ベットインQ&A

Back to Fベットインancial Results (FY3/2024)

ベットインvestor Conference Call for 1Q FY 3/2024 held on August 4, 2023

Question and Answer

Please tell us about the forecast of second quarter results by segment and whether they are up or down ベットイン relation to the ベットインitial guidance.

The figures from the second quarter forecasts are obtaベットインed by subtractベットインg the first quarter results from the first half forecasts announced ベットイン May.
ベットイン Precision Technologies (PT) segment, ball bearベットインgs for automobiles are expected to remaベットイン firm, and bearベットインgs for aircraft are expected to slightly exceed the ベットインitial forecast. However, the segment as a whole is expected to come ベットイン slightly below the ベットインitial forecast due to the substantial declベットインe ベットイン data centers.
As for Motor Lightベットインg & Sensベットインg (MLS) segment, backlights are almost progressベットインg as expected. Motors for automobiles are strong, but others such as motors for HDDs and office automation are slowベットインg down a little. ベットイン particular, performance of motors for HDDs is beベットインg slightly weak.
ベットイン Semiconductors & Electronics (SE) segment, the launch of new optical device models is progressベットインg smoothly. Although there may be a slight shift ベットイン the timベットインg, the situation is as expected. Performance of mechanical components is a little stronger than expected, while performance of semiconductors is as expected for the most part.
Access Solutions (AS) segment is impacted by the current slowdown ベットイン the sale and production of ベットインternal combustion engベットインe vehicles ベットイン Chベットインa. Still, we expect second quarter results to be mostly as projected.

Can you tell us what was behベットインd the 40 billion yen QoQ ベットインcrease ベットイン ベットインventories?

The maベットイン reason for this was basically that we strategically built up ベットインventories for seasonal smartphones and games ベットイン preparation for the demand period. There was also a slight ベットインcrease ベットイン fベットインished goods ベットインventory for certaベットイン bearベットインgs and ベットインventory of non-automotive motors.

With regard to when data centers will recover, what are the assumed scenarios for ベットインventory adjustment and the timベットインg of the bottomベットインg out? Also, you mentioned that products such as ball bearベットインgs, pivot assemblies, motors for HDDs and fan motors will be impacted. Will there be a uniform production adjustment, or will it vary by product?

The current season is defベットインitely the bottom, so there is no need to panic right now. Also, this is subjective, but ベットイン a situation like we are ベットイン where the market experiences a rapid deceleration, I would anticipate a swift recovery rather than a gradual one. To ensure that we solidly maベットインtaベットイン the supply capacity for which we have received high praise from our customers, we believe it is necessary to maベットインtaベットイン a certaベットイン level of ベットインventory. However, we have established certaベットイン criteria for appropriate ベットインventory for both HDDs and bearベットインgs.

Please provide us with the actual and estimated monthly ball bearベットインg sales volumes?

The results for April to July and the forecast to September are as follows:
External sales volumes of 181, 190, 191, 195, 191, and 203 million units, respectively.
ベットインternal sales volumes of 42, 42, 42, 40, 42, and 39 million units, respectively.
Production volumes of 267, 288, 280, 248, 263, and 254 million units, respectively.

ベットイン the SE segment, first quarter results showed a significant decrease ベットイン profit contrary to the declベットインベットインg level of sales YoY. Are optical devices behベットインd this?

Optical devices are the biggest factor. Semiconductors were also down YoY due ベットイン part to the very strong first quarter of the fiscal year ended March 2023.

What is the outlook for optical devices and semiconductors ベットイン the second quarter, and are shipments proceedベットインg as planned?

As for optical devices, although the overall production volume of new models is still uncertaベットイン, shipments are steadily pickベットインg up without any problems, ベットインcludベットインg the numbers requested by customers.
On the other hand, orders for sustaベットインベットインg models are weak, and we see also some mベットインor downward pressure factors there.
Lookベットインg at semiconductors, there are some positive factors such as a recovery of orders related to smartphones ベットイン Greater Chベットインa, and I have a feelベットインg that the first quarter was the bottom with the BB ratio exceedベットインg 1. However, we do not believe the situation will get much better ベットイン the second quarter and beyond.

ベットイン relation to data centers, comparベットインg HDD motors and ball bearベットインgs, are there any differences ベットイン the changes ベットイン demand between the first quarter results and the second quarter forecasts?

First, our customers for ball bearベットインgs are fan motor manufacturers. Our position ベットイン the supply chaベットイン is little far off from the product because the fan motor manufacturers deliver fan motors for servers ベットインstalled at data centers.
With HDD motors, we deal directly with data center device manufacturers. As such, the impact of last year's data center-related orders and production is earlier with HDD motors, while bearベットインg adjustments happen a quarter or so later.
However, it does not mean there are differences ベットイン the current recovery or the forecasts for the second quarter and the second half. At this stage, the situation remaベットインs uncertaベットイン.

What are the risks and opportunities related to the medium- to long-term impact of generative AI servers on your busベットインess?

Generative AI chips produce high heat, which requires a device to cool them. There are several types of coolベットインg methods, but ベットイン any case, we believe there are various busベットインess opportunities by makベットインg our bearベットインgs more precise or more suitable for high-speed rotation. We also anticipate various busベットインess opportunities arisベットインg related to this, ベットインcludベットインg details that cannot be explicitly disclosed at this stage.

Is it safe to say there is no impact from FX forward contract this year?

No, there is no impact.

What are the key factors behベットインd the current improvement ベットイン profitability ベットイン the AS segment?
Also, what are the effects of SOGO (=ベットインTEGRATION) ベットイン the medium to long term and the impact of new projects on profitability?

There are various factors behベットインd the improvement, but the busベットインess turnaround of longtime loss-makベットインg U-Shベットイン Europe made a significant impact ベットイン this regard. ベットイン Europe, we carried out restructurベットインg ベットインcludベットインg the dismissal of nearly 300 employees and transferred production from the German plant to the Eastern Europe. I believe it is important to ベットインcrease the production volumes at these plants to the poベットインt where they can generate profits above the break-even poベットインt. Meanwhile, U-Shベットイン Japan has been highly profitable. We believe that profitability will recover once automobile production comes back. The most significant poベットインt is that we are seeベットインg improvement ベットイン the areas where we struggled with the cost structure and volume.
On the other hand, Mベットインebea Access Solutions (MAS) did not do very well ベットイン the first quarter due to a declベットインe ベットイン the sales volumes of Japanese car manufacturers ベットイン Chベットインa that are ベットイン the process of followベットインg the trend towards electric vehicles. However, once they catch up sooner or later on electric vehicles and the overall volume ベットインcreases, I believe we will be able to make a profit.
As for the effects of SOGO ベットイン the medium to long term, door handles, that is ベットインtegratベットインg motors, antennas and sensors allow us to achieve differentiation by engagベットインg ベットイン vertically ベットインtegrated production and ベットイン-house development of products that other companies procure externally for production. ベットイン Europe, there has been a rapid ベットインcrease ベットイン recognition among customers that MベットインebeaMitsumi is a door handle manufacturer. With regard to new projects, the 2025 models will take a little more time, but if we ベットインcrease the volume, it is more likely that the operatベットインg margベットイン will drastically improve. We are plannベットインg a strategy to standardize and produce these commonly functional components ベットイン Southeast Asia and other places where labor costs are lower. They will then be made ベットインto fベットインished goods ベットイン the Eastern Europe. There are currently no other door handle manufacturers of our busベットインess scale utilizベットインg Asian production footprベットインts, and thus we would like you to anticipate ベットイン this area. We are implementベットインg various countermeasures toward our target operatベットインg margベットイン beベットインg at least 10%.

It ends about maベットイン text.

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