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spk00: Now, we would like to start the presentation on NIDEC Corporation's fiscal 2023 financial results. First, please turn off your mobile phones or put them on silent mode. NIDEC Corporation's representatives who are presenting the financial results are as follows. Mr. Shigenobu Nagamori, founder and executive chairman. Mr. Mitsuya Kishida, president and chief executive officer. Mr. Akinobu Samura, Senior Vice President and Chief Financial Officer. and Mr. Teruaki Urago, General Manager of the Investor Relations Department. That is all. In today's presentation, these executives will present you with an overview of the company's financial results for fiscal 2023 that will be presented by Mr. Samura, and a strategic portion will be explained by Mr. Kishida. Then the floor will be opened for a question and answer session. Please kindly wait to ask questions until then. The meeting is planned to end at 11.30 a.m. Now, Mr. Samara, please start your presentation. I would like to make some statements first. Please. Thank you. If I may say, at the beginning of this conference, I'd like to give you some explanation here. From April the 1st, this fiscal year, we have a new president on board, and he is also serving as CEO. He has yet to become the board of directors. member that won't be until the general shareholders meeting in June. We have had so-called successor issue at our company. We have had this nomination committee. has gone through the selection process. We have had five members of the nomination committee, three of them from the outside members, and they unanimously agreed on Mr. Kishida to serve as the president of this company. This nomination committee is a very well-balanced committee. They made a very good selection in a very balanced manner. in a very proper process. He was a very good person that we have selected in the nomination committee. Mr. Kishida is a former Sony executive. He has spent a long time overseas. And also, he has worked in several different business projects. We have the President, the CEO over here, and he will be spending most of our time giving you an explanation. I didn't have to come here actually today, but I am here. But according to strong records by IR department, I'm here rather reluctantly. We made a financial announcement yesterday, and the details were already checked and written about by analysts. They seem to be interested in various new areas, and these analysts seem to be lacking proper knowledge about these industries, and many reports are not really accurate. Our businesses are in very different areas from these people's interest. And the explanations in these areas, on these areas, are not really accurate enough. And I have instructed Mr. Kishina not to use so many technical terms, but explain to everybody in a very easy and understandable way. If you have any questions, please let us know, and please try to gain your knowledge as much as possible so that you can have a proper understanding about our businesses. As far as I can see from the analyst reports, these reports are rather biased. That way, investors may make the wrong decision. Please keep that in mind. This is something that I was saying, like preaching to the converted. But as we give first to Mr. Samara, the CFO, we'll give you a presentation first, followed by Mr. Kishida. Thank you. Thank you very much. This is Samara speaking. I would like to give you an update on the financial report for fiscal 2023. Please go to slides number three and four. First of all, net sales were up 4.7% to 2.348202 trillion yen. It was the record high last year, and now we have more than 100 billion plus to that. Operating profit was up 63.1% to 163.106 billion yen. Operating profit ratio was 6.1%. This is due to the fact that we have made a strategic change in even traction motor business to be more profit-focused. According to that move, 59.8 billion yen was recorded as part of our structural reform expenses. This is not included in our presentation material, but if you included this, it's at 9.5% in total. Therefore, in the actuality, the profitability has increased tremendously from the prior fiscal year. Profit attribute about the owners of the parent, as you can see, increased as well. In addition to our sales, our profit before income taxes also stand at record high. Please go to slide number five. This is about an overview by a product group. First of all, top left corner, small precision motors. When it comes to the immediate issues, there are some seasonal issues. We have had some decline in operating profit and sales, but we have been eliminating a significant portion of fixed cost. And among other actions, they have increased and enhanced their profitability. When it comes to how they could drive, has bottomed out already. We have had new businesses such as water cooling modules. These are emerging as new businesses. We have these new spreads coming out. That's what the last fiscal year was about. Next, top right portion, automotive production. We have EV traction motor business, and we have recorded structural reform for the EV traction motor business. And all in all, the business was in a deficit, but the existing businesses were going very smoothly, and we were voraciously obtaining opportunities for future business expansion. When it comes to existing traction motor business, We are aiming for a profitability going into a positive territory as early as possible as we try to improve the business's profitability. Bottom left section, appliance commercial and industrial business. When it comes to this segment, both sales and operating profit account for about 40 percent of the entire group's sales and operating profit. This is the largest portion of our business. and this has improved their profitability significantly from prior fiscal year. We are aiming for a further improvement in the profitability of this business. Lastly, machinery business. The equipment investment is rather in a very harsh situation, but we have just Takisawa who joined our group very recently. They are now fully consolidated in our group. When it comes to machine tool business, we have had OKK and a former portion of Mitsubishi Heavy Industry Machine Tool Co., Ltd. They are all part of our NIDIC group now. We are making a structural reform happening in these newly joined members, and we have been selling land, and all we know, we have a significant increase in profitability. Please go to slide number six. This is year-on-year changes. When it comes to exchange, with the exception of excluding the currency exchange rate, et cetera, if you take a look at this vertically, small personal motor, less sales, more operating profit. Automotive, more sales and operating profit. And appliance commercial and industrial products, you can see a significant increase in operating profit, despite the slight sales decline. And you can see the sales were all in all very flat, but you can see the profitability has increased significantly. Please go to slide number eight. You can see the situation on a free cash flow status. If you go to the left section of the slide, you can see the quota two and three, we were rather low in momentum. In quota four, you can see we focused on inventory improvement especially. That was a situation in Q4. And free cash flow, 92.5 billion yen. And our record was back in 2020, 1118.6 billion yen. And interest-bearing debt was down. And on a net basis, we have been able to decrease our debt, which means a significant, very positive factor for our future growth when it comes to cash. Please go to slide number nine. For fiscal 2023, we have focused on improving efficiency here. In 2024, which is this fiscal year, we're going to continue to improve our efficiency. On the other hand, we are going to be making aggressive investment in growth for mid-term and long-term growth. Please go to slide number 10. This is our forecast for this fiscal year of 2024. Sales is projected to be 2.4 trillion yen operating profit, 230 billion yen profit ratio to reach 9.6%. Exchange rates, U.S. dollars, 145 euro, 155 yen per euro. and all the other information on the slide. That is all for the overview of our financial performance. This is Kishida speaking. I would like to give you important points about our individual businesses, and I would like to give you my thoughts on this company's future. If you go to slide number 11, you can see all the product different groups. Small President Motors, automotives, among others. First, I'd like to give an update on automotive business. Over the past two years, we have gone through various structural reform in Europe and elsewhere, and we have had this attraction about our business-related issues facing us. We need to have this large-scale, aggressive structural reform. That's what we needed over the past two years. We are now at a very great turning point in our business. We need to exercise our strengths so that we can help this automotive business continue to be a major pillar or column. That's what we regard this business as over the past two years. If we look back at the situation, especially in China, it is very unique. No one, no suppliers in the market was able to make a profit. That was a very unique situation there in China. And we made a structural change, a business shift that took place. And that's our part of a structural reform last year, last fiscal year. When it comes to this EV business, the industry structure itself is making some changes, and I believe this confusion is going to continue. That's my expectations about this industry. We have made a significant change in our strategy very quickly, so we were able to, I believe, minimize the impact of the industry on our business. we can make electronics-related developments and we are expected to have state-of-the-art technology to be included in our products. In that regard, we will continue to run the front line of the entire race in the competition. As far as our servers are concerned, we have made significant personnel changes. In 2024, fiscally, we are going to have this restart as a new automotive business. Secondly, When it comes to traction motor business, among others, we need to decide who we sell our products to and what type of products we are going to develop. We have various different options. Now we are going to selectively choose when it comes to who we are going to sell our products to. We have this joint venture, GAC. And GSE has another joint venture with Japanese companies, various different companies. It is to these companies we're going to sell our products to. We are going to be efficiency-oriented as we try to develop our motors in these joint ventures. And that's the situation we elect to update you with when it comes to 2024. When it comes to our traction motor business, of course this is a business, therefore we will move up, move down some projects in our business. But these are not going to make any huge negative impact anymore. That's what I believe in.
spk01: So let me explain about NPE. We will be consolidating this company from this fiscal year. So I want to introduce some elements of this company. Earlier I said that You know, unlike the Neadex traction business, where do we sell it to? What sort of technology do we develop? We have to work together with Stellantis, our customer, and we're 100% aligned with them, so there's no concern about it. I, myself, last week... met Mr. Carlos Stabalas, CEO of Stellantis, and we took the entire day to confirm our commitments as parent companies. In fiscal 2024, the numbers that we have published as guidance is unchanged from Q3. Now, the orders is much more than the number we have disclosed. But with regards to who we are producing it for, there's no contemplation. So the production yield and the inability to produce and improve our technology, this is where we will be focusing on. So that's how we will operate this business in 2024. In terms of production volume, there may be some fluctuations on a daily basis. However, The company does not believe that there will be any major changes that would impact the company. And we have already decided on the models, so the stator this is the rotating component this is probably where the greatest hurdle is in terms of technology and the parts supply from us will start from 2024 for mpe so we as a group We'll bring our wisdom together from the parents so that we can lead to the success of MPE. And we have confirmed this with Stellantis. And this is how we would like to promote our business in 2024. So going forward, there are two slides on automotive business, non-traction business. So when we say traction business, at the peak time, this was less than 5% of Nidex business as a whole. So, you know, the automotive business in the company is more than 20%. So I want to talk about non-attraction business in automotive, which we have started from 2012. And we are not just going along with the wave of electrification, but we're also looking at the advancement of the telecommunication technology within the automotive industry. There's a system called bus which transmits the signals. That system is advancing more and more. And this is not just for EV, but the wave electrification is really affecting everything on the automotive. And here you see drive-by-wire technology. this is using mechanical access where we were using mechanical access to transmit signals we will not be using electric access so this is how we are seeing advancement so if this is the case up until now we had power steering as you can see at the bottom left you have electric power steering and on the right hand side you see Excuse me, up above, feedback actuator. These two are linked and work together in conjunction. So when the signals will be transmitted by electric city, then you have the... The one that is sending the signal and the receptor of the signal, actually you need two motors, and we use motor and actuator in terms of names. But by using signals, the requirements on the motors is accelerating more and more. And also even in the brake, There are some advancements that we see. So brake up until now was used using hydraulic, using pump, but hydraulic itself will be electrified. And the pump itself will be electrified as well. So we are now seeing technological innovation in this area of electronics. And we will work together with customers so that we can go along with this wave of electrification. And I have one more on automotive business. So you have telecommunication, entertainment, and power train systems. If you break it down like that, and also if you look at the front end, the center, and rear zone, or if... We are now seeing advancement in zoning of the car itself, and ECU is what it supports. Now, when we say ECU, this is engine control unit. So that's actually maybe an old word. So now we will replace this with the word electronics, perhaps. But control units signal circuit design and also software designs. This is a motor control system business and we see advancement there as well. Here at the bottom you see a seat strategy as an example. There are more than 20 motors that's installed in the seat itself. For example, in addition to the function to just adjust the seat, there's assist function for users so that they can drive a long time, or warning motors so that the user, the driver, will not fall asleep. So there are many components that are equipped here. Now, the car manufacturers have to deal with alternative driving, and they are inputting all the engineering resources there. So for us, the manufacturers, we will be receiving orders as a system at zones. So here the car seat is considered as a system, as one single ECU. But aside from that, there's door zone, so which we receive as an order, or you have the hood in the front as one system, or a cockpit navigation signals where it is displayed on the glass. This is the projection motor business, And we have more than 90% market share here in that business. So what sort of signal should be sent to the user, the passenger? That sort of business is really increasing quite significantly. So we will take on these needs so that we can offer solutions. So automotive business will expand even going forward. So next is on the machinery and machinery tools. So this is looking at machinery and others. What we're introducing here is a SCARA robot and cobots. We have already announced this, but this is a strain wave reducer called FlexWave, which is equipped with sensors. And we also have a very powerful reducer which supports the bottom. It's called Kinex. It's a cycloid reducer. So motors in robots and reducers. There are actually a couple of companies that have been monopolized by Kinex. few players. However, we are now entering this space as well. So, for example, we have low price technology which we have always been strong in and we will use this as a trigger and we are now selling this as a system. The investment in China in our production facility is actually decelerating slightly, but from the second half of 2024, we're planning to expand this business quite significantly. So I want to talk about the press machine up above to the left. And you have the press machine for manufacturing. We have a very large market share globally. And the motor, which corresponds to this, you're using press machine in order to build layers for the core. And we're also producing motor cores for that as well. And electronics, semiconductors, plates, electronic components. This is the motor high speed precision press for motor core. We also have a Giga press. This is very large motor and Giga means 10 tons. So there is a machine that actually makes this a very large body for this 10-ton press. And we have a production facility in Mexico which would allow us to supply around the globe. And for the press machine, we have Asia, Europe, and North America. We do have the production facilities there. And as a result of that, we're able to meet the customer's needs, many automotive manufacturers and business operators. So our characteristic is that we have global structure in place and we're able to meet different models from small to large size. We have a very full lineup of press machines. So let's move on to the machinery tools. As you can see from this table, we have the time is 10 trillion yen in this market. So you have this process called drilling the hole in the middle. This is a machining center. We have a very large market share here. And in addition to that, the orange, this is lathe. By TOB, we have acquired Takizawa. They have this very strong technology in lathe, and we believe that this will contribute to the global market as well. And although this area is very small in terms of market, we have gear cutting machine. We see the use for electric vehicles and hybrids. This is high precision gear cutting machine. And there are customers who say that they're not able to live without us. And that's a high level of technology we have in the gear cutting machines. So the fact that we have this machine tool itself is the ability that links to the product capability.
spk00: When it comes to this industry, we were late into this industry. But we like to regard ourselves as a new innovator for the development of this industry. Going forward, I'd like to explain this water cooling module systems. It was April the 15th that we made this announcement to the public. It's called the CDU, Coolant Distribution Unit. That's what it stands for. This is AI-based, very promising components for the server system for which demand will be significant. Monthly production will be significantly increasing from 200 to significantly more going forward. And 3,000 units will be the production per month going forward. That's what we would like to reach as a company. Hard disk drive is our very initial business that we started our company with. We have been very close to the revolution of IT and HDD. With the development of computers, we have developed our technologies as the revolution takes place for semiconductors. That's what this NIDIC is about. As of today, when it comes to CDU and the cooling motor business, We have a coolant distribution manifold, and we have CPU units and GPU units that have to be cooled. We have an LCM to cool these units. A coolant module, that's what it's called. And electronic processing, machining is what went up the areas. We have a huge, very sophisticated technology. We have a very small space here. Quick cutting technologies and other technologies that we have. This is a cooling technology, water cooling technology. We need to use water flowing inside the circuit. It's very highly sophisticated. These computer systems must not be wet, but this water has to flow right next to these water-sensitive computer units, components. We have to combine these units based on our customers' requirements. We have to be able to do it as freely as possible based on our customers' demands and requirements. And this is like a conjoining above. We need to have a very super accurate machining technique. That's what we need to have as a company. And we have a meta-automative contact. in which we could possibly have a contamination inside the water because of the small pieces of metal that has to be avoided at all costs. We need to utilize our quick coupling technology for which we have been receiving a lot of inquiries. I have been getting excited about my own talk, and that is all about the water cooling business. And this is a continuation of this aforementioned business. This is going to become a hugely promising business. now or the animal e m manufacturers and uh... other uh... manufacturers are the companies we are uh... we'll probably be any contacting directly this industry itself is going to go on through a huge change we're going to be you've been extremely close to those changes so that we cannot achieve our technological success ahead of others when it comes to this server of business We have been involved in computer PC businesses, and we have a super computer business coming along. And as they develop, we have a GPU to take care of. Automotive driving is coming up to become a reality. In order to make that happen, we have super fast communications networks. We have 5G in place now. We have a millimeter wave is now starting in China. We have a network slicing taking place as well, which is to make the personalized components operations, and that will become advanced as well. For that, data explosion will take place as well. And in such communication businesses, we are having various businesses taking place as NIDIC. AI service revolution and other industrial revolutions are what we are becoming. We continue to be very close. This is my final segment, appliance commercial and industrial segment. We have sub-segments, as you can see on this slide. When it comes to air conditioners and home appliance components, we have a commercial and industrial components. For industrial components, we are in various types of businesses, and we like to pick up one, motion and energy business. We have two examples of their business. Please go to the next slide. First of all, if you take a look at the left-hand side of the slide, this is about AI servers. We have data center business. We have emergency generators for auxiliary power supply units for data centers. This business is growing significantly, surprisingly fast. 12% CAGR, as you can see on this slide. This is a sizable business, as far as we can see. When it comes to data centers, The power has to be on all the time, and the water has to be running all the time to cool these components down all the time. And we need to have a second and a third backup system. For that, the power generators like this one are needed. We have been required to produce and supply a very highly sophisticated system. We have more than 50% of the shares in the business. We continue to steadily grow our shares in the market. And solar, photovoltaic, and wind power generation business is growing. These energies are naturally supplied resources are very unstable. First of all, we need to make sure to secure a very stable supply by stabilizing the voltage. We have a best battery energy storage system. That's what we have to stabilize. And this is gaining a lot of attention. This is a standalone unit. You can install this anywhere in the world. CAGR is 28%. This is another very high market share for CAGR. I myself will be involved in this business, in promoting this business. And that is all for my explanation. But when it comes to areas for fossil fuel energy, decarbonization is coming or taking place as well. This slide is about the infrastructure-related business. We have solutions that we are offering to our customers. If you take a look at the left-hand side, this is about Torrieste, Italy. There are borders for Slovenia and other European countries there. It's about... And if you go over the office and... This is about the transportation of oil, a transalpine business to Australia, Germany, and the Czech Republic. We have this pump drive motors for which we have received orders. In addition to the order intake, We need to have a good maintenance for these recurring businesses. Another area we have received our orders, and right on the side, this is about the liquid natural gas system installed in Qatar. This is a compressor for liquified natural gas. This is a huge compressor, as you can see on the slide. Liquid natural gas has to be transported. This is a fuel, fossil fuel, but it has to be liquified for transport. We are producing maintenance component services, what we are providing to our customers. As you can see, Nidec has been producing Nidecs, of course. But we are not just about the motor manufacturer. We are making products that spins and move. We are in a power generation business. We are making air compression business as well. The basics about the business technology is about the same, but in various many industries, we have these industries growing up despite regardless of economic situations. We are making contributions in these areas. As you can see, we are in the motor business, of course, but so many other businesses as well. And what we do as a company is to prevent global warming, and we are promoting decarbonization. We are proud of that type of promotion that we are doing. We and I, together with so many others in our team, We are in the second generation of the management of this company or the NIDIC group as a whole. We need people, technology, and so many other elements for us to move forward. And we need to beat the competition to be able to provide our customers with various solutions. That's what we are going to do. We will continue to do. As you can see on this magnetic logo, all for dreams. That's what we stand for. We have huge dreams in our service for the world. In order for us to make these dreams even bigger than they are now, we need to be able to be as a company that will last for the next 100 or even 200 years. That's the type of all-out effort we are going to make. On the short term, we may disappoint you about our financial performance, but I myself see the long-term situation. I want a long-term perspective so that this company will become a truly globally essential business in the world. And that's what I like to have in mind as we go forward together with our team members. We're going to make a healthy and wonderful growth as a company. We don't have any time to go back. I received a button to move forward. All for dreams. Thank you very much. Thank you very much, Mr. Nagamori, Mr. Kishida, Mr. Samura. Thank you very much for your explanations. Now we would like to open the floor for a question and answer session. If you have any questions, please raise your hand for a microphone. Now, does anyone have any questions? First, please, the person who raised his hand ahead of others. Thank you, please. Thank you very much. This is Takayama of Goldman Sachs. I have three questions. I'd like to give you these questions one by one. First of all, when it comes to this 230 billion yen operating profit, can you elaborate on that? I believe this could be higher. and then other circumstances. But this number, according to my calculations, it looks very or too conservative. Could this be a minimum number for you to try to achieve? Or as you've said, does this number contain some basis for your future growth? And you are seeing this year as a year of making not so much profit. Are you contemplating about taking time before you will be able to achieve your ideal stage from your perspective, Mr. Kishida? Or could this number just a number or just a conservative number? Can you elaborate on this number over here? This number looks a little different from the number that I usually see in this type of presentation. I would like to give you my explanation here. This is Mr. Nagamori speaking. When it comes to this new management, Prior to the establishment of the new management, we have this decision-making process, new one, new business decision-making process in place. We have a CEO decided, nominated in the nomination committee. I have never been involved in the establishment of these numbers here, but this new management's numbers are based on very detailed plans. And they have been part of all the detailed process when it comes to these numbers and establishment. Over the past three fiscal years, we have been in a tumultuous situation. These people, new people, have had to organize the situation to put everything back into normal. And they have been able to capture all the issues in a short time and solve them. What we need to do is as follows. And we need to, we like to make the upward revision instead of the downward revisions we have had to do. Forget about the past. We would like to come up with a very solid figures and achieve those results as promised. And prior to the three-year period that I've mentioned, we have already always made pretty much overachievement. Over the past three years, though, the situation has changed for the negative. underachievement was not really in our dictionary, but underachievement did happen over the past three years. So we had to say, if you will, to this wrong past management. And we now have a new management in place when it comes to Q4. These numbers seem to me to be rather conservative, but these are the numbers they came up with, the new management. As has been explained by Mr. Kishida, the CEO, he has won over people in the company. To be honest, these numbers look to me to be very conservative, but these are the numbers they would like to stick to. Despite a temporary decline in the share price, this will be a small incident compared with the history to take place 20 to 30 years from now. I sometimes feel I'm not going to feel disgusted about your report, Mr. Takayama. I'm not really making any complaint at all about your report, Mr. Takayama. So succession is going very smoothly from me to Mr. Kishida. It's not just one person when it comes to candidates. And this information is shared by multiple people, and we have ACM and other overseas business groups. These executives, the leaders of these business units are now first senior vice presidents, and they are involved in the decision-making process of these members.
spk01: So even though there may be slight changes, I don't think you will probably see what we have experienced in the previous years. So how should I say this? I believe that there's a completely new management structure in place. So I will quietly step back and disappear. And I want to make sure that when there's an administrative changes, there won't be any confusion. So I believe that my role is to make sure that it's done smoothly. So no matter what kind of question we get, we want to be able to explain well. And our business is wide range. And I think it's important that the CEO is able to have a full understanding of all businesses. Sometimes only the business unit heads are able to explain, but we don't want that to be the case. We want the CEO to be able to get a full understanding and explain for all business units. And, of course, risk, it doesn't mean that we don't have any risk. In fact, we need to continue to minimize risk. So even in traction motors in automotive business, you know, China business, you know, maybe there was a little bit of a strategic error there. But, you know, we had a lot of lessons learned. And thanks to that, the domestic customers are placing many orders to us. So I think we have new, very good products now and healthy profit. And in terms of number of customers and a type of customers, excuse me, you know, we have the world's top blue chip customers. And, you know, Nidec has always won with technology, not pricing. We're not a company that pursues just sales with just pricing, but we want to be focused on profit at 15%. So I think he has that leadership style, and I think he will probably carry on that legacy tradition. So all the members around the world, if there's an issue, we'll share that immediately. And the new members are fluent in English, so they can call the customers with just a mobile phone. And, you know, even in our businesses overseas, they can just call up and they can just discuss right on the phone. So I think we have a really good structure in place. There's a big renewal, new generations. IR, we have a new staff. Even in PR, I think that the way they do it has really changed. The way they think is very different. It's very much up-to-date, most recent. And so you need to also change your mindset. The image you have of us, Koyama and Nagamori, we're old guys. It's too old. But you have a long history. We've been around for a long time, but I think it's a new management. So, Kishida-san, it seems as though this just means conservative, or do you think it's something to do with not being able to achieve it? Well, I think number one priority is to make sure that we store confidence and trust. So we want to make sure that we are for sure able to meet the target that we publish. And that is how NIDIC should be. So that is why we are prioritizing this, and that's the reason why we have this number. But, of course, internally we have a bigger target. The second question is, I think you will be in the process of developing the midterm plan going forward, and I know that you will not be able to disclose any details today, but from the impression I have today is that the technology you have on hand today, if you look at the current situation, it seems as though there's much more opportunity and you want to maximize that, the opportunities, and it seems as though your strategy will be an extension of that. Maybe it might be difficult to share the target, but what sort of company you want to be. I forgot to, you know, mention this, but when we announce our Q1 results, we will be able to give you guidance for our midterm, midterm plan for 2028 and 2030. And we're actually in the middle of a discussion right now. So we have the organic growth, which we will focus on in 2024. But in addition to that, I'm sure there will be large M&As. And perhaps we may be incorporating larger technologies as well. So in Q1, the management team will discuss this. And we will also check the production basis there so that we can have a solid plan in place. And last question about the cooling system, the module. So I understand that you have a lot of competitors here on the thermal module. So what is your winning strategy here? So maybe you need to have the supply network first. What is it that you need to win? So not just on capacity, but also sales, share, anything that you have in visibility today. Before I share the number... In the new management system, there's one thing we're very, very cautious about, and I want to share about that. That is that this is an industry that is expected to grow quite significantly, but we don't want to be the kind of mistake we did in traction business. And what that is, is that When we talk about capacity, it's not just about production capacity, but there's technology capacity, manning plan, software development capacity as well, and we don't want to overcommit to that. I don't think that's a good starting point. Of course, you know, we are a promoting business because we know that we can enter the business. But when we do something new, we don't want to have quality or supply issues. And so that is why in the starting, you know, dawning age, we want to make sure that we have stable production and technology capacity so that we can meet the customer's demand. So the amount that we're projecting this year is As of today, it's still a very conservative plan. So I hope you will look forward to the progress that we will make. Okay, I understand. Thank you very much. Any other questions? So the third, fourth row from the front. Over to you. The fourth row from the front. Can you raise your hand once again? Please. Did you go for Nikkei Cross Tech? I have a question for EV traction motor. Previously, you had the production plan. I think you had a bar graph on that, which you used to announce. And I think it was like 2030. You were planning 10 million units. That plan is no longer valid because of the strategy change. Well, we don't want to just go after the number, the volume target in China. We did change our strategy. But, you know, we want to be number one in every one of the categories. That is our mission. So when the timing will be, that will be made clear in the mission plan. So in your company, you have the winning strategy, the formula, which you have built in the precision motor business. But in EV traction motor, so it's not about winning the cost competition and winning, gaining the profitability and winning. It will be different from your conventional strategy. Well, the winning formula will remain unchanged forever. We will take orders, win with technology, and we will see the differentiator. We will continue to win with that gap. So we don't want to expand our battlefield without having that confidence that we will win with technology. I think we had that mistake in the past. So that's why we want to make sure that we're firm and solid on technology so that we can always win. no one will out beat us. That is why I was trying not to talk too much today, but I need to answer that question. Up until now, In each product, we want it to be number one. That's what we have aimed for. And in hard disk drive business, at the starting point, we were making losses, but that's how we grew that business. And at that time, customers were, of course, you know, making, you know, losing money and suppliers were losing money. That was only a short period of time. And, you know, at that time, it was like, you know, 3 percent, 5 percent. But now, you know, we're, you know, making losses at 30, 40 percent, you know, not just us, but the suppliers, the competitors, and the customers themselves as well. So it's not that kind of a competition. When we talk about competition, so it's about, okay, we're making losses, but competitor is making profit, then that's our problem. But it's not just about 3% to 5%, but we're looking about... So when we initially, you know, sent this quote and then we see we discount over and over and we are now losing money after money, you know, that would disqualify the management. So if the customers are profitable and competitors are profitable and we are the only ones are unprofitable, then I think that's a disqualification. That's probably the right kind of a competition. But when in a market where no one is winning, then, you know, Of course, this is about are you losing money, $1 billion, $10 billion, $100 billion? I mean, that's different. But we're not doing business in order to make the company go bankrupt. So I think in that sense, he made a bold decision. I think it was good. If he were continuing with this business, the amount of losses would have been too big. So why is it that we lost here? We analyzed this, and it's not technology. Our technology, our motor is barrier, and everyone admits to that. But What about pricing? How is that pricing determined? Well, when you manufacture, there's cost and there's SG&A, right? But... You know, the competitor, you know, when we love to, you know, all the orders went to them and now they're increasing their losses. So, you know, it's not just exit. I think it's just resting. Even in hard to drive business, you know, we had that experience. What we did was we paused for a little bit. We took a break. And so you take a break and you think about it and look at the market to see whether it will be competing in pricing or whether it's a performance. So in automotive industry, we engaged in price competition, and the biggest issue was that battery prices are high. That's what's been said. And we always only talk about battery, but... If you want to, you know, increase the battery life, then you can actually reduce the quality of motors. So, you know, if you want to reduce your cost by overall, by entire car, then, you know, if you use high-quality motor, you can realize that. And then I think the European companies and Japanese OEMs really understand that, you know, that they need to really increase quality in order to reduce the overall cost. But I think the Chinese do not understand it. That is why we decided to exit from that. But there are some companies that do understand. So that is why we will continue to have business with them. So if our quality of their motors continue to increase, then our competition will also be more competitive. So I think once that competition is right in place, then we will be able to play the right kind of battle. So why did we lose? Well, no, we didn't lose. You know, if you went to the Red Ocean and if they said, you know, 100 and we say 100 and they say 90, then we say 70. That's how we continue to reduce the prices. That is why we lost.
spk00: When it comes to the current situation, EV is now losing its momentum now. There are quite a few auto manufacturers are developing EV models, and the competition is very aggressive. you may have more, it looks to me you are developing more components for small EVs. That way I believe the prices will drop. That way it will become difficult for you to make profit. That's what I like to know the most. For example, when it comes to, in the case of mobile phone, it used to be very big. You have to carry it over your shoulder. In the past, each unit, the telephone, mobile phone, cost 500,000 to 1 million yen. And the battery became smaller and smaller for the mobile phones. And the mobile phones themselves became smaller, and cost became lower and lower. And the use of the mobile phones spread more and more. And the profitability came to the suppliers as well as sellers of the mobile phones. and European businesses and Japanese businesses became very competitive against each other, and some left the market, and some became very much winners. And that's a very healthy type of competition. But when it comes to China, BYD, for example, has been receiving so much subsidy from the Chinese government, it's not really fair. When it comes to Tesla, their profitability is declining more and more significantly. If the company, if the new company emerge, And those companies that are working regardless of the profitability are now going bust. And if the current number of the companies in the market is down from 100 or 200 to 30, I believe healthy competition will start taking place. You have to... challenge with your endurance, and not so many people will be able to survive in such an environment. You have to have a very healthy type of services, products, et cetera, to survive in the market. If you win in the market, that's the ideal type of competition. If you try to sell your products too inexpensively in order to just beat the competition, that's not really healthy as a competition in the market. And in a healthy type of competition, only the healthy profit-making company will survive. Now, the number of the companies in the market in China is down to 70. These companies are reducing their products prices, and suppliers are being affected by that. And all the profitable companies so far, and with the exception of BYD, who has been receiving a lot of subsidy from China's government, Tesla is now losing its profitability. If the number reduces when it comes to the number of these companies in the market, I believe the healthy competition will start taking place. We are not going to leave the market. That's not really an option. One thing that I may add over here is as follows. When it comes to this shifting toward the components for compact models, this is just a normal product lineup. We're trying to be – it's not really – we are not – it's not we are dependent upon those compact products. We are part of the product lineup for compact products. That's what this chart is about. We are not reducing our profitability in red dojo market. In the conclusion, we will become the number one. We can record this statement. We can be the leading competitor. The next person, the female person over there, sitting very close to the entrance. Thank you very much. This is Nagai of TV Tokyo. I'd like to ask you two questions here. First of all, Mr. Kishida, when it comes to this explanation that you gave us, there are very positive impressions that I have about you. But when it comes to global market, uncertainty is growing larger and larger. What would be your risks? What would be your areas of attention going forward? When it comes to risks, in 2024, these risks are incorporated in our fiscal 2024 numbers here. We have regional risks. We have war-related risks. There are quite a few risks. that you will be talking about, but those risks are included in this fiscal 2024 strategic plan that we have in place. Thank you. And my second question, this is to you, Mr. Nagamori. When it comes to quarterly sales, China related numbers seem to have bottomed out when it comes to traction motor business, but structural reform have already completed or taken place. What is your perspective in the Chinese market? It's a question for you, Mr. Nagamori. You don't have to, you know, I don't want you to call on me, but when it comes to China, The situation has been very fierce. Competition has been very fierce, not just in the auto market, but so many other different markets. And Japanese companies are struggling in these highly fierce competitions. Those competitions themselves, in my opinion, are creating risks in the Chinese market, in China. When it comes to the auto market, China lost in a competition for gasoline vehicles. They weren't able to become number one. Therefore, they shifted their focus on EVs. And the Chinese government is spending money for these Chinese companies to become the world's number one. That is impacting various many different markets. And that is accelerating the current recession in the Chinese economy, in my opinion. And many people are realizing the fact. And currently, they are in the stage of restoring themselves. The situation won't be as bad as last year. It's a situation where prices continue to drop. I believe that situation has been rectified already. And the Chinese economy will make a convert, in my opinion. But one issue is that foreign companies are leaving the Chinese market in growing numbers. That's one concern for the Chinese economy. There are some economic and political issues between China and the United States. We are not really involved in those issues. But if you have a declining number of investors in your country, that will mean that that will be a negative factor in the short-term basis. But when it comes to market, the market is large in China. We have no intention of leaving the Chinese market for now. We are continuing our investment in China. We have a large volume of transactions, of course, according to some reports. If you have been in a business for a long time, you have certain countries as the area of frequent investment as a global company. You have to go through foreign currency exchange issues. Sometimes dollars become very strong, sometimes weak. Such fluctuations do occur. Some people pointed out that we may possibly have been overly dependent upon China. That's not the way we think. If you think that way, you wouldn't be able to stably run your company. And, of course, our next target is India for us to enter as a market. And I believe that's a very good choice, right choice for us. The Indian market will expand or grow very significantly. We go to enter a certain country because there is a promising market there. really whatever the cost of foreign exchange rate. Depending on those elements, the company's attitude will change. We don't have any intention of leaving the Chinese market. We are going to have a face-to-face competition. But we will not be in the market where we will be subject to significant loss. We like to be in a healthy type of competition. As you can see, the water company is a place where you generate the promise. We need to make a healthy profit to grow. And some people say that the Chinese market is going to shrink more and more. That's not the type of thinking that I have. I believe China will have another phase of growth, and there will be a market for us to be able to enter. As a global company, it's a principle for us to be able to be in a business in any country. Thank you very much for your very good insight. Next question, please. You have been raising your hand, the person, the female person from the federal. Thank you very much for your explanation today. I'd like to give you some questions. I'd like to give you one of the questions that I have. If you go to slide 9, you have seen this capital expenditure, 230 billion yen. You are going to make a very aggressive investment, and can you elaborate on that? Thank you. As Espen explained, 130 billion yen for fiscal 2024. That's our forecast. We're going to utilize our existing equipment as fully as possible. When it comes to developing factories in India, traction, NPE, which is joint venture with our Stellantis, we have a water cooling module projects as well. We're going to have aggressive investment in these areas. When it comes to water cooling modules, The technology is nurtured in our HDD business. We have been able to utilize those existing technologies. It's not going to be a huge investment, but we would like to have this investment in these new areas. That's part of the increase for our capital expenditure for this fiscal year, 2024. When it comes to our capital expenditure, if you take a look at this situation, please keep in mind the following information. We are going to purchase new businesses or companies, and if those things do not go well, we are going to make investment ourselves. If the M&A is successful, organic investment, organic growth won't be necessary. Otherwise, we are going to have a double investment, which will be redundant. For example, last year we purchased Takisawa, a machine tool called Limited. We were planning to make an investment in the latest company, but we were able to purchase Takisawa, so we did not have to make any investment, but we needed to have some money for purchasing Takisawa. So please make a very good distinction between the two. In that regard, Do you have any specific plan to build something as part of your M&A? So it all depends on M&A, I believe, when it comes to project or building new buildings. In that way, we will be spending money. So it's M&A. We may not be able to purchase the company that we wanted to purchase. Otherwise, we need to be able to be entering into new business. Purchasing company will be more inexpensive. Do you have any specific areas of investment when it comes to a strategy? I cannot disclose any information that will cause a problem. As has been explained by Kishida-san, We need to understand the technologies that we have yet to have. We need to purchase people to work as engineers as well. We were able to purchase the lathing manufacturer And we have multifunctional machines available for us. It will be very difficult for us to be able to start such a business from scratch. We were able to make these machines based on the technologies of a few companies we have purchased. We are dependent upon organic growth and M&A. These are the two factors for our growth. So the ratio between the two will be 50% and 50% going forward, 50% for organic growth and another 50% for M&A. 10 trillion may seem easy for you, but we now are able to purchase companies that are worth 500 billion yen or even 1 trillion yen. We can expect synergies with the existing companies with these new companies as well. Many people may be worried about us not being able to achieve the 10 trillion yen sales target. And some of the companies we have purchased are now making sales of 200 billion yen or so.
spk01: So let us take other questions. So this individual here. Akizuki Fund Nomura Securities. I have three questions. So first of all, Mr. Kishida, you're probably the right person to answer this, but you have developed this, formulated this plan and put it inside the profit, but your sales projection is Even if you multiply Q1 times four times, and if you ask Stellantis, you should actually exceed this full year projection. And the impression is you're quite conservative here. And the question is a very straightforward one. Why is it so conservative? And also, I think the message here is that you want to improve profitability on a company-wide basis. So on the cost side and optimization, what are your plans or what is it for this year and also a midterm plan? Thank you for the question. So the sales plan. I have taken into account the current risk. I put all the risks on the table and that's reflected here. But we think that we can actually exceed the cells despite the risks. We're confident about that. However, you know, what is it that we want to accomplish on a minimum basis, we have to commit to the market. So that was our starting point. And we have decided we need to really mitigate some of the risks. And that is why we have come up with this plan. And, of course, NPE is added. It's included in here. And the traction business itself, you know, we intentionally reduced it, the sales projection here. So that's reflected here. So what we plan to do going forward is that, you know, we're a manufacturer, so the basics will remain unchanged. So materials underpinned by technology, we have to look at efficiency in preventing yield, percentage of material used. In addition to that, We need to review our global competitiveness. We have global human resources strategy committee. So we're looking at fixed costs and headcounts. Where are the professionals located? And we want to make sure that we're coordinated globally. So we want to visualize fixed costs and have common understanding. it doesn't sound new when i say it like this but we are very serious about this we want to be you know serious about improving this global right so you're looking at consolidation of the factories so for example mitsubishi machinery okk you have collaboration that you know i think that would be effective in improving the overall profitability would that be included yes that was part of the consideration and discussion. So I talked about ASIM, new ASIM Technomotor moment, and you saw that chart earlier. so how do we ourselves realize synergies from these businesses we have discussed this with management overseas at this point in time today we don't have a specific plan on where we will integrate but we want to be efficient in our operations by all over the world by region by country Even if we go to India, it's not going to be more on an individual basis, but it will be on an overall basis. What do we want to do in India? So we would want to have that kind of perspective. Thank you. The second question, you know, Mr. Nagamori, you're responsible for M&A, so I want to ask this question to you. If you look back the last 10 years, I think the driver was your mid-sized motor. Maybe from the latter half of the year 2000, you have done a large M&As, a middle-sized motor, and that was the reason why you have grown, and that was your strategy. When you look at the next 10 years, natural flow will shift to larger motors, from small to medium to large size motors, that seems very natural. But if you look at it from a bigger picture, what is your 10-year plan, additional business that you want to add on through M&A? So we had maybe 73 companies or so that we had acquired over the years. And I know that there were some companies in there where you wondered why we purchased that company. You know, not much synergy, not much add-ons. But if you look back on this, you can see all the synergies that were generated from all of these companies that were even questioned. So, in principle, Nidec, you know, we're number one motor company. Putting aside if the market is saturated, but, you know, as long as it's not saturated and the market is growing, there's no point in us going into a different business but motor. So, but, you know, motors comes in different sizes from small to large and motors are used in different applications. And EV motors are electrified more and more in the world. So there are many motors that are really selling like the press machines. We have overwhelming share here and we're selling all of these around the globe and we're still capturing a very large market share. So these are all interrelated. So what is it that we're missing in the area where the market is growing? you know, maybe is it cheaper to do it organically or is it cheaper to do by M&A? So that would be our, you know, decision point. And that's, so then which company do we want to purchase? So that's how we would determine our M&A strategy. So, you know, we have this plan about, you know, where, which area we want to go and where are the needs, what's missing. So we have that picture. Now in the past, Hustle takeover was not easy, but we wanted to overcome that. So we have done a perfect acquisition. And I think this would be a textbook, a hostile takeover in Japan. So we have been very successful. So I know that from that, we can buy any company we wish to buy. In that sense, our scope would expand as well. So I think we can buy almost any company. So based on that, we will look at which one to company want to go, you know, in order. We have to look at the sequence. So maybe this is the nose, this is the ear, this is the, you know, we would look at it. So, you know, half of our 2030 sales will be by M&A. So it will be consistently. We have reinforced, you know, personnel in M&A, and we may do very large M&A. But if it's a competitive bid, we don't have to be, we are not willing to buy at a high price. You know, if there's 10, then we will only look at one. So we'll be cautious as well. Unfortunately, we have made no mistake. So we don't want to go because we really desire. But we think if it's a good supplement for our business, and if we think we can aim for 15% with this company, then we'll buy it. We will not buy a company that is loss-making. Up until now, we have bought companies that were loss-making, and we restructured it and rebuilt it. But it takes time. So we will buy something that is... already profitable so that it will contribute to our business immediately. People say that it's easy to rebuild a small company, but if actually larger companies, because they have personnel, especially in an overseas business, Japanese people can't just go in and take over. I think you have to look at, utilize the local people. If the Japanese went, I know that they will fail. So as a global company, I guess recently, If we say we want to buy your company, And they say, you know, oh, Japanese company, they always send Japanese people and we don't know what they're saying. But I say that, you know, the other companies we buy, you know, we're global. You know, we are Americans, we have Italians. And they say that, you know, we see your company and you don't send any Japanese people. So that's why they're willing to be bought. So that is why if it's a very large company, you know, large target, they're willing to accept it. But the Japanese companies are very, you know, they interfere. So that's why they don't want to be bought by Japanese company. But the reason why we have been successful, Amanda, is because we have been known to be a company that doesn't send Japanese people. So that's why they're willing to talk with us, sit on the table with us. And we've done this over the decade. And, you know, they see that, you know, the companies we have bought, like ACMMO, and they have improved. You know, they were our competitors before. So they were generating 5%. Now it's 10%. So we're able to buy good companies. It's not easy, but that's the case. Thank you. And the third question, very briefly, in terms of thermal module, In order to improve efficiency, I think the kilowatt units will increase. But do you think the unit price will also increase with an increase in kilowatt? So, you know, maybe, you know, is it a higher price between 100 kilowatt and 250 kilowatt? Yes, I think with increasing kilowatt, I think the prices will also increase. Unit price will increase. You should look at the inside of the machine. Have you ever seen the inside of the machine? No, you should. How can you write a report without looking at the content of our machine? If you can see what kind of components that we're using, you will be amazed with the precision of our components. And that's the process and the hardest drive. You all think that it's just a box, but if you look at the inside, you know that it's not easy to produce something like that. We have many patents we've already filed And it's high margin as well. Thank you very much. I have a lot of expectations. So thank you. So our time is up. So we'll take one last one question. Okay. Then a gentleman over there.
spk00: Thank you very much. This is Night of City Group Company. I'd like to talk to you, ask you about this fiscal year's report. If you go down to slide 20, the sales forecast for Moen, and from last to this fiscal year, the pace seems to be slowing down. And when it comes to automotive, the organic portion seems to be decreasing. And you are saying that these numbers are consecutive? I believe this conservativeness is incorporated, reflected here as well. When it comes to Moen, for next year and onward, the growth rate seems to be increasing after that. Can you elaborate on that? When it comes to Moen and ASM businesses, in this first half of this fiscal year, we have some consolidation of businesses taking place. Beyond that, they are planning to make profit. we have some collaboration, integration of our businesses. And after the process is over, they are planning to make progress. That's part of our plan already. One more thing that I'd like to say is that the charging business When it comes to these huge equipment, the port facilities, equipment for the ports, marine ports, and our service contracts are as long as 20 to 30 years. and then we have this uh... contract at the numbers and what the figures amount of money charged on a monthly basis that type of businesses is crying in and numbers uh... fifty or so it is sometimes contract appeal to use contract periods are 20 or even 30 years. They purchase our system that are like several billion yen, and the margin will be 40 to 50 percent. And we can expect the money to be paid from these customers on a monthly basis. That's one of the areas of focus over the past few years. And when it comes to these large equipment business, we're going to intensify our efforts in this money-charging business. One rapid increase is based on this charging business, which is now expanding. We have not been thought about much about this type of business up until now. We have purchased two service providers. in succession, and it's not so easy to operate these companies. Both businesses have a long history. We need to have a global network of our businesses. When it comes to Moen and others, they will be able to enjoy an operating profit ratio of 30%. That is my perspective about these businesses. When it comes to infrastructure-related businesses, their volume is on increase as well. Sometimes it takes three years before we can start shipping after receiving orders. And after that, we can expect money to be paid to us for maintenance services on a monthly basis. It will be a long-term business. They can constitute a very good base for sales and profit. For us to become a 3 trillion yen or 5 trillion yen company in the future, we need to be able to face and overcome recessions by utilizing the profit from these businesses and others. These companies are leaving one after another. Hardware companies, 50 years from now, for example, infrastructure is now in a phase of replacement in New York, London, and elsewhere. Underwater sewage facilities are now in the phase of replacement. Motors are generating quite a few needs for replacement. That's the type of business we need to shift our focus to as the major source of our income. Moin, for example, 13% plus 30%. And I believe within this fiscal year, Moin will be able to achieve 15% in operating profit ratio. And that's how promising that business is. When it comes to traction motor, we have suffered damage. But still, we have a base of our business alive. And thanks to this base, we can make another try. Thank you very much. When it comes to automotive business, can you have your explanation on that? When it comes to organic growth of automotive business, you're expecting sales to decline. Do you have any concerns or issues about the business? We are increasing. This is the minimum target we can confidently say we will be able to achieve. This is the number we can achieve with confidence. We must not be suffering from any underachievement, of course. I'm not involved in this process anymore, but I'm in charge of M&A. I'm in charge of purchasing new, very good companies. And Mr. Kishida is in charge of those operations. He must not overachieve any figure anymore. I believe these statements are very self-explanatory. That may be taken as a conservative statement. But that is all for NIDAC Corporation's explanation on fiscal financial performance for fiscal 2023. Thank you very much for your time.
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