Latest Update : Aug.17, 2021

Back to Financial Results (FY3/2022)

Investor Conference Call for 1Q FY 3/2022 held on August 4, 2021

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


Question and Answer

As a technical trend, the number of miniature and small-sized ball bearings is increasing structurally due to electrification of vehicles and increasing electrification. In fact, demand is currently up significantly.
We have previously explained that bearings will grow at a CAGR of around 8%, and this capital investment will be implemented in line with that. As a front runner in the industry, we understand that it is important to constantly move forward while thoroughly maintaining our supply capacity.
We haven't done a close review, but there's a definite tug on the line.
The biggest factor in the upward revision in the first half was semiconductors. Optical devices and others are also up. The figures for the second quarter were revised based on the most recent information available, so we recognize that there is not a significant buffer there.
The first half outlook for our major customers is better than anticipated, and production is being upped steadily. Aside from our major customers, we expect a slight downswing in sales for high-end Chinese smartphones. Putting these together, there is no change in the outlook for the first half or the full year.
There is also no change in our policy of going after business opportunities with non-major customers in the second half.
At this time, it looks like sales and profits will be stronger in the second half.
There are reports that some automobile manufacturers will increase production starting in September, so overall, the recovery will be delayed. Particularly in the fourth quarter, as various delays are resolved, we feel that sales will be stronger than the normal seasonality.
For example, first quarter machined component sales came to 44.1 billion yen, and second quarter sales came to 46.9 billion yen. The second half forecasts have not been revised, so they remain 42.0 billion yen in the third quarter and 42.0 billion yen in the fourth quarter. However, based on the current trend in demand, it's difficult to envision third quarter sales falling below second quarter sales. On the contrary, we recognize that the recovery initially anticipated in the second quarter has been pushed back to the third or fourth quarter. The same goes for motors, and we believe the overall trend is the same.
We hope to provide accurate forecasts in November after determining the situation.
On the plus side, we had just above 1.0 billion yen in revenue from recovery of costs from past fiscal years in electronic devices. On the minus side, there was around 0.4 billion yen in expenses in the U-Shin business due to increasing reserves in conjunction with combining retirement benefit plans. All together, the special factors came to just under 1.0 billion yen.
I can't get into specifics, but it should be seen as in line with our basic policy of withdrawing from lower priced products and focusing on high value-added products.
As for the reason the customer chose U-Shin, our understanding is that they recognized the diverse track record of MinebeaMitsumi, including in quality improvements related to automobiles, and our global supply system that includes Asia.
If a second company makes an entry during that time, it could decrease, but that is what we anticipate at this time.
From the first quarter to the second quarter, we expect net sales increase of 25.5 billion yen and operating income increase of 3.4 billion yen in the Mitsumi business. Of that, we expect semiconductors to remain at a high level of profitability. Beginning in the second quarter, we expect the launch of new models to produce a substantial increase in income from optical devices. The figures for mechanical components are conservative.
I'm afraid that we're not in a position to comment on that.
There was a bit of a struggle in the first quarter with automotive products transferred from Mitsumi business to the U-Shin business this year, but we expect improvements in the second quarter.
The U-Shin business, including automotive products transferred from the Mitsumi business, is positioned as Tier 1. Customer production adjustments will impact the U-Shin business, but this is different from our other businesses. I can't provide details, but some customers have already come up with recovery plans, so we believe this will lead to a substantial improvement in revenue.
We haven't disclosed separate profitability numbers for miniature/small-sized bearings, but once the volume bounces back, they will be very high. On the other hand, profitability of aircraft-related products is not that high. For that reason, when aircraft production bounces back, looking only at profitability, it will be a factor putting downward pressure on profitability.
Currently, we are focusing our bearing-related investments where costs are lowest, so profitability should go even higher. One way is to enter new countries, purchase land, and train local employees from scratch, but right now we are investing in a multi-purpose plant in Bang Pa-in and focusing on places where there are existing buildings. For that reason, profitability is high, and I believe it will remain so. However, rather than focusing only on that, keep in mind that even if aircraft production bounces back putting downward pressure on profitability, machined components profitability as a whole will remain very high.
We believe that when the semiconductor shortage is resolved and European business customers are able to build them in, the actual value will be around 7.0 billion yen. We will then reach 10.0 billion yen by reducing personnel by 300 and eliminating low-priced products. At this time, structural reform is progressing as planned.
Our motors are small-sized, so it is assumed that the impact of raw material prices is smaller compared to other companies. In the first quarter, however, there was a proportionate impact primarily from copper. For the year, our costs will be up several billion yen. In response, we have come up with multifaceted measures such as increasing the utilization rate and adjusting prices with customers. We expect the effects to manifest in the third and fourth quarters.

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