Q&A

Latest Update : May 25, 2016

Back to Financial Results (FY3/2016)

Investor Meeting Presentation for FY 3/2016 held on May 10, 2016

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

Question

Question and Answer

Sales for all electronic devices for the fourth quarter of the fiscal year that ended in March 2016 were about half of what they were in the third quarter, at approximately 46.6 billion yen. This fiscal year's first and second quarter sales figures are expected to total 32.9 billion yen and 56.7 billion yen respectively.
Given the way things stand now, we expect it to remain the same as it was last fiscal year.
We still see a shift to OLED as a future possibility and since I have been president we have been working on developing hybrid component products with an eye to that possibility becoming a reality. I can't say now whether simply going after low-priced smartphone demand would be good for us once the profitability of LED backlights starts to fall. We could make a really bold move as we did with our decision to withdraw from speakers, keyboards and vibration motors, shift personnel and take the next step forward. I also think it's important to allocate enough personnel and resources to manufacture the new products we are developing now once they are ready.
There's a lot to do before the business integration takes place, like making necessary arrangements for systems and employees. The most important thing of all is improving Mitsumi's profitability. The top priority management strategy is to have our key manufacturing personnel train local employees at all levels and sow the seeds of "Minebeaism" throughout Mitsumi once we get the green light from the anti-trust regulators in key countries. How quickly we can do that will be the key to success. The second crucial element is teamwork. We're short of R&D people and need Mitsumi's help to get the various new products we currently have in the works off the drawing board and into the market as quickly as possible. We'll make sure that everybody pulls together.
While we do need to change some of their machines, it's more about Mitsumi's manufacturing philosophy and strategy being so different from ours. We will have to review everything from procurement to logistics, but the real focus will be on a commitment to manufacturing. We should be able to go into the nuts and bolts of it all once things are settled at Mitsumi's extraordinary meeting of shareholders, which is scheduled for December.
Not at the moment.
Although I can't go into any details right now, I believe transferring our manufacturing strategy to Mitsumi is the best way to help the company improve.
The ball bearing business is very strong. Our operations in Singapore were up and running every day during the Chinese New Year holidays this past February. External sales hit a record high in March, totaling 165 million units, and remained up in April, at 159 million units. Sales should reach 170 million units sometime this year. People often ask me why our ball bearing business is so strong and all I can tell them is that our ball bearings really sell well. We've already gotten preliminary orders from our customers and the business shows no sign of losing any steam.
I think part of it is that our market share is growing. Chinese bearing manufacturers are quiet right now and many Chinese customers are shifting to high-end products. Since we have an edge when it comes to supplying high-quality ball bearings, our market share is increasing. As I've said before, I believe that Minebea will grow in pace with the increasing sales of high-end products and you can see it happening with the ball bearing business.
It's difficult to answer the question based on some hypothetical threat of OLED immediately replacing LED backlights. I just don't see OLED taking over the market so easily because the LED backlight unit we've developed jointly with other companies in the supply chain is looking really great. I don't know if low-priced smartphone manufacturers will still be using LCDs when and if OLEDs replace the LED backlights used in high-end smartphones, but we should of course come up with countermeasures in the event there really is such a technology shift. Now that we've developed a good product that's in the supply chain, the only thing I can say is that we are still committed to keeping LED backlights as one of our core businesses.
I think you may have misheard me. I never said "50:50." I said it was in "the spirit of equal partnership." That's why we are changing the company name. Mitsumi has many excellent engineers and they will share their abilities with us to help us create something new. I want to keep that spirit of innovation alive. That's what we mean by "a spirit of equal partnership."
Mitsumi Electric knows why they can't stay ahead of the competition in the manufacturing arena. Their people came and observed what we do during the due diligence process. We have both agreed that by adopting Minebea's manufacturing practices Mitsumi can transform itself into a totally different company. I'm sorry if I sounded condescending when I used the suffix "-ism," but that's basically all I was saying. Right now we don't have any plan to adopt Mitsumi's manufacturing practices. We've been thinking about what Mitsumi will be able to do by implementing our ultra-precision machining technology and how it can quickly ramp up a large-scale, production system like the one we use for our LED backlights. All we are going to do is to transfer our know-how to Mitsumi.
The motor business will see sales remain flat this fiscal year since this fiscal year the exchange rate is projected to drop from last fiscal year's rate of approximately 120 yen to the dollar to hit 105 yen to the dollar. We expect, however, profits to increase despite of the yen's appreciation although we haven't announced any specific figures.
The motor business has been up across the board, especially stepping motors and DC brushless motors. We've also seen healthy developments in our European automotive motor business, which we refer to internally as EMT.
Besides the business integration, we are also working to implement ERP, which will bring head office expenses up 2 billion yen this fiscal year.
The figure is also partly due to some other factors besides the translation impacts.
This fiscal year's estimated sales of electronic devices totaling 211.1 billion yen will mostly come from LED backlights. Although we had a lot of assembly work besides LED backlights, we don't expect it to generate much revenue this fiscal year.
Although we cannot consider concrete measures until we get approval from anti-trust regulators in key countries, production in Cambodia is sure to be a big option. If we have to transfer manufacturing operations or keep production costs down, it would make sense to use the Cambodian plant. That's all I can tell you about it at the moment.

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