Slide 1: Business Results, Second Quarter of Fiscal Year Ending March 31, 2014
Minebea Passion to Exceed Precision Business Results’ Second Quarter of Fiscal Year | Ending March 31, 2014 November 1, 2013 Minebea Co., Ltd.
Slide 2: 1. Financial Results 2. Policy and Strategy
November 1, 2013 Minebea Passion to Exceed Precision 1. Financial Results 2. Policy and Strategy
Slide 3: Financial Results
Minebea rassion to Exceed Precision Financial Results Hiroharu Katogi Director, Senior Managing Executive Officer November 1, 2013 PB
Slide 4: First half consolidated business results
Looking at consolidated business results for the first half of the fiscal year ending March 31, 2014, we see that net sales were up 30.0% year on year to total 180,799 million yen. Operating income climbed 68.9% year on year to reach 13,003 million yen while net income hit 8,772 million yen, 2.4 tim
Slide 5: Second quarter results
For the second quarter of the fiscal year ending March 31, 2014, net sales were 95,482 million yen. That’s up 35.5% from the same period last year and an increase of 11.9% over the previous quarter. Operating income was 9,465 million yen, 2.4 times that of the same period last year and 2.7 times tha
Slide 6: Second quarter net sales
Second quarter net sales totaled 95.5 billion yen, up 35.5% year on year and 11.9% from the previous quarter. This jump was due to increased sales volumes for a variety of our products, including ball bearings, motors and electronic devices, as well as foreign currency gains. 5
Slide 7: Second quarter operating income
Operating income for the second quarter was 9.5 billion yen, 2.4 times that of the same period last year and 2.7 times that of the previous quarter. Our operating margin improved 5.8 percentage points from the previous quarter to hit 9.9%. Profits for both the Machined Components and the Electronic
Slide 8: Machined Components segment results
Second quarter net sales in the Machined Components business segment totaled 34.6 billion yen, a 1.5% increase from the previous quarter. Operating income was up 23.9% from the previous quarter to total 8.5 billion yen while the operating margin reached 24.7%, up 4.5 percentage points from the previ
Slide 9: Electronic Devices and Components segment results
In the Electronic Devices and Components business segment, second quarter net sales totaled 60.6 billion yen, up 19.0% from the previous quarter. Operating income was back in the black with a total of 3.4 billion yen after a loss of 0.3 billion yen last quarter. The operating margin also improved by
Slide 10: Second quarter net income
Net income for the second quarter was 3.0 times that of the last year and 2.1 times that of the previous quarter to total 5.9 billion yen, with net income per share reaching 15.9 yen. As an extraordinary loss, we had a 1 billion yen impairment loss of fan motor’s excess production capacity in order
Slide 11: SG&A expenses
As sales increased, second quarter SG&A expenses rose 0.2 billion yen over what they were in the previous quarter to total 13.2 billion yen. The SG&A expenses-to-sales ratio, however, dropped 1.4 percentage points to 13.8% due to cost cutting efforts. 10
Slide 12: Inventory
Due to rising sales, inventory increased 1.4 billion yen compared to the previous quarter. 11
Slide 13: Capital expenditures and depreciation
Capital expenditures for the fiscal first half were 10.0 billion yen while depreciation and amortization expenses for the period totaled 11.7 billion yen. We are curbing capital spending as much as possible this fiscal year and trying to improve our financial position since we have already aggressiv
Slide 14: Net interest-bearing debt and free cash flow
Net interest-bearing debts, which are interest-bearing debts minus cash and cash equivalents, totaled 126.5 billion yen at the end of the second quarter. That’s down 9.7 billion yen from the end of the previous fiscal year. Free cash flow for this fiscal year is expected to total 17.1 billion yen du
Slide 15: Upward revision to full-year forecast
When we announced our first quarter results this past July, we made an upward revision to the first half forecast. Since we have surpassed that target in the second quarter and the business is moving squarely on track we have decided to make another upward revision to the forecast for the second fis
Slide 16: Revised business segment forecasts
This slide shows the revised business segment forecasts. 15
Slide 17: Policy and Strategy
Now let's move on to policy and strategy. 16
Slide 18: Upward revision to fiscal year forecast
We made an upward revision to our forecast for this fiscal year once again as shown here. Despite criticism from our investors we went ahead and did what we thought had to be done and I'm now happy to say that our efforts have paid off. 17
Slide 19: Factors driving the upward revision
The factors driving the upward revision include our all-out effort to improve productivity and cut production costs by leveraging our vertical and horizontal strengths as well as aggressive investments. These investments include construction of a new ball bearing plant, additional aircraft part plan
Slide 20: Drastic Changes in the Market
(Second half of FY 3/2013) Political and economic changes sharp drop in sales of Japanese products to China ®BYen significantly weakening against the dollar (driving sales up) Sharper depreciation of the yen against other Asian currencies (driving production costs up) Sales t Profits » Drastic Chang
Slide 21: Global economic recovery
Another important factor is the economy which has taken an upward turn over the last six months. The Japan Center for Economic Research's World Business Climate Index shows the global economy was "stormy" up until May of this year but shifted to "rainy" in June. Looking at the economic climate in Ch
Slide 22: Four areas: bearings, LED backlights, motors
Let's take a look at these four areas. Our ball bearing business is doing very well. I mentioned earlier that external shipment volume reached 143 million units in September. Sales remained robust in October as well. Although production was halted throughout China for a full week in October for the
Slide 23: Five Arrows growth strategy
The measures we have implemented and aggressive investments we have made over the years are now paying off. Assuming that the global economy will stay on track, we are now at a point where we have to develop a growth strategy that looks two years ahead. We recently made a company-wide announcement o
Slide 24: Light guide plate technology
Our light guide plate technology gives us an advantage in the LED backlight industry. Designed to effectively diffuse the light emitted from LEDs, they are used in products like smartphones. We plan to take this technology and apply it to street lights as well. Conventional street lamps illuminate e
Slide 25: Measuring components
Another area that holds huge potential is measuring components. So far we have been focusing on their function as mere gauges, like those used for scales, etc. Now we are taking the push approach to marketing rather than the pull approach. There's this product called TrackPoint, which is a red butto
Slide 26: Growth plans for next year
The areas I have described so far will be our growth drivers two to three years from now. Now I would like to talk about next year, before our five arrows reach their targets. We will increase LED backlight sales by 20 billion yen next year. We project this year's sales figure to total 60 billion ye
Slide 27: LED backlight capacity investment
We also plan to invest in one of our main growth drivers, the LED backlights business. The second factory building at our Cambodian Plant will be up and running in December. The new facility will be dedicated entirely to LED backlight production. In China, we will refit part of the Xicen Plant, whic
Slide 28: Hybrid components
We will leverage our collective technological capabilities with an eye to developing an even wider range of hybrid components to include lighting devices and more. 27
Slide 29: Aircraft parts demand
All signs indicate that aircraft demand will continue to soar into 2020. Our big challenge is figuring out how to get the most out of the synergy we have. 28
Slide 30: Turbocharger bearing unit sales targets
We set the sales target for turbocharger bearing units at 1 billion yen for next year and 5 billion yen for the year after next. It's believed that the number of new cars equipped with turbocharger will reach 35 million by 2015. Inquiries have been pouring in, especially for European models. Incorpo
Slide 31: Machined components acquisitions: APB and CEROBEAR
Back in May I said that Minebea would focus on machined components, and since then we have acquired two companies. One is APB, a manufacturer of bearings for machine tools. Another is CEROBEAR, a ceramic ball bearing manufacturer. We expect these two companies to generate substantial synergy. The fu
Slide 32: Improve balance sheet
Improve balance sheet Minebea Passion to Exceed Precision Improved cash flow brought net D/E ratio down to 0.85 (billions of yen) (billions of yen) 150.0 100.0 At i A 50.0 - e+ =~ | Ei Net interest-bearing debt (left axis) A Free cash flow (right axis) = a FY 3/2011 FY 3/2012 FY 3/2013 FY 3/2014 Ini
Slide 33: Net D/E ratio and M&A
Looking at the balance sheet, we see that cash flow has significantly improved. Net D/E ratio has gone down to 0.85. While we will work on reducing debt, we will still be aggressively seeking out good M&A opportunities. 32
Slide 34: M&A opportunities
We had been considering major M&A deals when the yen was strong. Unfortunately we missed our window of opportunity and the yen slid, which is something I have been kicking myself over for the last four years. We will be sure to keep an eye out for promising M&A opportunities as we move forward. 33
Slide 35: Dividends
For now dividends are as shown here, but we believe it's only natural that we should give back to our shareholders when our profitability gets better in the future. We promise to do the best we can to meet our commitment to our shareholders under the given circumstances. 34
Slide 36: Minebea Co., Ltd. Business Results
Minebea Passion to Exceed Precision Minebea Co., Ltd. Business Results http://www.minebea.co.jp/ Any statements in this presentation which are not historical are future projections based on certain assumptions and executive judgments drawn from currently available information. Please note that actua