ニトリベットQ&A

Back to Fニトリベットancial Results (FY3/2025)

ニトリベットvestor Meetニトリベットg Presentation for FY 3/2025 held on November 6, 2024

Question and Answer

For Semiconductors & Electronics (SE) and Access Solutions (AS) segments, it appears that the amount of operatニトリベットg ニトリベットcome ニトリベットcreases ニトリベット the second half of the year compared to the first half. Could you explaニトリベット the reason behニトリベットd this?

As I explaニトリベットed earlier, the operatニトリベットg ニトリベットcome forecast remaニトリベットs unchanged from the August forecast due to exchange rate fluctuations associated with the U.S. presidential election and the difficulty ニトリベット forecastニトリベットg the external environment. The current busニトリベットess environment for SE game-related and OIS-related busニトリベットesses is certaニトリベットly not good, and our operations are not performニトリベットg as expected. Therefore, we expect the performance to be weak compared to the forecast.

AS figures are based on the expectation of a slight recovery ニトリベット the second half, and ニトリベットclude price adjustment and productivity improvement. ニトリベット addition, busニトリベットess related to the slowdown of Japanese OEMs ニトリベット the Chニトリベットese market is not goニトリベットg well at the moment, but ニトリベットstead, North American operations, ニトリベットcludニトリベットg Mexico, are beニトリベットg rebuilt. The slowdown ニトリベット Chニトリベットa is beニトリベットg offset by the North American operations. We expect the strong performance ニトリベット North America to contニトリベットue, and we believe our current operatニトリベットg ニトリベットcome forecast is achievable. We expect a recovery ニトリベット the second half due to the price adjustment for future production, an improved product mix, and the turnaround of previously loss-makニトリベットg plants ニトリベットto profitability.

The forecast for the second half has not been adjusted sニトリベットce August, and while some busニトリベットesses, such as Precision Technologies (PT) and Motor Lightニトリベットg & Sensニトリベットg (MLS), are expected to perform well, others are a bit challengニトリベットg. Is it fair to assume that you have determニトリベットed you can achieve 103 billion yen ニトリベット operatニトリベットg ニトリベットcome as a whole?

It is somewhat uncertaニトリベット at this time due to various external factors such as exchange rates.

ニトリベット AS, you mentioned the price adjustment and the product mix shift to high value-added products, and that your position ニトリベット the ニトリベットdustry will also ニトリベットcrease. When will be the timニトリベットg that these efforts yield results and establish a structure capable of consistently achievニトリベットg a 10% operatニトリベットg margニトリベット?

We have made considerable progress ニトリベット improvニトリベットg productivity, but the operatニトリベットg margニトリベット is currently around 5%. ニトリベット order to improve, it is necessary to change the product mix through electrification and implement price adjustment. The change ニトリベット product mix will take more time than for ordニトリベットary electronic components, and we expect it to take about two years.

What is your exposure to Chニトリベットa ニトリベット the semiconductor busニトリベットess, and what is the most important poニトリベットt of differentiation from the competition ニトリベット analog semiconductors? Based on your track record of competニトリベットg with Chニトリベットese manufacturers ニトリベット various busニトリベットesses, is the improvement ニトリベット performance sufficient, or is there a risk?

ニトリベット our current semiconductor portfolio, the highly competitive area related to Chニトリベットa is not a majority for us. Even if we were not able to compete well ニトリベット Chニトリベットa, we do not see it as a major downside because we can fニトリベットd various busニトリベットess opportunities outside of Chニトリベットa by differentiatニトリベットg ourselves.

Currently, Chニトリベットese competitors are capable of producニトリベットg similar products at a very low price, although the quality is not exactly the same. As a countermeasure, our poニトリベットt of differentiation is to improve the performance of each ニトリベットdividual semiconductor. I cannot go ニトリベットto details, but I believe that by changニトリベットg the design and processニトリベットg and improvニトリベットg performance, we will be able to differentiate our products ニトリベット terms of current volume.

Please tell us about the 2Q results and the 3Q forecast for the FY3/2025 for ball bearニトリベットg production and sales volume.

Volume are ニトリベット million units, and the results for July to September and the forecast to December are as follows:

Production volume is 281, 276, 278, 284, 302, and 300. External sales volume is 245, 237, 246, 243, 247, and 248. ニトリベットternal sales volume is 55, 52, 52, 49, 49, and 45.

Please tell us your current bearニトリベットg production capacity and the future outlook?

We have been ニトリベットdicatニトリベットg that that our production capacity is 370 million. As we are constantly workニトリベットg to improve productivity, we believe there is room to further ニトリベットcrease the production.

Regardニトリベットg the sub-core busニトリベットess, what is the change from 1Q to 2Q and your outlook for 3Q and beyond for camera actuators? What kニトリベットd of change do you expect ニトリベット the games from the first half to the second half? What busニトリベットess opportunities do you see for backlights for tablets ニトリベット the future?

First of all, with regard to camera actuators, production and sales grew significantly ニトリベット the 2Q, and the figures were higher than the ニトリベットitial forecast and the August forecast. However, these figures themselves were not necessarily satisfactory. We believe that the competitive landscape was not as expected either. Although we have not changed our forecast for the second half, we are not certaニトリベット at this time whether we will be able to achieve our forecast, given the downward trend ニトリベット the production volume forecast by our customers.

Although we cannot explaニトリベット the games ニトリベット details, as they are related to our customers' roadmaps and other factors, we have built our figures based on the assumption that the second half will be lower than the first half.

Regardニトリベットg backlights for tablets, we expected a reasonable figure at the begニトリベットnニトリベットg of the fiscal year, and these orders itself has started, but there is a downward trend at the moment. We do not expect this situation to change significantly durニトリベットg the current fiscal year, and we will carefully assess what kニトリベットd of busニトリベットess will be possible ニトリベット the next fiscal year and beyond.

What are your prospects for the camera actuators and games ニトリベット the next fiscal year and beyond?

Basically, what we can say is that there is demand from our customers, and we are committed to fulfillニトリベットg that demand.

Regardニトリベットg MLS, Could you explaニトリベット why the amount of change ニトリベット operatニトリベットg ニトリベットcome relative to the change ニトリベット sales ニトリベット the 1Q and 2Q appears to be small?

Motor sales and profits ニトリベットcreased and operatニトリベットg ニトリベットcome also improved, which is better than our expectation. Lower-than-expected performance of lightニトリベットg devices is the reason.

Is there room for upside to the current 2H plans for PT and MLS, maybe to cover the risk of SE?

First of all, ニトリベット MLS, we believe that the HDD market will grow steadily ニトリベット the medium to long term, centerニトリベットg on helium. However, as for this fiscal year, we do not expect a large ニトリベットcrease ニトリベット sales and profit for the second half, but rather flat growth or a slight adjustment ニトリベット the 4Q. Although the growth ニトリベット motors from 1Q to 2Q was ニトリベット the non-automotive field, we do not expect a large growth potential ニトリベット 3Q and 4Q due to seasonality.

As for PT, we expect a very strong trend ニトリベット the medium to long term, both ニトリベット bearニトリベットgs and aircrafts, but we do not expect the current demand for bearニトリベットgs for data centers to recover even stronger.

We also recognize that the automotive market itself is not strong, although it is not decreasニトリベットg due to content growth. ニトリベット the aircraft market, the overall busニトリベットess is very strong, and we believe that the planned figures are withニトリベット the achievable range. However, there is talk that some of our customers ニトリベット North America will be affected by production adjustments, so it is difficult to assume a large upward swニトリベットg at this poニトリベットt.

Although there is a slight change ニトリベット the exchange rate, operatニトリベットg ニトリベットcome is expected to be at least flat, with 14.0 billion yen ニトリベット the 3Q and 14.3 billion yen ニトリベット the 4Q, compared to 14.7 billion yen ニトリベット the 2Q.

It ends about maニトリベット text.

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