Latest Update : Nov.18, 2019

Back to Financial Results (FY3/2020)

Investor Meeting Presentation for 2Q FY 3/2020 held on November 7, 2019

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


Question and Answer

In the second quarter, the production volume was 244 million units. We expect a volume of 256 million in the third quarter and 259 million in the fourth quarter. By month, external shipments came in at 183 million, 179 million, and 194 million in July, August, and September, respectively. Internal shipments came in at 64 million, 66 million, and 63 million, and the production volumes were 253 million, 235 million, and 245 million.
Very strong demand persists for automobiles, and we reached an all-time high during the second quarter. We believe that trend will continue.
Demand for other uses, including home appliances, has bounced back from a temporary dip. Basically, there are no shortfalls in a year-on-year comparison. The only weakness was in fan motors. Demand bottomed out in June and remained very low in July and August, but recently it has begun to recover, and that has brought the overall volume up.
We believe that ball bearing sales will go up a little more. Tentative orders are stronger than the forecast going into the fourth quarter. We will also begin commissioning the machinery and equipment that we invested in for mass production as appropriate and keep costs down to improve the operating margin.
Both. For automobiles, the number of units shipped has decelerated in China and around the world, but record-breaking ball bearing sales volumes were achieved in July and October. As for the product mix, the operating margin is higher for automobiles than for fan motors, and we believe this trend will continue.
It's driven by games and OIS. As reported in today's newspaper, Chinese brands are very strong when it comes to OIS. There has been talk for a while that Chinese brands would take off this year, and that trend is very prominent. This is a very big plus for us as well. We've also received very firm tentative orders for games, so we believe that the Mitsumi business will be a driver of growth.
Out of these five, we have already received orders for CSD and flush door handles, and some will start next year. Currently, we're working to prepare a solid production system through integrated synergy, including production know-how. We hope to launch home locks next fiscal year. We'll announce more specific figures next May.
Our target for operating income is 10 billion yen. Currently, the automobile industry is extremely varied in performance depending on the manufacturer. The ones doing well are doing very well, while European, American, and local Chinese manufacturers are struggling. Our plants are distributed evenly across the globe, so we will have to pay closer attention to the macro environment of the automobile industry.
CSD, flush door handles, E-Access and other products that will grow among the five pillars target luxury vehicles, but right now, quite a few are for lower priced vehicles, such as mechanical steering wheel locks. As such, the product mix will have to be changed to increase the margin, but the procedures for automobiles are very complicated, and new models come out once every four years, so it's not something that has to be done right away. However, once in, it continues for a long time. In this sense as well, the easiest of these to set to work on is the fifth, home locks.
Yes. The automobile manufacturer customers for the U-Shin business are limited, but bearings are universal for the most part. As explained, bearings very closely reflect the economy, so even as results improve moving forward, I think it's safe to say that it will be patchy to a certain extent. In fact, performance is gloomy for machine tools, but semiconductors are bouncing back. Accordingly, the way things bounce back varies depending on the industry, and even if things do bounce back, the strength of the manufacturer will still come into play. You could say that's the lot of a parts supplier.
In October, external shipments reached 195 million units, and internal shipments reached 65 million, for a total of 260 million. Production was boosted to 254 million units. I think production will be increased a little more.
In the second quarter, electronic device sales were 46.4 billion yen. The forecasts for third and fourth quarters are 52.1 billion yen and 46.8 billion yen, respectively. As for the Mitsumi business, second quarter sales were 100.9 billion yen, and the forecasts for the third and fourth quarters are 82.8 billion yen and 56.6 billion yen, respectively. For games, the peak was in the second quarter, and we anticipate a slight drop in the third quarter. However, I've heard that customer sales are very favorable, so I'm optimistic. In regard to optical devices, we expect OIS to grow significantly in the third quarter and fall slightly in the fourth quarter.
Yes. We believe that LED backlight sales will remain favorable.
Making improvements in Europe is the most important thing for a U-Shin turnaround. Our managements visit Europe once every two months, and I have personally visited Europe three times over the past six months. We are making various improvements centered on new products while sending a lot of support.
We're also promoting vertical integration, and in addition to providing backup for manufacturing internal parts, we're working on joint purchasing with the MinebeaMitsumi Group and unification of logistics.
As such, next year various new products will be launched in addition to improvements like these, so by putting our capabilities to use in a smooth launch, I believe U-Shin's results in Europe will change for the better. The employees are earnest, and morale is very high, so we'll solve each problem by engaging in team development.
However, as previously mentioned, the situation of European automobile manufacturers is patchy, and some are struggling with sales, so I think we'll have to watch a little more closely.
New products are being introduced on a different cycle than usual, so there will be considerable sales in the fourth quarter as well.
The relevant sales of the transferred products will be 10 billion yen. Including the ones that will be launched this year, electronic devices will gain around 15 billion yen.
We extended the mandatory retirement age for our employees to 65 this year, so the provision for retirement benefits has increased. Additionally, we are actively engaged in various M&A, so there are also expenses associated with that. One way of looking at it is that without M&A expenses it would be around 15 billion yen.
Basically, we're not considering expansion of the Cebu Plant. We anticipate that the increase will be absorbed by the Cambodia Plant. It's not that we're not making capital expenditures, but we aren't in a phase of very large expenditures. As business opportunities increase, we will address them by diverting or modifying existing capacity. We do not believe we will have to make major investments.
Specifically, we will increase our overall capacity by handling OIS for Chinese customers at the Cambodia Plant and using the Cebu Plant for our biggest customers.
Both. Generally speaking, there is the original U-Shin Group that was profitable and a group operating primarily in other areas of Europe, but the slowdown in the automotive market impacted the profits of both heavily. I can't provide details, but if you look at the situations of our customers, I think you'll see.
Our policy is to create and sell various new products, and we believe the biggest defense is to just go for it. With automobiles, it's clear what we can and cannot do ourselves, so we can't just put our hopes in the part that we can't do. The business that best meshes with us among the five pillars is home locks, so we hope to put our focus there to achieve growth.
Generally speaking, there will be a difference in the fourth quarter in the smartphone business. Also, about next year, as I've stated previously, we haven't heard anything from our customers about dropping LED backlights. That's all I can say.
I'm sorry, but I'm not at liberty to discuss that.
Looking at the current segmentation, games and OIS come to mind when talking about Mitsumi, but for the next driver, first we have semiconductors. When we merged with Mitsumi, we thought we would sell the semiconductor business first, but they have shown very good movement, and now they are at the core of profits.
Also, I think there could be a misunderstanding with past segmentation, but U-Shin's home locks will be backed up not by Minebea but by Mitsumi. Right now, we view integration as the most important thing, and we hope to make what comes about available for sale as soon as possible and prove ourselves. In the next period I hope to be able to introduce tangible results.
For fan motors, there are drivers like 5G and IoT, so once inventory adjustments in supply chain have come full circle, they will definitely bounce back, but how much depends on how things go in the world. What we can say is that demand bottomed out and has begun rapidly recovering. Based on the past, when we look back a year or two years from now, I think it will be apparent.
As for automobiles, it's unquestionable that electrification is advancing quickly. There are not many companies out there that can guarantee operation of their bearings in temperatures from -30°C to 120°C. Even if competition comes from China, they wouldn't be used in top-ranking cars right away, so we have an advantage. This trend will accelerate all the more in electric vehicles. Despite the environment in the automotive industry being as poor as it is, our bearing volume is increasing, and I think that is an impressive achievement.
As more and more cars are made into electric or hybrid vehicles, bearings will be used in everything from air resistance control to brakes. Steadily capturing this demand will also lead to an improved margin, so we will engage in thorough efforts.
Based on various information, I think things will go well to a certain extent.
As for the next period and beyond, it's just as I said earlier. If there are business opportunities, we'll pursue them.
I can't say anything about fields, but we aim to take advantage of integration and for people to look back later and say, "Now it makes sense!"
I think if you look at a showroom with U-Shin products, you'll feel that way about them as MinebeaMitsumi products.
We'll grow our Eight Spear products and steadily bring integrated products to market. This is a strategy that has remained unchanged over the past several years. That's the gist of it.

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