Nidec Corp Adr

Now we would like to start NEDEC Corporation's preliminary report on performance values for the first quarter of fiscal year 2025. First we would like to introduce our service. We have Mr. Mitsuya Kishida, the representative director, president, and CEO of NEDEC Corporation. And we have Mr. Akinobu Samura, who is the chief financial officer of the company. Then I am Teraki Urago of IR department. I'm today's moderator here. I would like to have Mr. Samura first give a presentation on the preliminary report, followed by Mr. Kishida's presentation on company's corporate strategy. And we would like to have a question and answer session after that. If you have any questions, please wait until then. We would like to finish this conference at 6 p.m. today. Thank you very much. And this is Mr. Samura speaking. Let's give an update on our financial result. First of all, I would like to offer my apologies for the trouble caused by the additional investigation into the FIERSC country of origin matter. Since we cannot give you the result of our performance the way we normally do, we decided to have this voluntarily disclosure as the preliminary report on finance values, which is something that we would like to explain with the notes and remarks after that in this presentation material. I would truly appreciate your understanding on this. And when it comes to our consolidated performance compared with the same time last fiscal year, we have had a relatively large fluctuation in a currency exchange evaluation. And against the US dollar, the yen has been appreciated by .2% in the middle of the quarter and .1% towards the end of the fiscal term. And our net sales was 637.9 billion yen, which was down by 1.6%. And our operating profit was 61.5 billion yen, or 9.6%, with a slight increase by .3% from the same time last year. But when it comes to the profit before income tax was 59 billion yen, which was down by 24.5%. When it comes to the quarterly profit attributable to the owner or was 45.5 billion, which was down by 18.5%. And financial forecast for this fiscal year remains unchanged, as you can see on the far right of this table over here. Next information by product segment, the small-president motor, they were able to have this increased profit compared with the prior fiscal term, fiscal quarter. This is thanks to the expanding demand for the HDD motor for near-line and other applications. It is also thanks to the expanding demand for water cooling modules for AI servers. And they were able to convert into the business portfolio that is more profitable than before. And the next one is about the automotive, which is top right corner. They were able to secure increased profit compared with the past prior quarter as well. They were able to have this traction motor business in China, where they were able to continue to have profit. When it comes to NPE, our joint venture in Europe, they were able to progress with the mass production, but their sales were in struggle, and the deficit remains to be in existence. When it comes to automatic business, the OEM manufacturers in Europe were in year struggle, and some improvement actions were taken under the new management. Because of that, there was a temporary cost increase by 2 billion yen, but still, they were able to keep this increased profit compared with the prior fiscal quarter. Next segment is about appliance commercial and industrial segment. This is the segment most prone to the class exchange fluctuation. And compared with the prior quarter, there was a decrease by 2 billion yen. The business was still going very well for best business as well as power generator business. But still, the usually highly profitable US motor had the drop due to seasonal factors, and there are some ongoing projects such as the consolidation of business spaces in Europe, and a structural reform cost of 1 billion yen was recorded as well. And all in all, the situation was rather in decline. And the next one is about, the final one is about this automation and machinery, they had decreased in sales and operating profit due to their decreased sales. And there were some issues with the profitability of the sales of the businesses. The sale of the businesses as well as the issues regarding the amount related to cost and profit. These are the temporary issues that are reflective of this final segment's latest performance. And this chart shows the net fluctuation that excludes class exchange fluctuation as well as structural reform related to cost. And you can see the increase in the cost of the business. When it comes to the class exchange, the impact on sales was 35.8 billion yen, and the impact on the operating profit is 2.6 billion yen. We had 2 billion yen on the impact of the structural reform, and another 1 billion yen impact on the appliance commercial industrial. So compared with the last fiscal year, there was an increase of 1.5 billion yen when it comes to structural reform related to cost. And last fiscal year, we made NPE wholly on the subsidiary of NIDEC Corporation. Therefore, we had a temporary increase of profit by 10.1 billion yen. But all in all, without these temporary elements, all the product groups were able to have this increased profit. And all the information related to product groups were exactly the same as the information that I just given you. Next, free cash flow. The level remained low at the plus 9.8 billion yen for this past first quarter. In order for us to sustainably generate the free cash flow at a level higher than We need to be able to properly control the operating capital, including inventory. We will continue to strongly take improvement actions by staying very close to the front line of our businesses. At the same time, we will make sure to spread the use of ROIC as a tool so that we can convert our business portfolio into a more profitable one. That is all from me. Thank you very much. From here on, here, I would like to explain to you some major topics, followed by a progress report on our midterm business plan. This is Mr. Mitsuya Kishida speaking. Over the past three months, I myself have been able to and have had to solve immediate issues. We need to become a better and a better global company. This is a very important and necessary steps for us to take. And I was determined to address various issues, including structural reform, business reform, integration, and the reform of the global headquarter. All of these things are part of the issues, actions that we need to take, in my opinion. And I like to work with all the global management executives. That's my personal commitment, as well as the company's commitment. And that's one thing that I want to share with you today. First of all, please take a look at that chart over here on the slide. This is the original form of our structural reform. This is about a hard disk drive business. Quarter by quarter, we have been doing a various business, near-line server, water cooling business, etc. The ratio of these businesses are growing larger and larger. And near-line business is approximately more than 80%, and quantity-wise, it's over 60% of the entire quantity of this business. These are the major driving forces of this business, small precision motors. And please look at this data center related information. When I, as I look back over the past year, we have had problem and issues with any of the chipsets. We have gone through a lot of discussions since then.

And we

have been able to understand our position in this market. That's what we have done over the past year. When it comes to the entire market, we have a platformer, including software, hyper software, cloud server-related vendors. And we have various leaders in this industry. And there are long-term, long-time leaders of this industry as well. We have power generation, power supply business, infrastructure business, emergency switch business, and many other different business exist in this industry. That's what we have understood as a group. That's what we have learned over the past year. And please take a look at the photo here. This is in Chiba Prefecture. And this is the reality, NRT-12 data center located in Chiba Prefecture. The test operation will start in full scale from next month. That's what I made a statement of press release back in June. This is NIDEX original specification in-road type. Please take a look at the photos on the right. And this requires NIDEX own specifications, unique specifications. We like to appeal these products to a wide range of potential customers and business partners, and we have had a lot of discussions on specifications. And from now onward, we are going to expand this business, in my feeling. When it comes to this domestic data center, this is not just about that business only. We will target the United States, China, Japan. We are receiving inquiring, quick coupling, CDUs, in-rack in-road type related to inquiries are what we are receiving at this moment. And towards the end of second half of this fiscal year, we will start this business successfully. In order to do that, we need to redevelop our own basic infrastructure. When it comes to Q1 of this fiscal year, air conditioners compressor business is something we like to talk to you about. We have been doing that business for a long time. We have had this new member of the company as part of our business group. A scroll compressor manufacturer is the type of business that they do. We have made a press release about this. When it comes to this compressor, we are going to unify all the products under the Nitec brand, and we are going to target the heat pump for commercial use, data center, chillers, all of these new and large products will be what we are targeting going forward. From here on, I would like to explain to you conversion 2027, which is something we have already made announcement on before. This is the overall picture of the conversion 2027. Towards that fiscal year, we would like to improve our cost structure. We are going to be focused on five different business pillars. Thirdly, we will convert to become a truly global system as a company. As I've said, this is the third one, it's the major topic for all of us at Nitec. There are quite a few things we need to do. And comprehensively, we will take action so that we can become a true global company. That's what we are doing at this moment. And among all these activities, we need to reduce the variable cost by 100 billion yen. As you can see here, 2.6 trillion yen, 50% of that is about 90% of that is generated by this portion over here. And the remaining 50% are the business over here. We have core businesses and non-core businesses. We will review, it may take time a little bit, but we will review all of these.