Presentation Transcripts

Now I will touch on each business segment.
These graphs show annual net sales and operating income for the machined components business segment.
Net sales for the fiscal year ended March 31, 2013 totaled 113.6 billion yen, up 6.1% from the previous fiscal year. Operating income fell 0.6% to reach 25.5 billion yen while the operating margin was down 1.5 percentage points at 22.4%.

Net sales of ball bearings increased 2.7% from the previous fiscal year to 60.9 billion yen. The external shipment volume ended up at the same year-on-year level, thanks to a nice increase during the first quarter as demand bounced back once the floods in Thailand subsided. Unfortunately the global economic slowdown characterized by the prolonged European debt crisis and economic downturns in emerging markets like China took a toll on demand in many product markets from the second quarter onward. Internal shipment volumes of ball bearings also dropped during the second half of the fiscal year, especially for our HDD pivot assemblies as lagging personal computer sales meant a continuing decline in HDD demand. Even though we cut labor and other costs, profits dipped below what they were for the previous fiscal year due to higher unit production costs due to lower capacity utilization.
We forecast increased sales and improved profits for the fiscal year ending March 31, 2014 as we focus on marketing efforts aimed at both existing and new ball bearing applications while internal demand for HDDs hovers at the same level it was in the second half of the last fiscal year.

Sales of rod-ends and fasteners were up 9.0% year on year to hit 22.9 billion yen. The rising demand in the aircraft industry, that is expected to continue over the medium term, has fueled orders on top of the impact of the weaker yen on currency translations. The result has been steady earnings and we are now expanding capacity at our Lop Buri factory while shifting production from factories in Japan, U.S. and U.K. to improve profitability even further. We expect increased sales and profits for the fiscal year ending March 31, 2014. The recent Boeing 787 problem is moving forward and we understand that the plane will be up in the air again soon. In the meantime we have continued to ship our parts to customers as requested.

Although the HDD market began to dry up in the second quarter along with personal computer sales, pivot assembly sales increased 11.2% to 29.7 billion yen. The upturn came after gaining the market share of a competitor whose operations were knocked out by the Thai floods. We forecast lower sales and profits for the fiscal year ending March 31, 2014 as the HDD market remains flat.