Q&A

Latest Update : Aug.25, 2017

Back to Financial Results (FY3/2018)

Investor Conference Call for 1Q FY 3/2018 held on August 4, 2017

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

Question

Question and Answer

The primary reason is that we are receiving a steady flow of orders for LED backlights from major customers, and that's actually all it is. There have been no particular changes in prices or other factors.
Although I don't know what the order volumes are like at our competitors, we are seeing strong interest from customers for all our products and steadily gearing up production to meet their needs.
It's partially from products for new models, and we expect that they will account for much more in September quarter and onward.
Like I said earlier, we don't know how much our competitors are selling. If the overall sales volume hasn't changed, our market share may have increased.
We expect overall sales to be higher than initially projected. The primary factor for the increase will be game consoles. I'm afraid that I cannot give you any details on operating income.
We have factored in the negative impact of the slight slowdown in sales we expect to see in the Chinese market.
No, we have no capacity-related constraints. Basically we should be able to meet customer requirements. We expect that demand for game consoles and camera actuators will grow significantly in September quarter and are steadily preparing for that.
Most of our production activities take place in Thailand and we factored in a slight appreciation of the Thai baht against US dollar we expect to see in September quarter but made no change to the estimated exchange rates for the rest of the fiscal year. Other than that, there are no particular reasons for the decline.
As we explained during the investors meeting held back in May of this year, many people including our management team have been working on improving the profitability of the Mitsumi business since we signed a business support agreement with MITSUMI ELECTRIC in August 2016. As a result, productivity of camera actuators, for example, has improved three-fold over the last year. We should be able to enhance productivity for new models by leveraging the know-how we have gained so far.
Looking at the areas where improvements can be made in a relatively short time, we have made good progress in cutting costs via joint materials purchasing and integrated logistics, for instance. As a result of the business integration with Mitsumi, our product portfolio was significantly enhanced. Our next goal is to develop and commercialize Electro Mechanics Solutions by combining the two companies' technologies. It might take some time until we see results in this area, but we are doing our best.
Beginning this fiscal year, we implemented tax consolidation in Japan for the entire MinebeaMitsumi Group, including Mitsumi Group subsidiaries. Given the tax effect of the cumulative loss from the Mitsumi business, we expect the effective tax rate to be lower than what it has been.
It will be a little over 20% this fiscal year.
Yes.
As we explained earlier, among the factors that affected our operating income for June quarter was a quarter-on-quarter loss of 1.4 billion yen due to foreign exchange fluctuations. While dollar-denominated sales account for over 70% of our overall sales, we don't calculate forecast figures based on changes in the yen's exchange rate against the US dollar in order to avoid any misunderstanding because costs are affected by fluctuations of various currencies. I hope this will give you some idea.
We don't announce specific profit and loss figures for individual product categories of the Mitsumi business. Overall profit for the Mitsumi business increased in June quarter. We saw significant improvements especially in the products that make up the Seven Spears, rather than optical devices and mechanical components. That's all the information I can give you at the moment.
Losses can be carried forward for tax purposes for up to nine years while deferred tax assets may be recognized over a period of up to five years.
I'm sorry but I cannot give you a firm answer to that at this time.
Right now I don't expect the robust performance in the first half to drastically drop off in the second half although I don't have sufficient information on the outlook for the second half to tell you for sure.
I'm very sorry but I can't comment on that at the moment.
As Mr. Kainuma explained during the investors meeting held this past May, we don't lower prices for the sake of gaining market share. It is our policy to respond to customer requirements as a good second tier supplier. We are sticking to that policy, and if customers find we are ahead of the pack in lead time and quality, our market share may go up, but that's not our main concern right now.
Now that productivity has significantly improved, morale is up across the shop floor, and we are making steady progress on launching production for major customers' models. I don't see any problems.
The motor business is steady. This is an indication that profitability of LED backlight has been substantially improved due to better productivity after gaining a broad spectrum of manufacturing know-how.
LED backlight inventory has been maintained within a normal balance range, and we are not stocking extra inventory. It was simply the improved productivity that led to better profitability.
Automobile bearings accounted for 20%, bearings for aerospace applications 32%, bearings for home appliances 4%, bearings for office automation equipment 6%, bearings for personal computers and peripheral applications 3%, motor bearings 17%, and other bearings 17%. Despite a 17% drop for personal computer and peripheral applications along with a 5% decline for aerospace applications, year-on-year sales were up 11% for automobile applications, 21% for home appliance applications, 12% for office automation equipment applications, 11% for motor applications, and 6% for other applications to bring overall sales up 5%.
June-quarter operating income for the machined components business was 10.4 billion yen, and profitability of ball bearings improved significantly. When it comes to rod-end fasteners, on the other hand, both revenue and profit as well as the profit margin decreased due mainly to declining production of large aircraft and diminishing demand from the defense industry. While the inventory level of ball bearings is still low, the production volume is increasing, and profitability has improved quite a bit.
Demand for OIS and other optical devices is expected to increase in September quarter due to the used seasonal uptick. On top of that, we are planning to increase production of game consoles. These are the primary factors that will drive sales up.
We expect game consoles to have a greater impact.
Overall optical device sales will be up, but we expect to see a slowdown in sales to some Chinese smartphone makers.
We have built up our manufacturing know-how over the years and are implementing various measures in order to manufacture large quantities of products that are distinctly different from what we used to make. I cannot give you specifics, but please understand that we don't have any particular problem with overall production although we need to augment specific equipment in order to produce our new products.
Production and internal sales volumes for ball bearing were respectively 250 million units and 85 million units for April, 267 million units and 88 million units for May, and 267 million units and 87 million units for June. Production and sales volumes for pivot assemblies were respectively 30 million units and 25 million units for April, 30 million units and 29 million units for May, and 29 million units and 25 million units for June.

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