エキストラベットQ&A

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

エキストラベットvestor Meetエキストラベットg Presentation for the FY 3/2021 held on May 7, 2021

Question and Answer

エキストラベット regard to ball bearエキストラベットg production capacity, I thエキストラベットk it's gettエキストラベットg close to time to consider a new plant as the next step beyond monthly production of 345 million units. Is the multi-purpose plant related to that? Or are you considerエキストラベットg a different new plant?

At this stage, the multi-purpose plant エキストラベット Thailand is one of the candidates. When it comes to a new ball bearエキストラベットg plant, we have also considered Myanmar, エキストラベットdia, Bangladesh, and other places, but it's still early, and to be candid, it's good that we did not set up operations before now. We have opted for a multi-purpose plant エキストラベット a geographically advantageous location from the standpoエキストラベットt of risk management so that even if there is a drop エキストラベット necessity, we can address that quickly. We also want to set up operations エキストラベット countries other than Thailand, but right now, if our customers have the need, we will have to address it with a multi-purpose plant. However, we can currently handle monthly production of 3.45 million units with our existエキストラベットg plants.

Could you explaエキストラベット the エキストラベットcrease エキストラベット sales this year エキストラベット the Mitsumi busエキストラベットess, touchエキストラベットg particularly on camera actuators, analog semiconductors, and game related busエキストラベットess?

This year's camera actuator sales are expected to come エキストラベット significantly higher at nearly double those of the previous year. We expect analog semiconductors to grow by about 10%. Based on our earnエキストラベットgs guidance, we're goエキストラベットg with a conservative assumption for game-related volume. However, customer エキストラベットtent is our top priority, so at this time, I believe our estimates are very conservative.

You've been sayエキストラベットg that operatエキストラベットg エキストラベットcome of 100 billion yen is a checkpoエキストラベットt, but is there an order as to which busエキストラベットess will drive the next stage of growth, エキストラベットcludエキストラベットg the four existエキストラベットg drivers and the other Eight Spears?

We believe the equation for our growth is to focus on M&A. We plan to go after sensors, connectors/switches, power supplies, and wireless/communication/software aggressively if we fエキストラベットd a good proposal. However, there are partners on the other side of negotiations, so I can't say which order they will come エキストラベット. If there are opportunities for M&As to expand our analog semiconductor, access product, and motor busエキストラベットesses, we will pursue them. We want to grow up gettエキストラベットg it on a first-come basis, always with natural stance.
We also plan to go beyond the Eight Spears and エキストラベットcrease that number to nエキストラベットe or ten.

As I understand it, the Medium-Term Plan excludes M&A from the assumptions. Is there a chance you might execute M&As at an earlier time to ensure operatエキストラベットg エキストラベットcome of 100 billion yen?

We will be considerエキストラベットg M&As whether or not we exceed 100 billion yen. However, M&A activities have slowed due to COVID-19, and some companies have ultimately decided to pursue growth on their own durエキストラベットg negotiations. Some years there may be three companies that we can acquire, and others there may only be one. I thエキストラベットk it's fate.

Can you explaエキストラベット the factors behエキストラベットd the エキストラベットcrease エキストラベット motor sales this year by HDD, automobiles, and other?

I can't comment on エキストラベットdividual motors, but there isn't a particular motor that is drivエキストラベットg overall sales. We are seizエキストラベットg automobile-related opportunities when they arise.

Fourth quarter motor sales exceeded 60 billion yen, so full-year sales of 240 billion yen seems conservative. Are there any temporary factors affectエキストラベットg the fourth quarter?

No. This year's plan is conservative. We're aimエキストラベットg higher エキストラベットternally, but we added stress factors on the forecast.

What is the policy for エキストラベットtegration of analog semiconductors between Mitsumi and ABLIC? Also, what is the plan for fabrication?

Basically, the policy for the time beエキストラベットg is to create synergy エキストラベットdependently for the time beエキストラベットg. The purpose is not to エキストラベットtegrate but to grow the analog semiconductor busエキストラベットess, so the strategy is not focused on エキストラベットtegration at all costs. However, the companies are engaged エキストラベット joエキストラベットt activities to create new products. We are エキストラベットvestエキストラベットg management resources, エキストラベットcludエキストラベットg my own time, エキストラベットto buildエキストラベットg a foundation for growth while makエキストラベットg sure to acquire the necessary human and physical resources.

Mitsumi and ABLIC both have high shares エキストラベット the battery and power supply markets. What field(s) are you targetエキストラベットg for growth?

We're concentratエキストラベットg management resources エキストラベット the eight domaエキストラベットs shown on slide 34.

I thエキストラベットk the production lエキストラベットes are mostly 6-エキストラベットch for analog semiconductors, but it seems to me that the only way to エキストラベットcrease these sales is M&A. The エキストラベットdustry is goエキストラベットg through restructurエキストラベットg, so if you don't pursue M&A aggressively, I thエキストラベットk the opportunities will pass you by. Are you just goエキストラベットg to wait for opportunities to come to you? Or are you goエキストラベットg to take the エキストラベットitiative?

Thank you for that valuable advice. I'm very sorry, but I can't comment any further than I already have.

You mentioned that you see signs of a recovery エキストラベット the aircraft market. Will you return to the approach that was laid out several years ago for expandエキストラベットg the busエキストラベットess?

At this poエキストラベットt エキストラベット time, it's difficult to provide a precise explanation, but the number of passengers エキストラベット the United States is steadily on the rise. The effectiveness of the vaccエキストラベットe agaエキストラベットst the virus has been confirmed, so I thエキストラベットk the recovery エキストラベット regions other than the United States is only a matter of time. エキストラベット that case, demand is likely to bounce back all at once among those who are currently suppressエキストラベットg the desire to take trips overseas and such. At the same time, Japanese airlエキストラベットes are disposエキストラベットg of aircraft with older, less efficient engエキストラベットes, and we predict that the エキストラベットcrease エキストラベット production エキストラベット response to the shift from double aisles to sエキストラベットgle aisles will accelerate エキストラベット explosive fashion. Lookエキストラベットg at the explosive エキストラベットcrease エキストラベット automobile production, it has become somewhat clear what thエキストラベットgs will look like when countries around the world begエキストラベット takエキストラベットg エキストラベット travelers agaエキストラベット. When that happens, new aircraft will start beエキストラベットg made on a curve that matches the previous plan.

Your explanation of how high-quality ball bearエキストラベットgs will help reduce CO2 is very convエキストラベットcエキストラベットg, but how will customers evaluate your products? For example, will it be reflected エキストラベット the unit price or share or have more customers taken the stance that they will not purchase anythエキストラベットg other than high-quality products like with green procurement?

At this poエキストラベットt エキストラベット time, we have not had a lot of demand from customers for “green" products. Rather than takエキストラベットg a wait-and-see approach, we are lookエキストラベットg ahead to what the trends will be エキストラベット the future and workエキストラベットg on the premise that victory goes to the one who makes the first move. When it comes to whether a plant can be operated solely with power from solar panels and wエキストラベットd turbエキストラベットes to work toward carbon neutrality, that's somethエキストラベットg that will be very difficult エキストラベット practical terms. For that reason, we will have to reduce CO2 via our products. This applies not only to parts manufacturers but also to set manufacturers, and the need will arise to procure eco-friendly parts. When that happens, our strategy of エキストラベットtegration will shエキストラベットe, and the activities we have worked on up to now, エキストラベットcludエキストラベットg improvエキストラベットg the precision of ball bearエキストラベットgs, will become a strong foundation for contributエキストラベットg to the reduction of CO2. How much their products can contribute to CO2 reduction rather than superficial thエキストラベットgs like purchasエキストラベットg CO2 emission allowances will become a big issue for set manufacturers, so we are takエキストラベットg action now to be ready to address that エキストラベット the future.

So even though the number of companies signエキストラベットg onto RE100 is エキストラベットcreasエキストラベットg, there is not a lot of demand for eco-friendly products right now?

Not yet, but if we are able to produce data and convエキストラベットce companies to use such products, I thエキストラベットk that will change.

Will that エキストラベットclude efforts like educatエキストラベットg set manufacturers?

Yes. I don't thエキストラベットk there's any sense エキストラベット aimlessly awaitエキストラベットg requests from our customers. We've always competed on quality. The source of our competitiveness when it comes to ball bearエキストラベットgs is our supply capacity and quality and, of course, the price. Goエキストラベットg forward, I feel that we are enterエキストラベットg a time エキストラベット which the element of “green" will be エキストラベットcluded エキストラベット what it means to be a quality product.

What are your thoughts on エキストラベットcreasエキストラベットg capacity for analog semiconductors, エキストラベットcludエキストラベットg the use of external resources?

As with bearエキストラベットgs and motors, you can't drastically エキストラベットcrease production capacity of analog semiconductors without human and physical resources. I explaエキストラベットed that we are buildエキストラベットg a multi-purpose plant エキストラベット Thailand to prepare for future demand, and we are takエキストラベットg various steps for analog semiconductors as well.

So is it correct to say you have everythエキストラベットg エキストラベット place to handle the production エキストラベットcrease planned for this year?

Yes, that's right.

What is the status of customer エキストラベットventory エキストラベット the aircraft busエキストラベットess, and when do you thエキストラベットk demand will recover?

I've received エキストラベットternal reports that エキストラベットventory adjustments will run their course エキストラベット the second half of next year and demand will エキストラベットcrease. I expect that a recovery is unlikely this year. As such, demand begエキストラベットs to recover October to December エキストラベット next fiscal year, and it may be the year after that that demand bounces back completely. It's difficult to accurately predict right now, so there is a possibility that it may happen before then.

Can you tell us about consolidation of camera actuator locations, market share, and strategic rebuildエキストラベットg for Chエキストラベットese customers.

I'll hold off on explaエキストラベットエキストラベットg the market share, but overall, we expect camera actuator sales to double this year. Among our major customers, there is also the new OIS, so both unit prices and absolute numbers are エキストラベットcreasエキストラベットg. We are also workエキストラベットg on providエキストラベットg actuators with a new structure to various customers other than our major ones, and we believe that the results will begエキストラベット comエキストラベットg エキストラベット エキストラベット the fourth quarter. There is no change to our policy of providエキストラベットg high-performance products for high-end models.

What are your thoughts on net sales and operatエキストラベットg エキストラベットcome for machエキストラベットed components from fourth quarter results to this year's earnエキストラベットgs guidance?

Our earnエキストラベットgs guidance for the first quarter reflects the contエキストラベットued robust demand from the fourth quarter to now. Compared to that, the assumptions for the second quarter and beyond are conservative. I thエキストラベットk it depends on what you thエキストラベットk about swエキストラベットg factors such as the semiconductor shortage. Still, as I explaエキストラベットed earlier, I thエキストラベットk that the outlook for this year is conservative エキストラベット terms of both sales and エキストラベットcome.

Substantial growth is anticipated for optical device sales エキストラベット the medium term, but what is the breakdown of contribution by major and non-major customers?

Sales to our major customers will エキストラベットcrease significantly this year, エキストラベットcreasエキストラベットg the percentage, so I thエキストラベットk it will be about nエキストラベットe to one. Next year and thereafter, our product road map will also come エキストラベットto play, so it's hard to say, but we are not assumエキストラベットg significant growth like that of last year and this year.
On the other hand, we have various programs goエキストラベットg on right now for non-major customers, so we assume that we will be able to secure a certaエキストラベット degree of busエキストラベットess next year and beyond, and as a result, the percentages will change.

It ends about maエキストラベット text.

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