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spk01: Now, we would like to start the presentation on NIDEC Corporation's performance for the first quarter of fiscal year 2024. First, please turn off your mobile phones or put them on silent mode. Nidec Corporation's representatives to be presenting today's earnings results are as follows. Mr. Mitsui Kishida, the president and chief executive officer of Nidec Corporation. Mr. Akinobu Samura, senior vice president and chief financial officer of the company. Mr. Teruaki Urago, general manager of the investor relations department. That is all. In today's presentation, Mr. Samura will present an overview of the company's earnings results for the first quarter of first fiscal year 2024. Then Mr. Kishida will present the company's business strategy going forward. Then the floor will be opened for question and answer session. Please kindly wait until then to ask your questions. The meeting is expected to last until 18 o'clock today. Now, Mr. Samura, please start your presentation. Thank you. This is Samura speaking. Thank you very much. I would like to talk to you and explain to you about our performance for the first quarter of this fiscal year. Please turn to slide three. Net sales were up 14.8% to 648.2 billion yen. This is a record high result for us. Operating profit was up 0.1% to 60.3 billion yen. It was a slight increase, but this is also once again a record high operating profit. operating profit ratio was 0.38%. And this operating profit ratio includes the Nidex PSAE motors. It's called NPE for short. This was an equity method affiliated until the end of fiscal 2023, but from April, this company, General Venture, was consolidated, and then the 10.1 billion yen was included as a result of re-measuring the share of the said company. This will be explained in detail later. When it comes to The operating profit before income taxes, profit attributable to the owners of the parent were both down. This is due to the effect of currency exchange rate. We had a decrease in the area of construction trade. Please turn to slide four. This is about the NPE's constant gain step acquisition of NIDIC PSA eMotors. NIDIC acquired a controlling interest in NIDIC PSA eMotors S.A.S., an equity-immediate affiliate of NIDIC. and the NIDIC made it a consolidated subsidiary as of April 1, 2024. Correspondingly, NIDIC recognized a gain on step acquisitions of 10.1 billion yen as a result of re-measuring the share of the said company held by the end of the previous fiscal year in fair value on the acquisition date. In this case, as of March 31st, which is 6.7 billion yen, this was evaluated and based on a fair value and etc. And gain on a step acquisition is going to be minus 6.7 billion yen plus 16.8 billion yen, which equals 10.1 billion yen. We had a third-party evaluation of this calculation base. When it comes to this accounting method, this is not so familiar with the general public, but this is not so much of an incident. SoftBank, Rakuten, Ricoh, Jal, and so many other companies have been involved in a similar method of acquisitions. Please turn to slide five. And based on the financial explanations, we have made upward revisions on the forecast. in terms of net sales, operating profit, operating profit ratio, among others. And we have this balance between the first and the second half of this fiscal year. We are trying to move up the schedule as much as possible. And we have more value balanced on the first half rather than on the second half. Please go to the slide number six. And this is about our profit performance by group product group. And when it comes to small precision motors, we have a recovery in the demand for the HDD motors, and we have a growing demand for water cooling module units. And we have the vertical startup of this water module unit business. And we accelerate the pace of this recovery, and we have made a V-shaped recovery, as you can see. And next, automotive products. We are yet to launch a mass production system, and this 33.8 billion yen is the amount of deficit for these automotive products. And we have 10.1 billion yen for – we have a positive number of 6.3 billion yen, as you can see on the top right-hand side of this chart. But in the end, we have been able to achieve the increased sales and operating profit. Next, appliance commercial and industrial products. consolidated and accumulated restructuring cost of 1.5 billion yen. We have a slight decrease in the year profit. Next, machinery. We have an optimization of our machinery production system. In the previous quarter of quarter four, last fiscal year, we have had some financial difficulties, but today we have had the transfer of people as well as machinery. Because of that, we have a temporary decline in our profitability and profit efficiency. And because of that, we have a decline, a slight decline in profitability. Please go to slide 7 for more detailed information, year-on-year changes. And you can see that we have a chart on the slight increase or decrease of our performance compared with the last fiscal year. And you can see the We have an increase in operating profit. We have the ACM and Moens restructuring taking place in Europe, including all of these elements. We have an increase in profitability and sales, and a small increase in motor and automotives. But we have a decrease in appliance commercial, industrial, and machinery, and some other business. And you can see this decrease in appliance commercial industrial products in terms of earning a profit. And the small precision motors and other units have enjoyed an increase in profitability. And the other sections have suffered some decrease. And you can see the transition of free cash flow And we have improved our performance when it comes to free cash flow. And we have been able to use this increased profitability for our shareholders and reinvestment purposes in order to maximize our profitability as a group, as a whole. And we were able to recover from the deficit from last fiscal year. And we have been able to generate a record high amount of free cash flow of 167.2 billion yen. And we have at the low level $18.5 billion, as you can see. But on a year-on-year basis, we have been able to achieve an improvement. Lastly, on slide 10, these are the highlights of what I have just explained to you. That is all for the outlook of our performance, latest performance. Thank you very much. This is Kishida speaking. I'd like to give you an important point, as well as our long-term business strategy. First of all, when it comes to Q1, for NIDIC, this was a very important three-month period for us to be able to make a very important step. Over the past years of hard work and dedication, we have looked at the reality very hard so that we could see for whom and how we should develop and make our products. And we'd like to give you an update on some of our business activities. First of all, when it comes to Q1, I'd like to give you some topics over here. I'd like to give you two points in this section of our presentation. First of all, automotive business. It was back in October last year that we have launched a very good restructuring reform. And we have talked to various people in the market. And these people's focus of interest was on the traction motor. We were able to understand that in the previous session of this meeting. And we were able to understand the very huge impact of this business on us. This year, last year, we have changed our strategy in this business, and we were able to see very positive changes, which I would like to give you an explanation on today in this meeting. And also, I would like to explain to you how we could make a further development of this business. First of all, The major change is as follows. We have had many traction businesses in China, and we have shifted our focus to be only dedicated on our joint venture in China. We have a GSC as our main customer, and from this fiscal year on, we have a joint venture in Stellantis, and the joint venture is called NPE. These are two major automotive joint ventures that we have. And we have a traction business mainly in China with JSC. And from the second fiscal quarter and onward, we are going to make a profit. We will make sure to advance our schedule as much as possible. And we are ahead of our schedule. That's why I wanted to report to you here today. When it comes to NPE, we will try to minimize the amount of deficit to the best extent possible so that we can start generating profit from the third quarter of this fiscal year. We have had a direct talk between the two parent companies' executives, and I can say this to you with confidence. When it comes to NPE, 670,000 units is our target. We have made a downward revision of this number to the 400,000 unit level. This is how we like to minimize the negative impact on our financial capability. We like to focus on our production in the second half of this fiscal year. When it comes to these two parent companies, we have had various series of discussions with each other. We have had discussions on investment. We have had a capacity of 1.5 million units, and that's our basic target for these two parent companies. That's going to be the area of our focus. We have a French production capacity. We will suppress it to a certain level. When it comes to the additional level, as you can see on this second section of this slide, we have been in a very strict, severe business circumstance. We will maximize the experience from the country, and we will be focusing on the supply of components such as motors and stators and rotors. We will be talking to European OEM manufacturers as well as Japanese OEM manufacturers to whom we elect to start supplying these products components. On to the right-hand side of this slide, these are the existing businesses. In these businesses, we have had major changes as well. first of all this market itself whether it be a ev or hybrid in either case we will make sure to we have been able to secure very good demands and orders of our products first when it comes to electronics we have inverters And we have this DC-DC converters. These are ECU units. Designing and delivery of these products are the new areas emerging in our company and business. We have OEM manufacturers, automotive, driving, EXO, the areas of other companies' concentrations. And we have had the orders for the entire seat related components, interior motors, brakes in the entire unit. All of these products are the areas in which we are receiving a growing number of inquiries and orders. In this area, we are making group-wide efforts. We have a large number of products ready to be supplied to our customers, the cockpit, etc. We are going to receive orders for a system basis as a whole.
spk00: Another point of change in this quarter is, as you can see on the upper left, is the water coolant system. And we have seen increased business here. If you look at this water coolant system, it's called the CDU unit. But aside from that, you have quick coupling and there are many peripheral devices and components, and we have decided to manufacture them in-house. So we are promoting production of critical components in-house. So when we say water coolant system, we have a tendency to speak only about water coolant system, but if you look at it as a whole, the AI data centers, which is experiencing an explosive growth, you will be able to see how our components are utilized in the AI data centers. So, for example, in the server racks of AI data center, there are water cooling system, spindle motors for the drivers, there's cooling tower, there's motors for the air conditioners or alternators for energy power generator or for Clean Energy, AI Data Center, BESS. This is the energy storage system. And we are able to supply all of these in a comprehensive manner. In fact, NITEC We do inspection devices of semiconductors, which is part of water coolant system. So we offer a variety of different types of products, which will contribute to the growth of the AI data centers. So going forward, based on what we have considered, we would work together with many core management around the world and steer our directions in this mid- to long-term direction that we have set out. And let me share that with you. So we have been aiming for 10 trillion sales. We will achieve this organically, which will contribute to 7 trillion and 3 trillion through new M&As. This is our mid- to long-term direction which we have set out, which we would like to describe to you. The mission of the new management is to carry on the strength of NIDIC so far, but also enhance our corporate value through quality growth in the period of the second founding. So this is what we have defined very clearly. And on top of that, we want to be a global company, and we will enhance that foundation as a global company. And also, we want to improve the quality of the company for corporate value. And as a passing point of that, we will aim for market cap of 10 trillion yen. In order to enhance our corporate value, It will not be all uniformly EV or any other one single product, but we have three axes of technology and five business axes which we would overlay. No matter what age we are in, no matter when, we will be pursuing something that would allow us to be needed by the society at all times, and therefore we would engage in activities towards the realization of circular society, and that's how we would like to grow as a company. So first of all, what is core of NIDEC? First of all, we had thoroughly discussed this, what it is. And we have the 73-year history since the foundation of the company over half a century or so. We have built track record on things that spin and move, and that's what it is. And in addition to that, when we think about what the core is, we have found that there are two other access for us. One is thermal management. Starting with motors, things that spin and move as we produce them, we need to convert from motion to heat, and that cannot be avoided. So how do we control a loss called heat? And that's a big challenge. And this is where we have built up a lot of know-how. The great leaps we have made in AI servers and also water cooling system. We will continue to build up on that capabilities and make sure that we bear fruit in AI service. And it's not just thermal management, but we have compressors which will reduce or compress the coolants. And it's not just cooling system, but we will also look at heating system as well. And we believe that there's room for expansion in the AC area. And other core access is electricity generation, storage, charge and conversion. This is area where we actually treat electricity. So we have more than 50 years of experience in this area. And so electricity, which is the source of energy, how do we manage this efficiently? This is something that we have been challenging on since the foundation of this company, and we have built up our experience in the 2010s. We have acquired companies outside of Japan, and we have been able to grow as a result of that. So from electricity to electricity, electricity to motion power, or mechanical power, we have this product line, lineup, and groups, which we would like to continue to increase and enhance. So the core of the three technologies will be the source of competitiveness of Nidec. and we will continue to drive towards the involvement and advancement. So change the world, move the world, change the future. This is the circular society which we would like to realize and we will do so with the contribution of this great technological capabilities and we will be able to become a solution provider which would reduce, which would realize carbon neutrality and CO2 reductions. So through this, what would be the applications in which we would be able to contribute to the world? There's five business pillars which we have identified and clarified. First pillar is supporting the AI society. That's how we had defined it. Today, AI today, it's not just the boom for today. AI's existence will become a norm in every industry and every life. And we would see explosive AI growth and demand for servers which support that. And we know that this will accelerate going forward. Edge AI will be embedded in different devices and terminals. It would be hard disk drivers, coolant fans, coolant and water cooling modules. These are the needs of the customers which we would incorporate so that we can be growing at the cutting edge of IT. And with that experience, we would do chillers, baths, power generator, and also semiconductor inspection devices. So that's thermal management, that's electricity generation and storage. All of these would allow us to face towards this explosive growth. The other pillar is the sustainable infrastructure and energy. In order to lead the circular economy, we need to meet the global demand for energy and support the conversion to sustainable energy. And what is it that we can do? Motor comprises 50% of the energy around the world. Therefore, we need to supply high efficient motors, which would lead this industry. In addition to that, renewable energy stability and supply and also levelizing electricity demand. In the area of power generation and battery, we have control system and battery storage system and electricity management system. These are the technologies that we have which we can contribute to the growth of this business segment as well. Next is the area of efficient manufacturing. Even in the monozukuri manufacturing We can contribute as we see automation evolve very rapidly, and as we see increasing labor costs, we're now beginning to see a big reform taking place in manufacturing. And we have been highly regarded in precision reducers, but we would also be able to offer solutions, especially for robots, especially reducers and motors. and in other areas as well. And we will make this our third pillar for growth. The fourth area is the pursuit for a better life. And we would like to contribute to this business as well. smart appliances and ACs for industrial purposes. These are the equipment and devices that will support the life and this will continue to advance even in global service. As we see increasing move towards higher quality of life, we believe that we can continue to expand our business in this domain as well. Safe and secure and health, those would be the perspective we would use to contribute to new product development, especially in AC. We will realize air to water, which is highly regarded. This is high efficient. compressors and we are also capturing new technologies such as heat compressors so that we can also contribute to the world. And finally, we have mobility innovation. This is electrification and automation of eco-friendly vehicles. We will begin to see continuous innovation in this area. And ahead of that, we can see new mobility such as eVTOL. Just recently, as I have just said, we have electric solutions. which we have been highly appreciated, and we can expect great expansion in the mobility products as well, which will contribute to the growth of this business area. So in these five business areas, we would like to continue to expand and leverage our strength so that we can generate next-step growth.
spk01: In various applications, we have areas, some areas for us to pursue. And we sometimes acquire knowledge internally, but sometimes by way of demand. And we like to drive this effort on a global basis. We have these five pillars of businesses, as you can see. This is how we like to grow each of these businesses. From the left, we can see the dark green. These are the areas, size is last fiscal year. 2.3 trillion yen in total. And towards the 2030 fiscal year, we would like to improve the sizes of these wheelers so that we can achieve more than 7 trillion yen in addition to the additional 3 trillion yen coming by way of M&A. And by growing these five pillars, we like to pursue the improvement and evolution of things that move and things that spin and move so that we can pursue a better life and a sustainable society. As a solution provider, we like to make contributions in these areas. Next, I would like to talk to you about India, which is one of our highly strategical areas in the world. This country as a market is continuing to grow rapidly. Ten years ago, we started doing business in the area. And we have 14 different areas of businesses. We have several in the northern part and some others in the southern part of the country. We can be as close to our customers as possible so that we can make the best way of contributions to each of these customers. As you can see, we have three cities. city where, in accordance with the growing demand for air conditioners, we would like to complete the construction of a campus. This is going to be our 15th construction business base. And in this rapidly growing country of India, we would like to secure a great number of talented and brilliant engineers. so that we can have this area as a center of excellence. That's what we would like to achieve in the future. In these activities, we would like to accelerate the pace of these activities, and we have made a press release today. We have this MOU to be established with Tata Electricies. Especially in the area of software programming, we like to deepen our relationship with each other by sharing with each other our knowledge and expertise. That's the contents of the press release. India will continue to grow and develop as a country. And we like to provide our companies customers with a global level of services. And that's part of our strategy. And towards 2030, we would like to achieve a huge growth as well as stable cash flow. That's what we need to do. As a matter of course, in order to grow these pillars of businesses, we would like to generate the cash flow better than we have been able to before. That's the type of change we would like to make happen. This is how we like to improve the cash flow, and eventually we like to have acquisitions by M&A, and we like to continue to make investment. At the same time, as has been the case, we will continue to make contribution back to our shareholders who have been great supporters of our company. that this is, in addition to this dividend and other things that have been already released to the public, we will continue to maintain the principle of a stable provision of dividends. We would like to continue to do that in a stable manner. In addition to that, in today's Board of Directors meeting, we have this effective date of October 1st. We are going to have a stock split, and the record date will be September 30th this year. The date of issue will be October 1st of this fiscal year. Split ratio will be two for one common stock. We like to continue to share the enjoyment of growth with as many people as possible. That's our strong wish as a company. On to the next slide. This is our organizational structure for our future growth. We have had a huge conversion of management system as of April 1st of this fiscal year. We will continue to be a global company. We will continue to pursue our dreams as a company. And we will continue to take on challenges more than any other companies out there in the market. No matter what changes we face and no matter what times we go through, we will continue to have this corporate culture as a foundation, as a company, so that we can have more people and so that we can enjoy more technologies as a company. This is the second phase of NIDAC's funding. We have now embarked on this process. We are going to move the future. We will change the future. We will move the world. This is how we like to continue to take on challenges as a part of our DNA, and we will continue to make steps one by one, all for our dreams. Thank you very much for your attention. Thank you.
spk04: Where did you come from? Can't you start earlier? Can't you go further? But is that all you can do? Now, I'll think about it. Do you want to prevent more abnormalities? Do you want to be able to coexist with more creatures other than humans? Do you want to protect more resources on Earth? Do you want to be able to be more powerful? Do you want to be able to be more quiet? Do you want to be able to be lighter, thinner, and smaller? Now we'd like to have a question and answer session.
spk01: If you have any questions, please make sure to be handed over a microphone. Please raise your hand if you'd like to ask any question. We'd like to have some questions from securities analysts, first followed by people in the mass media. Thank you very much for your understanding. First of all, from among industrial analysts, securities analysts, does anyone have any questions, please? Hello, thank you very much for your explanation. This is Takayama of Goldman Sachs. I'd like to ask you three questions. When it comes to water cooling module, over the past few months, I believe the situation has been truly dramatic over the past few months. And please give us an update on the upcoming sales forecast, operating profit forecast towards the end of this fiscal year. Please give me those numbers. I believe we have gone through some court issues, according to some news media reports. I believe that's the point where you have to be handling situations very sensitively, carefully. And we have been receiving requests of orders from people other than your major customers. When it comes to the companies other than Supermicro, do you have to be handling those quality issues, or are you trying to be focused on one major customer, which is super micro? What is your current situation at the business front? That's my first question here. I'd like to give you an answer. Mr. Samara gave you some figures over the numbers there. response to your question previous fiscal year annual forecast was 220 billion yen or so not you know that to achieve a minimum level of everything a profit of 15 but at the end of q1 when it comes to sales forecast it's about 7 billion yen or so when it comes to operating a profit I won't give you any specific numbers. We have been able to secure a profit better than planned originally. When it comes to this fiscal year's forecast, I believe we can achieve a little more than double than initially planned. When it comes to these numbers, I cannot give you details because of our relationship with our customers, but this is the level we have not really been able to imagine before. But when it comes to technological revolutions to make these water cooling modules, things are moving very rapidly. Chip safety is going to be a very important area of change in the second quarter going forward. And we need to improve our water pressure as well. We need to launch all of these improvements in various areas. We have Supermicro and its customers and the number of these customers is growing so rapidly as well. We need to focus on these existing customers. We definitely make sure never to cause any quality problems. If we do that, there won't be any future about this business. Based on that commitment, we are making various efforts to the best of our capability. When it comes to quick coupling and other component-related businesses, we have been receiving inquiries from various customers, potential customers. Through TOB, Takisawa is now a member of our NIDEC group, and Takisawa is now trying to make the products in growing numbers. We like to improve our production capabilities so that we can meet the growing needs of quick coupling and other components. We have another designing team to be able to cover the general purpose components and other products. That's part of our future perspective. But as of now, over the past three months, what we have done is to be focused on our business with Supermicro. And day in and day out, we are trying to meet the needs from the customer. You have talked about the in-house production of components and products. Can you talk more specifically about the products that you're trying to produce in-house? Are you receiving any approval from individual customers? These components are truly important. We need to obtain approval from individual customers. Currently, we are focused on quick coupling and other connection-related components. These are the group of components we are focused on, as well as some components within the chillers, pumps, water ascending components, motor-related components within the CDU. These are the areas of focus as of now. Thank you. And my second question is as follows. When it comes to traction motors, that's one of the major topics here. In China, What is the reason for you to be able to confidently say that you have been able to secure a profit in China? When it comes to Europe, how can you say that you will be able to make profits from Q3 and onward? I believe you are struggling with increasing the number of quantity, I believe. Are you still focused on the second half of this fiscal year, or what is your standard business perspective? Well, thank you very much. This is a very important business area as well. And based on our level of achievement in Q1, we would like to go to the next phase of achievement. When it comes to NCJ or NIDA Corporation, we have this business in China. As I've said before, we have Gen 1 products and Gen 2 products. We would like to replace them with Gen 3 products starting from September or from Q3 of this fiscal year, depending on the customers. And when it comes to development process of Gen 3 products, we have been doing this business very steadily when it comes to Gen 3 business in comparison with Gen 1 or Gen 2 businesses. We have spent five to six years for the transition from Gen 1 to Gen 2. We have had a new partner for electricity-related components. This communication is going very, very smoothly. And based on the knowledge and expertise accumulated inside, we have been able to do this business very smoothly now. Gen 3 products are starting up surely, certainly. In China, in the past, we have had some illusionary numbers that we have given you before. That's not the case anymore. We have handled all the fixed cost related issues. We have completed with the process. By the end of the last fiscal year, we can expect a profit to be generated in the area of Gen 3 in China. That's the response that I have received when it comes to automotive business in China. When it comes to NPE in Europe, We have had this very close weekly discussions between the two parent companies of this joint venture. We have been discussing material cost, fixed cost, and we are trying to reduce all of these costs in cooperation with these two, between these two parent companies. We are going to avoid making additional unnecessary investment. This is a production taking place within France. When it comes to this joint venture, we will continue to have this, strengthen this joint venture, of course, but at the same time, we would like to think about how much more production that we can take place in France based on the discussion between the two parent companies. Now, we would like to achieve the level that we have shown you today. And currently, things are going as planned when it comes to this NPA business. And we have been able to reduce the deficit more than we had anticipated. And I believe we will be able to reduce the deficit from Q1 to Q2 so that we can achieve a profit in Q3. That's what I can say to you with confidence. But at the same time, we need to make a large, huge amount of profit from this business. We have had a cap. Based on that, we are going to have a limit in the amount of profit that we can achieve. This is another important point of our business. We have EV-related traction components. Business is going to expand as far as we are concerned. More than we had anticipated, we would like to continue to stick to the business we are specialized in. We are truly good at the making. Thank you very much.
spk00: One last question. You mentioned about five businesses and three core accesses. This is very easy to understand. I was able to really understand, especially in light of the second generation. Now you had a chart with the 7 trillion yen organic growth achieving that by 2030. One question about that is what sort of visibility do you have? Maybe you have the fixed number for the next three years. So what's the substance of that? And also in the process of developing this, I'm sure you have found something that was missing this. So you have the three trillion in M&A. And so what sort of ideas do you have about M&A, the three trillion? So let's go back one page. So the further we try to advance in this area, there will be pieces that we will be missing. And what is it that we will be trying to fill in with M&A? And of course, I'm not going to be able to plot out for you today, but I'm looking at this metrics every week and have deep discussion with Mr. Nagamori. But the dots, the three dots you see, I would say that's the missing piece which would be filled in with Amanda. And I think as we move on, we will be able to increase greater visibility and there will be things that we will be able to see more. The visibility into each of these businesses in order to achieve 1.5 trillion, we have tried to build this up with all the businesses. And of course, there's some more, some less, and when you actually accumulate this, This is a group that was driven by automotive business. So, you know, auto projection much, much higher than this. And meanwhile, AI data center, the discussion has just started. So maybe it's not as high as this. So to be honest with you, there's a lot of ups and downs, but you know, next year, you know, we say maybe one target would be 3 trillion, maybe within a certain year we need to be able to achieve this certain level. So internally, we have a pretty substantial visibility and been able to share that inside. So there's a pathway that is already clearly in the company and within the businesses. Now, going forward, we need to get the feedback from the customers, from the stakeholders, and also internally as well so that we can improve the plan more so than before. So thank you very much. Any other questions? Then the person here. Akizuki from Nomura Securities. Thank you very much. I have three questions. First question, about upside on the profitability, and that was your track record in Q1. So what would be the factor for that? And also, Maybe if I could ask for more color, you talked about, you know, components are being produced internally, and perhaps that would improve your margin more so than ever. Now I'm asking this question with some speculations, but is that the right understanding? So I would like to hear more and get more color on profitability. Sure. So the market has just really started. And so in order, we have to increase the production system by tenfold, subtly. And it's been a lot of challenges and explorations. So 5% is just internally. you know, this is just from the original projection. But from going forward, you know, I talked about this being vertical startup, but we've been doing this at a very speedy manner and inappropriate manner. And as a result of that, we have been able to exceed a profitability target. But this industry is evolving at a very quick pace, fast pace. So we have to be cautious in order to secure solid profitability. In addition to that, as you rightly point out, producing in-house will help us with profitability, and this is our winning pattern before, so we will be through in pursuing that. However, if we limit this to Q1, the profitability improvement through in-house manufacturing. The contribution isn't so much in Q1. I think it will be in the latter half of this year that we will see more contributions. I hope you can look forward to this. Related to Takayama-san's question earlier, but, you know, quick coupling was a lot harder than you had assumed. There's a lot of water leakage, and so it's creating a lot of noise, I think. And I investigated the supplier, and there's a lot of Western companies who's involved in this business of, you know, quick coupling, and it seems as though it's very high-margin business, but You are a volume manufacturer. If you were to do this, my impression is that maybe the profitability is quite good. But in this process components, do you think there's a good profitability? You're right. So the supplier is quite limited today. These are all Canadian and German companies, so they are limited to those areas. And many assemblers are now starting to enter this business, but this is not an easy business, easy processing. And if there's one drop of leakage, it could cause great trouble. So we are extremely cautious and very thorough in confirming the technology so that we will be able to produce this perfectly in-house. Thank you. And the second question, ACM and Moen. How should we look at this business this year? Can you be more comprehensive on this explanation of these two businesses? In Q1, the restructuring charges was a little less against the plan, right? I think you said $1 billion, Samara-san, but $7 billion, I think that was the plan in the first half. So can you also explain about that, the progress on the restructuring? You have the projection improving profitability from the first half to second half, so are you able to maintain that? Thank you. So about restructuring, we were looking at 6 to 7 billion. That was our estimate initially. Overall, we want to reduce this as much as possible. Also, on a full year effect, We want to be sure that it's generated. So we will be working at cash out. And in Q1, we were able to maintain about $1 billion under this effort to make sure that we have as little cash out as possible. I have to be responsible for myself, so I have exchanges on a day-to-day basis. In Q1 restructuring, there was a lot of ASIM related, especially in Europe. So a lot of destruction took place in Europe, ASIM business. And the management actually go to the front lines and lead this. So I think the second half, we should be able to get a result a lot more than we are planning. Moen, in Q1, in some of the categories, there was a slight underperformance, but their target has been completely overcome. It's achieved. So ASIM and MoEM in the second half will lead the progress, especially in the five business areas that I had talked about earlier. So on Q1Q, Profitability seems to have declined slightly in the ACM moments. If you exclude restructuring, what is the reason for this decline in profitability? Well, there was restructuring and also in Q4, there was a big warehouse accident in the United States, and we had an estimate for the losses here. And this had increased a little bit in Q1, and so there was one-off reasons. And also, in the past, there was increasing selling prices, and so we had lost our shares. So there was a correction of that as well. So these are all one-off reasons. I see. Thank you. And last point. about M&A. So Nagamori-san in the past was saying that the next Nagamori, I'm sorry, I forgot the official, his name, his title, but anyway, he was saying that He wanted to do a large industrial motor, so you had a lot of M&As in the midsize. And I think if you were to go to the big size, you know, that would be a natural flow. But under Kishida CEO, under your new vision, you know, your next M&A will be relatively large in size. Where would you touch on? I'm sure you have a few candidates, but where would you start off with? As much as you can share, please give us that information. So I'm not sure to what extent I can share this information with you because that's a very difficult question, but thank you for that. So industrial use or mechanical I think we are more focused in our discussion and considerations doing a mandate. So there are several mandate candidates in these areas. But we don't really, if we were to categorize them, it's really going forward now. I mean, right now the candidates So I think the new management's role is to make sure that there's a good, strong pipeline of candidates of M&As, and that's still yet to take place. So on a day-to-day basis, we have very intense discussion on this. So I hope that this would be enough answer to your question. Thank you.
spk01: That person over there, please. This is Night of City Group Securities. Thank you very much for your explanation. I'd like to give you two questions here. First of all, when it comes to overall figures here, you have made an upward revision. Can you give me a background about this upward revision? 15 billion yen for the first half, and that includes NPE. It's about 5 billion yen as an additional element, I believe. Please tell me what this number comes from. When it comes to the second half of this fiscal year, I believe the number is slightly less than the first half year's number. Can you elaborate on that? When it comes to Q1, When it comes to the original guidance, it's 100 billion yen operating profit for the first half of this fiscal year. When it comes to Q1, 45 billion yen was what we were targeting, and then we were able to achieve 60 billion yen. Of that, 10 billion yen was concerning accounting issue. In Q1, we have achieved 5.9 billion yen. And we have eventually made this output revision by ¥115 billion. And throughout the year, we are going to achieve an expected output revision of ¥10 billion. If I may add one thing, When it comes in the area, especially in the automotive business, we have had some fragile situations we have to go through. We have had the downward revisions a number of times. In India, we are a group of achievement. We are committed to achieve as the new business management, executive management. Thank you very much. When it comes to this additional, I'd like to give an additional questions to that point. When it comes to cooling the business, you have had the business going over down original plan. And when it comes to Q2 and thereafter, at this moment, are you having these conservative forecasts? I would say yes. And when it comes to this business, as I've said, this business is under development still. And we need to check the situation very carefully as we move forward. Thank you very much. Here's my next question. When it comes to these five pillars of business, I'd like to give you a question. Sales are going to increase in each of these areas. When it comes to operating profit ratio or operating profitability towards 2030, how do you see these are going to change towards 2030? And are there any areas where you can expect a very good margin? If any, please tell me. In these business areas that we are going to be successful in, we elect to achieve at least 15% of operating profit ratio. That's the minimum for us to achieve, want to achieve. And there are some startup products which are going to underachieve this as a minimum target of 15%. But all in all, we definitely want to aim to achieve a 15% or 5% operating profit ratio as the competition in the market intensifies. That's the level of target that we have in our mind. Thank you very much. This is my additional question here. As far as you can see, You are going to be able to achieve a 15% in operating profit ratio in all of these areas. We are not going to enter into any business where we cannot expect to achieve a 15%. 15% is part of our DNA. We definitely need to achieve that. We are not going to be in any business just to grow the business. That's not the type of thinking that we have. Thank you. That is all from me. Next, we would like to have some questions from the mass media. The person who is raising his or her hands. Thank you. This is Abe of Nikon newspaper. I'd like to ask you two questions to Kishida-san. The first question is regarding the software development in India. Are you going to have the software development facility in India in the future, as you said in your explanation? When it's going to be? Is it going to be sometime in the near future? Can you tell me when it is going to be? The size of the facility is going to be smaller. We're going to have some movements taking place from some of our group companies. We have this facility called the Center of Excellence in India. We are going to do that. from this fiscally. We're going to take actions and the number will increase from several hundreds to several thousand in the future but we have this somewhere in the state which is home to Bangalore. We're going to develop software programs in this place within the state, home to Bangalore. Here's my next question. Thank you for the first question. This is not about India, but this is about this mid-term and long-term strategy. In the end, you're going to achieve the sales of 10 trillion yen in 2030, which is the same as before. And you explained once again about your company's need time and long-term strategy. Why is that? Are you going to change the way you make steps towards the future to achieve this number? Why is it that you explained this chart once again here just today? We have been sharing this information with you, 10 trillion yen in 2030 fiscal year. This is just about the sales target. We have not been able to explain to you the steps toward achieving the target. That has only been in Mr. Nagamori's mind. What we have done is to redraw the map toward achieving the target of 10 trillion yen in 2030. That's the meaning, the background of my latest explanation about this roadmap. Of course, there are some charts, there are some maps that are yet to be complete or perfect. That is true. There are some missing pieces as well. But we have this global team of management executives to try to come up with one map to be able to be shown to you. That's the major reason for us to have decided to explain this to you. Thank you very much for your explanation. Thank you. And here is going to be next question is going to be the final question. Does anyone have any question? Please, the person over there. This is Tsunoda of the Nihon Keizai newspaper. Thank you very much for your explanation today. I'd like to give you two questions. My first question is regarding this long-term and short-term strategy, long-term and mid-term strategy. You said that you're trying to achieve 10 trillion yen in sales in 2030. In 2025, for example, 2 trillion yen, ROIC with 15%, I believe that was your target in terms of ROIC. When it comes to these numerical targets, I believe this number strikes me as a conservative number. How come you have not been so aggressive in showing us these numbers? There are not so many people who would like to explain such reasons, I believe. But as I've said before, We are trying to redraw the roadmap toward achieving this goal of 2030, 10 trillion yen in sales. And as a mid-term goal, we have a ROIC-related number, which we have disclosed in the past. We have communicated these numbers to you. We're not going to throw everything away when it comes to our past targets or premises. But the way we try to do things has not been really a good match with the way we try to do things now. And we'd like to show you the result of our discussions. We have been target-based before. Now we are team-oriented as a company. We have been able to reach a consensus, which we would like to continue to show you going forward. We would like to improve our market capitalization as a company. We will continue to aim to achieve 10 trillion yen in sales in 2030 fiscal year. We have spent a lot of time discussing those issues on the balance sheet. We have cash flow targets, free cash flow target as well, that give a certain amount in a certain fiscal year. But at this moment, We are yet to be able to disclose those numbers to you in detail. When we have reached that stage, we would like to share these numbers with you in detail. As far as I'm concerned, I would like to be managing this company based on ROIC targets. Over the past three months, we have not been fully prepared to be able to disclose those attitudes. That's my honest answer to you. Thank you very much. Here's my second question when it comes to Indian software development project. you have had the mou with tata as a group company can you be more specific about products that you would like to utilize in association collaboration with tata we're not really limiting the area of the products that we like to utilize together with the tata electricity with this company i myself have been having a long-lasting business relationship even after joining Nidec. We have had some automotive-related talks with the company in the group. This release is not about a specific target or a specific group or a specific product to launch. This MOU is about letting you know about the future growth of our individual businesses. That's the case that has been so far. We have some differences in laws, taxes, tax affairs, tax practices in different states in India. We'd like to give you such information as part of our group-wide activities, and that's part of our vision as well. Thank you very much. Now we'd like to finish this financial presentation on NIDIC for the first quarter of this fiscal year 2024. Thank you very much for your attendance today. Thank you very much. Thank you very much, everyone.
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