Latest Update : Feb.17, 2015

Back to Financial Results (FY3/2015)

Investor Conference Call for 3Q FY 3/2015 held on February 3, 2015

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


Question and Answer

Monthly sales of LED backlights reached 15.4 billion yen in October, 16.2 billion yen in November, 17.7 billion yen in December, and a record monthly high of 18.1 billion yen in January. Since demand usually drops in February and March, we currently expect sales to total 12.6 billion yen in February and 12.0 billion yen in March. The upwardly revised forecast we announced today is based on estimated January sales of 17.0 billion yen. Sales are already 1.0 billion yen higher than that.
External ball bearing sales volumes totaled 148 million units in October, 146 million units in November, 141 million units in December, and 152 million units in January, which was also a monthly record high. The sales volume for February is expected to drop to 137 million units due to the Chinese New Year holidays but climb back up to 152 million units in March. Internal sales volumes hit 94 million units in October, 92 million units in November, and 90 million units in December and are expected to reach 92 million units in January and 88 million units in each February and March.
Pivot assembly sales volume totaled 35 million units in October, 35 million units in November, and 34 million units in December. Sales volume is projected to reach 34 million units in January, 33 million units in February, and 30 million units in March.
Our Electronic Devices and Components business segment is expected to see overall fourth quarter sales fall 17.0 billion yen below what they were in the third quarter, but the decline in operating income is projected to be 4.5 billion yen. The difference really doesn't seem as big as you suggest, but our operating income estimate is on the low side.
We take a close look at the actual currencies used in sales transactions and the percentages of foreign currency expenses in each region when estimating foreign exchange gains and losses. We can't just look at how the yen stacks up against the US dollar to determine what kind of impact foreign exchange rates will have on our financial performance. The average exchange rates of 112.34 yen to the US dollar and 3.45 yen to the Thai baht during the third quarter had the biggest impact.
Yes, but since our fourth quarter forecast is based on those assumed rates, we cannot provide precise figures for projected foreign exchange gains.
Production volumes totaled 247 million units in October, 241 million units in November, and 231 million units in December, and are expected to total 233 million units in January, 219 million units in February, and 242 million units in March.
It's because a large part of our sales growth came from pivot assemblies. The operating margin for ball bearings did not change much. Our ball bearing income was also affected by a slight dip in earnings for special bearings in the U.S. This was due to the December decline in demand that typically accompanies Christmas holidays.
Yes. It is counted as an extraordinary loss in our forecast.
Extraordinary losses for the fourth quarter are expected to total 5.7 billion yen, including 1.6 billion yen for the plea bargain deal and 4.1 billion yen due to costs associated with the discontinuation of the defined benefit pension plan for our U.S. operations. We do not expect to generate any extraordinary gains in the fourth quarter. The effective income tax rate for this fiscal year is expected to be 24.5%.
We expect sales to drop down to approximately 4.0 billion yen in the fourth quarter.
As I said before, our operating income forecast figures are on the low side.
At the beginning of this fiscal year we switched depreciation methods for equipment from ten-year straight line method to two-year. The weak yen was one of the factors driving depreciation costs up in the third quarter.
Since the U.S. Justice Department issued a press release about our plea agreement yesterday local time, we didn't want to wait too long to announce it. That's why we changed the time. An extraordinary loss will be posted in relation to this issue, so we announced our financial results and full-year forecast altogether.
Although most of it has to do with the impact of foreign currency changes, there was a slight increase in the amount to be posted this fiscal year.
Looking at our LED backlight sales forecast for the fourth quarter, we see that January sales were 1.0 billion yen higher than projected. Solid demand from the largest customer was a major factor behind this unexpected uptick. While demand normally drops off precipitously in the fourth quarter, this fiscal year we will see fourth quarter sales exceed the second quarter total due largely to strong demand from our Chinese customers.
I'm afraid I can't provide you with specific information about our customers. I'm sure the percentage of Chinese customers will be up in the fourth quarter.
We said last November that we would aim for at least a 20% increase in sales, but we are still scrutinizing the target figures for the next fiscal year. We will provide you with the forecast when we announce our full-year results in May. Nonetheless we will still aim to boost sales by 20% or more. We should be able to stay ahead of the pack for a while since new models to be released have sophisticated functions and are extremely difficult to manufacture. During the December factory tour I noted that we would introduce equipment to expand operations at our Ban Wa plant in Thailand and we are moving right on track in that direction.
We were looking ahead and produced more than we could sell in the second and third quarters. We have ample inventory that should allow us to keep up with the seasonal demand for ball bearings from air conditioner manufacturers for a while.
For one thing, we saw increasing demand from the civil aircraft industry, and on top of that, foreign exchange rates made a big difference.
The plant is scheduled to be completed in March. After we install the machinery, production will kick off in April. We will then gradually increase production and the plant should start operating full swing in June.

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