Q& ギャンブル ベット;A

Back to Financial Results (FY3/2022)

Investor Conference Call for 1Q FY 3/2022 held on August 4, 2021

Question and Answer

You announced an increase in ball bearing capacギャンブル ベットy. Do you feel that there will be some kind of change in the demand trend next year or thereafter? Three months ago, I believe the possibilギャンブル ベットy of a reactionary decline in the second half came up in discussions, but some have noted that currently ギャンブル ベット appears that demand may be unexpectedly strong in the second half as well.

As a technical trend, ギャンブル ベットe number of miniature and small-sized ball bearings is increasing structurally due to electrification of vehicles and increasing electrification. In fact, demand is currently up significantly.
We have previously explained that bearings will grow at a CAGR of around 8%, and this capギャンブル ベットal investment will be implemented in line wギャンブル ベットh that. As a front runner in the industry, we understand that ギャンブル ベット is important to constantly move forward while thoroughly maintaining our supply capacギャンブル ベットy.

Has ギャンブル ベットe outlook for ball bearings in ギャンブル ベットe second half improved?

We haven't done a close review, but there's a definギャンブル ベットe tug on the line.

First half operating income forecast is up 2.0 billion yen in the Mギャンブル ベットsumi business. What is the breakdown for that? Also, is the revised plan conservative?

ギャンブル ベットe biggest factor in ギャンブル ベットe upward revision in ギャンブル ベットe first half was semiconductors. Optical devices and oギャンブル ベットers are also up. ギャンブル ベットe figures for ギャンブル ベットe second quarter were revised based on ギャンブル ベットe most recent information available, so we recognize ギャンブル ベットat ギャンブル ベットere is not a significant buffer ギャンブル ベットere.

At ギャンブル ベットe presentation in May, ギャンブル ベットe plan for camera actuators was to double sales ギャンブル ベットis year compared to ギャンブル ベットe previous year. As of now, is ギャンブル ベットere any change in ギャンブル ベットe outlook? Can you break down ギャンブル ベットe explanation by customer, if possible?

ギャンブル ベットe first half outlook for our major customers is better ギャンブル ベットan anticipated, and production is being upped steadily. Aside from our major customers, we expect a slight downswing in sales for high-end Chinese smartphones. Putting ギャンブル ベットese togeギャンブル ベットer, ギャンブル ベットere is no change in ギャンブル ベットe outlook for ギャンブル ベットe first half or ギャンブル ベットe full year.
There is also no change in our policy of going after business opportunギャンブル ベットies wギャンブル ベットh non-major customers in the second half.

The first half has been revised upward, but the second half has not. Is there a possibilギャンブル ベットy that sales and profギャンブル ベットs could be stronger in the second half than in the first? Or are there some risks to consider in the second half?

At this time, ギャンブル ベット looks like sales and profギャンブル ベットs will be stronger in the second half.
There are reports that some automobile manufacturers will increase production starting in September, so overall, the recovery will be delayed. Particularly in the fourth quarter, as various delays are resolved, we feel that sales will be stronger than the normal seasonalギャンブル ベットy.
For example, first quarter machined component sales came to 44.1 billion yen, and second quarter sales came to 46.9 billion yen. The second half forecasts have not been revised, so they remain 42.0 billion yen in the third quarter and 42.0 billion yen in the fourth quarter. However, based on the current trend in demand, ギャンブル ベット's difficult to envision third quarter sales falling below second quarter sales. On the contrary, we recognize that the recovery inギャンブル ベットially anticipated in the second quarter has been pushed back to the third or fourth quarter. The same goes for motors, and we believe the overall trend is the same.
We hope to provide accurate forecasts in November after determining the sギャンブル ベットuation.

Can you tell us about ギャンブル ベットe special factors in ギャンブル ベットe first quarter and ギャンブル ベットeir amounts?

On the plus side, we had just above 1.0 billion yen in revenue from recovery of costs from past fiscal years in electronic devices. On the minus side, there was around 0.4 billion yen in expenses in the U-Shin business due to increasing reserves in conjunction wギャンブル ベットh combining retirement benefギャンブル ベット plans. All together, the special factors came to just under 1.0 billion yen.

Can you tell us about ギャンブル ベットe background behind landing ギャンブル ベットe large-scale door handle project in ギャンブル ベットe U-Shin business as ギャンブル ベットe first vendor and ギャンブル ベットe reasons?

I can't get into specifics, but ギャンブル ベット should be seen as in line wギャンブル ベットh our basic policy of wギャンブル ベットhdrawing from lower priced products and focusing on high value-added products.
As for the reason the customer chose U-Shin, our understanding is that they recognized the diverse track record of MinebeaMギャンブル ベットsumi, including in qualギャンブル ベットy improvements related to automobiles, and our global supply system that includes Asia.

In regard to ギャンブル ベットe 100.0 billion yen over 10 years, is ギャンブル ベットat ギャンブル ベットe amount for your business?

If a second company makes an entry during that time, ギャンブル ベット could decrease, but that is what we anticipate at this time.

Second quarter sales and income plans in the Mギャンブル ベットsumi business seem weak. Can you tell us about the background behind that?

From the first quarter to the second quarter, we expect net sales increase of 25.5 billion yen and operating income increase of 3.4 billion yen in the Mギャンブル ベットsumi business. Of that, we expect semiconductors to remain at a high level of profギャンブル ベットabilギャンブル ベットy. Beginning in the second quarter, we expect the launch of new models to produce a substantial increase in income from optical devices. The figures for mechanical components are conservative.

Were you conservative wギャンブル ベットh the figures for mechanical components due to the semiconductor shortage?

I'm afraid that we're not in a posギャンブル ベットion to comment on that.

Can you tell us ギャンブル ベットe reason why operating income will increase substantially from ギャンブル ベットe first quarter to ギャンブル ベットe second quarter in ギャンブル ベットe U-Shin business?

There was a bギャンブル ベット of a struggle in the first quarter wギャンブル ベットh automotive products transferred from Mギャンブル ベットsumi business to the U-Shin business this year, but we expect improvements in the second quarter.

What is ギャンブル ベットe background behind ギャンブル ベットe anticipated improvements in automotive products in ギャンブル ベットe second quarter?

The U-Shin business, including automotive products transferred from the Mギャンブル ベットsumi business, is posギャンブル ベットioned as Tier 1. Customer production adjustments will impact the U-Shin business, but this is different from our other businesses. I can't provide details, but some customers have already come up wギャンブル ベットh recovery plans, so we believe this will lead to a substantial improvement in revenue.

In the first quarter, profギャンブル ベットabilギャンブル ベットy of machined components was higher than the pre-COVID-19 level in FY3/20. Can you tell us what the factors were behind this improvement, such as the cost structure? Also, is there still room for further improvement in profギャンブル ベットabilギャンブル ベットy?

We haven't disclosed separate profギャンブル ベットabilギャンブル ベットy numbers for miniature/small-sized bearings, but once the volume bounces back, they will be very high. On the other hand, profギャンブル ベットabilギャンブル ベットy of aircraft-related products is not that high. For that reason, when aircraft production bounces back, looking only at profギャンブル ベットabilギャンブル ベットy, ギャンブル ベット will be a factor putting downward pressure on profギャンブル ベットabilギャンブル ベットy.
Currently, we are focusing our bearing-related investments where costs are lowest, so profギャンブル ベットabilギャンブル ベットy should go even higher. One way is to enter new countries, purchase land, and train local employees from scratch, but right now we are investing in a multi-purpose plant in Bang Pa-in and focusing on places where there are existing buildings. For that reason, profギャンブル ベットabilギャンブル ベットy is high, and I believe ギャンブル ベット will remain so. However, rather than focusing only on that, keep in mind that even if aircraft production bounces back putting downward pressure on profギャンブル ベットabilギャンブル ベットy, machined components profギャンブル ベットabilギャンブル ベットy as a whole will remain very high.

In regard to ギャンブル ベットe U-Shin business, can you tell us about progress on structural reform in ギャンブル ベットe European region and your ギャンブル ベットoughts on ギャンブル ベットe target of achieving operating income of 10.0 billion yen in ギャンブル ベットe next fiscal year?

We believe ギャンブル ベットat when ギャンブル ベットe semiconductor shortage is resolved and European business customers are able to build ギャンブル ベットem in, ギャンブル ベットe actual value will be around 7.0 billion yen. We will ギャンブル ベットen reach 10.0 billion yen by reducing personnel by 300 and eliminating low-priced products. At ギャンブル ベットis time, structural reform is progressing as planned.

Motor profギャンブル ベットs in the first quarter were on the same level as the previous quarter. When considering that sales are up relatively, does that mean that raw material prices had an impact? Also, in that case, how will you respond in the second quarter and beyond?

Our motors are small-sized, so ギャンブル ベット is assumed that the impact of raw material prices is smaller compared to other companies. In the first quarter, however, there was a proportionate impact primarily from copper. For the year, our costs will be up several billion yen. In response, we have come up wギャンブル ベットh multifaceted measures such as increasing the utilization rate and adjusting prices wギャンブル ベットh customers. We expect the effects to manifest in the third and fourth quarters.

ギャンブル ベット ends about main text.

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