I would like to explain the consolidated financial results for the third quarter of the fiscal year ending March 2024. Consolidated net sales for the third quarter of the fiscal year ending March 2024 was up 2.6% year-on-year and up 0.4% quarter-on-quarter to total JPY 381,207,000,000 million. Operating income was down 5.8% year-on-year and up 13.7% quarter-on-quarter to total JPY 24,027 million. Profit for the period, attributable to the owners of parent, up 20.2% year-on-year and down 7.7% quarter-on-quarter to total JPY 14,754 million. Net sales hit a quarterly record high.
We estimate that the FX translations have a quarter-on-quarter impact of +JPY 12.3 billion and year-on-year impact of JPY 13.1 billion in net sales, and quarter-on-quarter impact of +JPY 2.6 billion, and year-on-year impact of JPY 0.4 billion in operating income. We made slight retrospective changes to last fiscal year's, and Q1 and Q2 of this fiscal year financial statements are due to the PPA for Honda Tsushin Kogyo and Minebea Connect. Please note that the figures on the following pages are revised figures. Next slide, please. This is for quarterly trend in net sales, operating income, and operating margin. The operating margin for the third quarter was 6.3%, which is down 0.6 percentage point year-on-year and up 0.7 percentage points quarter-on-quarter. Next slide, please.
Here shows the difference between the forecast as of November and actual results for net sales and operating income by business segment for the third quarter. Net sales of PT exceeded the expectations due to solid growth in automobile and aircraft applications, although sales to data centers remained sluggish. MLS sales exceeded expectations, mainly in motors for automotive applications and the electronic devices. SE sales was below expectations, mainly in optical devices. AS sales exceeded expectations due to a recovery in automotive production. Operating income for PT was lower than expected due to a deteriorating utilization. MLS was broadly in line with expectations, mainly due to strong sales of motors for automotive applications and electronic devices. SE was lower than expected, mainly in optical devices. AS exceeded the expectations due to factors such as price corrections and productivity improvement. Next slide, please.
Let's look at the quarterly result by segment, starting with the Precision Technologies business segment. On the left is a graph indicating quarterly net sales trends, and on the right is a graph with a bar chart, quarterly operating income trends, along with a line chart for operating margins. Third quarter net sales increased 4.9% quarter-on-quarter to total JPY 53.9 billion. Sales of ball bearings increased at 2.9% quarter-on-quarter to total JPY 38.2 billion. The monthly external shipment volume was up by 9.2% quarter-on-quarter for a monthly average of 219 million units.
This was mainly due to an increase in automotive applications, thanks to the market recovery and content growth, as well as slight signs of a bottoming out in data center applications. Sales of rod end and fasteners are totaling JPY 11.5 billion, were up by 13.3% over the previous quarter. Sales of pivot assemblies were up 1.9% quarter-on-quarter to total JPY 4.3 billion. Operating income for the quarter totaled JPY 19.8 billion, and the operating margin was 18.2%. On a quarter-on-quarter comparison, operating income increased 8.3%, while the operating margin improved to 0.6 percentage point. Turning to product-by-product results, operating income for rod end and fasteners and the pivot assemblies increased quarter-on-quarter. Next slide, please.
Now let's take a look at the Motor, Lighting, and Sensing segment. Net sales decreased 0.8% quarter-on-quarter to total JPY 91.9 billion. Looking at the results by product, the sales of motors increased 0.6% quarter-on-quarter to reach JPY 69.5 billion. This is mainly due to solid sales, particularly for motors for automotive applications. Sales of electronic devices were down 3.2% from the previous quarter to total JPY 12.7 billion. Sales of sensing device totaling JPY 8.9 billion were down 6.6% from the previous quarter. Operating income came to JPY 2.8 billion, and the operating margin was 3.1%.
On a quarter-on-quarter basis, operating income decreased by 22.2%, and operating margin was down by 0.8 percentage points. Next slide, please.
... Let's look at the performance for the Semiconductor and Electronics segment. Net sales decreased by 6.8% quarter-on-quarter to total JPY 146.5 billion. This was mainly due to higher sales from optical devices amid ramp-up production of new products, while sales of mechanical components decreased. Operating income totaled JPY 12.8 billion, with an operating margin of 8.7%. Operating income increased 1.2%, and the operating margin increased 0.7 percentage points quarter-on-quarter. This increase was mainly due to the jump in sales for optical devices. Finally, let's look at the next slide. Let's look at the Access Solutions segment. Net sales increased 13.3% quarter-on-quarter to total JPY 87.9 billion. This was mainly due to a recovery in production of automotive manufacturers.
Our operating profit totaled JPY 5.7 billion, and operating margin was 6.5%. Operating income increased 4.9 times, and operating margin increased five percentage points quarter-on-quarter, mainly thanks to productivity improvement. Next slide, please. The bar graph here shows trends in profit attributable to owners of the parent, while the line graph chart changes in the profit for the period per share. The profit for the period was JPY 14.8 billion, earnings per share was 36.5 yen. Next slide, please. Next, this is the quarterly inventory trend. At the end of the third quarter, inventory totaled JPY 300.5 billion, which is JPY 2.3 billion less than it was three months ago. Next slide, please.
This graph contains a bar chart showing trends in net interest-bearing debt, which is a total interest-bearing debt minus cash and cash equivalents, and a line chart indicating free cash flows. At the end of the third quarter, net interest-bearing debt, totaling JPY 237.6 billion, was up JPY 35.9 billion from the end of the previous fiscal year. Regarding the net interest-bearing debt forecast at the end of the year ending March 2024, we expect our cash position to improve due to our high cash-generating capacity. Next slide, please. The forecast for the full year ending in third, March 2024 has been revised downward, JPY 77 billion to JPY 70 billion in operating income after a close examination of market assumptions and the status of the order. Overall net sales is unchanged, with slight revisions between the business segments.
Operating income for AS is kept to the same level as initial plan, and the downward revision has been made for the other business segments. The exchange rate is assumed to be 145 JPY to the USD. Next slide, please. This slide shows the forecast by business segment. Next slide, please. This chart shows the difference between the revised forecast and the forecast as of November. This is all for my presentation.
Chairman Kainuma, over to you.
I will explain about page 15 onwards. Page 15 is as stated here, but I would like to apologize to you at the outset. So, the Q3 result announcement, so this number, JPY 7.8 billion, is the bottom. But we had to make a downward revision, and I am very regrettable. I am serving for 15 years, and we made an announcement in November, and revising it in February had never happened before. And that is because the customers' related information that we obtained in the past and the information we received in the new year were different. But of course, we should have been able to assume such changes, but this time it fell short.
So bearings are recovering, but now the recovery possibility is not as strong as before. I mean, I do think that this is the real bottom of the business, meaning that we can expect a gradual recovery next fiscal year onwards. I think there is a higher probability of such a recovery. In March, we gather various data and receive reports from sales side and formulate budget spending four days. And after such a process in March, we will be announcing in May. Next page, please. What I want to emphasize here is the competitive landscape remains the same. And motors, by raising prices, we are now collecting business costs, and therefore, when the volume comes back, it we can surely make a recovery.
Bearings, if it improves just a little bit more, then the next year onwards, all the increment, that will be profit. So, centering around the data centers, we have no other choices but to wait for the recovery. We must do what we need to do now, and wait for the right timing. Bearings, the improvement, the productivity improvement, people have been working hard, and 10% improvement is now possible. Page 17, aircraft is progressing smoothly, and it has recovered to the pre-COVID level. The one aircraft, one type of aircraft has recovered to the pre-COVID level, and WI, the double corridor aircraft, the big aircraft, the people are saying that they will recover in the summer of next year.
And the RO-RA, we have decided to acquire RO-RA link rod. At the edge of this, there is a rod end. So vertical integration, this rod. The rod end, that will be attached and supplied to our customers. Thus far, we have considered three companies, but unfortunately, for all three companies, we were not able to agree on pricing, and therefore, we did not acquire. But this is the last chance for us, and we have been able to capture this opportunity, the aircraft parts and components that are manufactured in various countries, and we are preparing. And we will be able to further broaden aircraft business with this new product. Page 18 shows the more information about the RO-RA.
Page 19, Hitachi Power Device, the integration, when that is finished, the power semiconductors will be number two. I think the analog power has hit the bottom. In the second half of next year, probably, we will be able to see full-fledged recovery. But once again, we will confirm that, and in May, we will report to you once again. Fortunately, the preparation for integration is going smooth, smoothly. And ABLIC, by integration, this lineup is expanding. There are no overlapping products, and this medical, which is a niche market, we can increase the presence of our analog products. As I explained to you last time, in May, when we announced results in May. I think the integration will be more solid, and I will be able to share with you more stories then.
Page 20, please. Page 20, as I have said repeatedly, so 3, the third quarter, JPY 5 billion I have been talking about, and the actual was JPY 5.7 billion. So this is in line with our expectation. And now, the production has been sluggish due to various issues such as supply chain disruptions and OEMs. Productions are slowing down, and I wouldn't say we are not impacted, but JPY 10 billion.
... we should be able to achieve according to the reports I had. Next year, in April onwards, OEMs production will be normalized. So, the JPY 20 billion will be in our sight, and JPY 5.7 billion has been achieved in Q3. This, I believe, have wiped out most of your worries. Page 21. Some of you may be concerned that automation is not progressing. But finally, we have been able to work on this. In Shiodome, there is a robotics floor, newly created, and we have conducted the various trials in order to see how production lines should be combined. Until March of this year, without using this, we will reduce the processes equivalent to approximately 6,000 workers.
We will be automating more processes, and the processes equivalent to 13,000 workers will be automated by March 2026. The wages are increasing, and hiring will be even more difficult in any country. These things that we have contemplated for a long time, it can be realized now. Going to page 22. This will be ESG topics. In Cambodia, the 50-megawatt large-scale solar power generation system business is going to be started. In the company plant in Cambodia. 1.5 times of electricity that's what is used here. To be precise, one plus 1.5 times, so it's 2.5 times of electricity can be covered through this system in terms of electricity supply.
So we have been able to get the approval from the government, and we have partners. 2025 will be the target year. In the place called Pursat Province, the solar power generation plant is going to be built this June at the annual general shareholders meeting. We will change the articles of incorporation of our subsidiary in Cambodia. So this will be a ultimate vertical integration can be conducted in Cambodia with this plant. Cambodia, Philippines, shown here. And another area will be Thailand, and with the government, we are conducting various negotiations. So I think by next fiscal year, I think we'll be able to make some kind of announcement about Thailand. So I think basically, ESG matters cannot be avoided. It's because we are growing at this speed, how much should we put in efforts?
In terms of the plants that we get through acquisition, they are not, you know, solar power generation. It's very difficult to get to a hundred percent, but we will not give up, and do what we can. With the cooperation with the overseas government, yeah, we hope that we'll be able to focus on this sustainable growth. So in FY 2023, in terms of the. Page 23, 32, excuse me. So in terms of the EPS growth, so the EPS CAGR is 15.8%. Well, since 2009, on April 1, I became the president. If it's one, as index, it's about 7.8 times. Going forward, we will continue to focus on EPS and continue to grow. Page 24.
So we have been giving you some concerns, but in terms of the dividends, it should be stable. So it's JPY 20 for the interim. At the year-end, JPY 20. JPY 20, so it'll be JPY 40 dividends for the full year will continue to pay out. In terms of shareholder return, we have dividends. And we, in terms of share buybacks, in this past 15 years, we have conducted about 51 million shares, and we have acquired JPY 76.6 billion worth. So there was a 20 million with the share exchange at the time of Mitsumi Electric, and conversion of Euro-yen convertible bonds inherited from Mitsumi Electric.... because the share price has gone up, so we have to convert because of that.
So, we have been using 9.66 million, so about 29 million shares. Shares is the number of shares that we have now, but we will continue to do share buybacks. So, I think people were worrying what will be happen next fiscal year. And if you look at appendix, that would be page 27, with the last fiscal years, as we announce our results. So we give you the image at the time of the market recovery, how this will look like. So at 77 will be the starting point, but wherever we look at it, if you look at a potential in terms of the operating income, the capability of our operating income, I think this is how it would look like.
The issue is, so whether it's going to recover from April, June, or after summer, depending on the timing, it would differ. But again, I would like to explain about this in the May announcement. So that's all from me. Thank you.
Next, we'd like to go into Q&A. So, there is the first question from Goldman Sachs Securities, Nakayama-san, please.
Thank you very much for your explanation. I have three questions. The first question would be, Mr. Kainuma, you said that... So changing in October, and then changing in January, you said that this was different, unprecedented change that you have seen in the market. So can I want to confirm what happened. What was the change? Of course, I think there was a drastic change in North American market, but what would be the magnitude?
Give me the top three factors in terms of what impacted your revision. Maybe there was some upside as well. Depending on the magnitude, can you explain more in detail about what impacted performance?
Let's start with your first question. But basically, the smartphones and I think the ball bearings, and I think with these this I can explain everything. You said that you I should give you three, but I think basically with these two I can basically explain why our business was tough. Oh, I see. What about the upside, hard disks, data centers? Yes, hard disks, it has hit the bottom, that's for sure, and so gradually, we have start to see an improvement.
The profit contribution, of course, they have been contributing more to our profit, but compared to the peak profit level, it's still not that level. So of course, we have gone through, passed through the worst, that's for sure. And the people who have been sent to the other divisions, so we have, called them back to the hard disk business. So going forward, what, how will this recovery look like? We were not still sure how this recovery is going to look like, but it's still gradually recovering, and the profit is recovering accordingly. I think that's what we're seeing right now. I see.
My second question is that in terms of optical device, next fiscal year's, how are you going to manage that business next fiscal year?
It seems that in terms, not on the volume outlook and the pricing, seems to be. We, we do hear that maybe the pricing, it may receive pressure in terms of pricing. But on the other hand, including how you can actually get the volume, I think basically, they will offset each other and be flat. But for next fiscal year, is there a risk that the profits going down can be avoided? Is there a soft landing in sight?
So, in terms of how we're going to put assumptions on the volume, that's what we're looking at. And it's very difficult to actually foresee what in the future, depending on the current market situation, I think basically we can't foresee much of the growth right now in terms of the environment.
So the customer's pricing pressure, well, the pricing pressure coming from the customers is still strong, and that situation has been unchanged. And what, in terms of us being engaged in the business, means that, we will have to improve our productivity, improve our yield, and by doing so, satisfy the requirements coming from the customers. So that is what we have to continue. For this fiscal year and next fiscal year, if you compare these two years. Well, this fiscal compared to last fiscal year is still struggling. If you look in the first quarter, the competitors took our share, and, we had a loss here. But, so that has led to a decline in profit.
So, if you consider this as a floor, next fiscal year, we will be able to be, we want to capture the same level of profit or more than, this year, and we think, we're confident about that.
My last question is about in terms of the macro cycle, well, semiconductors, bearings, those will be susceptible to the economic cycle, and how is this recovery? So, Mr. Kainuma said that, you want to study until March. So currently, compared to the January term and the current situation, I think from April to June, if you're able to, recover from April to June, you'll be able to reach, what you have said in, shown in the appendix. I think you basically are behind by three months, or is it completely unforeseeable?
So, I don't think whatever I say will be convincing, but that's. But anyway, so I really do not think that, from April, we're going to see a sudden recovery in the market. But May, what's going to happen, what's going to be happen, June, what's going to happen, we haven't analyzed the situation yet, so it's very difficult for us to give you a picture.
Understood. Thank you.
Let us move on to the next question. Mizuho Securities, Mr. Goto, please go ahead. Can you hear me?
Yes, we can. Thank you. So, some of my questions are maybe overlapping with the previous one. So, smartphone and ball bearings are the two, the only two, reasons. And can you elaborate on, more, on each of them? So, December and January forecast, changed. Smartphone, I think I can understand, but, what, what's been happening for bearings? Are there any changes that, force you to, put down the expectations? So can you, help me understand, more about the recent changes? Smartphone, so it's sort of a time lag of from, what, we heard from last year, but there was no time lag.
We thought there would be a time lag, but consumption issues and the customers' inventory issues. I would assume there are many issues. But we calculated and estimated that based upon the assumption that there would be a time lag, but it didn't. That is a problem. In other words, the sales of customers have been sluggish, and it has impacted your business. Am I right? I cannot explain the causal effect, because I cannot disclose customers' information. However, the share and so forth, the why they no longer need the products, I suppose they could, they could not make so many. What about bearings? The bearings. By application, first of all, automotive has been robust, in line with the expectations, and there are no major changes.
However, the data center recovery in January to March, we thought recovery would be stronger. However, actually, it's been flattish or slightly down. So our expectations and assumptions were wrong. And also, HDDs for data centers has hit the bottom and started to recover. And we are assuming the same type of recovery, but Q3 to Q4, the sales are not coming back. So our assumption turned out wrong. Accordingly, the things that we planned to produce with regards to March inventory would be maintained, so the production plan has been revised down.
... which affected the profit. So negative impact we'll be seeing in January to March vis-a-vis the December numbers. But there is one good news. As you may be aware, the farm motors customers are mostly Taiwanese, and they had a huge volume of inventory, but they have consumed all those inventories, and we are seeing the various new moves. And if the constructions are started, I think the numbers will increase. But the US interest rate and global interest rate are the main factors. As long as the rate remains high, the investment appetite will not be enhanced. So now may be the transitional period, that is how I imagine. But if the actual demand becomes stronger, things will be better.
So for a few more months, we would like to wait and report to you again.
In your explanation, I mean, I came up with additional question. The bearings for our data centers in January to March were sluggish. Understanding that in the second half of last year, there was a recovery due to the cycle, but it was eaten up, and now the actual demand is not growing. And that is the—Is that the reason why the business is being sluggish?
Yes, that is correct.
Understood. I have another question. MLS, profit has been revised down. So the home appliances and automotive, so October, compared with, October to December, it's become even lower. Am I right in understanding it that way?
That is correct. Particularly China, the various customers in China are seeing weaker than expected recovery. So we put together the numbers with a conservative view, particularly for motors.
HCD and automotive are all right, but others remain weak?
Yes, and, some others are not recovering at all. So there are the mixed situations.
Understood. Thank you.
Let's go to the next question from UBS Securities, Hirata-san, please. UBS Securities, Hirata-san, please.
Excuse me, this is Hirata from UBS Securities. Can you hear me?
Yes.
Thank you. I have two questions. The first question is about Access Solutions. Profitability has improved this quarter. The sales has increased, I think that is one of the reasons. But once again, can you explain what is happening at the Access Solutions segment? And this JPY 6 billion, a little under JPY 6 billion quarterly income, is this the run rate that we should assume for next fiscal year? Can you explain about that?
In terms of the Access Solutions, there have been two reasons why this is better. Well, one is the productivity improvement. Various challenges were upon the past couple of years, so we have severely improved these issues.
On top of that, volume has recovered, because by the manufacturing business, specifically what we are producing, you have to produce volume, or else it won't generate profit. In terms of the what we have to supply to the customers, because we have the lines there, so that we can satisfy the demands coming from the customers, or else the customers won't give in, give it-- won't give us orders. But due to COVID, this order has stopped. So, basically, if there is a line that if you want to go over that, you'll be able to get profit. Once you exceed that level of volume, in terms of the productivity improvement or, eliminating waste, this will be effective. And then, as a result, this will lead to a high profit.
This is a very simple story here, and I think, basically, I think you should understand it that way. On the other hand, JPY 6 billion by quarter, this will be the runway going forward. We have Forex and various other factors that you have to consider, and this will have an impact, even if you consider that we have been able to improve the volume, maybe suddenly, some issues will come out, and then, then maybe the customers will stop producing or there, maybe there'll be some, one of the companies in the supply chain will be impacted by an earthquake, and they won't be able to supply. So, these things will happen all the time. So, if nothing happens, I think basically the number you're seeing for this quarter will be kind of, what we can generate.
But maybe there'll be some fluctuations, if you consider the environment. Understood. So, in terms of, nothing, no one-off factor, for instance, revision of the prices, for instance? No, no. So, from now to 2025, there'll be we have been able to get a lot of types of orders. Some from another company, some orders from, that were given to another company, completely given to us. So, so the electromagnetics and mechanics solution door handles from 2025, is going to be used by various types of automobiles. I think that's what's happening right now.
Understood. Thank you very much. So, my second question is about the semiconductor solutions about next fiscal year. You have introduced the reasons why this profit is going to improve. So for the mechanical components, the next fiscal year's outlook, what is your outlook?
Well, some, maybe, it seems that some new products will start to contribute. So how should we consider this?
So, the customers' new models, whether they have new models or not, we can't comment about that. So, as you have mentioned, next fiscal year, if there is a new model, if a new model comes up in next fiscal year, for us, this will be a new business opportunity for us. So currently, we have been reducing our production. So, within this year's performance, the fourth quarter, well, in terms of production, we are controlling the production. Based on what is happening, the next fiscal year, if new models start to come out, this means that, next fiscal year will see a positive trend compared to this fiscal year.
Understood. Thank you very much.
The next question is from Mr. Mochizuki of Nomura Securities.
Mochizuki speaking. Can you share with me the numbers, the bearing October to December actuals and the outlook for January to March, and mechanical consignment sales, the Q3 and Q4, if you have the numbers with you?
First, the mechanical. The Q3, 121, Q4, 95.
Then Q3 external sales from October, JPY 220, JPY 205, and JPY 212. JPY 214, JPY 203, JPY 234. Internal sales, JPY 36, JPY 36, and JPY 39. January to March, JPY 37, JPY 36, JPY 36. And October, JPY 246, JPY 255, JPY 248. JPY 253, JPY 253, and JPY 277. JPY 277, very high, isn't it?
Q4 average is 277.
About 30 million production reduction took place in the past. External sales for November, can you repeat? November external.
225.
Thank you. If I may ask you one more question. Optical devices, Q3, Q on Q, probably Q4 will be lower due to seasonality, but how much a decline are you anticipating, if I may ask you?
Q3, Q4 sales-
... it's like 15% growth? 15. So at the end of Q2, as Kainuma said, regarding Q3 was far below than expectation. And Q4, the 30% reduction or 40% reduction. I see. So Q3 downswing and Q4 a down swing, probably JPY 3 billion or JPY 4 billion.
After core devices are likely to have tough time in Q4, which means that it's not gonna be easy, but are there any segments that can offset such decline? As of December, the numbers Q3 downward change, but it's going to be offset in Q4. In other words, in the second half, we thought that the number would be maintained, but compared with that assumption, so downside in Q4- downside in Q3, there will be no upside in Q4?
So, there will be no downside in Q4. I see. Understood.
With this, we would like to close the Q&A session. With this, we would like to end today's meeting. Thank you very much for your participation.