Minebea Mitsumi Inc U/Adr

Today, I would first like to explain the consolidated financial results for the second quarter of the fiscal year ending March 31st, 2022.

Consolidated net sales for this second quarter of this fiscal year was up 2.8 percent year-on-year and up 13.6 percent quarter-on-quarter to total 281.955 billion yen. Operating income totaled ¥25.005 billion, which was 42.8% up year-on-year and up 27.4% quarter-on-quarter. Profit for the period attributable to owners of the parent increased 54.4% year-on-year and 39.1% quarter-on-quarter, for a total of ¥20.393 billion. net sales, operating income, and quarterly profit all hit second quarter record highs. We estimate the foreign currency translations have a year-on-year impact of plus ¥10.4 billion in net sales and plus ¥2.8 billion in operating income. Quarter-on-quarter impact was plus ¥1.7 billion in net sales and plus ¥1.5 billion in operating income. We made retrospective changes to last fiscal year's financial statements due to the PPA for ABLIC. Please note that the figures on the following pages are revised figures. Next slide, please. This is the summary result for the first half. For items, we have hit the first half record highs as well. Going to the next slide. This is the quarterly trend in net sales, operating income and operating margins. The operating margin for the second quarter was 8.9%. This was up 2.5 percentage point year on year and up 1.1 percentage points quarter on quarter. Next slide, please. This is the difference between the forecast as of August and actual results for net sales and operating income by business segment for this second quarter. Net sales for the machine components business segment was slightly lower than projected due to a slowdown in sales to the automobile industry caused mainly by a shortage of semiconductors. The electronic devices and components business saw lower than expected and sales due primarily to lagging sales of automotive motors and backlights caused by a shortage of semiconductors. The Mitsumi business enjoyed higher-than-projected sales for mechanical components, optical devices, analog semiconductors, and so on. The Yushin business experienced lower-than-expected sales due to a slowdown in automobile production. Operating income for the machine components business segment was almost on par with the forecast. The electronic devices and components business experienced lower than expected operating income due to a decline in sales. The Mitsumi business operating income surpassed the forecast thanks to higher than expected sales of optical devices and semiconductors as well as further improvement in the profitability of semiconductors. The Yushin business experienced lower than expected operating income due to a decline in sales. Next slide please. Now let's take a look at the quarterly trend by segment, starting with the machine compliance business segment. On the left is a graph indicating quarterly net sales trends. On the right is a graph that shows on the bar chart for quarterly operating incomes along with a line chart for operating margins. Second quarter net sales was almost on par with the previous quarter at ¥44.3 billion. Bull bearing sales dipped 1.1% quarter on quarter to a total of ¥31.9 billion. The monthly external shipment volume was down 2% quarter on quarter for an average of 241 million units. This is due primarily to a slowdown in sales to the automotive sector. Sales of aircraft bearings remain sluggish due to the stagnant market. Sales of rod ends and fasteners totaling ¥6.5 billion were up 0.6% from the previous quarter. Sales of pivot assemblies increased 8% quarter-on-quarter to total ¥5.9 billion. Operating income for the quarter totaled ¥11.9 billion and the operating margin continued to recover at 26.9%. Operating income rose 9% quarter-on-quarter, while the operating margin improved 2.1 percentage points. Looking at the results by product, we see that operating income for ball bearings and people assemblies increased quarter-on-quarter, while operating income for rod ends and fasteners was about the same last quarter. For ball bearings, profit increased while sales decreased quarter-on-quarter, thanks to high utilization rates on top of improved productivity. Going to the next slide. Now, let's look at the electronic devices and components segment. Net sales increased 3.6% quarter-on-quarter to hit 93.7 billion yen. Looking at the results by product, we see the sales of motors increased 3% quarter-on-quarter to reach 66.1 billion yen. Although sales was impacted by reduced automotive production due to semiconductor shortages, sales mainly for HCDs remained robust. Sales of electronic devices were on par quarter-and-quarter to total ¥17.3 billion. Sales of sensing devices totaling ¥9.3 billion were up 16.8% from the previous quarter. Operating income came to 6.1 billion yen and operating margin was 6.5%. Operating income fell 23.2% quarter-on-quarter, while the operating margin dropped 2.2 percentage points. Excluding the one-time recovery of costs from the past fiscal year, which was recognized in the previous quarter, and the impact of the one-time costs due to the effects of the COVID-19 and semiconductor shortages, profits would have substantially increased. Looking at the results by product, although the operating income for sensing devices was up and the operating income for electronic devices was down, while operating income for motors about the same in the previous quarter. For your reference, figures shown on the fiscal year ended March 2021 was before based on the classifications used before changes to the business segments were made. Please note that the same applies to the rest of the presentation.

Next slide, please. Let's look at the performance for the Mitsumi business segment. Net sales increased 44.6% quarter-on-quarter to a total of 111 billion yen. As the seasonal demand picked up, so did sales of optical devices and mechanical components, along with sales of analog semiconductors and other products, which were also boosted by strong demand. Operating income came to 11.3 billion yen, and the operating margin was 10.2%. On a quarter-on-quarter basis, operating income increased 2.2 times, while the operating margin rose 3.6 percentage points. The primary factors behind these increases include a further increase in the profitability of analog semiconductors in addition to seasonal demand. Moving on to the next slide. Finally, let's look at the Yuxin business segment. Net sales were down 11.3% quarter-on-quarter to hit 32.7 billion yen. This was due to production adjustments by some automakers due to the semiconductor shortage. While our operating loss totaled 0 billion yen, the operating margin was minus 0.1%. The bar graph here shows trends in profit attributable to owners of the parent, while the line graph charts changes in profit for the period per share. The profit for the period was ¥20.4 billion, earnings per share was ¥50.4. Next slide, please. Next, we have the quarterly inventory trend. At the end of the second quarter, inventory totaled 214.1 billion yen, which is 18.6 billion yen more than what it was three months ago. This was due to a strategic increase in the inventory of raw materials, et cetera, as well as a postponement in shipments of some products requested by the customers. Next slide, please. The bar chart in this graph shows the trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalent, and the line chart indicates the free cash flow. At the end of the second quarter, net interest-bearing debt totaling 90.2 billion yen was up 5.8 billion yen from what it was at the end of the previous fiscal year. Moving on to the next slide, we made upward revisions to the full year forecast for the fiscal year ending March 31, 2022, which was announced in August. We expect 1,050 billion yen for net sales and have revised the forecast for operating income to 90 billion yen. The estimated net sales figures for the machined components, electronic devices and components and Mitsumi business were revised up while the estimated net sales figure for the Yushin business was revised down since it will be significantly affected by the slowdown in automotive production due to the shortage of semiconductors. Overall sales forecast remains unchanged. After revising the estimated operating income figures in light of the revised A sales figure estimates that we made an upward revision to the average income forecast. The exchange rate assumption is 110 yen to the US dollar. The next slide, please. This slide shows a forecast by business segment. Thank you for listening.