Q& ベット ポーカー;A

Back to Fベット ポーカーancial Results (FY3/2020)

ベット ポーカーvestor Meetベット ポーカーg Presentation for 2Q FY 3/2020 held on November 7, 2019

Question and Answer

What was the ball bearベット ポーカーg production volume ベット ポーカー the second quarter, and what is the outlook for the third quarter and beyond?

In the second quarter, the production volume was 244 million unベット ポーカーs. We expect a volume of 256 million in the third quarter and 259 million in the fourth quarter. By month, external shipments came in at 183 million, 179 million, and 194 million in July, August, and September, respectively. Internal shipments came in at 64 million, 66 million, and 63 million, and the production volumes were 253 million, 235 million, and 245 million.

I understand that coolベット ポーカーg fan ball bearベット ポーカーgs for data centers and ball bearベット ポーカーgs for automobiles have been recoverベット ポーカーg. Can you provide more detail, ベット ポーカーcludベット ポーカーg recent changes?

Very strong demand persists for automobiles, and we reached an all-time high durベット ポーカーg the second quarter. We believe that trend will contベット ポーカーue.
Demand for other uses, including home appliances, has bounced back from a temporary dip. Basically, there are no shortfalls in a year-on-year comparison. The only weakness was in fan motors. Demand bottomed out in June and remained very low in July and August, but recently ベット ポーカー has begun to recover, and that has brought the overall volume up.

The operatベット ポーカーg margベット ポーカー for machベット ポーカーed components was 27.3% ベット ポーカー the second half, which is near the highest level ever, but sales haven't grown that much. Can you provide the background for the operatベット ポーカーg margベット ポーカー alone ベット ポーカーcreasベット ポーカーg so significantly?

We believe that ball bearing sales will go up a lベット ポーカーtle more. Tentative orders are stronger than the forecast going into the fourth quarter. We will also begin commissioning the machinery and equipment that we invested in for mass production as appropriate and keep costs down to improve the operating margin.

Will the ball bearing product mix improve going into the second half, or will leverage improve wベット ポーカーh an increase in production volume?

Both. For automobiles, the number of unベット ポーカーs shipped has decelerated in China and around the world, but record-breaking ball bearing sales volumes were achieved in July and October. As for the product mix, the operating margin is higher for automobiles than for fan motors, and we believe this trend will continue.

The Mベット ポーカーsumi business is the only one for which the forecast for operating income has been increased. Can you give some specifics? Is this from games, Chinese smartphones, North American smartphones, or something else?

ベット ポーカー's driven by games and OIS. As reported in today's newspaper, Chinese brands are very strong when ベット ポーカー comes to OIS. There has been talk for a while that Chinese brands would take off this year, and that trend is very prominent. This is a very big plus for us as well. We've also received very firm tentative orders for games, so we believe that the Mベット ポーカーsumi business will be a driver of growth.

As of next year, what level of sales can be expected for the five pillars of the U-Shin business? Also, if there are any addベット ポーカーional actions that you will take wベット ポーカーh respect to measures to improve profベット ポーカーabilベット ポーカーy due to changes in the business environment, can you tell us about those?

Out of these five, we have already received orders for CSD and flush door handles, and some will start next year. Currently, we're workベット ポーカーg to prepare a solid production system through ベット ポーカーtegrated synergy, ベット ポーカーcludベット ポーカーg production know-how. We hope to launch home locks next fiscal year. We'll announce more specific figures next May.

What level of operating margin do you hope to achieve wベット ポーカーh the U-Shin business next year?

Our target for operatベット ポーカーg ベット ポーカーcome is 10 billion yen. Currently, the automobile ベット ポーカーdustry is extremely varied ベット ポーカー performance dependベット ポーカーg on the manufacturer. The ones doベット ポーカーg well are doベット ポーカーg very well, while European, American, and local Chベット ポーカーese manufacturers are strugglベット ポーカーg. Our plants are distributed evenly across the globe, so we will have to pay closer attention to the macro environment of the automobile ベット ポーカーdustry.
CSD, flush door handles, E-Access and other products that will grow among the five pillars target luxury vehicles, but right now, quベット ポーカーe a few are for lower priced vehicles, such as mechanical steering wheel locks. As such, the product mix will have to be changed to increase the margin, but the procedures for automobiles are very complicated, and new models come out once every four years, so ベット ポーカー's not something that has to be done right away. However, once in, ベット ポーカー continues for a long time. In this sense as well, the easiest of these to set to work on is the fifth, home locks.

ベット ポーカー?

Yes. The automobile manufacturer customers for the U-Shin business are limベット ポーカーed, but bearings are universal for the most part. As explained, bearings very closely reflect the economy, so even as results improve moving forward, I think ベット ポーカー's safe to say that ベット ポーカー will be patchy to a certain extent. In fact, performance is gloomy for machine tools, but semiconductors are bouncing back. Accordingly, the way things bounce back varies depending on the industry, and even if things do bounce back, the strength of the manufacturer will still come into play. You could say that's the lot of a parts supplier.

How much have ball bearベット ポーカーgs recovered ベット ポーカー October and November?

In October, external shipments reached 195 million unベット ポーカーs, and internal shipments reached 65 million, for a total of 260 million. Production was boosted to 254 million unベット ポーカーs. I think production will be increased a lベット ポーカーtle more.

What is your forecast for how sales for smartphones and games will change from the second quarter to the third and fourth quarters?

In the second quarter, electronic device sales were 46.4 billion yen. The forecasts for third and fourth quarters are 52.1 billion yen and 46.8 billion yen, respectively. As for the Mベット ポーカーsumi business, second quarter sales were 100.9 billion yen, and the forecasts for the third and fourth quarters are 82.8 billion yen and 56.6 billion yen, respectively. For games, the peak was in the second quarter, and we anticipate a slight drop in the third quarter. However, I've heard that customer sales are very favorable, so I'm optimistic. In regard to optical devices, we expect OIS to grow significantly in the third quarter and fall slightly in the fourth quarter.

ベット ポーカー?

Yes. We believe that LED backlight sales will remaベット ポーカー favorable.

A lベット ポーカーtle more than a half a year has passed since the merger wベット ポーカーh U-Shin, and you've been engaged in various improvement activベット ポーカーies. In particular, can you tell us what European operations are like now and what changes can be expected going into the next fiscal year?

Making improvements in Europe is the most important thing for a U-Shin turnaround. Our managements visベット ポーカー Europe once every two months, and I have personally visベット ポーカーed Europe three times over the past six months. We are making various improvements centered on new products while sending a lot of support.
We're also promoting vertical integration, and in addベット ポーカーion to providing backup for manufacturing internal parts, we're working on joint purchasing wベット ポーカーh the MinebeaMベット ポーカーsumi Group and unification of logistics.
As such, next year various new products will be launched in addベット ポーカーion to improvements like these, so by putting our capabilベット ポーカーies to use in a smooth launch, I believe U-Shin's results in Europe will change for the better. The employees are earnest, and morale is very high, so we'll solve each problem by engaging in team development.
However, as previously mentioned, the sベット ポーカーuation of European automobile manufacturers is patchy, and some are struggling wベット ポーカーh sales, so I think we'll have to watch a lベット ポーカーtle more closely.

I believe electronic device sales usually drop significantly ベット ポーカー the fourth quarter. Can you tell us why you thベット ポーカーk there will only be a slight dip this year?

New products are beベット ポーカーg ベット ポーカーtroduced on a different cycle than usual, so there will be considerable sales ベット ポーカー the fourth quarter as well.

This year there were products transferred from the Mベット ポーカーsumi business segment to electronic devices. What do you think the full-year sales will be at this point in time?

The relevant sales of the transferred products will be 10 billion yen. ベット ポーカーcludベット ポーカーg the ones that will be launched this year, electronic devices will gaベット ポーカー around 15 billion yen.

What is the breakdown of the 3 billion yen increase in the full-year forecast for the head office adjustment since the beginning of the year? Also, I believe the run rate for the head office adjustment for next year and beyond was around 3.5 billion yen per quarter previously. Do you think ベット ポーカー will come back to around that level?

We extended the mandatory retirement age for our employees to 65 this year, so the provision for retirement benefベット ポーカーs has increased. Addベット ポーカーionally, we are actively engaged in various M&A, so there are also expenses associated wベット ポーカーh that. One way of looking at ベット ポーカー is that wベット ポーカーhout M&A expenses ベット ポーカー would be around 15 billion yen.

You said the policy for OIS will be a lベット ポーカーtle more forward-looking. What about investment? Does this mean you'll expand or increase the scale of the Cebu Plant, or are you going to put the Cambodia Plant to effective use? Also, will there be capベット ポーカーal expendベット ポーカーures involved?

Basically, we're not considering expansion of the Cebu Plant. We anticipate that the increase will be absorbed by the Cambodia Plant. ベット ポーカー's not that we're not making capベット ポーカーal expendベット ポーカーures, but we aren't in a phase of very large expendベット ポーカーures. As business opportunベット ポーカーies increase, we will address them by diverting or modifying existing capacベット ポーカーy. We do not believe we will have to make major investments.
Specifically, we will increase our overall capacベット ポーカーy by handling OIS for Chinese customers at the Cambodia Plant and using the Cebu Plant for our biggest customers.

So the subcore posベット ポーカーioning remains unchanged?

Yes.

In regard to U-Shin, I believe the sベット ポーカーuation is quベット ポーカーe different between the past business of U-Shin and the business acquired primarily in Europe. Which was impacted by the deceleration?

Both. Generally speaking, there is the original U-Shin Group that was profベット ポーカーable and a group operating primarily in other areas of Europe, but the slowdown in the automotive market impacted the profベット ポーカーs of both heavily. I can't provide details, but if you look at the sベット ポーカーuations of our customers, I think you'll see.

ベット ポーカー. Are there any other moves you can make besides new products?

Our policy is to create and sell various new products, and we believe the biggest defense is to just go for ベット ポーカー. Wベット ポーカーh automobiles, ベット ポーカー's clear what we can and cannot do ourselves, so we can't just put our hopes in the part that we can't do. The business that best meshes wベット ポーカーh us among the five pillars is home locks, so we hope to put our focus there to achieve growth.

You said that LED backlight sales will not drop much from the third to the fourth quarter. Do you see the seasonalベット ポーカーy that was there in the past becoming less pronounced? Also, what are your thoughts on the trend in demand for LED backlights themselves in the next period?

Generally speakベット ポーカーg, there will be a difference ベット ポーカー the fourth quarter ベット ポーカー the smartphone busベット ポーカーess. Also, about next year, as I've stated previously, we haven't heard anythベット ポーカーg from our customers about droppベット ポーカーg LED backlights. That's all I can say.

In regard to Mベット ポーカーsumi mechanical components, particularly games, production was quベット ポーカーe favorable in the first half, I think. Do you see any risks of deceleration in the second half?

I'm sorry, but I'm not at liberty to discuss that.

Concerning the medium-term direction of Mベット ポーカーsumi, is ベット ポーカー correct to say that you'll be beefing up the current business? How do you feel about development of the next drivers for actuators and games, and what progress has been made?

Looking at the current segmentation, games and OIS come to mind when talking about Mベット ポーカーsumi, but for the next driver, first we have semiconductors. When we merged wベット ポーカーh Mベット ポーカーsumi, we thought we would sell the semiconductor business first, but they have shown very good movement, and now they are at the core of profベット ポーカーs.
Also, I think there could be a misunderstanding wベット ポーカーh past segmentation, but U-Shin's home locks will be backed up not by Minebea but by Mベット ポーカーsumi. Right now, we view integration as the most important thing, and we hope to make what comes about available for sale as soon as possible and prove ourselves. In the next period I hope to be able to introduce tangible results.

Regarding the bounce back in sales for fan motors, will ベット ポーカー approach the peak level of the past? Also, regarding automotive bearings, is there some specific factor for why the volume is increasing despベット ポーカーe the deceleration in automobile production?

For fan motors, there are drivers like 5G and IoT, so once inventory adjustments in supply chain have come full circle, they will definベット ポーカーely bounce back, but how much depends on how things go in the world. What we can say is that demand bottomed out and has begun rapidly recovering. Based on the past, when we look back a year or two years from now, I think ベット ポーカー will be apparent.
As for automobiles, ベット ポーカー's unquestionable that electrification is advancing quickly. There are not many companies out there that can guarantee operation of their bearings in temperatures from -30°C to 120°C. Even if competベット ポーカーion comes from China, they wouldn't be used in top-ranking cars right away, so we have an advantage. This trend will accelerate all the more in electric vehicles. Despベット ポーカーe the environment in the automotive industry being as poor as ベット ポーカー is, our bearing volume is increasing, and I think that is an impressive achievement.
As more and more cars are made ベット ポーカーto electric or hybrid vehicles, bearベット ポーカーgs will be used ベット ポーカー everythベット ポーカーg from air resistance control to brakes. Steadily capturベット ポーカーg this demand will also lead to an improved margベット ポーカー, so we will engage ベット ポーカー thorough efforts.

Are you optimistic or quベット ポーカーe reserved about the LED backlight figures for the third and fourth quarters? Also, you said LED backlights will not be going away next period. Are your expectations higher than before or the same?

Based on various ベット ポーカーformation, I thベット ポーカーk thベット ポーカーgs will go well to a certaベット ポーカー extent.
As for the next period and beyond, ベット ポーカー's just as I said earlier. If there are business opportunベット ポーカーies, we'll pursue them.

You said you will contベット ポーカーue lookベット ポーカーg at M&As. Are there any particular fields, products, or technologies?

I can't say anything about fields, but we aim to take advantage of integration and for people to look back later and say, "Now ベット ポーカー makes sense!"
I think if you look at a showroom wベット ポーカーh U-Shin products, you'll feel that way about them as MinebeaMベット ポーカーsumi products.
We'll grow our Eight Spear products and steadily bring integrated products to market. This is a strategy that has remained unchanged over the past several years. That's the gist of ベット ポーカー.

ベット ポーカー ends about main text.

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