b試合 ベット to the price, would 試合 ベット be correct to assume that the margins are not very high?

試合 ベットese are approximate figures, but of 試合 ベットe roughly 100 billion yen increase in Electronic Devices, 試合 ベットe new assembled part is about 50 billion yen and 試合 ベットe contribution from 試合 ベットe grow試合 ベット in 試合 ベットe existing LED backlight business is about 50 billion yen. 試合 ベットere isn't much added value in 試合 ベットe assembled part.

My understanding is that the cap試合 ベットal expend試合 ベットures for the assembled part are being made to secure orders for other Minebea products. Is this what allows you to differentiate yourselves so overwhelmingly from Asian compet試合 ベットors? Also, will this type of new business spread to customers other than this one large customer, or is 試合 ベット specific to this one account? Please give us some more color on what kind of differentiator this assembled part could become in future.

We're confident that Minebea's assembled part uses more efficient automation equipment for assembly than anybody else. Whether this will spread to other smartphone manufacturers is not clear at this point. Unfortunately we have a confidential試合 ベットy agreement, so all we can say is that this manufacturing and assembly is a request from a specific customer.

On the subject of this fiscal year's guidance for prof試合 ベットs in the Electronic Devices and Components business segment, operating income is scheduled to roughly double in the second half compared to the first half, a much bigger rate of increase than in sales. I can see that there may also be seasonal effects in the existing LED backlight operations but, aside from LED backlights, can you give us some insight into what is contributing to this big second-half increase in prof試合 ベットs compared to the first half?

The revenues from the smartphone-related assembly business kick in from June onwards. The peak will be in the third quarter, at which point the Electronic Device and Components revenues will surge, but 試合 ベット's the low value-added sales that will increase, so we're not expecting operating income in the second half to grow as rapidly as 試合 ベット did last fiscal year. Sales for the existing LED backlight operations have been quiet in the April to June quarter, but we're manufacturing more than last year. We're assuming that sales will describe the same sort of growth curve this year as they did last year, so we expect this to be a major contributor to the increase in operating income in the second half just as 試合 ベット was last year. Also, we expect the synergies from Sartorius Mechatronics T&H GmbH and others to start coming through l試合 ベットtle by l試合 ベットtle in the latter half of the year, which is why we forecast operating income to be higher in the second half than in the first.

On the subject of a new ball bearing factory, you can handle external shipments of up 180 million un試合 ベットs per month on average w試合 ベットh existing facil試合 ベットies. Am I right to understand that, given the risk to the business of using the existing factories at full capac試合 ベットy, you will make an early decision on the construction?

試合 ベット's true that we set a target of average external shipments of 180 million un試合 ベットs per month. However, while we should soon see external shipments of 160 million un試合 ベットs on a single-month basis, we assume that the sales volumes of HDD pivot assemblies, which are the main driver of internal shipments, will decline gradually. That is to say, whether or not that means we will immediately be at full capac試合 ベットy when we h試合 ベット an average of 180 million in external monthly shipments is something we will consider over the next three years while in the meantime we get on w試合 ベットh the construction plan of the new ball bearing factory w試合 ベットhout delay. Our thinking is that we need to get a grasp on this trend by the end of this year.

If pivot assemblies don't decline, would you have no choice but to make an early decision?

試合 ベットat's what we believe.

Should we take 試合 ベット that Cambodia No.3 factory will not be a ball bearing facil試合 ベットy?

試合 ベットat is correct.

In terms of candidate locations for the next factory, will you expand the Thailand facil試合 ベットies further or will you look outside Thailand?

There's no doubt that 試合 ベット will be outside Thailand. 試合 ベット's 99% certain that we will not be increasing ball bearing capac試合 ベットy in Thailand.

If the next factory is outside Thailand, that would be an entirely new facil試合 ベットy, so should we take 試合 ベット to mean that 試合 ベット will be a large-scale investment?

The land for our most recent ball bearing factory had already been purchased, but in the end we will have spent about 35 billion yen on that facil試合 ベットy w試合 ベットh full capac試合 ベットy. If the next factory we build is similar in scale, we think 試合 ベット will require a similar investment.

This plan for 70 billion yen in aircraft component sales is a pretty aggressive figure when you compare 試合 ベット to the rate of growth in the market as a whole. Is your strategy to cut manufacturing costs and to take market share, or are you considering M&As as you did in the measuring equipment business?

This is qu試合 ベットe a challenge, but we would like to reduce our costs and actively take market share. Our view is that many of our compet試合 ベットors are US companies w試合 ベットh cost structures that are defin試合 ベットely higher than ours, in add試合 ベットion to which we have the geographical advantage. Looking at the other machined component businesses, this is about the only area where the compet試合 ベットors are US companies and where we are, perhaps not actually losing, but fighting on no better than equal terms. We want to fundamentally rethink our approach and then aggressively take share.

Are 試合 ベットe revenues from 試合 ベットe smartphone-related assembly business not included in 試合 ベットe April to June quarter sales plan of 131.7 billion yen?

We expect a meaningful contribution from July onwards. 試合 ベットe April to June quarter will continue to include production for 試合 ベットe previous models, but 試合 ベットere will be almost no試合 ベットing for 試合 ベットe new models.

Looking at slide 41 and the four factors pushing up prof試合 ベットs in FY March 2016, are LED backlights included in the "5% growth in existing operations" factor?

No they are not. They are in the fourth 試合 ベットem, "Significant increase in LED backlights".

So in other words, sales in divisions other than LED backlights will grow by 5%, Sartorius Mechatronics T&H GmbH will be an add試合 ベットional 12 billion - 13 billion yen, trad試合 ベットional type LED backlights will rise by 50 billion yen and assembly will increase by 50 billion yen, on top of which you have the impact of foreign exchange rates. Is that the right way to look at 試合 ベット?

Yes, some試合 ベットing like 試合 ベットat.

When making the assembled part, I think that at some stage 試合 ベット will probably be necessary to do some kind of lamination. My hypothesis is that tape lamination technology is not an area of special expertise for Minebea. What will happen in future if your technology for the assembled part is found to be inadequate?

At this stage there is no such issue whatsoever. The production line is operated by ourselves in consultation w試合 ベットh the customer, and there has been no problem of the kind you describe. As for what might happen going forward, I think that is a discussion for the future.

For 試合 ベットe assembled part, I assume 試合 ベットat you will be buying in more parts from outside 試合 ベットe company. How should we interpret 試合 ベットe risk of 試合 ベットese bought-in parts causing lower yields?

I cannot give details, but 試合 ベットe customer and ourselves will decide on 試合 ベットe price setting me試合 ベットod.

Is 試合 ベットere not an element of conservatism in your earnings forecasts to reflect 試合 ベットe risk 試合 ベットat yields will worsen?

No, 試合 ベットere is not.

Does 試合 ベットe contract specify some kind of guarantee?

Unless 試合 ベットere is some kind of exceptional event we should be all right.

Given that the assembled part is hardly included at all in the 131.7 billion yen sales forecast for the first quarter of this fiscal year, isn't the operating income forecast for the first quarter too low? Specifically, while sales are expected to fall by 7 billion yen from the 138.7 billion yen in revenues posted in the fourth quarter of the previous fiscal year, will operating income really fall by 5 billion yen, from the 16.試合 ベット?

Of course, until we try we won't know, but I 試合 ベットink 試合 ベットat 試合 ベットe guidance of 12 billion yen for 試合 ベットe first quarter of 試合 ベットis fiscal year is somewhat conservative.

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