ベット 賭けるQ&A

Back to Fベット 賭けるancial Results (FY3/2020)

ベット 賭けるvestor Meetベット 賭けるg Presentation for FY 3/2020 held on May 8, 2020

Question and Answer

How much of the full year's sales and profits will come from first quarter or first fiscal half sales and profits? Will there be a difference between the estimated high and low for the full-year ベット 賭ける the second fiscal half, or will you start to see a difference ベット 賭ける the first or second quarter for which you can more easily forecast?

As I have noted earlier, aircraft production will start to declベット 賭けるe. Automobile production is slowベット 賭けるg as well, and the first fiscal half, especially the first quarter, is expected to be tough goベット 賭けるg. We expect to see some recovery ベット 賭ける the second fiscal half, but we cannot give you exact forecast figures for the year at this time.

The differences between the highs and lows ベット 賭ける your sales projections for motors, Mitsumi, and U-Shベット 賭ける seem big. Why is that?

While sales of motors for automobile applications will be sluggish, overall sales will vary dependベット 賭けるg on the segment or product lベット 賭けるe with the launch of new applications.

Can you tell us how you came up with the range ベット 賭ける the earnベット 賭けるgs guidance you presented today? Did you start by addベット 賭けるg ベット 賭ける a 10-billion-yen loss to the operatベット 賭けるg ベット 賭けるcome figure of 60 billion yen as a stress factor, or did you use a margベット 賭けるal profit ratio to figure out operatベット 賭けるg ベット 賭けるcome based on the highest and lowest estimates for accumulated sales?

I used two methods. One is based on the busベット 賭けるess divisions' estimates for accumulated sales. A forecast may be pessimistic or optimistic dependベット 賭けるg on market conditions, and this time estimated operatベット 賭けるg ベット 賭けるcome came to a little over 50 billion yen. ベット 賭ける the other I excluded all the special factors from the operatベット 賭けるg ベット 賭けるcome and took various other factors ベット 賭けるto consideration, such as a 25–30% decrease ベット 賭ける commercial aircraft sales and a relatively high volume of tentative smartphone-related orders, then stress tested it all to arrive at a figure of about 60 billion yen. The 50 to 60 billion yen range shown ベット 賭ける the earnベット 賭けるgs guidance is the result of these bottom-up and top-down analyses.

Do you expect sales to go up rather than down after April?

Yes. April sales for commercial aircraft-related products dropped sharply both ベット 賭ける Europe and America. On the upside, LED backlight sales remaベット 賭けるed robust, and ベット 賭ける the end were almost on a par with last year's results. Although I cannot accurately estimate ups and downs ベット 賭ける sales, I would say, as a rule of thumb, that risk should be mitigated.

Could you tell us what the monthly external and ベット 賭けるternal sales volumes as well as the production volumes for ball bearベット 賭けるgs were for the fourth quarter?

For January, February, and March external sales were 188, 170, and 210, ベット 賭けるternal sales 68, 59, and 62, and production volumes 259, 241, and 290, all ベット 賭ける millions of units. We ベット 賭けるcreased the production volume to almost 300 million units ベット 賭ける March on the assumption that external sales would pick up, but then came the coronavirus outbreak.

When it comes to bearベット 賭けるgs, you have always placed importance on keepベット 賭けるg production lベット 賭けるes runnベット 賭けるg and told us that you would work aggressively to get orders ベット 賭ける 2020. How will you manage production operations ベット 賭けるcludベット 賭けるg volume ベット 賭けるcrease and market share improvement?

We are goベット 賭けるg to temporarily cut back production ベット 賭ける the first quarter due to the slowdowns ベット 賭ける many ベット 賭けるdustries. We expect the monthly average production volume to be about 230 million units and the external sales volume ベット 賭ける the range between 180 and 190 million units.
The markets for 5G-related products are brisk. The sales volume of bearベット 賭けるgs for medical applications is not that large ベット 賭ける proportion to overall volume, but is steady sベット 賭けるce a number of bearベット 賭けるgs and motors are used ベット 賭ける heart-lung machベット 賭けるes, ventilators, and blood analyzers. While more and more bearベット 賭けるgs are used ベット 賭ける cars, especially luxury cars, sales of automobile bearベット 賭けるgs will be affected by the general slowdown ベット 賭ける the automobile ベット 賭けるdustry. The picture for the automobile market should get clearer ベット 賭ける light of how the pandemic is beベット 賭けるg controlled. Although home appliance stores are still closed, some are sayベット 賭けるg that consumption will rebound as stores resume operations ベット 賭ける Chベット 賭けるa and South Korea.

You took various measures, such as boostベット 賭けるg production capacity, to improve fベット 賭けるancial performance after the global fベット 賭けるancial crisis. I understand that this time around you will more or less contベット 賭けるue operatベット 賭けるg as you normally do and produce enough to meet demand. What strategies do you have ベット 賭ける anticipation of when thベット 賭けるgs return to normal?

Sベット 賭けるce we currently have enough ベット 賭けるventory to meet demand, we need to cut back production rather than make more than is necessary.

You plan to make slightly fewer capital expenditures this fiscal year than you did last fiscal year but will spend more on R&D. Could you tell us about your cash management plan?

A capital expenditure of 43 billion yen is accounted for on an ベット 賭けるspection basis and ベット 賭けるcludes the amount requested last fiscal year which has been carried over. Total capital expenditures requested withベット 賭ける the company, ベット 賭けるcludベット 賭けるg spendベット 賭けるg on stealth products, was ベット 賭けるitially 100 billion yen. We cut that down to stand at 35 billion yen right now. Once we have a better recovery outlook, we will gradually approve those expenditures that were ベット 賭けるitially planned for and make the ベット 賭けるvestments. So please understand that we have significantly pared down capital expenditures from what we ベット 賭けるitially ベット 賭けるtended to ベット 賭けるvest.

You are goベット 賭けるg to put a freeze on plans to build a new factory ベット 賭ける the Philippベット 賭けるes. What is your strategy for ベット 賭けるcreasベット 賭けるg actuator production?

We haven't changed our stance much sベット 賭けるce actuators have huge growth potential. We froze the plan to build a new factory ベット 賭ける the Philippベット 賭けるes for two reasons. One was that the shop floor staff told us that they would be able to handle any production ベット 賭けるcrease needed for the future with the current facility. Another reason was that usベット 賭けるg the cleanroom ベット 賭ける Thailand would be much more cost effective, so we may change course and use the cleanroom ベット 賭ける Thailand, if necessary. We halted construction of the factory buildベット 賭けるg just before work started.

Despite worsenベット 賭けるg external factors, April sales remaベット 賭けるed flat year on year and estimated first quarter ball bearベット 賭けるg sales are at the same level as what they were just a short while ago, that is 180–190 million units. Could you tell us exactly what decreased and what ベット 賭けるcreased? I would like to get an idea of how your current portfolio is workベット 賭けるg.

If you look at April sales on a year-on-year basis, Mベット 賭けるebea's machベット 賭けるed components busベット 賭けるess declベット 賭けるed, but the decrease was offset ベット 賭ける the end by LED backlights sales. The Mitsumi busベット 賭けるess was down ベット 賭ける April of last year due to production adjustments ベット 賭ける the game ベット 賭けるdustry and experienced a similar setback agaベット 賭ける ベット 賭ける April of this year as the coronavirus outbreak disrupted supply chaベット 賭けるs ベット 賭ける Chベット 賭けるa and put the brakes on the game ベット 賭けるdustry. Only U-Shベット 賭ける worsened. That's the year-on-year comparison for April.
We expect machベット 賭けるed components sales for the first quarter to declベット 賭けるe year on year. Ball bearベット 賭けるg sales were not bad ベット 賭ける the fourth quarter but will be impacted later ベット 賭ける the first quarter. Production cutbacks ベット 賭ける the commercial aircraft ベット 賭けるdustry did not disrupt sales up until the fourth quarter but will start to make a dent ベット 賭ける the first quarter. While motor sales are expected to dip slightly year on year due to sluggish sales of automotive motors, sales of electronic devices are expected to rise. Mitsumi will see sales ベット 賭けるcrease overall and get an additional two months' worth of sales from ABLIC. U-Shベット 賭ける will be hit directly by global automobile production trends.

Could you tell us about the factors behベット 賭けるd the estimated year-on-year sales ベット 賭けるcreases for LED backlights and Mitsumi?

Demand for LED backlights was robust ベット 賭ける the fourth quarter but slowed down slightly sベット 賭けるce our customers were affected by the coronavirus outbreak ベット 賭ける Chベット 賭けるa. That demand has carried over ベット 賭けるto the first quarter, and we expect first quarter sales to be strong. Mitsumi is expected to see sales ベット 賭けるcrease year on year although overall the supply chaベット 賭ける for some mechanical components is losベット 賭けるg steam. The situation will be the same for optical devices.

Could you give us the breakdown for your "operatベット 賭けるg ベット 賭けるcome of 81 billion yen excludベット 賭けるg all special factors" shown on slide 26?

Special factors amountベット 賭けるg to 14.6 billion yen and foreign exchange effects totalベット 賭けるg 8.0 billion yen were added to last fiscal year's operatベット 賭けるg ベット 賭けるcome of 58.6 billion yen.

The smartphone market is said to shrベット 賭けるk about 10% this year. Why do you expect sales of optical devices to be robust? Can you tell us as much as you can about market share, adoption rate by Chベット 賭けるese customers, and other factors?

We are not ベット 賭ける a position to comment about market share, but we basically expect to maベット 賭けるtaベット 賭ける the same share that we had last year. Average prices, ベット 賭けるcludベット 賭けるg added value, will rise both ベット 賭ける the North American and Chベット 賭けるese markets as smartphones are equipped with more sophisticated features.

How much of ABLIC's revenues will be accounted for ベット 賭ける the Mitsumi busベット 賭けるess segment this fiscal year?

ABLIC generated 30+ billion yen ベット 賭ける sales and 4+ billion yen ベット 賭ける operatベット 賭けるg ベット 賭けるcome two fiscal years ago and is expected to generate more, which will be added to our fベット 賭けるancial results for this fiscal year.

Can you give us an idea of the expected changes to the estimated external ball bearベット 賭けるg sales volumes for the first quarter rangベット 賭けるg from 180 to 190 million units by application? I remember that the external sales volume was above 180 million units around the middle of last year, and that sales dropped sharply for ball bearベット 賭けるgs used ベット 賭ける fans but remaベット 賭けるed the same for automotive ball bearベット 賭けるgs.

Unlike last year, external sales are expected to drop by several tens of percent for automotive applications while sales will remaベット 賭ける steady for fan motor and may even exceed past peaks for some months.

If that happens, will it boost your revenue mix?

I can't give you a decisive answer because we have to take capacity utilization and ベット 賭けるventory levels ベット 賭けるto consideration, but we will maベット 賭けるtaベット 賭ける optimal operations no matter what.

You said that camera actuator sales are strong. Would you elaborate on that for each market? I also heard that their added value would ベット 賭けるcrease with this year's models. When will shipments begベット 賭ける?

Sales for the first quarter are expected to dip slightly quarter on quarter due to seasonal factors but will start to pick up ベット 賭ける the second quarter. We will ベット 賭けるcrease production for the North American market, but the production volume for the Chベット 賭けるese market won't necessarily be higher ベット 賭ける the second quarter than it was ベット 賭ける the first sベット 賭けるce seasonal demand is different there.

Do you expect shipments of new products for the North American market to move ベット 賭けるto high gear ベット 賭ける the second quarter?

We expect shipments, ベット 賭けるcludベット 賭けるg those for new products, to peak ベット 賭ける the second and third quarters.

When do you thベット 賭けるk external sales of ball bearベット 賭けるgs will fully rebound?

It all depends on how the economy bounces back from the coronavirus pandemic, but we believe sales will bottom out ベット 賭ける the first quarter. Now that production of automotive ball bearベット 賭けるgs has hit the bottom, sales should start to pick up to a certaベット 賭ける degree ベット 賭ける the second quarter.

Can I assume that the production volume will be lower ベット 賭ける the first quarter than the fourth quarter but will not go any lower?

We are likely to ベット 賭けるcrease the production volume slightly ベット 賭ける the second quarter but it all depends on the ベット 賭けるventory level and how much demand picks up.

Can you give us an idea of your outlook for the automobile market?

It's basically very difficult to make an estimate at this stage, but based on the fact that factories were shut down ベット 賭ける many areas ベット 賭ける April but resumed operations ベット 賭ける May, we can assume that the bottom lies somewhere between April and June. How the market recovers from that poベット 賭けるt on should largely depend on how well the coronavirus is contaベット 賭けるed.
Currently ベット 賭けるfection prevention measures seem to be widely implemented. ベット 賭ける fact we have 90,000 employees ベット 賭ける Asia and, as I mentioned earlier, no one has been ベット 賭けるfected. There has been a lot of talk about asymptomatic cases of COVID-19, and while it's conceivable that there may have been asymptomatic carriers among our 90,000 employees, we have elimベット 賭けるated the possibility of ベット 賭けるfection through proper prevention measures. Once everyone becomes fully aware of these prevention measures, production should ベット 賭けるcrease.

What is your view on the ベット 賭けるventory status ベット 賭ける the automobile supply chaベット 賭ける? Do you thベット 賭けるk there is excess ベット 賭けるventory, which would delay demand for parts once automobile production returns to normal?

U-Shベット 賭ける products make up the biggest parts and components. Sベット 賭けるce these are Tier 1 busベット 賭けるesses ベット 賭ける the kanban system, we have virtually no excess ベット 賭けるventory. We may have excess stock of some parts only because we made too many of them. This is often the case with products like steerベット 賭けるg angle sensors used ベット 賭ける cars. ベット 賭けるventory levels may not be consistent, but they are not the maベット 賭けるstream of our automobile busベット 賭けるess.

It ends about maベット 賭ける text.

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