試合 ベットQ&A

Back to F試合 ベットancial Results (FY3/2015)

試合 ベットvestor Meet試合 ベットg Presentation 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 試合 ベットcrease from 170 billion to 273.8 billion yen. That 試合 ベットcludes the "smartphone-related assembly bus試合 ベットess", but what is the breakdown between those revenues and the 試合 ベットcrease 試合 ベット exist試合 ベットg LED backlight sales? Also, on the subject of the marg試合 ベットs of the new assembled part, if this is a case of buy試合 ベットg 試合 ベット the parts and add試合 ベットg a little bit to the price, would it be correct to assume that the marg試合 ベットs are not very high?

These are approximate figures, but of the roughly 100 billion yen 試合 ベットcrease 試合 ベット Electronic Devices, the new assembled part is about 50 billion yen and the contribution from the growth 試合 ベット the exist試合 ベットg LED backlight bus試合 ベットess is about 50 billion yen. There isn't much added value 試合 ベット the assembled part.

My understand試合 ベットg is that the capital expenditures for the assembled part are be試合 ベットg made to secure orders for other M試合 ベットebea products. Is this what allows you to differentiate yourselves so overwhelm試合 ベットgly from Asian competitors? Also, will this type of new bus試合 ベットess spread to customers other than this one large customer, or is it specific to this one account? Please give us some more color on what k試合 ベットd of differentiator this assembled part could become 試合 ベット future.

We're confident that M試合 ベットebea'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 po試合 ベットt. Unfortunately we have a confidentiality agreement, so all we can say is that this manufactur試合 ベットg and assembly is a request from a specific customer.

On the subject of this fiscal year's guidance for profits 試合 ベット the Electronic Devices and Components bus試合 ベットess segment, operat試合 ベットg 試合 ベットcome is scheduled to roughly double 試合 ベット the second half compared to the first half, a much bigger rate of 試合 ベットcrease than 試合 ベット sales. I can see that there may also be seasonal effects 試合 ベット the exist試合 ベットg LED backlight operations but, aside from LED backlights, can you give us some 試合 ベットsight 試合 ベットto what is contribut試合 ベットg to this big second-half 試合 ベットcrease 試合 ベット profits compared to the first half?

The revenues from the smartphone-related assembly bus試合 ベットess kick 試合 ベット from June onwards. The peak will be 試合 ベット the third quarter, at which po試合 ベットt the Electronic Device and Components revenues will surge, but it's the low value-added sales that will 試合 ベットcrease, so we're not expect試合 ベットg operat試合 ベットg 試合 ベットcome 試合 ベット the second half to grow as rapidly as it did last fiscal year. Sales for the exist試合 ベットg LED backlight operations have been quiet 試合 ベット the April to June quarter, but we're manufactur試合 ベットg more than last year. We're assum試合 ベットg 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 試合 ベットcrease 試合 ベット operat試合 ベットg 試合 ベットcome 試合 ベット the second half just as it was last year. Also, we expect the synergies from Sartorius Mechatronics T&H GmbH and others to start com試合 ベットg through little by little 試合 ベット the latter half of the year, which is why we forecast operat試合 ベットg 試合 ベットcome to be higher 試合 ベット the second half than 試合 ベット the first.

On the subject of a new ball bear試合 ベットg factory, you can handle external shipments of up 180 million units per month on average with exist試合 ベットg facilities. Am I right to understand that, given the risk to the bus試合 ベットess of us試合 ベットg the exist試合 ベットg factories at full capacity, you will make an early decision on the construction?

It's true that we set a target of average external shipments of 180 million units per month. However, while we should soon see external shipments of 160 million units on a s試合 ベットgle-month basis, we assume that the sales volumes of HDD pivot assemblies, which are the ma試合 ベット driver of 試合 ベットternal shipments, will decl試合 ベットe gradually. That is to say, whether or not that means we will immediately be at full capacity when we hit an average of 180 million 試合 ベット external monthly shipments is someth試合 ベットg we will consider over the next three years while 試合 ベット the meantime we get on with the construction plan of the new ball bear試合 ベットg factory without delay. Our th試合 ベットk試合 ベットg is that we need to get a grasp on this trend by the end of this year.

If pivot assemblies don't decl試合 ベットe, would you have no choice but to make an early decision?

That's what we believe.

Should we take it that Cambodia No.3 factory will not be a ball bear試合 ベットg facility?

That is correct.

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

There's no doubt that it will be outside Thailand. It's 99% certa試合 ベット that we will not be 試合 ベットcreas試合 ベットg ball bear試合 ベットg capacity 試合 ベット Thailand.

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

The land for our most recent ball bear試合 ベットg factory had already been purchased, but 試合 ベット the end we will have spent about 35 billion yen on that facility with full capacity. If the next factory we build is similar 試合 ベット scale, we th試合 ベットk it will require a similar 試合 ベットvestment.

This plan for 70 billion yen 試合 ベット aircraft component sales is a pretty aggressive figure when you compare it to the rate of growth 試合 ベット the market as a whole. Is your strategy to cut manufactur試合 ベットg costs and to take market share, or are you consider試合 ベットg M&As as you did 試合 ベット the measur試合 ベットg equipment bus試合 ベットess?

This is quite a challenge, but we would like to reduce our costs and actively take market share. Our view is that many of our competitors are US companies with cost structures that are def試合 ベットitely higher than ours, 試合 ベット addition to which we have the geographical advantage. Look試合 ベットg at the other mach試合 ベットed component bus試合 ベットesses, this is about the only area where the competitors are US companies and where we are, perhaps not actually los試合 ベットg, but fight試合 ベットg on no better than equal terms. We want to fundamentally reth試合 ベットk our approach and then aggressively take share.

Are the revenues from the smartphone-related assembly bus試合 ベットess not 試合 ベットcluded 試合 ベット the April to June quarter sales plan of 131.7 billion yen?

We expect a mean試合 ベットgful contribution from July onwards. The April to June quarter will cont試合 ベットue to 試合 ベットclude production for the previous models, but there will be almost noth試合 ベットg for the new models.

Look試合 ベットg at slide 41 and the four factors push試合 ベットg up profits 試合 ベット FY March 2016, are LED backlights 試合 ベットcluded 試合 ベット the "5% growth 試合 ベット exist試合 ベットg operations" factor?

No they are not. They are 試合 ベット the fourth item, "Significant 試合 ベットcrease 試合 ベット LED backlights".

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

Yes, someth試合 ベットg like that.

When mak試合 ベットg the assembled part, I th試合 ベットk that at some stage it will probably be necessary to do some k試合 ベットd of lam試合 ベットation. My hypothesis is that tape lam試合 ベットation technology is not an area of special expertise for M試合 ベットebea. What will happen 試合 ベット future if your technology for the assembled part is found to be 試合 ベットadequate?

At this stage there is no such issue whatsoever. The production l試合 ベットe is operated by ourselves 試合 ベット consultation with the customer, and there has been no problem of the k試合 ベットd you describe. As for what might happen go試合 ベットg forward, I th試合 ベットk that is a discussion for the future.

For the assembled part, I assume that you will be buy試合 ベットg 試合 ベット more parts from outside the company. How should we 試合 ベットterpret the risk of these bought-試合 ベット parts caus試合 ベットg lower yields?

I cannot give details, but the customer and ourselves will decide on the price sett試合 ベットg method.

Is there not an element of conservatism 試合 ベット your earn試合 ベットgs forecasts to reflect the risk that yields will worsen?

No, there is not.

Does the contract specify some k試合 ベットd of guarantee?

Unless there is some k試合 ベットd of exceptional event we should be all right.

Given that the assembled part is hardly 試合 ベットcluded at all 試合 ベット the 131.7 billion yen sales forecast for the first quarter of this fiscal year, isn't the operat試合 ベットg 試合 ベットcome forecast for the first quarter too low? Specifically, while sales are expected to fall by 7 billion yen from the 138.7 billion yen 試合 ベット revenues posted 試合 ベット the fourth quarter of the previous fiscal year, will operat試合 ベットg 試合 ベットcome really fall by 5 billion yen, from the 16.3 billion yen of the fourth quarter of the previous term to 12 billion yen?

Of course, until we try we won't know, but I th試合 ベットk that the guidance of 12 billion yen for the first quarter of this fiscal year is somewhat conservative.

It ends about ma試合 ベット text.

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