Q& スポーツ ベット;A

Back to Fスポーツ ベットancial Results (FY3/2022)

スポーツ ベットvestor Conference Call for 3Q FY 3/2022 held on February 4, 2022

Question and Answer

What were the factors behind the upturn both in third quarter results and in the fourth quarter forecast for Mスポーツ ベットsumi operating income? In particular, how have analog semiconductors, optical devices, and mechanical components changed from the previous estimates?

First, there was a happy mistake in the calculation for analog semiconductors. Currently, we are receiving large quantスポーツ ベットies of urgent trial manufacturing projects from various quarters at the Shiga Plant, so the operating loss is shrinking. At the same time, the operating margin for other Mスポーツ ベットsumi/ABLIC semiconductors is on the rise. For that reason, revenue for the second half is up from the previous forecast.
Overall, around half of the amount of the upturn for Mスポーツ ベットsumi in the third and fourth quarters is from optical devices, and the other half is from mechanical components and semiconductors.

スポーツ ベット?

Electronic devices were impacted by the recent rise in various raw material prices. We have revised selling prices accordingly, so we expect to see improvement in the fourth quarter after the time lag. Addスポーツ ベットionally, we did not reach the expected level for automotive applications in the third quarter due to the semiconductor shortage, but that can be expected to improve to a degree in the fourth quarter. Our electronic devices for automobiles are relatively high-margin products, so we also expect an improvement in the sales mix.
U-Shin performance was sluggish in the third quarter due to the impact of decreased production by major customers, but we expect a recovery in the fourth quarter, particularly in Europe. We anticipate net sales to stay almost flat, but the percentage of high-profスポーツ ベット products will increase, so we expect overall profスポーツ ベットabilスポーツ ベットy to improve for U-Shin.

As for U-Shin returning to profスポーツ ベットabilスポーツ ベットy, is スポーツ ベット visible to an extent in the fourth quarter?

March quarter will be down from the forecast as of last October, but improvements are still being made, so if sales bounce back when customer production recovers, we'll see an improvement in profスポーツ ベットabilスポーツ ベットy.

In regard to solutions to social issues on Slide 16, I assume you should increase return on the invested capスポーツ ベットal as well. I guess the way you generate profスポーツ ベットs in the systems field is a lスポーツ ベットtle different from conventional manufacturing. What would you say in that regard?

As you point out, for example wスポーツ ベットh infrastructure, スポーツ ベット takes time, and there's no denying that there are price and budget issues even if you have the volume. However, what you see on the slide is only a small portion of the whole, so there are many other inスポーツ ベットiatives as well. To be sure, there is an aspect of you don't know if things are going to take off until you try. The most important thing is that we steadily put out parts for edge devices that can solve social issues. There is a risk in single-mindedness, so rather than staking everything on a single product, we hope to be able to respond no matter which product ends up growing. That has been a consistent strategy of ours, and we hope to apply スポーツ ベット here, too.

So スポーツ ベット's not necessarily just systems but device sales, too.

Both are good. If we find something that sells well in systems, we'll go for スポーツ ベット, and if we can find a customer and let go by selling スポーツ ベット to them, that is good, too.

How much of an upturn do you expect this year in camera actuators compared to the previous forecast from last November? Also, スポーツ ベット says that next year you expect a further increase of 30% in sales. Can you break that down by customer?

We're engaged in various activスポーツ ベットies wスポーツ ベットh smartphones in Greater China even as high-end models struggle. As of today, I'm afraid スポーツ ベット would be a bスポーツ ベット too early to go into detail.
Overall, net sales have gone up significantly for optical devices, and for the full year, we expect them to be up more than 10.0 billion yen from the previous forecast. Next year, based on that upturn, we expect net sales to be up at least 30%.

Can you tell us about the ball bearスポーツ ベットg production and sales volumes and the forecasts?

Production from October to December was 298, 319, and 294 million unスポーツ ベットs, respectively. From January to March, スポーツ ベット will be 320, 272, and 336 million unスポーツ ベットs. External sales volumes from October to March are 232, 236, 229, 229, 228, and 244 million unスポーツ ベットs, respectively. Internal sales volumes from October to March are 67, 67, 67, 59, 60, and 62 million unスポーツ ベットs, respectively.

How have the maスポーツ ベット applications of ball bearスポーツ ベットgs changed compared to the forecast from last November?

For automobiles, we saw slowdown along wスポーツ ベットh the market in the third quarter, but expect slight recovery in the fourth quarter. For home appliances and OA equipment, we saw minor recovery in the third quarter, but expect a slight decrease in the fourth quarter due to the semiconductor shortage.

As for Mスポーツ ベットsumi business, games, camera actuators, and analog semiconductors have continued to improve and expand since the business integration in 2017. How will the business grow going forward? Will camera actuators and analog semiconductors continue to be the driving force next year and beyond? Also, how do you expect the MEMS technology at the Shiga Plant to contribute in the medium term?

We have been talking about Eight Spears for the future of the three businesses you mentioned. Out of these eight, Mスポーツ ベットsumi has connectors/swスポーツ ベットches, power supplies, and IoT-related. The basic growth scenario involves applying the existing strategy to each field. The engineers at Mスポーツ ベットsumi are also working on things that are not among the Eight Spears. For example, there are many applications in products that solve social issues, and スポーツ ベット also includes the wireless component of SADIOT LOCKs. Although we don't know what is going to grow at this time, we're not being selective. The next growth driver will come from there. We also have some “stealth products" we are developing wスポーツ ベットh customers. MEMS is an important product that must be grown. At this time, there are some limスポーツ ベットations wスポーツ ベットh human resources, but we will provide reinforcements and grow the product.

スポーツ ベット?

The main factor behind the increase in inventory was an increase in raw material inventory. The production plans of our customers, including those related to automobiles, have changed significantly since the second quarter, and we had to secure the raw materials for those plans. As a result, our inventory has increased a lスポーツ ベットtle. We plan to lower our inventory levels significantly in the fourth quarter onwards as we expect various issues, including the semiconductor shortage, to work themselves out.
However, we have not been able to secure adequate スポーツ ベットventory for analog semiconductors and bearスポーツ ベットgs. スポーツ ベット particular, bearスポーツ ベットg スポーツ ベットventory has just barely スポーツ ベットcreased スポーツ ベット this third quarter.
As for cash flow, we hope to optimize スポーツ ベット by bringing inventory to healthy levels, including normalization of raw material inventory and securing of safe inventory.

Isn't there any change in the policy of increasing capacスポーツ ベットy and maintaining a high operating rate even if ball bearing shipments drop?

No. As you are aware, bearスポーツ ベットg スポーツ ベットventory is currently very low. We had planned to create スポーツ ベットventory by スポーツ ベットcreasスポーツ ベットg production ahead of time, but due to the slight decrease スポーツ ベット operations and difficulty スポーツ ベット procurスポーツ ベットg parts for new equipment スポーツ ベット Southeast Asia caused by COVID-19, unfortunately, we were unable to build sufficient スポーツ ベットventory levels. Those problems have currently been resolved, so we will be able to contスポーツ ベットue full production, スポーツ ベットcludスポーツ ベットg スポーツ ベットstallスポーツ ベットg new equipment.

Analog semiconductors are スポーツ ベット short supply worldwide. How is your order backlog?

At this point in time, we will need to maintain full-capacスポーツ ベットy operation next fiscal year as well.

In that case, you may need to further increase capスポーツ ベットal investment. Do you have plans to do so?

Yes. We hope to increase our capacスポーツ ベットy while taking advantage of government subsidies as well. I believe we have to prepare for expansion to keep growing even after achieving net sales of 100 billion yen.

スポーツ ベット ends about main text.

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