Business Results First Quarter of Fiscal Year ending March 31, 2006 July 28, 2005 Minebea Co., Ltd. 0
1. Financial Results 2. Policy and Strategy July 28, 2005 1
Financial Results Hiroharu Katogi Director, Managing Executive Officer July 28, 2005 All explanation are given on a consolidated basis. 2
Summary of Consolidated Business Results Year ending Year ended Mar 05 Change Mar 06 (Millions of yen) Q1 Q4 Q1 yoy 71,324 72,491 75,690 +6.1% Net Sales 2,802 4,450 3,010 +7.4% Operating Income 1,982 3,371 2,163 +9.1% Ordinary Income Income before 1,937 1,942 830 -57.1% Income Taxes Net Income 208 2,911 980 4.7X Effect of FX Fluctuations Q1 of FY Mar 05 Q1 of FY Mar 06 US$ ¥108.71 ¥107.28 Thai Baht ¥2.71 ¥2.70 Net sales minus ¥80 million Operating income ¥ 0.00 billion 3 July 28, 2005 In the first quarter, our principal markets such as PC and HDD continued to be strong and the economy remained firm world-wide. In this demand environment, sales reached 75.7 billion yen, exceeding plan, lifted by increased sales of mainstay products and relatively stable sales prices. Operating income was 3 billion yen, although remaining at a low level, it was a slight improvement from the first quarter of the last fiscal year. Net income increased from the same period of the last fiscal year to 1 billion yen, owing to negative adjustment of income taxes despite extraordinary losses of 803 million yen in impairment losses on idle fixed assets in conformity with asset-impairment accounting, which we introduced from this fiscal year, and 458 million yen in retirement benefits to directors and corporate auditors. In comparison with the previous quarter, the fourth quarter of the last fiscal year, sales increased but operating income fell, due to one time income of reversion of royalty payment in the previous quarter and lack of improvement at the three loss making businesses. 3
Net Sales yoy increased 6.1% Change qoq increased 4.4% (Billions of yen) 75.4 75.2 75.7 72.5 80.0 71.3 60.0 40.0 20.0 0.0 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 Net Sales 4 July 28, 2005 Sales increased compared to the first quarter of the last fiscal year, as pivot assemblies for HDDs, rod-end & spherical bearings for aircraft, keyboards and fan motors for PCs, lighting devices for mobile telephones all increased in sales. 4
Operating Income yoy increased 7.4% - - - in real term increased 24.7% Change qoq decreased 32.4% - - - in real term decreased 18.1% (Billions of yen) Operating income 7% 5.0 profit and loss in quarterly results 4.4 4.5 profit and loss recalculated with revised royalty rate. 6% 6.1% 4.2 4.0 3.6 5.5% 5% 3.7 3.0 2.8 3.0 3.9% 4% 3.5% 4.0% 2.7 3% 2.4 2.0 2% 1.0 1% 0.0 0% 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 Operating Income Operating margin 5 July 28, 2005 The graph shows last fiscal year's operating income adjusted for revised royalty rate. Operating income in the first quarter was in line with plan made at the beginning of the fiscal year. Compared with the first quarter of the last fiscal year, losses of Minebea- Matsushita Motor joint venture and keyboard business widened, but profitability improved at spindle motor business, lighting device business and rod-end & spherical bearings. 5
Net Income yoy 4.7x Change qoq decreased 66.3% (Billions of yen) 4.0 2.9 3.0 2.0 1.6 1.0 0.9 1.0 0.2 0.0 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 Net Income 6 July 28, 2005 Net income improved significantly from the first quarter of the last fiscal year. There were extraordinary losses as mentioned in a previous slide. 6
Sales of Machined Components Business Bearing-related products yoy increased 7.2% qoq increased 5.7% (Billions of yen) � Large increase in sales of pivot Other machined components assemblies for HDD. Bearing-related products 40.0 Increased sales for 3.5 and 2.5 inch HDD. 30.6 29.8 29.1 28.9 28.3 30.0 � Favorable sales in bearings for aircrafts. 4.6 5.3 4.2 4.4 4.0 Started shipment for A380 of Airbus. 20.0 26.0 24.9 24.5 24.6 24.2 10.0 0.0 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 7 July 28, 2005 Of machined components business segment, bearing related products had a strong quarter and sales reached 26 billion yen in the first quarter. In particular, pivot assembly business continued to be strong. In the first quarter, demand recovered for 2.5-inch and increased for 3.5-inch. Demand for small sizes were affected by slight adjustment but remained at a high level. Recovery of demand for rod-end & spherical bearings for aircraft application is evident at a faster pace than expected. Internal shipments of ball bearings expanded in response to increased production of pivot assemblies and fan motors, lifting total shipments, but external shipments remained almost flat. 7
Sales of Electronic devices and Components Business Rotary components Change yoy decreased 1.5%, qoq increased 4.4% Other electronic devices Change yoy increased 15.2%, qoq increased 7.8% Other electronic devices Rotary components (Billions of yen) � Expanded sales of fan motors for PC. 43.1 46.3 46.3 42.7 45.1 50.0 � Increased sales of backlights due to 40.0 recovery of demand for mobile phones 16.2 19.1 18.9 17.3 18.7 and start of new model. 30.0 � Due to decline of market share, 20.0 shipment of HDD spindle motors 26.9 27.2 27.4 25.3 26.4 10.0 remained low. 0.0 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 8 July 28, 2005 Of electronic devices and components business, first quarter sales of rotary components were 26.4 billion yen, almost no change from previous quarters. Sales of fan motors for PC jumped but sales of HDD spindle motors decreased due to lower market share. Sales of other electronic devices and components grew to 18.7 billion yen, owing to higher sales of keyboards and back lights. 8
Operating Income ( ) Operating margin (Billions of yen) 6.0 5.4 5.1 5.1 6.0 5.1 (20.6%) (18.5%) (17.2%) (18.0%) (16.6%) 4.0 2.0 0.0 -0.7 (-1.6%) -2.0 -1.8 -2.1 -2.3 (-3.9%) -2.7 (-4.6%) (-5.3%) -4.0 (-5.9%) 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 Machined components business Electronic devices and components business 9 July 28, 2005 Operating income of machined components segment was 5.1 billion yen in the first quarter, flat from the same quarter of the previous fiscal year. Operating loss of electronic devices and components segment was 2.1 billion yen. 9
Operating Income of 3 Businesses (Billions of yen) Sum except for 3 businesses 0.7 0.7 0.7 0.6 1.0 0.2 0.5 0.0 -0.5 -1.0 3 businesses -1.5 Profit and loss recalculated with -2.0 revised royalty rate -2.5 -2.2 -2.2 -2.5 -3.0 -2.7 -2.9 -3.5 -4.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY ended Mar 04 FY ended Mar 05 FY ending Mar 06 10 July 28, 2005 Of electronic devices and components segment, total of the businesses except the three businesses declined in profit slightly from the fourth quarter of the last fiscal year. Back light business expanded but sales and income declined for speaker business. The loss of the three businesses widened. Depressed sales volume is the reason for spindle motor business. Structural reform measures and production integration are still underway at Minebea-Matsushita Motor joint venture and keyboard businesses. 10
Sales by User Industry and by Region The number inside the circle is sales %. The number outside the circle is the change yoy. Others +14.7% PC and related products Motors 12.7% +10.7% +10.3% 5.4% 37.5% Aerospace 9.2% +18.1% 9.7% 14.8% 10.7% Automobile +2.3% OA & IT Home electronics -2.9% Europe -9.1% Japan +1.5% North and +1.9% South America 9.7% +2.0% 26.1% 14.8% 49.5% Asia (excluding Japan) +10.9% 11 July 28, 2005 By application, fan motors, keyboards and pivot assemblies for PCs and HDDs had brisk sales. Bearings for aircraft application also recorded high growth in sales. By region, sales in Greater China area continued its high pace of growth. 11
S.G. & A. Expenses Target of FY ending Mar 06 below 16% (Billions of yen) 15.0 17.8% 20% 16.6% 16.4% 16.1% 14.8% 15% 10.0 10% 13.4 12.3 12.2 11.9 10.7 5.0 5% 0.0 0% 1Q 2Q 3Q 4Q 1Q FY ended Mar 05 FY ending Mar 06 S.G.&A. expense S.G.&A. to sales ratio 12 July 28, 2005 Expenses in the first quarter increased in line with sales growth despite efforts to reduce expenses. We target to reduce SG&A to below 16% as % of sales. 12
Capital Expenditure (Billions of yen) Pivot assemblies for HDD Improve 20% of production capacity from present situation. Ball bearings Improve profitability 39.9 MMMC JV Maintain production system 40.0 Forecast of FY ending Mar 06 22.5 billion yen 30.0 26.2 23.1 18.8 20.0 16.4 10.0 4.3 0.0 FY ended FY ended FY ended FY ended FY ended FY ending Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Q1 Capital Expenditure 13 July 28, 2005 Capital expenditure in the first quarter was 4.3 billion yen. The main areas of investment are additional installation of automated assembly lines for small-sized pivot assemblies, capacity expansion and productivity advancement of ball bearings, and production transfer, measures to bring parts manufacturing in-house and productivity improvement at Minebea-Matsushita Motor joint venture. 13
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