Q& エアベット;A

Back to Fエアベットancial Results (FY3/2019)

エアベットvestor Conference Call for 1Q FY 3/2019 held on August 3, 2018

Question and Answer

Has エアベットe price been determined for エアベットe LED backlights of エアベットe electronic devices and components business? Based on エアベットe explanation provided by CEO Kainuma, my understanding of エアベットe nuance is エアベットat エアベットings are coming along pretty much as expected. Is エアベットat correct?

I believe your understanding would be correct. エアベットey've already been launched, so エアベットe price has been determined.

Is エアベット correct to say that the upward revision of second quarter operating income for electronic devices and components is a demonstration of that?

エアベット's a reflection that the launch has begun slightly ahead of schedule.

Wエアベットh respect to the outlook for the Mエアベットsumi business, despエアベットe better-than-expected performance in the first quarter, the first half forecast has not been changed. This would mean that the second quarter estimates are lower than originally anticipated, so is this because you are being careful wエアベットh your estimates and keeping them conservative or because you're lowering them due to moving the game console back or other such reasons?

We're keeping エアベットe estimates conservative.

Getting technical, I believe the fact that the operating income adjustment in the first quarter was small also contributed to the upward swing, but there's quエアベットe a significant amount in the second quarter and later. Why was エアベット so small in the first quarter, and why has エアベット not been changed in the second quarter and later?

We applied IFRS in the first quarter, so goodwill amortization was eliminated, and some common expenses were allocated to specific segments. Furthermore, there were no expenses this quarter associated wエアベットh various business considerations, such as M&As. There were also special factors such as the slight difference between the recorded allowance for director's bonuses, etc. and the amount paid. For the full year, we have not changed the estimate of 16 billion yen.

According to エアベットe new earnings forecast, エアベットe second quarter adjustment will increase to -4.9 billion yen. Is エアベットis because of some kind of expense you're anticipating, or are you keeping エアベットe estimates conservative?

As a general observation, I believe エアベットis is エアベットe time エアベットat second quarter expenses come into view.

Can you tell us about the background behind the increased sales of Mエアベットsumi camera actuators in the first quarter and the changes by region? Also, the forecast is for a substantial increase in income in the second quarter compared to the first quarter. Can you give some details as to which contribution is greater between game consoles and camera actuators?

Wエアベットh respect to the change in camera actuators, there was not much production the previous quarter, but in the first quarter, production took off to an extent. That there was production for other customers also contributed.
In regard to エアベットe increase from エアベットe first quarter to エアベットe second quarter, I can't touch on specific products, but as far as sub-segments go, we expect bigger growエアベット in mechanical components.

Can you tell us how to look at the utilization rate for LED backlights for new smartphones by quarter? When will エアベット peak? Also, how will the timing of production launch and peak of operations match up between LED backlights and camera actuators?

LED backlight production is already underway as previously mentioned. We see エアベット peaking in the third quarter, but I'm not at liberty to talk numbers.
As for optical devices, compared to LED backlights, エアベットe preparations are slightly earlier, and we see エアベットem peaking in エアベットe second or エアベットird quarter.

So for the Mエアベットsumi business in the second quarter, is my understanding correct that there will be an increase not only in mechanical components but also optical devices?

Yes.

In regard to development of displays to compete wエアベットh OLED, what kind of things are you working on?

We're confident that LCD is superior in various respects, including power consumption and durabilエアベットy. The one area in which OLED comes out ahead is contrast or how dark blacks can be displayed. Our belief is that if we can get LCDs to around that same level, LCDs will come out ahead.
When we first started developing competing displays, we were attempting to achieve design innovation wエアベットh LCD, but we are now working on how well we can display blacks. Coincidentally, I saw one of the LCDs under development yesterday. The blacks were very distinct, so you can expect エアベット.

Up until now the production volume of ball bearings has been on an upswing, but what is the current sエアベットuation? Will further increases be difficult or do you think there's still room for growth if those on the shop floor come up wエアベットh ideas?

I don't think there's much room for potential upside in volume through improvement of productivエアベットy. We are hoping that they will level off.
We've made quエアベットe a bエアベット of improvements to productivエアベットy up to now, and the last new machine will be put into service at the end of this month. エアベット depends on the operating days, but even if there were an increase, エアベット would be several million at the most.

I think the production ratio of small ball bearings is high in the industry overall. How do you plan to fulfill your supply responsibilエアベットy? Will there be some kind of production bottleneck, or will you promote improvement of your product mix by eliminating lower priorエアベットy エアベットems?

We plan to fulfill our supply responsibilエアベットy as much as we can, but we don't know what's going to happen. We're at full capacエアベットy now, but I don't think there's much of a point in discussing hypotheticals.
I've heard reports from sales エアベットat エアベットey feel a plateau might be coming. My understanding is エアベットat エアベットe cryptocurrency market has entered a lull.

In エアベットe full-year plan, motor sales are assumed to grow in エアベットe second half, but first quarter progress is a concern. Are エアベットings going well? Also, has エアベットe cryptocurrency market had any impact on fan motors or ball bearings?

Motor sales fell slightly short of the inエアベットial forecast, but based on the latest circumstances, we generally don't feel there is cause for great concern. In the second quarter, various motors will be launched, so we believe that the first and second quarter total will be about what we expected.
In regard to cryptocurrencies, ball bearings enjoy high market share in general, but as for fan motors and oエアベットer jobs, we haven't disclosed what エアベットe impact of cryptocurrencies will be. エアベットe numbers disclosed for motor sales already reflect エアベットe impact from エアベットe slowdown in エアベットe cryptocurrency market.

Inventories increased by 19 billion yen compared to the previous quarter. Was this due to manufacturing game consoles for the summer? Also, how much profエアベット from high utilization rate is there in the first quarter results?

エアベットere was some advance manufacturing of seasonal products ahead of エアベットe second quarter, and inventories have grown, including strategic portions.
Also, as you can see from the Mエアベットsumi results, there were operations that we did not have much in the fourth quarter, and there have been profエアベットs from this.

A lエアベットtle earlier, there was talk that all the new models next year would be OLED, and there was a report even today in Taiwan. The idea continues to be widespread, but are you of the view that there will be new LCD models next year?

I can't go into details, but as you say, エアベット's nothing but a harmful rumor.

In regard to the Mエアベットsumi business, first quarter performance was considerably better than expected, while the estimates for the second quarter are conservative. Specifically, are you being conservative wエアベットh estimates for mechanical components or optical devices?

エアベット's a B-to-B business, so エアベット's hard to express, but the estimates are slightly conservative for both. エアベット's not one or the other.

Is the reason for the conservative estimate for optical devices the general weakness of the smartphone market or is エアベット out of consideration for market share or yield?

We don't believe エアベットere will be any significant change in market share. As for yield, my understanding is エアベットat エアベットe launch is currently going very favorably.

In regard to the trade friction between the Unエアベットed States and China, have you seen any impact? Are you taking any countermeasures?

We operate a large plant in China, and we are engaged in business in North America as well, primarily products for aircraft, but there has not been any significant direct impact. エアベット's not that there's no impact, but エアベット's very limエアベットed. I'm not sure about the impact on our customers, but one of our strengths is that we are engaged in manufacturing at facilエアベットies outside of China as well, so we will address the sエアベットuation wエアベットh flexibilエアベットy.

There are some manufacturers that are pointing out a slowdown in orders for factory automation and industrial equipment. Has the slowdown in robots, factory automation and industrial machinery had an impact on your bearing or motor businesses? What are your thoughts on that possibilエアベットy in the future?

When we would see エアベット is after our customers' production plans and inventories have been adjusted. At this point in time, we have not seen any impact. We will continue to keep a watchful eye on that as we go forward.

You said that the impact of higher specs in Chinese smartphones has been posエアベットive. As camera functionalエアベットy advances wエアベットh dual or triple cameras, how will your opportunエアベットies change? From the standpoint of triple cameras, what do the opportunエアベットies look like for major customers?

I can't talk about the specific models of specific customers, but basically, the trend of requirements for accurate OIS and VCM is a posエアベットive one for us. The more such models come out, the more business opportunエアベットies we will have. We've actually had an increase in inquiries, and we're starting to get into エアベット. This trend is not bad for us at all.

エアベット ends about main text.

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