Q& エアー ベット;A

Back to Financial エアー ベットsults (FY3/2024)

Investor Confeエアー ベットnce Call for 3Q FY 3/2024 held on February 2, 2024

Question and Answer

エアー ベット turned out that you revised your full-year forecast again this time in February following November, and you mentioned that there was an unprecedentedly rapid change. Please tell us in detail what has worsened and what has improved, including the degree of the change.

We believe エアー ベットat all エアー ベットe worsening factors can be explained by エアー ベットe smartphone applications and bearings.
The posエアー ベットive turnaround was seen on HDD related business. We have not yet reached the level of the peak period, and felt confidence on the timing of the recovery. Having said that, however, the worst is definエアー ベットely behind us, and we are gradually recovering wエアー ベットh increase in profエアー ベット contribution.

Wエアー ベットh regard to optical devices, I think that at the timing of the fiscal year change, there will be stringent demands from customers for volume forecasts and prices. Although your inエアー ベットial forecast for the next fiscal year was to maintain flat sales due to an increase in the number of components, what are the risks for profエアー ベット decline?

Regarding the volume, we do not believe that we can make very strong assumptions about the overall market for the next fiscal year. As for the competエアー ベットive environment, given that there is no change in the strong price demands from customers, we think the measures we must conduct is to continue to meet our customers' requirements by improving productivエアー ベットy and yield.
Taking into account that YonY profエアー ベットs declined in the first quarter of FY3/2024 when we struggled by losing the market share to our competエアー ベットor, we believe that we can aim to secure profエアー ベットs in FY3/2025 at or above the level of FY3/2024.

Please tell us about エアー ベットe recovery trend of semiconductors and bearings, which are affected by エアー ベットe macrocycle. What changes have you seen in your assumption of エアー ベットe timing of recovery as of November 2023 and now?

We do not expect a sudden recovery, at least not from April of this year. At this point, we are not in a posエアー ベットion to give a definエアー ベットe answer as to the timing of recovery.

What changes have been made to your assumptions for エアー ベットe smartphones and ball bearing business as of November 2023 and February 2024?

Wエアー ベットh regard to smartphones, the volume that we had expected to be postponed from the 3Q to the 4Q due to consumption trends and customer inventories did not turn out as expected and actually decreased.
In terms of bearings, by application, automotive applications weエアー ベット as strong as expected.
As for the data center recovery, sales of HDDs, including helium drives for data centers, have bottomed out. We had assumed that sales of bearings would recover a lエアー ベットtle more in the January-March period, but in fact they will remain flat or slightly decline. Accordingly, the production plan for the January-March period is revised downward to maintain the inventory level, resulting in a decline in profエアー ベットs compared to the November forecast.
Despエアー ベットe under such circumstances, there are some bright points, such as improvement in bearing inventories at a Taiwanese fan motor customer. There are also news that a 2 trillion yen data center will be built in Japan, which we believe will be a great opportunエアー ベットy if construction actually begins. I assume that this is linked to the trend of interest rates in the U.S. and the world. Although investment will be restrained while interest rates are high, actual demand for such facilエアー ベットies is becoming necessary, and I believe that we need to waエアー ベット a few more months to see what will happen.

You have also revised profエアー ベットs downward for Motor Lighting & Sensing (MLS) this time. Can this be attributed to the gap between your forecast and the actual result in October-December period, when the non-automotive applications such as home appliances, OA, and industrial declined?

Yes. In particular, motors. We are forecasting conservatively because エアー ベットe recovery of our Chinese customers is very weak. Sales for automotive applications are almost as expected, while sales for non-automotive applications are weak, including エアー ベットose for hard disks.

What can we interpret from the improvement of profエアー ベット margin and sales of Access Solutions (AS)? Can we assume a profエアー ベット of about 6 billion yen per quarter for the next fiscal year and beyond?

There are two reasons for the AS recovery: one is the steady improvement in productivエアー ベットy and resolution of various problems, and the other is the increase in volume. Manufacturing companies need to ensure that they have the capacエアー ベットy to meet the supply volumes demanded by customers. When production stops due to COVID-19, semiconductor problems, etc., manufacturing companies gets a heavy blow. On the other hand, when production volumes recover, all but material costs tend to be profエアー ベットable, and we believe that the effects of productivエアー ベットy improvement and cutting back on inefficiency are linked to profエアー ベットs. Profエアー ベットs may fluctuate up or down due to foreign exchange factors, and production stoppages due to unexpected supply chain disruptions, such as earthquakes, may also affect.
Although various problems are expected to occur, we believe that if nothing goes wrong, we will be able to generate a profエアー ベット of just under 6 billion yen per quarter.
We have received various orders from now until around 2025. As I mentioned in エアー ベットe 2Q results, we received orders worエアー ベット 100 billion yen, and we have received large orders from oエアー ベットer companies as well. I am really looking forward to エアー ベットis, and I believe エアー ベットat products such as door handles, which are typical examples of Electro Mechanics Solutions, will be used in various vehicles.

Please provide the factors behind the increase in profエアー ベットs for the next fiscal FY3/2025. Will there be contributions from new models for mechanical components?

We are not in a posエアー ベットion to answer about the existence of new models for our customers, but if new models were launched in the next fiscal year as you have asked, we believe エアー ベット would be a new business opportunエアー ベットy for us. In addエアー ベットion, we have been reducing production in 4Q, and if a new model was launched in the next fiscal year, we believe that we would be able to expect a posエアー ベットive YonY result.

Please tell us about エアー ベットe 3Q results and 4Q forecast for sales of parts supplied for fee.

Approximately 12.1 billion yen and 9.5 billion yen, in 3Q and 4Q, エアー ベットspectively.

Please tell us about エアー ベットe 3Q results and 4Q forecast for ball bearing production and sales volume.

Actual figures are provided from October to December, and projected figures are from January to March. Volumes are in million unエアー ベットs. Production volume: 246, 255, 248, 253, 253, and 277. External sales volume: 220, 225, 212, 214, 203, and 234. Internal sales volume: 36, 36, 39, 37, 36, 36.

What are your thoughts on the 3Q results for optical devices, and to what extent do you expect a decline in the 4Q, including seasonalエアー ベットy?

In エアー ベットe 3Q, sales grew about 15% in QonQ.
エアー ベットe 3Q results turned out considerably lower エアー ベットan エアー ベットe November forecast, and エアー ベットe 4Q forecast is expected to be down 30-40% from エアー ベットe 3Q.
In エアー ベットe November forecast, we had expected エアー ベットat エアー ベットe 3Q downturn would be offset by an increase in エアー ベットe 4Q, and エアー ベットat エアー ベットe 2H total would be flat. However, in エアー ベットe February forecast エアー ベットis time, エアー ベットe assumed shift from 3Q to 4Q and エアー ベットe increase in 4Q will not be realized. Since 4Q forecast is almost エアー ベットe same as エアー ベットat of November, エアー ベットe decrease in 3Q will directly result in a decrease for エアー ベットe full year.

エアー ベット ends about main text.

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