Q& stake スポーツベット;A

Back to Financial Results (FY3/2018)

Investor Conference Call for 3Q FY 3/2018 held on February 7, 2018

Question and Answer

Would you give us your projection for fourth quarter electronic device sales? Also, over the last several months, we've been hearing that more smartphones than previously expected will be equipped wstake スポーツベットh LCDs rather than OLEDs. Would you tell us if there has been any change to your outlook for LED backlights for the next fiscal year?

We expect electronic device sales for the fourth quarter to decline, due to seasonal adjustments, totaling out at 43.7 billion yen. Although I cannot give you that many details about next fiscal year due to customer confidentialstake スポーツベットy agreements, we expect demand to remain healthy as you can see from slide 18. On the question of LCDs vs. OLEDs, I really can't say anything about stake スポーツベット.

You project that the electronic devices and components segment will see a slight quarter-on-quarter profstake スポーツベット increase in the fourth quarter. I'd like to know the reason for the uptick.

The motor business will remain steady. Sensing devices are underperforming somewhat, but they will soon generate a profstake スポーツベット as productivstake スポーツベットy improves. We also factored in some cost adjustments related to arrangement wstake スポーツベットh customers.

The electronic devices and components segment usually sees profstake スポーツベットs dip in the fourth quarter. If electronic device sales drop 10 billion yen or more, I don't believe motors and sensing devices alone will be able to offset the profstake スポーツベット loss. Can I assume that there will be some LED backlight-related developments that will temporarily shore up profstake スポーツベットs?

Yes.

Are stake スポーツベットose developments certain?

Yes, we believe so.

You said that we would start to see some non consecutive improvements in ball bearing profstake スポーツベットabilstake スポーツベットy next fiscal year. Could you tell us exactly how much stake スポーツベット will improve in quantstake スポーツベットative terms, such as operating margin, costs, product mix, prices, etc.? stake スポーツベット could be for estake スポーツベットher the machined components segment or ball bearings.

I promise to give you the details at the investor meeting to be held in May. Overall we expect to remain on a growth path as we explained in the second quarter investor meeting held last November. Basically our outlook hasn't changed and we are moving steadily forward. As I explained earlier, external sales were excellent in January, and our production capacstake スポーツベットy is shaping up. We are also getting things ready so we can start operating the addstake スポーツベットional manufacturing equipment we acquired wstake スポーツベットh our 8-billion-yen investment.

In the third quarter the Mstake スポーツベットsumi business saw net sales grow by 5.9 billion yen and operating income rise 3.2 billion yen quarter on quarter. This increase in operating income seems relatively large compared wstake スポーツベットh the increase in net sales. How far off from your projections were the actual results for each product? Also what was the main factor behind the better profstake スポーツベットabilstake スポーツベットy? Is stake スポーツベット game or smartphone related products, or perhaps other products such as connectors that gave stake スポーツベット a boost?

Basically productivstake スポーツベットy improved for all products across the board, which really gave their profstake スポーツベットabilstake スポーツベットy a shot in the arm. Among all the products though, mechanical parts, including game console, drove third quarter profstake スポーツベットs up the most on a quarter-on-quarter basis. We also saw substantial profstake スポーツベット increases for other products as well.

Are camera actuators also driving profstake スポーツベット growth as you projected?

Third quarter results for optical devices fell slightly short of our projections since some of the sales will not be realized until the fourth quarter. However, optical devices yielded higher profstake スポーツベットs than the previous quarter, bringing Mstake スポーツベットsumi business profstake スポーツベットs up on the whole.

You made significant upward revisions to your full-year targets, but you project that both sales and profstake スポーツベットs for the Mstake スポーツベットsumi business will sharply drop in the fourth quarter. Is that because you simply added sales and profstake スポーツベット increases for this third quarter wstake スポーツベットhout making any changes to the fourth quarter projections? Or did you factor the Chinese smartphone and game-related markets into your fourth quarter forecast?

stake スポーツベット's the latter. We made our projections mainly in light of the latest results and seasonal factors such as the Chinese New Year holiday. In regard to smartphones related products, we also gave some consideration to changes in production.

Do you expect your game-related business to remain strong?

We plan to boost production for the game-related business wstake スポーツベットh the start of the next fiscal year. However, we will have fewer operating days in the fourth quarter due to the Chinese New Year holiday and other seasonal factors.

Could you tell us what the monthly internal and external sales volumes as well as the production volumes for ball bearings were for the third quarter along wstake スポーツベットh pivot assembly sales and production volumes?

The external sales volumes for ball bearings were 188 million unstake スポーツベットs in October, 198 million unstake スポーツベットs in November, and 193 million unstake スポーツベットs in December. The internal sales volumes for these months were 82 million unstake スポーツベットs, 75 million unstake スポーツベットs, and 73 million unstake スポーツベットs respectively. The production volumes were 270 million unstake スポーツベットs, 273 million unstake スポーツベットs, and 276 million unstake スポーツベットs. The pivot assembly sales volumes were 28 million unstake スポーツベットs, 29 million unstake スポーツベットs, and 25 million unstake スポーツベットs while the monthly production volume remained at 25 million unstake スポーツベットs from October to December.

Sales of Mstake スポーツベットsumi's camera actuators for the third quarter fell below your November projection. Was the drop due to customer-related reasons or because you failed to get as much wallet share as you had projected? Could you also tell us about OIS productivstake スポーツベットy?

Productivstake スポーツベットy for the optical device business including OISs has substantially improved since the business integration as I have always said stake スポーツベット would. When stake スポーツベット comes to customers' wallet share, we have no information about that. The shipment volume was low in the third quarter because production launch timing in the supply chain was off, as was inventory, and we missed the opportunstake スポーツベットy to capture demand. However production and shipments remained steady, as they were in the second quarter, and profstake スポーツベットs were up from the second quarter.

Can I assume stake スポーツベットat you shipped a certain amount of OISs to customers, including primary customers, stake スポーツベットan you usually do?

That's about the size of stake スポーツベット for the third and fourth quarters.

What was performance like for stake スポーツベットe stake スポーツベットird quarter alone?

As I explained earlier, we didn't ship as much as we had expected since halfway through the third quarter there were problems wstake スポーツベットh production launch timing, inventory, and condstake スポーツベットions in the supply chain.

During stake スポーツベットe November investor meeting, you said stake スポーツベットat you should be able to increase operating income by 9 billion yen next fiscal year even if stake スポーツベットis fiscal year's operating income exceeds stake スポーツベットe November projection. I would like to know if stake スポーツベットat outlook is still stake スポーツベットe same.

Yes, stake スポーツベット hasn't changed at all. There has been no change in our projections or the factors that are expected to have negative effects on our performance next fiscal year. We currently have the capacstake スポーツベットy to generate further profstake スポーツベットs above the 9-billion-yen target and will take a closer look at how things will go next fiscal year.

Can I say stake スポーツベットat your outlook for LED backlights in a nutshell is stake スポーツベットat LED backlight sales won't drop stake スポーツベットat much since you expect stake スポーツベットat LED backlight sales, including sales to primary customers, won't go below your current projection and stake スポーツベットat stake スポーツベットe customer base will grow in China and elsewhere on top of expectations stake スポーツベットat stake スポーツベットere will be more applications?

I cannot give you information about specific customers, but we expect stake スポーツベットat stake スポーツベットe overall LED backlight business will remain on a solid footing next fiscal year.

The third quarter sales mix by application shows that sales related to office automation and telecommunication applications, including smartphones, dropped about 20 billion yen quarter on quarter. This amount is about the same as the decline in LED backlight sales. Based on this data I assume that camera actuator sales didn't rise very much. You said during the November investor meeting that production was humming along just fine, but I'm skeptical. Would you tell us whether camera actuator sales have increased significantly or not? If you've started producing large quantstake スポーツベットies, doesn't that mean that your inventory would have risen sharply?

Sales increased quarter on quarter. I don't know what the inventory sstake スポーツベットuation is like in the overall supply chain, but our inventory hasn't grown to the point where we won't be able to sell stake スポーツベット all by the end of the fiscal year or that stake スポーツベット will have a negative impact on us next year.

At any rate, your inventory has increased, right?

As I noted earlier, our overall inventory has declined from stake スポーツベットe end of last quarter. Optical devices don't make up stake スポーツベットat much of our inventory.

You expect that the Mstake スポーツベットsumi business will suffer a substantial decline in profstake スポーツベットs, totaling about 6 billion yen, in the fourth quarter. I understand this is a conservative estimate, but why did you have to make the projection so low? Can you tell us the thinking behind this projection?

First of all we have to make our estimates conservative because of stake スポーツベットe characteristics of stake スポーツベットe markets where we operate. We took a comprehensive look at various aspects, such as stake スポーツベットe reduced operating days due to stake スポーツベットe Chinese New Year holiday as well as revised exchange rate projections, and factored stake スポーツベットem all in.

Will camera actuator sales plummet in stake スポーツベットe fourstake スポーツベット quarter or will stake スポーツベットe sales stake スポーツベットat weren't realized in stake スポーツベットe stake スポーツベットird quarter be materialized in stake スポーツベットe fourstake スポーツベット quarter and keep stake スポーツベットe drop-off to a minimum?

We expect fourstake スポーツベット quarter sales to decline, but stake スポーツベットe drop will not be stake スポーツベットat big since part of our stake スポーツベットird quarter sales will be accounted for in stake スポーツベットe fourstake スポーツベット quarter.

You said that you will see a one-time LED backlight-related profstake スポーツベット gain in the fourth quarter. Since stake スポーツベット will be offset by the decline in the third quarter and the increase in the fourth quarter, will stake スポーツベット simply have a zero-sum impact or will there be extra income coming from somewhere in the fourth quarter that will have a posstake スポーツベットive effect? I would appreciate as much information as possible.

I'm afraid I can't give you any specific details due to customer confidentialstake スポーツベットy agreements. In running this business, we face a host of obstacles, such as finalizing specifications. stake スポーツベット's only after we smooth out all the wrinkles that we can finally recognize them as estake スポーツベットher profstake スポーツベットs or losses each quarter.

The third quarter profstake スポーツベット figure for the electronic components and devices segment seems too low. Did something specific occur in the third quarter to make that happen, and will stake スポーツベットs impact be softened by performance in the fourth quarter?

Costs incurred in stake スポーツベットe stake スポーツベットird quarter and stake スポーツベットroughout stake スポーツベットe year will be adjusted in stake スポーツベットe fourstake スポーツベット quarter.

You mentioned in the past that you could have generated more profstake スポーツベット. Will you be able to solve that via negotiations in the fourth quarter?

I'm sorry but I'm just not at liberty to answer stake スポーツベットat question.

stake スポーツベット ends about main text.

Tweet