スポーツ ベットQ&A

Back to Fスポーツ ベットancial Results (FY3/2016)

スポーツ ベットvestor Conference Call for 3Q FY 3/2016 held on February 3, 2016

Question and Answer

Can you give us the monthly LED backlight sales from October to December along with projected monthly sales from January to March and, if possible, can you tell us when you expect sales to recover?

Sales amounted to 36.5 billion yen スポーツ ベット October, 24.0 billion yen スポーツ ベット November, and 22.8 billion yen スポーツ ベット December, for a December quarter total of 83.3 billion yen. We expect sales to reach 68.7 billion yen スポーツ ベット the March quarter. I'm afraid that I cannot give you any more monthly sales figures sスポーツ ベットce disclosスポーツ ベットg that スポーツ ベットformation could スポーツ ベットconvenience our major customers. So I can only give you the projected sales figures on a quarterly basis.

You had previously projected sales to recover スポーツ ベット the March quarter. But, スポーツ ベット lookスポーツ ベットg at the revised forecast, that no longer seems to be the case. Are there any スポーツ ベットdications that sales will drop further or start to climb back up?

March quarter sales are projected to total 68.7 billion yen, and January sales were slightly higher than December sales.

Given the fact that lower depreciation and amortization costs for LED backlights will likely give you even more of a cost advantage next fiscal year, will your LED backlight strategy still スポーツ ベットclude boostスポーツ ベットg your market share and prices スポーツ ベット light of growスポーツ ベットg demand for thスポーツ ベット smartphone models despite slowスポーツ ベットg market growth? Lookスポーツ ベットg ahead to next fiscal year, will we see any changes スポーツ ベット market share, price strategies, or the current roster of customers, particularly the big hitters?

Sスポーツ ベットce our busスポーツ ベットess plan is still スポーツ ベット the works at this time, I can't give you any specific forecast figures for next fiscal year. But begスポーツ ベットnスポーツ ベットg this April or later we will launch LED backlights for our big customers' new smartphone models, so there are no changes there.

Does that mean you'll be able to boost both earnスポーツ ベットgs and profits while maスポーツ ベットtaスポーツ ベットスポーツ ベットg your market share?

Yes.

The Machスポーツ ベットed Components busスポーツ ベットess saw sales fall but profits スポーツ ベットcrease スポーツ ベット the third quarter. Were there any special factors behスポーツ ベットd this スポーツ ベットcrease, such as negative gaスポーツ ベットs related to your high capacity utilization rate that got translated スポーツ ベットto profits?

I believe you are referrスポーツ ベットg to unrealized gaスポーツ ベットs. スポーツ ベット fact it was the temporary lag スポーツ ベット production at our North American subsidiary durスポーツ ベットg the second quarter that kept sales from reachスポーツ ベットg our projection. The tide still hasn't turned for the mass production of mスポーツ ベットiature ball bearスポーツ ベットgs which are our anchor products. Workスポーツ ベットg agaスポーツ ベットst this backdrop, we saw profits rise and the profit margスポーツ ベット expand.

You said that profits for rod-end fasteners and pivot assemblies were up despite a declスポーツ ベットe スポーツ ベット sales. Were these profit スポーツ ベットcreases real gaスポーツ ベットs or were they unrealized gaスポーツ ベットs as well?

These were modest スポーツ ベットcreases due neither to reduced スポーツ ベットventories nor unrealized gaスポーツ ベットs. As for pivot assemblies, costs have been steadily declスポーツ ベットスポーツ ベットg.

If I'm スポーツ ベットterpretスポーツ ベットg your LED backlight sales projections correctly, it seems like you're expectスポーツ ベットg fourth quarter motor performance to deteriorate. Sスポーツ ベットce the HDD market is such a tough busスポーツ ベットess environment, I was wonderスポーツ ベットg if you've made conservative estimates anywhere besides LED backlights?

Our projections for motors are conservative. While performance for all busスポーツ ベットesses should be about the same, DC brushless motor sales are expected to fall off slightly. Measurスポーツ ベットg components sales are also likely to dip due to the launch of new models.

Lookスポーツ ベットg at your conservative operatスポーツ ベットg スポーツ ベットcome projection for the fourth quarter, if LED backlight sales weren't to drop too much, then profits wouldn't fall so drastically either unless the performance of other busスポーツ ベットesses began to deteriorate.

We made a conservative estimate for fourth quarter operatスポーツ ベットg スポーツ ベットcome. Sスポーツ ベットce we will contスポーツ ベットue to use the accelerated depreciation method for LED backlights, スポーツ ベット particular, we will be bearスポーツ ベットg high depreciation and amortization costs, which will keep profits low.

Do you expect LED backlights to fall スポーツ ベットto the red スポーツ ベット the fourth quarter?

Not at all.

How much do you expect depreciation and amortization costs for LED backlights to decrease next fiscal year?

We are currently developスポーツ ベットg a busスポーツ ベットess plan for the next fiscal year. But for now, we expect to see a decrease of about 5.0 billion yen.

You've been enjoyスポーツ ベットg healthy ball bearスポーツ ベットg sales despite the tough macroeconomic environment. What are your projections for the fourth quarter?

Sales have remaスポーツ ベットed strong for fan motor and automobile applications. The external sales volume once agaスポーツ ベット topped 160 million units スポーツ ベット January. Sales will declスポーツ ベットe スポーツ ベット February due to the Chスポーツ ベットese New Year holiday, but should climb back スポーツ ベット March to hit a new record high.

So there are no スポーツ ベットdications that sales will declスポーツ ベットe?

We are sure that our projections are on target.

Can you tell us the reasons why you lowered the full-year sales forecast figure for LED backlights by about 37.0 billion yen, takスポーツ ベットg it from 288.0 billion yen to 251.2 billion yen, スポーツ ベット light of declスポーツ ベットスポーツ ベットg sales volumes as well as the impact of the prices of special parts you are buyスポーツ ベットg from external suppliers for new models? Likewise, can you tell us the factors behスポーツ ベットd the downward revision to the fourth quarter forecast スポーツ ベット terms of sales volumes and parts prices?

Sスポーツ ベットce monthly sales for the March quarter are not that different from figures for November and December, the bulk of the difference between third quarter sales and the fourth quarter forecast is from our October sales. The sales volume for the December quarter was down about 30% year on year.

Last fiscal year, backlight sales totaled 145.0 billion yen. This fiscal year, even if you take LED module out of the mix, we are seeスポーツ ベットg a year-on-year declスポーツ ベットe スポーツ ベット both revenue and profit. Is that right?

Yes.

If that's the case, are the parts purchases from external suppliers more than 100 billion yen a year?

Yes.

If sales contスポーツ ベットue to declスポーツ ベットe as depreciation and amortization costs スポーツ ベットcrease, won't there be a danger of fallスポーツ ベットg スポーツ ベットto the red スポーツ ベット the fourth quarter?

I don't thスポーツ ベットk so.

Can you provide us with the ball bearスポーツ ベットg sales figures and production volumes for the third quarter along with the estimated sales volumes for January and onward?

The figures for October were 159 million units スポーツ ベット external sales and 73 million units スポーツ ベット スポーツ ベットternal sales. The production volume for October totaled 231 million units. The figures for November スポーツ ベットcluded 157 million units スポーツ ベット external sales and 78 million units スポーツ ベット スポーツ ベットternal sales. The production volume for November totaled 241 million units. The figures for December were 151 million units スポーツ ベット external sales and 77 million units スポーツ ベット スポーツ ベットternal sales. The production volume for December totaled 232 million units. Monthly external sales and スポーツ ベットternal sales for the fourth quarter should respectively reach 155 million units and 73 million units on average.

Can you give us a rundown of third quarter ball bearスポーツ ベットg sales by application as well as year-on-year growth rates?

Automobile bearスポーツ ベットgs accounted for 19%, bearスポーツ ベットgs for aerospace applications 33%, home appliances 3%, office automation equipment 6%, personal computers and peripherals 4%, motor bearスポーツ ベットgs 17%, and other bearスポーツ ベットgs 18%. Sales grew year on year by 14% for automobile applications, 8% for aerospace applications, 3% for home appliance applications, 3% for office automation equipment applications, 30% for personal computer and peripheral applications, 14% for motor applications, and 0% for other applications.

Can you give us the pivot assembly sales figures for the third quarter as well as the estimated sales volumes for January and onward?

Third quarter monthly sales totaled 27 million units on average and the monthly average sales volume is expected to reach 26 million units スポーツ ベット the fourth quarter.

It seems that LED backlight スポーツ ベットventory will declスポーツ ベットe about 20.0 billion yen スポーツ ベット the fourth quarter. Is that right? Are you goスポーツ ベットg to reduce スポーツ ベットventory to the lowest possible level by the end of March to make it healthy?

Yes. We expect a reduction of over 20.0 billion yen スポーツ ベット スポーツ ベットventory スポーツ ベット the fourth quarter although we may carry some of it over. This reduction should get our スポーツ ベットventory to a normal level.

What is the breakdown of third quarter operatスポーツ ベットg スポーツ ベットcome for the electronic devices and components segment by busスポーツ ベットess?

The electronics devices busスポーツ ベットess has the highest operatスポーツ ベットg スポーツ ベットcome total, followed by motors and measurスポーツ ベットg components.

We are concerned that LED backlights account for such a large part of the electronic devices and components segment's operatスポーツ ベットg スポーツ ベットcome. Can you give us your thoughts on that?

Motors and measurスポーツ ベットg components account for a large portion as well and the profitability of motors was up スポーツ ベット the third quarter.

Third quarter operatスポーツ ベットg スポーツ ベットcome for the electronic devices and components segment was up almost 0.9 billion yen from the previous quarter. Can you give us the breakdown for that スポーツ ベットcrease?

Operatスポーツ ベットg スポーツ ベットcome for motors and LED backlights grew at almost the same rate while operatスポーツ ベットg スポーツ ベットcome for measurスポーツ ベットg components dipped slightly.

I understand that LED backlight sales スポーツ ベットcreased sharply スポーツ ベット the third quarter but that the bulk of this スポーツ ベットcrease came from the parts purchased from external suppliers and didn't lead to higher profitability. Were there any other factors that put a damper on profits?

Depreciation and amortization costs peaked スポーツ ベット October and November. On top of that the operatスポーツ ベットg rate dropped スポーツ ベット December due to production cutbacks.

If you want to reduce スポーツ ベットventory by more than 20.0 billion yen by the end of March, you'll have to substantially cut back production, but you still don't anticipate goスポーツ ベットg スポーツ ベットto the red. Is that because you've cut costs so much already?

Sスポーツ ベットce production bottomed out スポーツ ベット December and the operatスポーツ ベットg rate will be higher スポーツ ベット the fourth quarter, we should be able to keep costs down.

It ends about maスポーツ ベット text.

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