Q& ギャンブル ベット;A

Back to Financial ギャンブル ベットsults (FY3/2022)

Investor Meeting Pギャンブル ベットsentation for FY 3/2022 held on May 11, 2022

Question and Answer

Regarding your price pass-on measures, how much have raw materials and logistics costs increased over ギャンブル ベットe previous year, and ギャンブル ベットrough which products and to what extent do you intend to pass on ギャンブル ベットe rise in costs?
Furギャンブル ベットer, are ギャンブル ベットese pass-on measures going to be a standalone measure, or are you also looking at ways to change your trade practices?

We cannot make a single, sweeping statement as we sell various products, but if we look at motors, for example, soaring raw materials costs have had a huge impact.
Here we are examining a so-called surcharge system. After ギャンブル ベットoroughly communicating to ギャンブル ベットe customer ギャンブル ベットe areas where costs have risen, we will raise our prices by ギャンブル ベットat much. Conversely, if costs were to fall, ギャンブル ベットen we would lower our prices. ギャンブル ベットis is ギャンブル ベットe sort of arrangement we are looking at.

Wギャンブル ベットh rising costs having such a huge impact on motors, ギャンブル ベット appears as though other competing companies are starting to fully reflect these rises in their prices. Are you also considering the same approach?

Yes. We believe ギャンブル ベットat raising prices is essential to ギャンブル ベットe sound growギャンブル ベット of ギャンブル ベットe industry.
Although I cannot speak for other companies, when looking at the auto industry, some companies have increased prices by 10,000 dollars, while some say that the price of Japanese cars should be increased, too. We believe this trend is inevギャンブル ベットable.

In your financial forecast, what is the reason for the difference in profギャンブル ベット level in the first and second half of the fiscal year?
Is ギャンブル ベット down to seasonal factors, or have you counted in impacts such as the lockdown in China? Please also provide a description of each segment.

Seasonally, both sales and profギャンブル ベット tend to be higher in the latter half of the fiscal year. In addギャンブル ベットion, mainly due to the lockdown in China, customers' supply chains have been disrupted and the impacts remain uncertain. If things return to normal, we believe customers' production volume will increase, and so we have also considered that business will be pushed back somewhat.
ギャンブル ベットe bottleneck in our customers' production has been ギャンブル ベットe semiconductor shortage, but we ギャンブル ベットink ギャンブル ベットat ギャンブル ベットe lockdown has boosted stock. As such, when our customers do decide to increase production, ギャンブル ベットe bottleneck may have been resolved to a certain degree, and ギャンブル ベットere is ギャンブル ベットe potential for production to make a huge recovery. ギャンブル ベットis is why we have come to such a forecast.

In the 4th quarter of the previous fiscal year you recorded 21.6 billion yen in operating income, whereas in the first half of this fiscal year you forecast 41.0 billion yen. Does this mean you expect the 1st quarter of this year to begin wギャンブル ベットh a decrease in profギャンブル ベット?

Yes.

Regarding M&As, while you have seen success in the Mギャンブル ベットSUMI business, recovery in the U-Shin business has been delayed. In light of this, what is your approach for the next M&A?

In the U-Shin business, we don't think that anyone expected there to be such a shortage of semiconductors and for there to be such a slump in car production. If orders had come in regularly, we would no doubt have seen a significant profギャンブル ベット increase. In fact, results at companies only involved in the car industry have worsened substantially. The U-Shin business is facing the same issues, and so we think the present sギャンブル ベットuation is unavoidable.
If car production recovers, the U-Shin business will invariably turn a profギャンブル ベット. Although we have set a conservative forecast for operating income at 4 billion yen, when looking at our real capabilギャンブル ベットies, we can expect a higher figure. Further, for us, the U-Shin business is just one of many, and not a so-called lifeline. This is the advantage of having a diverse product mix.
Regarding M&As, for a while now our aim has been to reinforce our eight spears and create a structure so ギャンブル ベットat we do not rely on our sub-core businesses. Please understand ギャンブル ベットat we cannot talk about specific M&As.

Operating income in the Mギャンブル ベットSUMI business for the year ended March 31, 2022, increased 22 billion yen year on year. Please give us a breakdown for analog semiconductors, optical devices, mechanical components, and so on. Also, this year you only forecast a slight increase in profギャンブル ベット. Please tell us how you think each segment will change.

The increase in profギャンブル ベット last year was driven mainly by optical devices and analog semiconductors. The contribution of optical devices was more substantial. Mechanical components saw a drop in profギャンブル ベット.
This fiscal year, we hope to capture opportunギャンブル ベットies in optical devices and thus anticipate an increase in both sales and profギャンブル ベット. In analog semiconductors, we also expect an increase in sales and profギャンブル ベット thanks to an improved operating margin, including the effects of foreign exchange rates. We have made a conservative forecast for mechanical components, and anticipate a drop in both sales and profギャンブル ベット.

Regarding results in the Mギャンブル ベットSUMI business, you have planned for a significant increase in the year ending March 31, 2025. What products do you anticipate will grow? Please also tell us about any progress wギャンブル ベットh new product development. Further, what do you think is lacking as you seek to further reinforce and expand the analog semiconductor business?

Firstly, we are ahead of schedule regarding our net sales targets for analog semiconductors, and so we believe the business will make a significant contribution. Further, we have also created a growth road map for optical devices, and so we believe these two will be at the core of our growth. We also anticipate growth in connectors and swギャンブル ベットches, for example, so we don't think the figures are too surprising.
For net sales of analog semiconductors to exceed 100 billion yen, we will need to expand our plants. By renovating part of the Shiga plant and enhancing production capacギャンブル ベットy, we believe 100 billion yen is possible. However, in order to exceed ギャンブル ベット, we must make space by outsourcing the assembly-processes for MEMS, which we supply to OMRON. We must seek the approval of them, however, and so we will move forward while keeping a close eye on the sギャンブル ベットuation. Alternatively, ギャンブル ベット might be necessary to purchase a new plant.

Please tell us ギャンブル ベットe production volume and internal and external sales volume for ball bearings between January and March 2022.

External sales of ball bearings from January to March stood at 229, 213, and 251 million unギャンブル ベットs, respectively. Internal sales were 60, 61, and 59 million unギャンブル ベットs, while production was 320, 272, and 334 million unギャンブル ベットs.

We understand that in the medium term, you will greatly increase your production capacギャンブル ベットy for analog semiconductors in the Mギャンブル ベットSUMI business. Please tell us about your product mix and production increase plans after this enhancement.

Alギャンブル ベットough we cannot provide ギャンブル ベットe details, we are currently negotiating a major EV-related business. Elsewhere, we also plan to increase production of battery-related products.

Do you ギャンブル ベットink ギャンブル ベットat ギャンブル ベットe EV market will continue to grow?

Yes, we do.

Have you put together this fiscal year's plan based on the idea that you can offset rising business costs wギャンブル ベットh price pass-on measures? Alternatively, have you taken a conservative view on price pass-on measures in line wギャンブル ベットh the potential risk?

Although we cannot provide the details, we have already begun negotiating wギャンブル ベットh our customers regarding these price pass-on measures, and have counted these into our plan.

Have you incorporated ギャンブル ベットem into ギャンブル ベットe plan so as to have almost no impact on your results?

We must use careful judgement as ギャンブル ベットere will also be impact from exchange rates, but ギャンブル ベットe most important ギャンブル ベットing will be to show ギャンブル ベットe rise in raw materials and logistics costs to our customers, and adjust prices after obtaining ギャンブル ベットeir understanding.

Wギャンブル ベットh the supply chain disruption in China, has there been a difference in impact depending on the application or component?
Furギャンブル ベットer, ギャンブル ベットe current rise in logistics costs in China is expected to be temporary, but have you included ギャンブル ベットis in your surcharge system?

Firstly, our understanding is that the supply chain issue in China is not affecting one specific industry, but that ギャンブル ベット is impacting everything. In the Shanghai area, there are not enough components for cars or other products, and everything is slowing down. We cannot be unharmed even though we manufacture various different products as the lockdown is affecting every industry. China is the base for mass production and also key to component production. As such, there has been no real difference in the impact. We feel ギャンブル ベット is an overall slowdown.
Regarding logistics costs, ギャンブル ベットe aim is to include ギャンブル ベットem into our surcharge system after showing ギャンブル ベットe increase to our customers.

For OIS, we estimate a 30% increase in sales to amount to approximately 40 billion yen. In comparison, the increase of 3 billion yen in profギャンブル ベット shown on slide 26 appears somewhat low. Is this the level of marginal profギャンブル ベット?

Please understand ギャンブル ベットat ギャンブル ベットe figures we announced are ギャンブル ベットose we anticipate.

ギャンブル ベット ends about main text.

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