Latest Update : Aug.11, 2014

Back to Financial Results (FY3/2015)

Investor Conference Call for 1Q FY 3/2015 held on July 31, 2014

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


Question and Answer

Actually we only made slight changes to the second quarter forecast, so it's basically unchanged from our initial projections.
The monthly external ball bearing sales volume for the April-June period was 145 million units on average. It is expected to reach 147 million units in July, 144 million units in August, and finally 152 million units in September, for an all-time high. The first arrow of our Five Arrows strategy is aimed at increasing external ball bearing sales to 150 million units per month on average at the earliest possible date and, even though it's just the one month, it looks like we'll be reaching that target earlier than planned.
The monthly average pivot assembly sales volume for the April-June period was 34.5 million units and it is expected to be 33 million units in the July-September period. We'll see rod-end sales increase from what they were during April-June. Judging from current performance, machined components sales should remain upbeat in the July-September period and be slightly higher than what they were during the April-June period.
Motor sales will continue to be lifted up slightly by the office automation equipment and automobile markets like they were in the first quarter.
We started producing LED backlights for a major customer's new models in June. Our factory staff really went the extra mile to quickly boost production. Now that the production rate is up, we can safely say that we have turned the corner after a rocky start. The only concern is that overall demand is increasing from what it was when we talked about it at the last investor meeting held in May. It's vital that production keep pace in the second quarter and onward. We have started a project with a big customer for its new model that's coming out next year, so we have to think about production capacity. Right now we are revising our plan to boost production and I should be able to give you a better picture of the situation at the second quarter investor meeting.
LED backlight sales accounted for about 80% of all electronic device sales in the April-June period, which came to 21.6 billion yen. Judging from current performance, sales for the July-September period should reach 30 billion yen. The profit margin for the first quarter didn't change much from last fiscal year. That's because depreciation and amortization costs jumped 244 million yen in three months as a result of shortening the depreciation period for LED backlight production equipment on top of an increase in temporary expenses associated with the steep ramp up of production in June. We don't expect to see any drastic changes to the profit margin in the July-September period.
The drop was mainly from sluggish performance at our American subsidiary due to cuts in the U.S. military budget there. Working with an eye to enhancing synergy among our rod-end production bases around the globe, including the U.S., Europe, Japan, and Thailand, we went ahead with a reorganizing initiative that put our U.S. subsidiary's rod-end operations under the Rod End / Fastener Business Unit. If we focus on increasing sales to the booming civil aviation market, we should be able to achieve our initial targets.
New automobile applications are on the rise as are server fan motor applications.
We believe that external ball bearing sales volumes will remain upbeat.
In April, the external ball bearing sales volume totaled 139 million units, the quantity used in house was 92 million units, and production volume reached 237 million units. In May, the external sales volume came to 146 million units while in-house use totaled 89 million units and the production volume hit 242 million units. In June, the external sales volume was 149 million units, the quantity used in house 93 million units, and production volume 242 million units. During the second quarter we expect the July external ball bearing sales volume to total 147 million units, in-house use to reach 88 million units, and production volume to hit 244 million units. In August, the external sales volume will reach 144 million units, the quantity to be used in house 89 million units, and production volume 247 million units. In September, the external sales volume will come to 152 million units, the quantity to be used in house 91 million units, and production volume 244 million units.
I wouldn't say plenty, but we can manage it.
We decided to invest an additional 1.8 billion yen in ball bearing manufacturing equipment this month. The new equipment will enable us to produce 7 million units more a month.
It's about 250 million units per month. Since we still have half of our new Thai factory open, this will give us ample room to up production.
We will install a clean room that will occupy the remaining half of the Cambodian plant's second factory building. We are also looking over the plan to see how we can boost production at not only this plant but also the Lop Buri plant in Thailand as well as the Suzhou and Xicen plants in China.
Automobile bearings accounted for 17%, bearings for aerospace applications 28%, bearings for home appliances 4%, bearings for office automation equipment 6%, bearings for PCs and peripheral equipment 3%, motor bearings 17%, and bearings for other applications 25%.
You won't see any major differences in profitability among the different applications. Once we boost production, the operating rate will climb and the unit manufacturing cost will fall. That translates to higher profitability.
I think it's about 20%.
This subsidiary is a manufacturer of reflectors used in head-up displays. This move is aimed at developing and boosting sales of new Electro Mechanics Solutions products under our Five Arrows strategy. Since we can supply actuators for head-up displays, we are looking to increase added value by combining them with this manufacturer’s products. These reflectors can also be applied to LED lighting. Since we haven't started working on setting specific sales targets, we still don't know how this move will affect our bottom line. This is still a business of the future.
Our customer base is expanding. We believe both the market and our share of it are fueling demand.
While we know that demand for parts will fluctuate significantly due to seasonal factors in the smartphone market, demand for our superior ultra-thin high quality LED backlights is definitely growing.

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