Business Results First Half of Fiscal Year Ending March 31, 2008 October 31, 2007 Minebea Co., Ltd. 0
1. Financial Results 2. Policy and Strategy 1 October 31, 2007 1
Financial Results Hiroharu Katogi Director, Senior Managing Executive Officer 2 October 31, 2007 All explanations are given on consolidated bases. 2
Summary of Consolidated Business Results for 1H Despite higher Thai Baht and 1Q weakness in HDD market, sales and operating income increased due to 2Q HDD market recovery and company-wide cost reduction efforts Year ended Year ending 1H of year ending Mar. '08 Change Mar. '07 Mar. '08 (Millions of yen) Original Vs. 1H 1H yoy forecast forecast Net sales 163,998 168,247 +2.6% 162,500 103.5% Operating income 13,367 15,121 +13.1% 14,000 108.0% Machined components business 13,317 13,704 +2.9% 13,800 99.3% Electronic devices and 50 1,417 x28.3 200 x7.1 components business 10,947 13,236 +20.9% 11,500 115.1% Ordinary income 11,114 12,196 +9.7% 10,500 116.2% Income before income taxes 7,468 7,474 +0.1% 6,500 115.0% Net income 18.72 18.73 +0.1% 16.29 115.0% Net income per share (yen) FX Fluctuations 1H of FY Mar. ’07 1H of FY Mar. ’08 US$ = ¥115.26 ¥119.64 Euro = ¥145.58 ¥161.83 Thai Baht = ¥3.03 ¥3.77 (¥3.47*) RMB = ¥14.40 ¥15.68 (*) is on-shore rate reported by the Bank of Thailand 3 October 31, 2007 Minebea achieved consolidated net sales of 168,247 million yen, operating income of 15,121 million yen, and net income of 7,474 million yen for the first half of the fiscal year ending March 31, 2008. Both sales and profit increased over the same period last year. Net sales were up by 2.6%; operating income was up by 13.1%; and net income was up by 0.1%. These financial results were better than the plan at the beginning of this fiscal year. The better performance is due to rapid recovery in the HDD market in the second quarter, increased sales of information motors, ball bearings, and aircraft parts, improved profit in the Electronic Devices and Components segment including our keyboards business turning profitable, and progress in measures for companywide cost reduction, although there were adverse foreign currency impacts from the higher Thai baht and the first quarter fall in sales of HDD related products due to inventory adjustments by HDD makers. 3
Summary of Quarterly Consolidated Business Results for 2Q Despite higher Thai Baht, sales and operating income increased due to HDD market recovery and company-wide cost reduction efforts Year ended Year ending Mar. '08 Change Change Mar. '07 (Millions of yen) 2Q 1Q 2Q YoY QoQ Net sales 83,797 81,766 86,481 +3.2% +5.8% 7,509 7,115 8,006 +6.6% +12.5% Operating income 6,234 6,252 6,984 +12.0% +11.7% Ordinary income Income before 5,909 5,476 6,720 +13.7% +22.7% income taxes 4,180 3,133 4,341 +3.9% +38.6% Net income 10.48 7.85 10.88 +3.9% +38.6% Net income per share (yen) FX Fluctuations 2Q of FY Mar. ’07 2Q of FY Mar. ’08 US$ = ¥115.80 ¥119.42 Euro = ¥147.67 ¥162.43 Thai Baht = ¥3.05 ¥3.84 (¥3.49*) RMB = ¥14.49 ¥15.80 (*) is on-shore rate reported by the Bank of Thailand 4 October 31, 2007 For the second quarter, Minebea had net sales of 86,481 million yen, operating income of 8,006 million yen, and net income of 4,341 million yen. Year on year, net sales were up by 3.2%; operating income was up by 6.6%; and net income was up by 3.9%. Continuing from the first quarter, there were adverse foreign exchange impacts from the higher Thai baht. In the second quarter, however, demand for HDDs recovered rapidly, which was also followed by recovery in sales of HDD related products, such as pivot assemblies and HDD spindle motors. Progress in companywide cost reduction measures also contributed to higher profit. 4
Quarterly Net Sales Increased 3.2% yoy (Billions of yen) Increased 5.8% qoq 100.0 75.7 80.0 80.9 81.8 80.2 83.8 83.3 83.7 81.8 86.5 80.0 60.0 40.0 20.0 0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q FY ended FY ended FY ending Mar. '06 Mar. '07 Mar. '08 5 October 31, 2007 Net sales for the second quarter increased by 5.8% over the first quarter, and by 3.2% year on year. Foreign exchange impact of the weaker yen brought about an increase of 4.5 billion yen year on year, and an increase of 0.3 billion yen over the first quarter. With the start of the second quarter, demand for HDDs recovered rapidly, which was followed by increased sales of HDD related products, such as pivot assemblies and HDD spindle motors. Also, keyboards sales for high-value-added products were strong. 5
Quarterly Increased 6.6% yoy Operating Income Increased 12.5% qoq Operating Income 10.0 9.3% 10.0% Operating Margin 9.0% 9.0 8.7% 7.5% 7.3% 8.0 7.3% 8.0% 7.9% 7.5% 7.0 6.0 5.3% 6.0% 5.0 4.0% 4.0 4.0% 8.0 7.1 6.3 6.6 7.5 3.0 6.0 6.0 5.9 2.0 2.0% 4.2 3.0 1.0 0.0 0.0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q (Billions of yen) FY ended FY ended FY ending Mar. '06 Mar. '07 Mar. '08 FX Fluctuations 1Q of FY Mar. ’08 2Q of FY Mar. ’08 US$ = ¥119.85 ¥119.42 Euro = ¥161.22 ¥162.43 Thai Baht = ¥3.70(¥3.44*) ¥3.84 (¥3.49*) RMB = ¥15.55 ¥15.80 (*) is on-shore rate reported by the Bank of Thailand 6 October 31, 2007 Operating income for the second quarter was up by 12.5% over the first quarter. This fiscal year, profit improved, with second quarter profit exceeding the favorable level of the same period last year. There were 0.4 billion yen of adverse foreign exchange impacts from the higher Thai baht in the second quarter, relative to the first quarter. 6
Business Segments Machined Components Business Net sales Operating income Other machined components (Billions of yen) Pivot assemblies (Billions of yen) Rod-end & spherical bearings Operating income 80.0 8.0 30.0% Ball bearings Operating margin 72.2 70.1 69.9 67.8 67.4 70.0 9.1 8.4 62.2 9.8 20.6% 9.7 21.2% 10.2 19.3% 6.0 60.0 18.8% 19.8% 9.8 19.1% 14.7 18.7% 18.6% 15.0 20.0% 13.6 12.3 17.1% 13.1 50.0 16.6% 11.3 10.5 9.8 9.9 4.0 9.4 7.1 40.0 8.8 7.1 7.0 6.8 6.5 6.6 8.0 6.2 6.1 6.0 30.0 5.1 10.0% 2.0 20.0 37.9 36.7 36.8 36.4 35.2 33.1 10.0 0.0 0.0% 0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q Mar. '06 Mar. '06 Mar. '07 Mar. '07 Mar. '08 Mar. '08 1H 2H 1H 2H 1H 2H E Mar. '06 Mar. '07 Mar. '08 7 October 31, 2007 Operating income of the Machined Components Business segment for the second quarter was 7,105 million yen, with an operating margin of 19.3%. Net sales of miniature and small-sized ball bearings for the second quarter were up by 2.4% year on year but down by 1.3% over the first quarter. Sales quantity during the second quarter increased from month to month. The average sales quantity, including for in-house use, increased to 190 million units per month, a record level. Profit also solidly increased. Net sales of rod-end bearings continued solid increases due to strong aircraft production. As a result, net sales for the second quarter were up by 14.4% year on year, and up 1.0% over the first quarter. The Increase in sales was followed by solid increases in profit. Net sales of pivot assemblies jumped in the second quarter, up by 23.8% year on year and up by 23.7% over the first quarter. Net sales recovered rapidly since July from the severe sales environment in the first quarter that stemmed from HDD makers' inventory adjustments. As a result, the average sales quantity increased to 27 million units per month, up by about 20%. Although the yield rate needs improving, profit improved over the first quarter. 7
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