Nidec Corp Adr

Good day, everyone, and welcome to today's NTTAC conference call hosted by Mitsubishi UFJ Morgan Stanley Security. Today's call is being recorded. All this time, I do like to pass the conference to Mr. Orikasa at Mitsubishi UFJ Morgan Stanley Security for the opening remarks. Mr. Orikasa, please go ahead, sir.

Dear everybody, thank you very much for joining this conference call. and our sincere apologies for 10-minute delay due to technical difficulties on our side. My name is Yori Jorikasa, General Manager of Kyoto Branch at Mitsubishi UFJ Morgan Stanley Security. Before the meeting starts, please make sure all the materials have been distributed. If not, please download the files on NIDIC's homepage at this moment. Now, may I introduce Mr. Akira Sato, First Senior Vice President and the Chief Performance Officer, who will be speaking to you shortly. First, Mr. Sato will make a presentation. After his presentation, we will move on to a Q&A session. Mr. Sato now discusses the company's Q1 fiscal year 2020 results, future outlook, as well as management strategies. Mr. Sato, please go ahead.

Thank you very much, Mr. Morikawa. Good day, ladies and gentlemen, and welcome to today's conference call. My name is Akira Sato, the Chief Performance Officer of NIDIC. And I will be your main speaker for today. Joining me is Masahiro Nagayasu, General Manager of NIDIC's IR team. For the forward-looking statements, please see slide number two. of our presentation material for details. Now, I will review the key figures. Please see slide number three for our first quarter's results. As summarized on slide number four, the net sales stood at 336.9 billion yen 7% down year-on-year. However, despite reduced profit due to the lower sales, the operating profit increased to 28.1 billion, 2% up year-on-year. Mainly contributions for improvements on cost structure to WPR program. The profit attributable to owners of talent increased by 6.2 fold on the year to 20.3 billion yen. This year, 2019, first quarter sold losses mainly on the transfer of second, which is Compulsor business for refrigerators. On slide number five and six, you have step charts showing the net sales and operating profit year-on-year and quarter-on-quarter, respectively, by product groups with exchange rate effect, alienations, and structural reform expenses. As you see on slide number six, the net sales went down quarter on quarter due to negative exchange rate fluctuations, reduced sales of auto and appliance, commercial and industrial, or ACI. However, the operating profit has improved significantly as all of the segments except for auto have improved quarter on quarter. Please turn to slide number nine, which is showing changes in our regional productions on the month and basis, where the pre-pandemic average utilization ratio is assumed to be 100%. As of the end of April, when our previous results were announced, China and Japan were already almost fully recovered. However, as of the end of June, other regions like Europe, Americas, and rest of Asia also make a significant recovery. Please see slide number 10. While the net sales of the first quarter was just about to form the bottom due to COVID-19, the operating profit ratio is on its way to steady recovery successfully. The net sales is expected to burn back in the second quarter, and operating profit ratio has already shown recovery as to exceed not only that of previous fourth quarter, but also the third quarter last fiscal year, fiscal year 2019. Slide number 11 is illustrating our automotive business as a successful example of WTF4. The graph on the left-hand side makes a year-on-year comparison of the sales and operating profit of existing businesses, excluding those from the traction motor-related business and NIDAC mobility. Also, the graph on the right-hand side compares those of NIDAC mobility on a quarter-on-quarter basis. You will notice clearly that In both cases, we have established structure where health cells can still create positive operating problems. Please see slide number 12. The sales volume of electric vehicle or EVs that have adopted our e-axle exceeded 58,000 units. on a cumulative basis as of end of June, which consists of six models, as you see in the table on the right-hand side. Please see slide number 13. As a recent example, Chinese automaker Geely launched their new EV called Geometry C in June. NIDEX E-AXLE NI150EX installed in Geometry C is a model that has evolved from the E-AXLE that started mass production in April 2019. It contributes greatly to improving the power performance, electricity cost performance, sounds and vibration performance, and reducing vehicle weight of geometry C by applying NIDEX unique technologies such as circuit design, light thinning, short and small motor structure, utilizing the permanent magnet and unique motor oil cooling structure, and of the second generation inverter. Also, as you see on slide number 14, GSE, New Energy Automobile, or GSE-LP, a brand of Chinese automaker, GSE Group, launched their new EV called AonV in June. which has also adapted our E-AXL and I-150EX, the first two models that GSE NE has already launched are also equipped with our same E-AXL. And especially, the first model called ION-S has always been ranked as one of the top three best selling EVs in the Chinese domestic market. Please see sign number 15. The net sales of ACI in the first quarter went down mainly due to impact from COVID-19. However, it is showing a sign of recovery. The net sales was down 14% quarter on quarter, while the operating profit ratio improved by 2.5 points quarter on quarter. ACI is currently undergoing a comprehensive review of its cost structure and is on its way to improve operating profit ratio by optimizing outsourcing costs, labor costs, and fixed costs. Slide number 16. This is the same slide as the one we used in April, but just to make sure these are NIDICS solutions for the common problems of humankind, which have been exposed by COVID-19. 5G and thermal solutions, decarbonization, manpower saving, digital data explosion, and power saving. We will capture these new five big waves as our growth drivers for now and going forward. Please see slide number 17. The shipment of Rudra-10 and Rudra-4 FDD or UFF, which is used mainly for PC applications, marked a record high level in the first quarter. UFF firmly supports the demand for teleworking. which started as one of the new five big waves in the wake of COVID-19. Please see slide number 18. Our product lineups continue to expand into robotics as Manpower City, which is one of the new five big waves is becoming even more important in the wake of COVID-19. As you see on this slide, we are ready to cope with manpower saving needs through such products as modules, motors, reducers, automated guided vehicles, and so on. in the field of service and communication robots, commercial and industrial robots, and logistics and agriculture. Please see sign number 19. In light of spreading of COVID-19, NIDAC has made a declaration of health-oriented management in order to enhance employees' health, motivate, and encourage employees, and ultimately enhance our corporate value further through productivity reform. As concrete measures, firstly, health promotion committee has been established to facilitate liaison with management, the Corporate Health Insurance Association, in industrial doctors and employees. Secondly, in order to reduce the risk of COVID-19 infection, safe reduction of smoking oils in underway and the total smoking ban of NIDICS premises is expected by the end of fiscal year 2021. Further improvement and measures for health promotion will be implemented through analysis of our employees' health conditions and other issues. Lastly, on behalf of the entire management team, I would like to thank our customers, partners, suppliers for their support and their commitment, as well as our shareholders. At this time, we would like to open up the call for your questions. Thank you very much for your attention.