Q&A

Latest Update : Aug.12, 2008

Back to Financial Results (FY3/2009)

Investor Conference Call for 1Q FY 3/2009 held on July 31, 2008

* Some parts have been added and modified for a clearer understanding.

Question and Answer

In the machined components business segment, pivot assemblies had the largest decline, and the decline in ball bearings was similar to that of rod ends. In the electronic devices and components business segment, HDD spindle motors had the largest profit decline.
For currency impacts compared to the previous 4th quarter, the lower Thai baht vs. the yen had a 0.4 billion yen positive impact, and the Chinese renminbi added 0.1 billion yen for the same reason. The US$ alone fell for a negative impact of 0.8 billion yen. The Singapore dollar and the Euro did not have large impacts. Together, the overall currency impact was negative 0.4 billion yen relative to the previous 4th quarter.
It is difficult to accurately calculate the impacts of raw material and personnel costs, but higher raw materials prices had about a negative 0.1 billion yen impact relative to the previous 4th quarter. Personnel costs are difficult to calculate because they are also affected by production quantity and production capacity, but I think we were affected by about 10% higher wage rates in China.
External ball bearing shipments in the 1st quarter were favorable, at 125 million units per month. Internal usage fell slightly to 70 million units per month due to lower sales volume in pivot assemblies etc., but we feel overall manufacturing and shipments were extremely favorable. However, it was difficult for this positive performance to absorb the impacts of the lower US$ against the Thai baht and Chinese renminbi, resulting in lower earnings. For the 2nd quarter, we think there are slight summer seasonal effects in Europe and the U.S., but external shipments are forecast to be favorable, at over 120 million units per month. Also, pivot assembly sales volume is expected to increase in August and September, resulting in higher internal usage, for favorable ball bearing production and shipments overall.
Pivot assembly sales volume was over 25 million units per month in the 1st quarter, but this is expected to grow over 10% to about 28 million units per month in the 2nd quarter.
Ball bearing net sales were below plan. However, this decline is considered to be 100% due to currency impacts, as shipments was favorable. Also, we are making internal cost reduction efforts and implementing price adjustments, and we think these effects of such progress will start to show in improved earnings for the 2nd quarter.
It is true that automobile sales are decreasing in the U.S. market, but in Minebea's case, the ratio of sales for automobile industry is not very high. A larger portion of ball bearing shipments are for fan motors used in consumer electronics, office equipment and PCs, which are growing favorably. Thus, ball bearing shipments are favorable in both the 1st and 2nd quarters.
For ball bearings, we started price adjustment negotiations with customers in July, so we think these effects will start to show from the middle of the 2nd quarter, and their full effects will show starting 3rd quarter. For pivot assemblies, increased raw material prices are continuing since last year, and we started price adjustment negotiations from the middle of the 1st quarter, with these effects starting to show in July.
For rod ends, raw material prices have continued to rise over the past several years. We have been working to absorb these increases internally and adjusting our prices, but we will adjust our prices again if necessary from now on, too.
We are not yet at the stage to state a detailed explanation, but as noted in the press release, the stepping motor businesses of the two companies have few overlapping areas, and their technical aspects are highly complementary, so they are considered able to maximize their synergies. We expect synergies in expanded sales volume and technical aspects. However, this is a basic agreement, and various procedures must now be followed to reach a final agreement, so we are thinking that it will be finalized by this year end. Therefore, we think the effects will actually start to show next year.

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