Minebea Mitsumi Inc U/Adr

My name is Yoshida. Today I would like to explain the consolidated financial results for the second quarter of the fiscal year ending March 31st, 2023. Consolidated net sales for the second quarter of the fiscal year ending March 2023 was up 17% year-on-year and up 31.5% quarter-on-quarter to total 330 billion 21 million yen. Operating income was up 5.6% year-on-year and up 85.2% quarter-on-quarter to a total of 26,394,000,000 yen. Profit for the period attributable to owners of the parent was down 1.6% year-on-year and up 86.9% quarter-on-quarter to a total of 20,060,000,000 yen. In terms of the sales, it has been a record high as a quarter. And in terms of the operating income, it was a record high as well. We estimate that the first translations had a quarter-and-quarter impact of plus 19.3 billion yen and year-over-year impact of 45.8 billion on net sales. And for operating profit, quarter-and-quarter impact was 3.2 billion, while year-on-year impact was 6.8 billion. Please go to the next slide. This is the summary result for the first half. The net sales was a record high for the first half as well. Moving on to the next slide. This is the quarterly trend in net sales operating income and operating margin. The operating margin for the second quarter was 8%. It was down 0.9 percentage points year-on-year and up 2.3 percentage points quarter-and-quarter. Since the company had forward foreign exchange contracts, there was a negative impact on operating income due to the impact of the currency fluctuations that was higher than expected. Please see the company's estimate of the foreign exchange impact in the boxes shown on the slide. We estimate that the second quarter's operating profit there was a positive impact of 8.4 billion yen for forward exchange and negative impact of 3 billion yen for forward exchange contracts compared to the initial forecast. Therefore, we estimate that the operating income would have been 29.4 billion yen if there had been no effect of forward exchange contracts. Moving on to the next slide. This slide shows the difference between the forecast as of August and actual results for net sales and operating income by business segment for the second quarter. Net sales of the machine components were higher than projected mainly thanks to the aircraft business. The electronic devices and components fell below the forecast mainly due to a slowdown in HDD motor sales. The Mitsumi business enjoyed higher than projected sales mainly for optical devices and mechanical components. The Yushin business was slightly lower than expected. Operating income for the machine components was almost on par with the forecast. The electronic devices and compliance business experienced lower than expected operating income due to the decline in sales. The Mitsumi business saw higher than expected operating income thanks to an increase in sales. The Yushin business was more or less in line with the forecast. Next slide please. Now, let's take a look at the results by segment, starting with the machine components. On the left is a graph indicating quarterly net sales trend. On the right is a graph with a bar chart of quarterly operating income trends, along with a line chart for operating margins. Second quarter net sales increased 10.6 quarter-on-quarter to a total of 51.3 billion yen. Sales of ball bearings increased 15.2% quarter-and-quarter to total 39.2 billion yen. The monthly external shipment volume was up 13.1% quarter-and-quarter for an average of 251 million units per month. The monthly external shipment volume hit record high due to the robust sales for automotive and data center. Sales of rod ends and fasteners totaling 8.2 billion yen were up 7.4% over the previous quarter. In the aircraft business, there were signs of sales recovery, especially in the European market. Sales of pivot assemblies decreased 17.4% quarter-on-quarter to total 3.9 billion yen. The sales of machine components hit record high. Operating income for the quarter totaled 12.5 billion yen and the operating margin was 24.4%. On a quarter-on-quarter basis, operating income increased by 22.8%, while the operating margin improved 2.4 percentage points. Next slide, please. Next is the electronic devices and components segment. Net sales increased 20.3% quarter-on-quarter to a total of 98 billion yen. Looking at the results by product, sales of motors increased 13.8% quarter-on-quarter, reaching ¥71.4 billion. Overall performance remained firm despite a slowdown in the sales in the HDD market. Sales of electronic devices were up 59.1% from the previous quarter to a total of ¥15.5 billion. This is due to the sales increase of the LED backlights. Sales of sensing devices totaling ¥10.1 billion were up 22.9% from the previous quarter. Operating income was ¥3.3 billion and the operating margin was 3.3%. On a quarter-on-quarter basis, operating income increased 16.6 times, while the operating margin increased 3.1 percentage points. We estimate that there was a negative impact of 1.8 billion yen from the foreign exchange as a special factor. Please go to the next slide.

Let's look at the quarterly trend of performance for the Mitsumi business segment. The results for Honda Tsushin Kogyo, which became a consolidated subsidiary on September 16, are reflected in the results from the second quarter. Net sales increased 58.2% quarter-on-quarter to total 137.4 billion yen. At seasonal demand, the picked-up soldered sales of optical devices and mechanical components while sales of semiconductors also remained upbeat. Operating income totaled 15.7 billion yen while the operating margin was 11.4%. Operating income increased 71.7% and the operating margin rose 0.9 percentage points quarter on quarter. This is mainly due to an increase in sales with seasonality. Moving on to the next slide. Finally, let's look at the quarterly trend of Yuxin business segment. Net sales increased 19.1% quarter-on-quarter to 42.9 billion yen. This is due to the recovery trend in automakers production, although the situation varied from region to region and customer to customer. While our operating income totaled 0.6 billion yen and the OP margin was 1.5%. Next slide, please. This bar graph here shows the trends in quarterly profits attributable to the owners of the parent, while the line graph chart changes in the profit for the period per share. The profit for the period was 20.1 billion yen, and the earnings per share was 48.6 yen. Next slide, please. Next, we have the quarterly inventory trend. At the end of the second quarter, inventory totaled ¥272.8 billion, which is ¥8.4 billion more than what it was three months ago. This is mainly due to the strategic build-up of inventories needed to meet the currently expected increase in sales as well as foreign currency effects. Next slide, please. This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, and the line chart indicating free cash flow. At the end of the second quarter, net interest-bearing debt, totaling 191.4 billion yen, was up, from the end of the previous fiscal year. This is mainly due to the expenditure for the purchase of the new Tokyo headquarters building, as well as the increase in inventories. The forecast for the net interest-bearing debt at the end of the fiscal year, ending March 2023, expected to increase from the end of the previous fiscal year. However, excluding the expenditures for M&A announced recently, the net interest bearing debt is expected to be virtually the same level as of the end of the previous fiscal year. Next slide, please. We made an upward revision to the full year forecast for the fiscal year ending March 2023, which was announced in August. The net sales and operating income are forecasted to be 1,250 billion yen and 115 billion yen respectively. The estimated sales for the Mitsumi business machine components and Yushin business were revised up. On the other hand, the sales for the electronic devices and components business was revised down. Overall, we have revised up the forecast of our sales. The estimated operating income was revised up as gain on the sales of Tokyo headquarters, a building of 13 billion yen, was added. However, while taking into account the impact of revised forex assumptions, we have maintained the forecast of operating income excluding gain on sale. Because of the uncertainties such as the global economic slowdown, the exchange rate assumption is 140 yen per U.S. dollar. This slide shows the forecast by business segment. Again, on sale of Tokyo headquarters, it is included in the adjustment for the second half. This concludes my presentation.