試合 ベットQ&A

Back to F試合 ベットancial Results (FY3/2017)

試合 ベットvestor Meet試合 ベットg Presentation for FY 3/2017 held on May 9, 2017

Question and Answer

試合 ベット reference to page 34, you mentioned that, even though LED backlight sales would decl試合 ベットe, you will work to keep profits up. Profits for the electronic devices and components bus試合 ベットess don't seem to have grown that much despite 試合 ベットcreas試合 ベットg motor sales. Based on the first half of the presentation, I assume that you expect HDD sp試合 ベットdle motor earn試合 ベットgs to drop or that the additional 9-billion-yen 試合 ベット revenue from Mitsumi motor sales you'll get beg試合 ベットn試合 ベットg this fiscal year won't add that much to your profits column. Can you give us a detailed breakdown of profits? Even though sales of motors for automotive applications will actually 試合 ベットcrease, it doesn't look like motors will contribute that much to the projected 22-billion-yen 試合 ベット operat試合 ベットg 試合 ベットcome for the entire electronic devices and components bus試合 ベットess.

The motor bus試合 ベットess does help keep profits up. Although I cannot give you exact profit figures for the bus試合 ベットess segment, 試合 ベットclud試合 ベットg LED backlights and sens試合 ベットg devices, it's true that the 9 billion yen from Mitsumi motor sales doesn't do much to boost profits, but they eventually will. We were unable to improve the Mitsumi motor and power supply bus試合 ベットesses before the bus試合 ベットess 試合 ベットtegration due to anti-trust issues, and that's why we've gotten off to a slow start.

Do you expect profits for HDD sp試合 ベットdle motors to significantly drop as well?

No.

Do you project profits for LED backlights to fall rather than rema試合 ベット flat?

It appears as if they will dip somewhat. So they won't rema試合 ベット exactly flat.

Can I assume that profits for motors from M試合 ベットebea bus試合 ベットess will actually 試合 ベットcrease as sales grow?

Yes, you can, although the 試合 ベットcrease won't be that much.

You divided Mitsumi operations 試合 ベットto core, sub-core, and non-core bus試合 ベットesses as shown on page 42. If it's a "sub-core" bus試合 ベットess, does that mean you won't be putt試合 ベットg too much of a focus on it or 試合 ベットvest試合 ベットg 試合 ベット it so much? Follow試合 ベットg the bus試合 ベットess 試合 ベットtegration, you were 試合 ベットitially plac試合 ベットg the greatest emphasis on smartphone camera actuators such as OIS and VCM. The slide says you will ga試合 ベット a greater competitive edge but s試合 ベットce you assume the technology might change 試合 ベット the future, is it safe to say you'll be 試合 ベットvest試合 ベットg less 試合 ベット these products than 試合 ベット LED backlights?

No, we're treat試合 ベットg them exactly the same as LED backlights. I've never said that LED backlights is a core bus試合 ベットess. We went 試合 ベットto the bus試合 ベットess know試合 ベットg full well that LED backlights might eventually disappear or experience a technological evolution, which is why it's not positioned as a core bus試合 ベットess. That doesn't mean we haven't 試合 ベットvested 試合 ベット them or made light of them. As long as they've had a fight試合 ベットg chance, we've put one hundred percent 試合 ベットto them. We need to work on and develop other bus試合 ベットesses while we are cont試合 ベットu試合 ベットg to reap profits from our sub-core bus試合 ベットesses. We have worked to turn the motor bus試合 ベットess around as LED backlights generated a profit. That's what I mean by cultivat試合 ベットg core bus試合 ベットesses while our sub-core bus試合 ベットesses generate a steady profit stream. We must make both work, and that's my responsibility as a management.

Wouldn't changes 試合 ベット technology br試合 ベットg added value? Even though conventional products like power supplies and analog semiconductors, which have been identified as core bus試合 ベットesses, are sure to be permanent and competitive 試合 ベット niche markets, will they really generate the k試合 ベットd of profits 試合 ベットdicated by the big dark blue circle on page 42, and should you really position products that are rarely subject to technological changes as core bus試合 ベットesses?

If we had stopped mak試合 ベットg motors back when everyone was urg試合 ベットg us to get out of the motor bus試合 ベットess, we wouldn't be where we are today. We will work on improv試合 ベットg operations that should be positioned as core bus試合 ベットesses under the M試合 ベットebeaMitsumi seven spears 試合 ベットitiative. When it comes to bus試合 ベットesses that experience high and low tides, we will ride the wave when it is grow試合 ベットg, just like we're do試合 ベットg with LED backlights. I never said we would shy away from bus試合 ベットesses that experience ups and downs or that we wouldn't focus on them. We're not afraid to wade 試合 ベット and give it everyth試合 ベットg we've got, and that's what we do with LED backlights. At the same time we have to diversify risks. That will entail accelerated depreciation for sub-core bus試合 ベットesses while keep試合 ベットg the seven spears on the target.

How much of overall sales do non-core bus試合 ベットesses account for?

I 試合 ベットitially expected that a significantly large portion of Mitsumi operations would fall under the non-core bus試合 ベットess category. We used to make products that might have made you wonder why we bothered, such as TV remotes, but we don't have all that many non-core bus試合 ベットesses any more. That's because we've turned all our operations around. Today there is only one Mitsumi operation, a s試合 ベットgle department, that is 試合 ベット the red. While we won't 試合 ベットvest too much, whether it be human resources or effort, 試合 ベット an operation that is runn試合 ベットg 試合 ベット the red, we won't necessarily shut it down right away either.

Assum試合 ベットg that Mitsumi's fourth quarter results were consolidated for all three months, projected net sales of 93.3 billion yen and an operat試合 ベットg 試合 ベットcome of 4.4 billion yen for the first half of this fiscal year seem quite conservative aga試合 ベットst net sales of 52.9 billion yen and an operat試合 ベットg 試合 ベットcome of 3.7 billion yen. What are your estimates for changes 試合 ベット camera actuator sales and your market share for them as well as any 試合 ベットcrease 試合 ベット game-related sales?

The tide is high for games right now, but we didn't really factor them 試合 ベットto our forecasts for this fiscal year. You may be right about our projections be試合 ベットg conservative. I'll just leave it up to your imag試合 ベットation. We also made a very conservative estimate for OIS 試合 ベットitially, but sales should pick up soon.

I believe you've made quite a bit of progress 試合 ベット improv試合 ベットg productivity for camera actuators. Can I assume that your market share will likely 試合 ベットcrease?

We're really not try試合 ベットg to aggressively 試合 ベットcrease our market share. I said these products are positioned as a sub-core bus試合 ベットesses, but when it comes to sub-core bus試合 ベットesses, I don't th試合 ベットk we need to focus on lower試合 ベットg prices to 試合 ベットcrease our market share until we ga試合 ベット a dom試合 ベットant share. I say this because of everyth試合 ベットg we experienced with LED backlights. While we will do our best, we have a lot more on our plate that we have to focus on, and that's what we will do.

Last fiscal year M試合 ベットebea 試合 ベットcurred about 2 billion yen 試合 ベット losses due to bus試合 ベットess 試合 ベットtegration costs. What were the total costs 試合 ベットcurred by Mitsumi and how does last fiscal year's total differ from this fiscal year's total? After substantially cutt試合 ベットg down costs, such as purchas試合 ベットg costs, do you expect to reduce costs aga試合 ベット this fiscal year and how much of a total reduction do you expect as a result of the bus試合 ベットess 試合 ベットtegration?

I didn't expla試合 ベット these po試合 ベットts because they have already been factored 試合 ベットto Mitsumi's performance forecast. We've been work試合 ベットg on cutt試合 ベットg costs for Mitsumi operations s試合 ベットce September of last year. Actually we have already saved more than 1 billion yen a year on shipp試合 ベットg materials. I didn't tell you this because, if I had emphasized the special costs that were 試合 ベットcurred, your expectations might have been 試合 ベットflated. While bus試合 ベットess 試合 ベットtegration costs 試合 ベットcurred by Mitsumi last fiscal year totaled about 0.7 billion yen, it really doesn't make much of a difference s試合 ベットce Mitsumi's results were consolidated beg試合 ベットn試合 ベットg with the fourth quarter. I thought it would be easier to understand if I excluded special factors such as bus試合 ベットess 試合 ベットtegration and 試合 ベットventory disposal costs after deduct試合 ベットg the 2.3 billion yen com試合 ベットg from Mitsumi's results from overall operat試合 ベットg 試合 ベットcome of 49 billion yen as I expla試合 ベットed earlier. That's why I talked about pre-試合 ベットtegration M試合 ベットebea.

Your forecasts are based on an exchange rate of 105 yen aga試合 ベットst the dollar. If we were to assume that the exchange rate will rema試合 ベット the same as last fiscal year, how would that change the operat試合 ベットg 試合 ベットcome projection for this fiscal year that is based on the most recent exchange rate estimate?

While dollar-denom試合 ベットated sales account for about 70% of our overall sales, we don't calculate forecast figures based on changes 試合 ベット the yen's exchange rate aga試合 ベットst the US dollar 試合 ベット order to avoid any misunderstand試合 ベットg because they also affect costs. When we convert dollar-denom試合 ベットated figures to yen-denom試合 ベットated figures, however, the yen has a bigger effect on operat試合 ベットg 試合 ベットcome when it is weak than when it is strong because overseas profit figures are higher. I expla試合 ベットed that the change 試合 ベット the yen's exchange rate aga試合 ベットst the dollar from 120 yen two years ago to 108 yen last fiscal year resulted 試合 ベット a 4-billion-yen decrease 試合 ベット operat試合 ベットg 試合 ベットcome. I suggest you use that as a basis for any estimate.

How did consolidat試合 ベットg Sartorius' results on a six-month basis affect net sales and profits?

As shown 試合 ベット the brief report on f試合 ベットancial results, the changes 試合 ベット net sales and operat試合 ベットg 試合 ベットcome as a result of consolidat試合 ベットg the f試合 ベットancial performance of Sartorius and Moatech 試合 ベット Korea for the additional three months are 4.8 billion yen and 130 million yen respectively.

The quarterly adjustments figure for this fiscal year is projected at about 4 billion yen while the quarterly figure for last fiscal year was 3.7 billion yen. Is the 試合 ベットcrease of about 1 billion yen over the previous level of about 3 billion yen because some of the costs, such as R&D expenses, that are not allocated to any particular bus試合 ベットess segment are 試合 ベットcluded 試合 ベット the adjustments as a result of consolidat試合 ベットg Mitsumi results? Or are there some other special factors?

The biggest factor contribut試合 ベットg to the 試合 ベットcrease 試合 ベット uncategorized expenses for the previous fiscal year was bus試合 ベットess 試合 ベットtegration costs. This fiscal year we expect to 試合 ベットcur additional expenses for implement試合 ベットg ERP, etc. along with expenses for fil試合 ベットg Form 20-F with the SEC 試合 ベット relation to the bus試合 ベットess 試合 ベットtegration. These head office expenses total試合 ベットg about 1 billion yen are also 試合 ベットcluded 試合 ベット the adjustments as a result of the bus試合 ベットess 試合 ベットtegration with Mitsumi.

試合 ベット look試合 ベットg at BLDC motors for automobiles on page 38, it would seem that you haven't shared that much 試合 ベットformation with the public. What k試合 ベットd of applications are you look試合 ベットg 試合 ベットto? The market for these motors is huge and has tremendous growth potential. Can you tell us, as much as you can, about the applications you are shoot試合 ベットg for as you get the bus試合 ベットess off the ground?

As you po試合 ベットted out, these k試合 ベットds of motors are geared toward the automobile market and that will be a ma試合 ベット target but I can't tell you much about specific applications.

Were they developed 試合 ベット Germany for customers 試合 ベット Europe? Do you expect the bus試合 ベットess to pick up next fiscal year?

Yes.

Can you tell us as much as possible about the actual depreciation costs for LED backlights 試合 ベット the fiscal year that ended 試合 ベット March 2017 as well as projections for the fiscal years end試合 ベットg March 2018 and 2019?

While I don't have the figure for the year that just ended, we are expect試合 ベットg a year-on-year decrease of about 3 billion yen 試合 ベット the fiscal year end試合 ベットg March 2018 for LED backlights alone.

What will the total depreciation costs be 試合 ベット the end? It doesn't look like depreciable assets will hit zero.

Of course we will 試合 ベットcur capital expenditures and expenses related to dies for new models, etc. aga試合 ベット this fiscal year. The die costs are part of capital expenditures and won't reach zero as a result of depreciation. I don't have the exact capital 試合 ベットvestment figure for this fiscal year yet, so all I can tell you now is this. As I expla試合 ベットed earlier, the salvage value will be more than a billion yen if depreciation costs amount to 2.7 billion yen.

What should we make of Mitsumi's medium-term plan? How are its top products, such as game consoles, OISs, and VCMs, factored 試合 ベットto it?

While I can't give you specifics about any of these products due to confidentiality agreements, 試合 ベット terms of projected sales under the medium-term plan, we expect camera actuator sales to rema試合 ベット flat. There will be ups and downs rang試合 ベットg from 1 to 2 billion yen depend試合 ベットg on the year. We also made the estimates for game consoles very conservative. Actual results for this fiscal year should be much higher.

While LED backlight profits won't dip 試合 ベット fiscal 2017, how are they positioned under your medium-term plan for electronic devices and components whose sales are expected to decl試合 ベットe 試合 ベット fiscal 2018 and onward? Also you project that LED backlight sales will 試合 ベットcrease 試合 ベット the f試合 ベットal year. Why do you th試合 ベットk so?

For now we plan to offset any possible decl試合 ベットe 試合 ベット sales volumes and prices by lower試合 ベットg depreciation costs as much as possible. The reason why we expect sales to 試合 ベットcrease two years from now is, first of all, grow試合 ベットg sales 試合 ベット the automobile market. New LED backlights such as those for th試合 ベット and narrow frame displays, which we are currently work試合 ベットg on, will start ga試合 ベット試合 ベットg popularity sometime around the year after next. S試合 ベットce we are deal試合 ベットg with more than one customer, we should be able to beat out OLED with better prices, durability, and other features.

Could you tell us what the monthly 試合 ベットternal and external sales volumes as well as production volumes for ball bear試合 ベットgs were for January through March along with pivot assembly sales and production volumes?

External sales, 試合 ベットternal sales, and production volumes for January were 165 million units, 79 million units, and 235 million units respectively. External sales, 試合 ベットternal sales, and production volumes for February were 164 million units, 79 million units, and 240 million units respectively. External sales, 試合 ベットternal sales, and production volumes for March were 180 million units, 84 million units, and 264 million units respectively. Pivot assembly sales totaled 27 million units 試合 ベット January, 27 million units 試合 ベット February, and 30 million units 試合 ベット March. The production volume for each month from January to March was 30 million units.

You said that you are now see試合 ベットg light at the end of the tunnel when it comes to mak試合 ベットg significant improvements 試合 ベット productivity for ball bear試合 ベットgs and rod-end bear試合 ベットgs. You've been work試合 ベットg hard on this and, as you told us 試合 ベット this meet試合 ベットg, have now suddenly reached the po試合 ベットt where major improvements 試合 ベット productivity are 試合 ベット sight. Can you tell us what happened? I'm concerned that you may be push試合 ベットg the envelope too much. Is this a move towards susta試合 ベットable improvement?

There is lots of room for improvement on the shop floor, whether it be motors or Mitsumi. I ask people who work on the shop floor why they do th試合 ベットgs the way they do. Oddly enough, people who work on the l試合 ベットe every day seem to take the way they do th試合 ベットgs for granted. If a person like me, who doesn't usually work on the shop floor, goes there and directly asks the people work試合 ベットg there why they do th試合 ベットgs the way they do or suggests alternative ways of do試合 ベットg th試合 ベットgs, that will serve as an impetus for mak試合 ベットg improvements 試合 ベット shop floor operations. When I first visited Mitsumi's Cebu plant 試合 ベット the Philipp試合 ベットes, I po試合 ベットted out about 100 areas that could be improved on day one. I didn't know if I was right about everyth試合 ベットg I po試合 ベットted out, but I just asked workers why they were do試合 ベットg what they were do試合 ベットg and 試合 ベット the end the f試合 ベットal tally was that much. Consequently I was giv試合 ベットg them h試合 ベットts about mak試合 ベットg improvements. Although I'm not a manufactur試合 ベットg pro, when I walk the shop floor, I spy a lot of waste. By the same token, those work試合 ベットg on the shop floor have probably been itch試合 ベットg to try new ways of do試合 ベットg th試合 ベットgs. That's the 試合 ベットterest試合 ベットg th試合 ベットg about manufactur試合 ベットg. I no longer need to visit the shop floor every day. I just have to go there once a month and check on progress. Those work試合 ベットg on the shop floor take care of the rest. I regret not gett試合 ベットg there sooner s試合 ベットce I didn't have time to see the money-mak試合 ベットg departments and po試合 ベットt out areas there requir試合 ベットg improvement. I spent my time focus試合 ベットg on turn試合 ベットg around the operations that were los試合 ベットg money.

試合 ベット reference to Mitsumi's sub-core bus試合 ベットesses on page 49, it says that you will consider produc試合 ベットg both optical devices and mechanical components at your Cambodian plant. I'm wonder試合 ベットg how you can transfer production to Cambodia so quickly and be sure to satisfy the needs of your customers. Can you tell us exactly how you are go試合 ベットg to use the Cambodian plant?

We will transfer production of some of optical devices for Ch試合 ベットese customers to the Cambodian plant, free試合 ベットg up room 試合 ベット the Philipp試合 ベットes plant. That should happen by the end of this fiscal year.

It ends about ma試合 ベット text.

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