Briefing on items on the agenda
Latest Update : July 6, 2016
The 70th Ordinary General Meeting of Shareholders
We now report Minebea's business results for its 70th fiscal year, together with consolidated and non-consolidated financial statements.
More information is provided on pages 4 through 54 of the Notice of the 70th Ordinary General Meeting of Shareholders.
Brief Explanation of the Current Business Environment
The weak yen, high share prices, and low oil prices were initially expected to fuel Japan's economy during the year under review. However spring-to-summer consumer spending, capital expenditures, and exports remained stagnant as a second-half slowdown in China and other emerging economies, falling resource prices, and a rising yen cast a dark shadow over the economy. The U.S. economy continued to grow mainly in the household sector due to the robust performance of the service industry and a better job market. Despite declining exports to non-EU countries, local consumption kept the European economy moving forward on a moderate upward trajectory. Excess production capacity and slowing investment in real estate development in China has gradually unveiled a picture of economic uncertainty in Asia. Although ASEAN countries, whose economies rely largely on China, didn't see exports to China grow, they enjoyed moderate economic recoveries due partly to public investments, measures to spur consumption, and other initiatives.
Working against this backdrop, the Minebea Group has been concentrating on cutting costs, creating high-value-added products, developing new technologies, and enhancing its marketing approach to improve profitability even further.
Current Fiscal Year Results on Consolidated Basis
As a result, net sales soared by 109,138 million yen year on year to total 609,814 million yen, reaching 600 billion yen for the first time ever. Operating income fell 8,663 million yen year on year to total 51,438 million yen while ordinary income was down 13,479 million yen year on year at 46,661 million yen. Net income attributable to owners of the parent decreased 3,501 million yen year on year to reach 36,386 million yen.
Business Results by Segment
Now we review the business results by segment.
Machined Components Business
Products in our Machined components business segment include our mainstay product, ball bearings, mechanical components, such as rod-end bearings used primarily in aircraft and hard disk drive (HDD) pivot assemblies, etc. as well as fasteners for automobiles and aircraft. Strong demand in all major markets fueled both sales and profits of ball bearings. Sales of aircraft rod-end bearings rose on the wings of soaring sales in the civil aviation market where demand was particularly strong for energy-efficient planes. Pivot assembly sales dipped slightly in the face of the shrinking HDD market but improved production efficiency drove operating income up.
All these factors combined brought net sales for the fiscal year under review up 8,026 million yen year on year to total 163,811 million yen. Operating income also jumped 1,132 million yen year on year to total 40,854 million yen.
Electronic Devices and Components Business
The core products of our Electronic devices and components business include electronic devices (LED backlights for LCDs, measuring components, etc.), HDD spindle motors, stepping motors, DC motors, fan motors, precision motors, and special devices. Surging demand buoyed sales of LED backlights for LCDs as market preferences shifted to high-end smartphones. Minebea's LED backlights for LCDs enjoy a technological edge when it comes to making thinner products and the fact that they have more components enables them to command a higher price.
Although sales increased substantially, they fell short of our initial forecast. This decline was due to the unexpectedly large gap between the volume initially requested by major customers and the volume actually sold in the second half of the fiscal year, resulting in a year-on-year drop in income. Both sales and profits of measuring components also rose substantially due partly to the acquisition of the Sartorius Mechatronics T&H Group in the previous fiscal year. HDD spindle motor sales slightly declined due to a shrinking HDD market while stepping motors saw both sales and profits grow mainly in the office automation equipment and automobile markets.
As a result, net sales for the fiscal year under review increased sharply by 100,743 million yen year on year to total 445,467 million yen while operating income dropped 8,411 million yen year on year to total 22,336 million yen.
Consolidated Operating Income for this Fiscal Year
In addition to the figures stated above, operating income of the consolidated statement of income for the fiscal year includes 116,270 million yen in corporate expenses, etc., which do not belong to any particular segment, as adjustments.
Now let's move on to capital expenditures made during the fiscal year.
During the fiscal year under review, capital expenditures were 7,735 million yen for the Machined Components Business, 29,012 million yen for the Electronic Devices and Components Business, 178 million yen for the Other Businesses, and 6,953 million yen for the whole company (common), totaling 43,878 million yen.
The main capital expenditures for the Machined Components Business were equipment for bearings and mechanical components related facilities in Thailand. The main capital expenditures for the Electronic Devices and Components Business were equipment for LED backlights for LCDs and components related facilities in Thailand. Other capital expenditures for other businesses and at the whole company (common) were mainly expenditures related to the augmented production capacity of the Cambodian plant.
Consolidated Financial Statements
Now we review the consolidated financial statements.
Consolidated Balance Sheet
Let's start off with the consolidated balance sheet.
Looking at the assets section, we see that total assets decreased 30,616 million yen from the previous consolidated fiscal year end to total 459,427 million yen. The main reasons for this drop include a reduction in tangible fixed assets by the appreciation of the yen along with decreases in notes and accounts receivable which went hand in hand with lower fourth quarter sales.
Moving on to the liabilities and net assets section, we see that liabilities totaled 221,454 million yen, with a year on year decrease of 34,990 million yen. This drop was primarily due to a decline in notes and accounts payable as a result of fewer material purchases in lighting devices, as well as a decrease of the long-term loans payable.
Net assets rose 4,294 million yen to total 237,973 million yen from the previous consolidated fiscal year end. This is due mainly to an increase in retained earnings and to a decrease of foreign currency translation adjustments due to the appreciation of the yen.
These results all add up to liabilities and net assets totaling 459,427 million yen, a 30,616 million yen decrease over what they were at the end of previous consolidated fiscal year.
Consolidated Statement of Income
Now let's look at the consolidated statement of income.
Net sales were up 109,138 million yen year on year to total 609,814 million yen, and hit a record high. Operating income decreased 8,663 million yen year on year to total 51,438 million yen. Since we already went over net sales and operating income, I won't go into it again here.
Ordinary income fell 13,479 million yen year on year to total 46,661 million yen mainly due to larger foreign currency exchange losses.
Net income attributable to owners of the parent fell 3,501 million yen year on year to total 36,386 million yen due to an increase in extraordinary income which includes the insurance income that cover the damages and lost earnings caused by the 2011 Thai floods and a decrease in extraordinary losses.
Consolidated Statement of Changes in Net Assets and Notes
We'll skip the consolidated statement of changes in net assets and notes, which are provided on pages 25 of the Notice of the 70th Ordinary General Meeting of Shareholders.
Non-Consolidated Financial Statements
Next is an overview of our non-consolidated financial statements.
Non-Consolidated Balance Sheet
Now let's look at the non-consolidated balance sheet.
The balance sheet shows an 20,948 million yen decrease in assets over the figure at the end of the previous fiscal year, bringing total assets to 368,266 million yen. This is due mainly to decreases in accounts receivable caused by the sales decrease in the second half.
Looking at the liabilities and net assets section, we see that liabilities totaled 175,727 million yen, down 26,368 million yen from the previous fiscal year end. This drop was primarily due to a decline in accounts payable as a result of fewer material purchases in the second half. Net assets totaled 192,539 million yen, up by 5,420 million yen over the previous fiscal year end. This is due mainly to an increase in retained earnings driven by net profit.
These results all add up to total liabilities and net assets of 368,266 million yen, an 20,948 million yen decrease over the previous fiscal year end.
Non-Consolidated Statement of Income
Now let's look at the non-consolidated statement of income.
Net sales were up 107,743 million yen to reach 451,110 million yen year on year. This is due mainly to a surge in sales of LED backlights, measuring components, ball bearings and other products. Operating income fell 7,094 million yen from the previous fiscal year to total 12,090 million yen. This decrease was due mainly to a decline in gross profits from LED backlights for LCDs and an increase in costs associated with the business integration. Ordinary income fell 8,159 million yen from the previous fiscal year to total 15,950 million yen. This is because of decrease in operating income and decrease in dividends income. After extraordinary losses decreased compared with last fiscal year, net income increased 2,175 million yen to total 11,750 million yen.
Non-Consolidated Statement of Changes in Net Assets and Notes
You will find the non-consolidated statement of changes in net assets and notes on pages 43 of the Notice of the 70th Ordinary General Meeting of Shareholders.