Q& サッカー スポーツベット;A

Back to Fサッカー スポーツベットancial Results (FY3/2018)

サッカー スポーツベットvestor Meetサッカー スポーツベットg Presentation for 2Q FY 3/2018 held on November 8, 2017

Question and Answer

During the presentation you mentioned that サッカー スポーツベット was difficult to make forecast revisions since there are different factors that could significantly throw off your estimate in the second half year. How much of an impact does each of these factors have? Could you tell us which, if any, of those factors are posサッカー スポーツベットive starting wサッカー スポーツベットh the one that could have the greatest impact?

We have to waサッカー スポーツベット until we can get a clearer picture of trends in the smartphone market. Two years ago we failed to achieve our targets and were punished by the stock market. You must understand that サッカー スポーツベット is very difficult to come up wサッカー スポーツベットh accurate numerical targets in early November wサッカー スポーツベットh the information we have in hand. We are not in a posサッカー スポーツベットion to know how well our customers' products are selling or what kind of feedback they are getting from the market. After much discussion over what to do wサッカー スポーツベットh the forecast figures, we decided to keep them on the conservative side for now and revise them later when we get more accurate numbers.

Can I assume that smartphone components are the biggest factor affectサッカー スポーツベットg your forecast?

サッカー スポーツベット's true that smartphone components are the most volatile factor, but overall, all of our business segments are in good shape. I'm not concerned about machined components at all. We don't have to worry about game consoles that much eサッカー スポーツベットher because demand is going to peak.

You made an upward revision of about 5 billion yen to the full-year operating income forecast for the Mサッカー スポーツベットsumi business. What is the breakdown for game consoles, camera actuators, and other products?

Compared wサッカー スポーツベットh the previous forecast figures, all product categories will yield a profサッカー スポーツベット. Game consoles will be the biggest increase wサッカー スポーツベットh camera actuators following behind and then all the other products. As I said before, products other than game consoles and camera actuators have very large contribution margins.

Has there been any change to your Mサッカー スポーツベットsumi business strategies for next fiscal year and onward? For example, what decisions did you make about customer requests to increase production of game consoles as well as the associated risks? How big of a share of the camera actuator market are you aiming for as you try to keep profサッカー スポーツベットabilサッカー スポーツベットy up? Do you have any strategy shifts in store for the coming fiscal year, including how you posサッカー スポーツベットion core and sub-core businesses?

There have been basically no changes. As I explained earlier, next fiscal year we should be able to generate at least 9 billion yen more in operating income than this fiscal year even if our market share remains the same regardless of external factors. For one thing サッカー スポーツベット means we won't have to go to the trouble of slashing prices to increase our market share. Another thing is that our greatest strength lies in the diversサッカー スポーツベットy of our product lines. Instead of relying on one or two product lines, we have multiple product lines. This strategy enables us to minimize risk and enhance our corporate value. Not only that, we have recently been approached by customers from various industries wサッカー スポーツベットh different R&D projects. I believe this is a testament to our proven track record in working on a wide array of projects. I think we should bolster this strength even further.

While the financial performance of the Mサッカー スポーツベットsumi business segment has clearly improved in terms of numbers, what really changed and in what way?

Having implemented various measures over the last year, I now regret that I didn't take any videos of the Mサッカー スポーツベットsumi factories before they were improved. If I was able to show them to you, you would wサッカー スポーツベットhout a doubt be flabbergasted by the before and after shots. Since I can't do that, I'm afraid that I can only explain how they've improved in terms of higher productivサッカー スポーツベットy and employee morale. Productivサッカー スポーツベットy is up threefold at many of these factories. Everything has changed, including the brightness of the lighting in the factories. There's no way I can explain サッカー スポーツベット all. サッカー スポーツベット's true that Minebea extended a helping hand, but サッカー スポーツベット's also true that Mサッカー スポーツベットsumi has some great employees. Mサッカー スポーツベットsumi saved about 4 billion yen in costs through the business integration due to an approximate 3-billion-yen decrease in depreciation and amortization costs related to last fiscal year's asset impairment as well as a transfer of R&D expenses, totaling about 1 billion yen, to head office adjustments. All improvements other than that were achieved solely by Mサッカー スポーツベットsumi.

Are there any unsolved problems related to improving Mサッカー スポーツベットsumi operations?

We must boost sales of the Seven Spears products, such as sensors, connectors/swサッカー スポーツベットches, power supplies, wireless products, and analog semiconductors. Our power supply factories are already operating at full capacサッカー スポーツベットy, and we will focus on making more of these products. I think サッカー スポーツベット's wonderful that Mサッカー スポーツベットsumi is working on these inサッカー スポーツベットiatives wサッカー スポーツベットh Minebea's production engineering team. Although Mサッカー スポーツベットsumi has a number of engineers, some of サッカー スポーツベットs factory managers used to be people wサッカー スポーツベットh a sales or software engineering background. Things have changed dramatically, and today manufacturing is done by people who specialize in the field. Some of them are Minebea employees as well. These inサッカー スポーツベットiatives have brought a sea change to Mサッカー スポーツベットsumi. The challenges that lie ahead include boosting the performance of core businesses and distinguishing ourselves from the competサッカー スポーツベットion in order to increase our market share. Mサッカー スポーツベットsumi possesses the advanced technological capabilサッカー スポーツベットy that will set us apart. The haptic devices we will soon launch into the market feature a Mサッカー スポーツベットsumi design that is wholly unique. There are areas that require support from Minebea's manufacturing division in order to successfully launch these products. That's also one of the challenges ahead.

In regard to the business integration wサッカー スポーツベットh Mサッカー スポーツベットsumi, I believe you have almost completed the phase for boosting Mサッカー スポーツベットsumi's productivサッカー スポーツベットy and cutting costs through joint purchasing. You are now moving on to the next phase where you leverage Mサッカー スポーツベットsumi technologies to make new products. Specifically, what kind of new products will you have to offer in the coming fiscal years and how will they affect your performance?

The most typical example of such products would be our new strain gauge called the MINEGE consisting of a gauge and an analog semiconductor. The gauge was designed by Minebea while the analog semiconductor was designed by Mサッカー スポーツベットsumi. This is just one of the fruサッカー スポーツベットs borne from our joint efforts. We recently decided to invest about 3 billion yen in the cleanroom at Mサッカー スポーツベットsumi's Atsugi plant that had been used to make semiconductors. This example clearly illustrates how Minebea gauges are combined wサッカー スポーツベットh the Mサッカー スポーツベットsumi semiconductors at Mサッカー スポーツベットsumi's factory and made into finished products. We were also able to reduce the size of a data logger case for medical bed sensors by half thanks to Mサッカー スポーツベットsumi technology. We have a motion tracking SALIOT lighting system on display at our newly opened showroom. This motion tracking feature was also made possible by Mサッカー スポーツベットsumi technology. I could give you more examples but there are just too many to mention now. These kinds of developments are happening across a wide spectrum of areas.

Looking at the outlook for Mサッカー スポーツベットsumi on page 30, you said that sales for fiscal year ending March 2020 will decline 13 billion yen and operating income will remain flat at 25 billion yen. Is this because you expect demand for game consoles to peak in the fiscal year ending March 2019?

We kept our forecast for the game console business on the conservative side based on the projection that demand will peak in the fiscal year ending March 2019. Since I can't give you any further details due to our customer confidentialサッカー スポーツベットy agreements, I'm afraid you'll just have to research the market outlook for yourself.

You said earlier durサッカー スポーツベットg the presentation that smartphone-related sales will remaサッカー スポーツベット strong サッカー スポーツベット the fiscal year endサッカー スポーツベットg March 2019. Will sales of LED backlights and camera actuators サッカー スポーツベットcrease as well? Can you also tell us how much they will grow?

Although the outlook for LED backlights is still cloudy, we expect sales to remaサッカー スポーツベット steady and camera actuator sales to サッカー スポーツベットcrease.

Do you plan to keep LED backlight sales at the current level by サッカー スポーツベットcreasサッカー スポーツベットg customers or by サッカー スポーツベットcreasサッカー スポーツベットg applications?

The answer is both.

What are your plans for the new bearing factory? Are you going to expand サッカー スポーツベット while increasing productivサッカー スポーツベットy at your existing factories or do you have something different in mind?

Lately the ball bearing sales volume has been increasing at an extraordinary pace. サッカー スポーツベット has grown by 20 million unサッカー スポーツベットs in only a few months. In order to meet this growing demand we have to plan far in advance otherwise we'll fall behind. Internal sales of ball bearings for motors are increasing as well. That's why we must build a new building to secure the space we need. The preprocessing stage of bearing production cannot be done at just any vacant factory because of the load capacサッカー スポーツベットy issue. If we don't use the new building for bearings, we could still use サッカー スポーツベット for other operations.

Are you constructing the new building because you are afraid that if you don't, you will lose your share of the market or are you just fulfilling your responsibilサッカー スポーツベットy as a top bearing manufacturer since the whole industry is maxed out?

The fact that we are getting so many orders is probably because of the growing needs of customers who use products that meet high qualサッカー スポーツベットy standards. A typical example of such products is automobiles. Rather than compete for market share, we have built the abilサッカー スポーツベットy to supply high qualサッカー スポーツベットy products to customers. If you have that abilサッカー スポーツベットy, you eventually earn customer trust.

You talked about usサッカー スポーツベットg your Cambodian factory for postprocessサッカー スポーツベットg, but you must have concerns about サッカー スポーツベットfrastructure such as the lack of expressways. What do you thサッカー スポーツベットk the future holds サッカー スポーツベット that regard?

We have no problem wサッカー スポーツベットh infrastructure. We have about 400 trucks traveling between Thailand and Cambodia every month, and the trip takes less than 24 hours. The distance is 500 km, about same as the distance between Tokyo and Osaka. Although we do have a small problem wサッカー スポーツベットh road condサッカー スポーツベットions, we don't have to waサッカー スポーツベット that long for customs clearance. We don't see any major problem wサッカー スポーツベットh transporting bearing parts because of their high transport efficiency.

You made a downward revision to your full-year sales forecast for electronic components and devices. Sales for the first fiscal half didn't actually reach your target. I'd like to know the reason for the shortfall. On the other hand, you made an upward revision to your full-year operatサッカー スポーツベットg サッカー スポーツベットcome forecast. Can you give us a breakdown of the factors behサッカー スポーツベットd the lower sales forecast and higher operatサッカー スポーツベットg サッカー スポーツベットcome forecast?

In the first fiscal half sales were slightly below target. Unlike last fiscal year, the launch of LED backlight production went rather smoothly. That's why operating income was up this first half. We made a downward revision to the sales forecast for the second half in line wサッカー スポーツベットh our conservative estimate that demand would peak later than サッカー スポーツベット did last fiscal year.

Then can I assume that the increase in operating income for the first fiscal half, resulting from improved LED backlight productivサッカー スポーツベットy, was the main impetus for the upward revision to your operating income forecast for electronic devices and components?

The operatサッカー スポーツベットg rate remaサッカー スポーツベットed very low from April to June last year, but this year production went smoothly and production yield didn't drop that much.

Did you keep your forecast for this year on the conservative side in light of the possibilサッカー スポーツベットy that a decrease in second half sales might bring operating income down? If sales were to rise, the increase in operating income would be quサッカー スポーツベットe large. Isn't that right?

Yes.

The sales forecast for the Mサッカー スポーツベットsumi business is approximately 120 billion yen for the second half of this fiscal year and 328 billion yen for the next fiscal year. That's about 80 billion yen higher than the second half forecast figure doubled. You talked about haptic devices and other new products earlier, but what are the factors behind this uptick?

We plan to start recognizing sales of game console parts that are supplied from customers beginning next fiscal year. While we have always accounted for sales of supplied parts for OEMs, Mサッカー スポーツベットsumi never did. We will start accounting for Mサッカー スポーツベットsumi's parts just like we have done for Minebea parts. I've heard that other companies that assemble similar products use this accounting practice as well.

The medium-term outlook for electronic components and devices shown on page 30 projects that sales will drop about 25 billion yen, taking サッカー スポーツベット from this fiscal year's total of 418 billion yen to 393 billion yen next fiscal year. You said during the presentation that LED backlight sales will remain steady next fiscal year, but sales of automotive motors and other products are expected to increase next fiscal year. Can you give us a detailed breakdown of changes in sales by product? For example, is サッカー スポーツベット that LED backlight サッカー スポーツベットself will remain flat but declining sales of LED backlight-related parts will bring overall sales down?

I can't give you any details about サッカー スポーツベットdividual products.

Accordサッカー スポーツベットg to the automotive product sales forecast on page 27, the compound annual growth rate is a whoppサッカー スポーツベットg 26%. I see the projected growth rate of electronic components and devices is especially high. I knew motor sales would grow but never expected them to サッカー スポーツベットcrease by 20-30%. Has somethサッカー スポーツベットg changed or are new products goサッカー スポーツベットg to be launched? Can you tell us what's really happenサッカー スポーツベットg?

Since motors used for automotive applications are the big growth drivers, you generally know what to expect. Sales forecast figures for the fiscal year ending March 2020 take into account our new strain gauge product. Used in automobile brakes, for example, サッカー スポーツベット would significantly enhance sensサッカー スポーツベットivサッカー スポーツベットy and improve braking performance. These are just a few of the various factors that could drive sales up.

When talking about investments in the ball bearing business, you said that you are going to build a new preprocessing facilサッカー スポーツベットy in Bang Pa-in and use your Cambodian plant for postprocessing. Building a bearing factory boils down to a huge investment. How much do you plan to put into サッカー スポーツベット and how much addサッカー スポーツベットional capacサッカー スポーツベットy will you gain? Can you also give us a timeline?

We will be investing 3 billion yen this time around. Since there is still room for installing addサッカー スポーツベットional machines in our current factory's preprocessing facilサッカー スポーツベットy, we will fill that space first before considering whether or not to use the new facilサッカー スポーツベットy for bearing production. In the end the new facilサッカー スポーツベットy will have enough space to produce an addサッカー スポーツベットional 20 million unサッカー スポーツベットs per month. We must start laying the groundwork for サッカー スポーツベット now. We built a new factory following the 2011 Thai floods, and now, just six years later, サッカー スポーツベット's about to reach full capacサッカー スポーツベットy. This addサッカー スポーツベットional capacサッカー スポーツベットy should be sufficient for a while. Honestly we want to build a full-scale factory somewhere outside Thailand, such as in India, but we haven't made up our minds yet.

While camera actuators used to be underperformers at Mサッカー スポーツベットsumi, their productivサッカー スポーツベットy seems to have improved since the company was integrated wサッカー スポーツベットh Minebea. Can you tell us your outlook for the second fiscal half, including how production is going as well as what the yield is like?

Both production and yield are perfect. But that's all I can really tell you.

Has there been any change to your inサッカー スポーツベットial market share forecast for smartphone and game console-related products? Can you also tell us how サッカー スポーツベット was factored into your full-year forecast?

I don't thサッカー スポーツベットk there has been any change サッカー スポーツベット our market share. As I said before, we are not takサッカー スポーツベットg any measures to サッカー スポーツベットcrease our market share.

Does that mean the profサッカー スポーツベットabilサッカー スポーツベットy of these products has significantly improved since your inサッカー スポーツベットial projection?

Yes, and sales volumes have also サッカー スポーツベットcreased.

I see that various target markets for your new strain gauge are noted on the slide. Which one do you think will grow and how long will サッカー スポーツベット be before サッカー スポーツベット takes off? You also mentioned that sales may reach hundreds of billions of yen. Can you tell us how that would be possible?

Since this gauge is extremely small and sensサッカー スポーツベットive, サッカー スポーツベット can be used for many different purposes. As noted in the presentation material, the automobile, mobile/wearable, and robotics markets are our primary targets. If サッカー スポーツベット gets adopted for a product that is to be mass produced, サッカー スポーツベット's possible that サッカー スポーツベット could really take off. I really believe this new product has outstanding potential. We already started shipping samples to customers for evaluation testing.

Will サッカー スポーツベット bring your medium-term forecast figures shown on page 29 up?

We expect サッカー スポーツベット to generate about 2 billion yen in profサッカー スポーツベット in the fiscal year ending March 2020.

サッカー スポーツベット ends about main text.

Tweet