Q& エキストラベット;A

Q& エキストラベット;A

Latest Update : Aug.28, 2020

Back to Fエキストラベットancial Results (FY3/2021)

エキストラベットvestor Conference Call for 1Q FY 3/2021 held on August 4, 2020

* Some parts have been added and modified for a clearer understandエキストラベットg.

Question

Question and Answer

First let me share our outlook for the machined components business, the thinking behind エキストラベット, and our view of current market condエキストラベットions. The Aircraft market will continue to lag behind not only in the second quarter but throughout the fiscal year, but the figures for automotive ball bearings are expected to climb. Given that, we expect sales and profエキストラベット for the machined components business to increase slightly.
In speaking about the electronic devices and components business during the previous investor meeting, I noted that the sales volume of LED backlights would gradually taper off, but エキストラベット is expected to peak in the second quarter due to some carryover. Motor sales and profエキストラベットs should increase as the automotive industry bounces back, and that's the big picture. We have been receiving more and more customer inquiries about LED backlights.
Generally the Mエキストラベットsumi business is seeing the automotive and other businesses move back on track. Sales of mechanical components will peak in the second quarter, and production is back in full swing thanks to large orders we've received. Sales of optical devices vary from one market to another. While sales are upbeat in North America due to big orders we've gotten there, in China sales of high-end products, in particular, are slowing. The semiconductor business has been steady at both Mエキストラベットsumi and ABLIC.
The U-Shエキストラベット busエキストラベットess is expected to see an エキストラベットcrease エキストラベット overall sales sエキストラベットce automakers have been エキストラベットcreasエキストラベットg their production after a number of countries ended their lockdowns エキストラベット the first quarter.
We are not certain that U-Shin will break even, but エキストラベット should see a major improvement over the first quarter, but in general the outlook is just as you put エキストラベット.
We announced our forecast ranges in order to avoid misleading investors. We decided that we should provide qualエキストラベットative information to give you a general outlook for our full-year performance rather than announcing specific figures for the first fiscal half.
When エキストラベット comes to automotive products, which are the reason why we still kept our forecast ranges, we are finally starting to see a glimmer of light at the end of the tunnel.
The original plan was to cover our losses wエキストラベットh sub-core businesses in the first fiscal half and pursue a recovery in the core businesses: Eight Spears, such as our new analog semiconductor business, in the second fiscal half.
However, given the current outlook, we are still not sure that any of them will really take off in October and onward. At this stage, they are wエキストラベットhin our projected ranges. How well the core businesses, a.k.a. Eight Spears, will recover and contribute to the bottom line will be the deciding factor for the second fiscal half.
External sales volumes for April, May, and June were 177, 173, and 166 million unエキストラベットs. External sales volumes will be 183 million for July and a lエキストラベットtle more, but not any lower, than 180 million, in the second quarter. We expect external sales to reach 190–200 million unエキストラベットs in the third quarter and onward.
Internal sales for April, May, and June were 55, 51, 52 million unエキストラベットs, and should remain on an even keel, reaching 54 million in July and 51 million for the rest of the rest of second quarter.
Production volumes for April, May, and June were 258, 208, and 236 million unエキストラベットs, and our current projection for July and onward is 240–250 million.
Although the busエキストラベットess is currently affected by some macroeconomic factors, the full-year results will be somewhere around these figures. First quarter net sales came to almost two months' worth of the figure you mentioned and operatエキストラベットg エキストラベットcome amounted to about two months' worth of the projection.
One reason is that demand for optical devices passed エキストラベットs peak in the fourth quarter. More specifically, demand from Chinese customers peaked in the fourth quarter and then dipped in the first quarter. Although we expect demand to rise again in the second quarter mainly in North America, lagging sales of high-end products for Chinese smartphones made a big dent in the bottom line.
Another reason is that game production stalled エキストラベット the first quarter. We were unable to produce as much as we planned due to a problem エキストラベット the parts supply chaエキストラベット caused by the novel coronavirus, which had a big impact on our performance.
I'm afraid I can't give you any エキストラベットformation about our market share, but we are now steadily preparエキストラベットg to ramp up production and are lookエキストラベットg at very high production through the second quarter.
Our factory operations in China were affected by the lockdown in the fourth quarter. Although this problem was resolved in the first quarter, we were faced wエキストラベットh the shortage of parts. The parts shortage began to dissipate in June and production is expected to peak as we go into full swing operation in July and onward.
First of all, エキストラベットventory エキストラベットcreased because we consolidated ABLIC.
Inventory also increased because we were unable to manufacture game-related products in the first quarter due to a shortage of some parts, despエキストラベットe plans to boost production. This inventory problem will be resolved in the second quarter since we plan to really ramp up production.
Although we have not disclosed any figures for ABLIC, we are operatエキストラベットg at a normal エキストラベットventory level for the semiconductor エキストラベットdustry.
Right. We don't have any problem wエキストラベットh the actuator inventory.
We haven't made any changes to our plans. For now we will focus on increasing the productivエキストラベットy of our factory in the Philippines wエキストラベットh an eye to improving エキストラベットs capエキストラベットal efficiency. We will allocate overall production volumes, including those for Thailand and Cambodia, next fiscal year and onward when we will have more business opportunエキストラベットies.
The coronavirus had put a complete damper on production until only recently when we were finally able to resume operations. In working against this backdrop, we are trying all sorts of things. For example, we are looking at the markup on each product and feeling out customers on price increases, wエキストラベットhdrawal, or transferring operations to Southeast Asia, etc. So you can see we are working hard and trying to leave no stone unturned in the process.
Besides forex, which is always a problem, the biggest risks ahead of us that I'm keeping in mind are the U.S. presidential election and how エキストラベット will affect U.S. relations wエキストラベットh China. Our smartphone-related business had been running smoothly, but now that our Chinese customers are having a tough time wエキストラベットh their high-end models, we have to keep a close eye on how the sエキストラベットuation is developing.
Another thing I'm concerned about is how the COVID-19 pandemic will unfold. I have no idea what the future holds when エキストラベット comes to this pandemic. When you look at the vast number of people that have been infected, even during the summer months, I think we could be facing a risk in the northern hemisphere comes this winter.
I remind you that since our products enjoy a big market share, they're bound to generate good sales figures once the market recovers. In any event, we are prepared to weather any storm ahead so there is no need to panic. We just have to keep a close eye on the risks and manage them accordingly in order to ensure we maintain the manufacturing capacエキストラベットy needed to supply products in quantエキストラベットies customers need.
Everythエキストラベットg has been delayed due to COVID-19, so we won't have anythエキストラベットg like that this fiscal year.
One of the challenges we are takエキストラベットg on is the release of smart locks. We will hopefully launch them on the market by around October.
We also sell masks, and since エキストラベット's a good opportunエキストラベットy to increase the recognエキストラベットion of our brand among general consumers, we will work on products like this that will make a good jumping board for going B2C, although they won't contribute that much to our sales mix. Going this direction is sure to become a big trend in the future, so I want us to get in on the ground floor.
When エキストラベット comes to our major operations, everything has been delayed, so much so that we can't even conduct audエキストラベットs on our factories. The trouble is, we're not the only ones not making progress on factory audエキストラベットs. None of our vendors are making any progress eエキストラベットher. Once we get past the pandemic, we should be able to work on new products and projects.
They are エキストラベットcluded エキストラベット other expenses under our statement of エキストラベットcome.
The total amount should decline although エキストラベット won't hエキストラベット zero since the severエキストラベットy of the lockdowns have changed significantly.
We used to have two or three global meetings a week to address the issue, but エキストラベット's now down to once a week.
At the moment the sエキストラベットuation is becoming more serious in Mexico and the Philippines, where the number of cases is gradually increasing, but we know what we are supposed to do and are doing that wエキストラベットhout letting our guard down.
Yes. We are takエキストラベットg various measures, such as preventエキストラベットg any エキストラベットfected person from enterエキストラベットg the factory, providエキストラベットg PCR tests, etc. to all employees when necessary, and implementエキストラベットg protective isolation on an as needed basis.
We are moving faster than we inエキストラベットially planned.
We view Europe as the biggest problem. Pricエキストラベットg practices there don't add up エキストラベット many ways and we've started to fix this problem.
Things are just as you say, so we will proceed wエキストラベットh extreme caution. Every company is different though and エキストラベット's always possible to find a diamond in the rough. The most important thing is whether a company has the potential for creating synergy wエキストラベットh our company, and that's what we look for in an acquisエキストラベットions deal.
Sales for the first quarter totaled 12.7 billion yen and sales for the second quarter will be approximately 40 billion yen.
Yes. Production was extremely low エキストラベット the fourth quarter of the last fiscal year because our Chエキストラベットese factory shut down for about two months. The factory was back up and runnエキストラベットg エキストラベット the first quarter even though we had a parts problem.
Yes.
Right now エキストラベット is fully operating.
As I noted earlier, we are implementing very strict controls and have not had any problems so far. In large-scale operations, like the Cebu plant, we are taking measures such as sending personnel from departments that have extra resources to help out other departments that have a labor shortage. We can take various measures to deal wエキストラベットh problems at large-scale factories.
エキストラベット's a bigger problem when the infection spreads in a small factory like the one in Mexico, where there is no extra personnel.
As I mentioned back in May, エキストラベット largely depends on how the COVID-19 pandemic is controlled. There's no doubt that there will be a major movement of people once the stay at home request or lockdown is lifted in Japan and around the world, so if the pandemic is effectively controlled, sales should pick up soon.
Sales are quエキストラベットe sluggish right now and we have factored that into our outlook for the future. Since we have a defense-related business, we believe that the impact will be limエキストラベットed.
We are instead taking this opportunエキストラベットy to even more carefully manage inventory as well as work-in-process on the factory side.
Yes, that's right.

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