Minebea Mitsumi Inc U/Adr

My name is Yoshida. Today, I would first like to explain the consolidated financial results for the fiscal year ended March 31, 2021. Consolidated net sales for the fiscal year ended March 31, 2021 totaled ¥988,424,000,000 while operating income reached ¥51,166,000,000 and profit for the period attributable to the owners of the parent was ¥38,759,000,000. These figures represent year-on-year increase of 1.0%, decreases of 12.8% and 15.7% respectively with net sales for the period hitting record high. Operating income includes special expenses totaling approximately 7.6 billion yen incurred due to the impact of COVID-19, etc. Operating income for the fourth quarter of the fiscal year also includes one-time expenses shown in the box at the bottom right on the slide. One-time expenses include the PPA of approximately 2.1 billion for the Mitsumi business, and the write-off of molds and inventory and optical devices for major Chinese customers of approximately 1.9 billion yen, and the restructuring costs in Europe, etc. of approximately 4.3 billion yen in the Yuxin business segment, totaling approximately 8.3 billion yen. These were not included in the forecast we revised in February. Foreign currency exchange rates are estimated to have a year-on-year impact of minus 20.3 billion yen in net sales of minus 3.6 billion yen in operating income. Moving on to the next slide, please. Consolidated net sales for the fourth quarter for the fiscal year March 2021 was up 10.6% year-on-year and down 9.1% quarter-on-quarter to total 250,985,000,000 yen. Net sales for the fourth quarter hit a record high. Operating income was down 30.2% year-on-year and down 55.9% quarter-on-quarter to total 8,650,000,000 yen. Profit for the period attributable to the owners of the parent was down 44.6% year-on-year and down 64.3% quarter-on-quarter to total 5,775,000,000 yen. Operating income for this quarter includes special factors totaling approximately 1.2 billion yen due to the impact of COVID-19. We estimate that the foreign currency translations have a year-on-year impact of minus 4.9 billion yen net sales and minus 1.6 billion yen in operating income. Quarter on quarter impact was plus 2.0 billion yen in net sales and minus 0.5 billion yen in operating income. We made a slight retrospective changes to last fiscal year's financial statements due to the PPA for Yuxin. Please note that figures on the following pages are revised figures. Next slide, please. This is the annual trend in net sales, operating income, and operating margin. The bar graph on the left is net sales, and the one on the right is operating income, along with a line chart for the operating margin. The operating margin for fiscal year March 2021 was 5.2%, down 0.8 percentage points year on year. If the effects of the aforementioned one-time expenses were not factored in, the operating margin would be 6%, almost flat from the previous year. Please note that figures of the fiscal year March 2018 and before are based on JGAP and provided for your reference so that you can look at the past figures. The same applies here and after. Next slide, please. This is a quarterly trend in SEL's operating income and operating margin. The operating margin for the fourth quarter was 3.4%, down 2.1 percentage points year on year, and down 3.7 percentage points quarter on quarter. If the effects of the aforementioned one-time expenses were not factored in, the operating margin would be 6.8%. Moving on to the next slide, please. This slide shows the difference between the forecast as of February and actual results for net sales and operating income by business segment for the fourth quarter. Sales for the machine component segment exceeded the forecast mainly thanks to robust sales of wool bearings to automotive industry and FAM Motors. Sales for the electronic devices and components segment were higher than forecasted in general, including motors. Sales for the Mitsumi business and Yushin business were slightly higher than projected. Operating income for the machine components segment was higher than forecasted thanks to the growing external shipment volume of ball bearings along with the improvement in productivity. Operating income for the electronic devices and components was almost in line with the forecast. Although both the Mitsumi business and the Yushin business recorded lower than expected operating income, if the effects of the aforementioned one-time expenses were not factored in, the Mitsumi business was almost as expected and the Yushin business was higher than expected, thanks to the recovery of the automotive industry. Next slide, please. Now let's take a look at the results by segment, starting with the machine components segment, On the left is a graph indicating yearly net sales trends, and on the right is a graph with a bar chart showing yearly operating income trends, along with a line chart for operating margins. In the fiscal year March 2021, net sales were down 13% year-on-year, to a total of 157.4 billion yen. Salesable bearings decreased 6.8% year-on-year to reach 109.1 billion yen. The monthly average bearing of sales volume totaled 208 million units for an increase of 10.1% year-on-year. Looking at sales by application, we see that annual sales of ball bearings used in data centers increased year-on-year and flat for automobile applications decreased for office automation equipment. Sales of rods and fasteners were down 29.1% year-on-year to a total of 27.8 billion yen. Sales of pivot assemblies decreased 16.4% year-on-year to a total of 20.5 billion yen, steadily contributing to our bottom line as we held on to an 80% plus market share. Operating income for the fiscal year totaled 31.2 billion yen, putting the operating margin at 19.8%. We saw the operating income decrease 21.7% and the operating income margin decline 2.2 percentage points year-on-year. Looking at the year-on-year results by product, we see that the profits for rod ends and fasteners, ball bearings, and pivot assemblies fell. For the fiscal year ending March 1, 2022, we can see strong uptrends in demand for ball bearings in a wide range of applications, mainly for automobiles and for servers. Sales for commercial aircraft, including rod ends and fasteners, are expected to remain at the same level as the fiscal year March 2021. This is due to the fact that it takes time to adjust inventories in the supply chain, although there are signs of recovery in the aviation demand. For pivot assembly, we anticipate a decline in demand as the HDD market shrinks. Moving on to the next slide, please. This slide shows the quarterly trends in the machined components segment. Fourth quarter net sales increased 11.1% quarter-on-quarter to total ¥44.1 billion. Sales of ball bearings increased 11.8% quarter-on-quarter to total ¥31.4 billion. The monthly external shipment volume was up 9.5% quarter-on-quarter from an average of 243 million units. We see strong demand increase in wide applications including automobiles and data centers. Sales of aircraft bearings remained sluggish due to the stagnant market. Sales of rod ends and fasteners totaling 7.2 billion yen were up 14.8% over the previous quarter. Sales of pivot assemblies increased 3.4% quarter-on-quarter to total 5.5 billion yen. Operating income for the quarter totaled 8.8 billion yen and the operating margin was 20%. On a quarter-on-quarter basis, operating income rose 6.4%, while the operating margin dropped 0.9 percentage points. Looking at the results by product, we see that profits for ball bearings and people assemblies rose, while profits for rod ends and fasteners fell due to the impact of temporary change of product mix. Next slide, please. Now let's look at the electronic devices and components segment. In fiscal year March 2021, net sales were down 4.1% year-on-year to total 363.8 billion yen. Looking at the results by product, we see the sales of motors increased 12.1% year-on-year to reach 201.9 billion yen. This increase was due to the recovery of all products from the impact from COVID-19 in the first quarter. Electronic devices sales were down 23.2% year-on-year to hit 124.7 billion yen due to the declining number of sales units of models that used LED backlights at the major customers. Sales of sensing devices totaled 32.6 billion yen, increasing 0.4% year-on-year. Operating income increased 0.5% year-on-year to reach ¥17.6 billion, while the operating margin rose 0.2 percentage points to reach 4.8%. Looking at the results by product, we see that the operating income was up for the motors and sensing devices but down for electronic devices. In the fiscal year ending March 31, 2022, we anticipate the growth of motors will accelerate and that sales and profits will increase significantly. For electronic devices, we expect a decrease in sales and profits due to a decrease in the number of units of models that use LED backlights. Sales of sensing devices will be almost flat, but profits are expected to increase due to improved profitability. From the fiscal year ending March 2022, we have changed our business segment classification for some businesses. I will explain in details later when we look at the slides forecast for business segment and changes to business segments. So in this square, we show the number in this slide. So please refer to these numbers in this slide in the box. Going to the next slide. This is the quarterly trends in electronic device and component segment. Net sales increased 4.7% quarter-on-quarter to hit ¥94.9 billion. Looking at the results by product, we see that sales of motors increased 13.6% quarter-on-quarter to reach ¥60.5 billion. This is because sales of all types of motors, including the automobile application, remained robust thanks to the recovery and growth of the market. Sales of electronic devices were down 13.2% from the previous quarter to a total of ¥24.4 billion. This is because the peak demand period for our major customers models that use our LED backlights came to an end. Sales of sensing devices totaling 8.9 billion yen were up 8.5% from the previous quarter. Operating income came to 5.7 billion yen operating margin was 6%. On a quarter on quarter basis operating income rose 32.1% while the operating margin increased 1.3 percentage points. Byproduct, we see that operating income was up for motors and sensing devices, but down for electronic devices. Please go to the next slide.

Let's look at the performance for the Mitsumi business segment. Net sales increased 23.5% year-on-year to total ¥361.0 billion in the fiscal year ended March 2021. Sales increased due to strong sales of mechanical components thanks to growing demand. as more people around the world avoid going out, as well as strong sales of analog semiconductors, including the new consolidation of Ablick. Operating income came to ¥19.8 billion. and the operating margin was 5.5%. These figures represent a 5.9% year-on-year increase in operating income and 0.9 percentage point year-on-year decrease in the operating margin. Profits for analog semiconductors, mechanical components, and power supplies grew while other businesses saw profits decrease. One-time expenses incurred during the fourth quarter include a PPA of approximately 2.1 billion yen, and a write-off of molds and inventory of optical devices for major Chinese customers of approximately ¥1.9 billion for a total of ¥4.0 billion. If these are excluded, it would be a 27% year-on-year increase in operating income and 0.2% point year-on-year increase in the operating margin. If the fiscal year ending March 2022, we expect the sales to increase, mainly due to optical devices, but we expect sales to be on par with the fiscal year ended March 2021. Due to a conservative view of machine components, the business transfer in the Mitsumi business segment will have an impact of decrease of 19.5 billion yen in net sales for the fiscal year ending March 2022. I will explain about it later. Next slide, please. Mitsumi business segment quarterly trends. Net sales decreased 30.5% quarter-on-quarter to total 79.4 billion yen. While sales of analog semiconductors increased, sales decreased for other products, primarily mechanical components and optical devices, as the peak demand period has passed. Operating income totaled 0.8 billion yen. While the operating margin was 1%, operating income decreased 91.8% and the operating margin declined 7.7 percentage points quarter on quarter. This was due to decrease of profit along with the decrease of sales in addition to the effects of aforementioned one-time expense. If the one-time expense are not factored in, The operating margin would be 6.1%. Next slide, please. Finally, let's look at the Yuxin business segment. Net sales decreased 16% compared to fiscal year ended March 2020 to total 105.1 billion yen in the fiscal year ended March 2021. The factors for this decrease include a significant slowdown in production mainly in Europe in the first quarter because of restrictions imposed on operations due to COVID-19 pandemic. Operating loss came to 1.9 billion yen and the operating margin was minus 1.8%. These figures represent a 3.9 percentage point drop in operating margin. One-time expenses incurred during the fourth quarter totaled approximately 4.3 billion yen for restructuring Europe, etc. If these expenses were excluded, a decline in operating income would be 6% and operating margin would have risen 0.2 percentage points. In the fiscal year ending March 2022, We anticipate an increase in sales and an improvement in operating profit and loss due to the impacts of the recovery in automobile market. Regarding the restructuring in Europe, while we have reached agreements with employees, local governments, etc. about the details of structural reforms to be implemented, our personnel reduction plan will not be in order to avoid any impact on our business partners. Therefore, we won't see a reduction in fixed costs until the next fiscal year, which is the fiscal year ending March 2023. The impact of the business transfer in the Yuxin business segment will be an increase of 28.5 billion yen in net sales for the fiscal year ending March 2022. Next slide, please. This shows Yushin business segment quarterly trends. Net sales increased 5% quarter-on-quarter to hit 32.3 billion yen. Sales increased as the overall automobile market rebounded, although the level of recovery varied by region and customer. The operating loss came to ¥2.5 billion, and the operating margin was minus 7.9%. The operating margin was down 13.3 percentage points for the same period. Although profitability improved due to the recovery in sales, profits dropped due to the bookings of the aforementioned one-time expenses. If these expenses were excluded, operating margin would be 5.5%, and the operating margin would have risen The bar graph here shows trends in profit attributable to owners of the parent, while the line graph charts changes in the period per share. The profit for the period was 38.8 billion yen. Earnings for the period per share was 95 yen. The bar graph here shows trends in quarterly profit attributable to owners of the parent, while the line graph charts changes in the period per share. changes in the profit for the quarter per share. The profit for the period was 5.8 billion yen. Earnings per share was 14.2 yen. Next, we have the quarterly inventory trend. At the end of the fourth quarter, inventory totaled 171.4 billion yen, which is 2.9 billion yen less than what it was three months ago. This is due primarily to the fact that the inventory strategically accumulated was sold in phases as expected. While inventory needed to increase sales that is currently expected has been secured. This graph contains a bar chart showing trends in net interest-wearing debt, which is total interest-wearing debt minus cash and cash equivalent, and a line chart indicating free cash flows. At the end of the fourth quarter, net interest-wearing debt totaling ¥84.4 billion was up ¥9.2 billion from what it was. At the end of the previous fiscal year, this is a summary of the forecast for the fiscal year ending March 2022. Net sales, operating income, and profit for the period are all expected to reach record highs in the current fiscal year. Sales are expected to exceed ¥1 trillion, with a decrease in LED backlights and mechanical components compensated by the increase in optical devices and motors. Operating income is expected to increase to a record high of ¥80 billion. due to the expansion of profits accompanying the growth of businesses such as ball bearings, motors, analog semiconductors, and optical devices. The exchange rate is assumed to be 170 yen to US dollar. Next slide, please. This slide shows the forecast by business segment. Next slide, please. Now I would like to talk about all the changes to the business segment. The smart product business has been transferred from the electronic devices and component segment to the Mitsumi business segment. Likewise, the home security units business has been transferred from the Yushin business segment to Mitsumi business segment. We made these changes in order to consolidate the relevant businesses and basic technologies into the Mitsumi business segment. This will allow us to strengthen our own EMS strategy and integrate the mechanical and electronic technologies that we have as an edge device manufacturer is an eye to creating high-value-added products for key markets such as the IoT market. We will work to create greater synergy between related business and technologies. For example, we will turn conventional mechanical products such as locks into IoT products such as the Sariot smart lock. We also transferred the automotive business from the Mitsumi business segment to the Yushin business segment. This will enable us to make production and sales operating even more efficient by consolidating automotive parts sold as a tier 1 supplier. We are also aiming to create the synergies between products for vehicles equipped with more automatic and electric electrical components such as using the three core products, CSE flash handles as well as e-lodge and the high frequency technologies of our automotive business to create the high value added products. The results for the fiscal year ended March 2021, as well as estimated sales for the fiscal year ending March 2022 for these businesses that have been transferred are as shown on the slide. Next slide, please. This slide shows the results for the fiscal year ended March 2021 that have been recalculated to reflect the newly reorganized business segments. The numbers in the red frame are recalculated and redisplayed. This concludes my explanation. Thank you.