Now it's time to begin the meeting. Thank you very much for joining us in the MinebeaMitsumi Analyst Session for the First Quarter of the Fiscal Year ending in March 2023. Allow me to introduce to you today's participants. From your right, Representative Director, Chairman, CEO, Yoshihisa Kainuma. Director, President, COO & CFO, Katsuhiko Yoshida, at your service. Thank you very much. First, Yoshida will take you through our financial results, and then Kainuma will give you a business update and management strategy, which will be then followed by Q&A session. We plan to finish this meeting at 7 :00 P.M. For more details of the financial statements, please access our website where you can see supplementary information and the flash reports. There is a link on the screen to the questionnaire.
We will welcome your feedback so that we can carry out IR activities in a better way. Today's meeting inclusive of a Q&A session will be video recorded for uploading on the website later on. Thank you for your understanding. Mr. Yoshida, over to you.
My name is Yoshida. Today, I would like to explain the consolidated financial results for the first quarter of the fiscal year ending in March 2023. Consolidated net sales for the first quarter of the fiscal year ending March 2023 was up by 1.1% year-on-year and down 13.3% quarter-on-quarter to total JPY 251.04 billion. Operating income down 27.4% and down 34.2% quarter-on-quarter to total JPY 14.255 billion.
Profit for the period attributable to the owners of the parent down 26.8% year-on-year and down 30.7% quarter-on-quarter to total JPY 10.734 billion. Net sales hit a first quarter record high. In addition, operating income exceeded the initial forecast despite the impacts of the lockdown. We estimate that the foreign currency translations have a year-on-year impact of +JPY 21.2 billion in net sales and +JPY 4.7 billion in operating income. Quarter-on-quarter impact was +JPY 14.2 billion in net sales and +JPY 3.4 billion in operating income. Next slide, please. This is quarterly trend in net sales, operating income, and operating margin.
The operating margin for the fourth quarter was 5.7%, down 2.2 percentage points year-on-year and down 1.8 percentage points quarter-on-quarter. If the loss of approximately JPY 8.3 billion due to special factors such as the lockdown in Shanghai were excluded, the operating margin would be 9% up 1.5 percentage points quarter-on-quarter. Next slide, please. Here shows the difference between the forecast as of May and the actual results for net sales and operating income by business segment for the first quarter. Net sales of the mechanical components were higher than projected, mainly because of steady sales of ball bearings for data centers despite the impact of the lockdown in Shanghai.
Net sales of the electronic devices and components were lower than the projection due to the impact of the lockdown in Shanghai, a lagging recovery in automotive motor sales caused by semiconductor shortage and a slowdown in smartphone backlight sales. The Mitsumi business enjoyed higher than projected sales overall, mainly for mechanical components, semiconductors, and optical devices. The U-Shin business experienced a slightly lower than expected sales due to a slow recovery in automobile production. Operating income for the mechanical components was almost on par with our forecast, but was lower than the projection for the electronic devices and components, primarily due to the impacts of the lockdown in Shanghai. The Mitsumi business enjoyed higher than expected operating income thanks to the increased sales of mechanical components and further improvements in the profitability of semiconductors.
In the U-Shin business, quarterly operating income was almost on par with our forecast, although sales to the automobile industry started showing signs of recovery in June. Next page, please. Now let's take a look at the results by segment, starting with the mechanical components business segment. On the left is a graph indicating quarterly net sales trends, and on the right is a bar graph that charts quarterly operating income trends, along with a line chart for operating margins. First quarter net sales increased 0.8% quarter-on-quarter to a total of JPY 46.4 billion. Sales of ball bearings increased 3.2% quarter-on-quarter to a total of JPY 34 billion.
The monthly external shipment volume was down 3.9% quarter-on-quarter for an average of 222 million units. Net sales remained strong as sales began to rebound mainly in the automobile market, although they were affected by the shortage of semiconductors and the lockdown in China. Sales of rod-ends and fasteners are totaling JPY 7.6 billion, were up by 0.1% over the previous quarter. Sales of pivot assemblies are decreased by 12.9% quarter-on-quarter to a total of JPY 4.7 billion. Operating income for the quarter totaled JPY 10.2 billion, and the operating margin was 22%. On a quarter-on-quarter basis, operating income decreased to 9.6%, while the operating margin dropped to 2.5 percentage points.
Next slide, please. Now let's look at the electronic devices and components segment. Net sales decreased 15.4% quarter-on-quarter to total JPY 81.4 billion. Looking at the results by product, we see that the sales of motors decreased 10.9% quarter-on-quarter to reach JPY 62.7 billion. This is mainly due to the impact of the lockdown in Shanghai. Sales of electronic devices were down 36.6% from the previous quarter to a total JPY 9.7 billion. This is due to the decline in sales of LED backlight models used by our key customers. Sales of sensing devices are totaling JPY 8.2 billion, now we're down 10% from the previous quarter.
Operating income came to JPY 0.2 billion, and the operating margin was 0.2%. On a quarter-on-quarter basis, operating income decreased to 95%, while the operating margin decreased to 3.9 percentage points. Next slide, please. Let's look at the performance for the Mitsumi business segment. Net sales decreased 19% quarter-on-quarter to total JPY 86.8 billion. This is primarily due to the seasonal drop in demand for optical devices and mechanical components. Operating income totaled JPY 9.1 billion, while the operating margin was 10.5%. Operating income decreased 10.6%, while the operating margin rose 1 percentage point quarter-on-quarter. This is due to a profit loss resulting from the aforementioned seasonal decrease in demand that brought the sales down. Next slide, please. Finally, let's look at the U-Shin business segment.
Net sales decreased 9.6% quarter-on-quarter to JPY 636 billion. This is mainly due to the lagging recovery in automobile production caused by the lockdown in Shanghai. Operating loss totals JPY 0.3 billion, and operating margin was -0.9%. Next slide, please. The bar graph here shows the trends in the profit attributable to owners of the parent, while the line graph chart shows changes in the profit for the period per share. The profit for the period was JPY 10.7 billion. Earnings per share was JPY 26.4. Please go to the next slide. Next, here we have the quarterly inventory trend. At the end of the first quarter, inventory totaled JPY 264.4 billion, which is JPY 45.1 billion more than what it was three months ago.
This is primarily due to the foreign exchange effects, as well as the fact that we strategically built up our inventory to secure enough stock to keep pace with growing sales of optical devices and other products that we currently expect. Next slide, please. This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, and a line chart indicating free cash flows. At the end of the first quarter, net interest-bearing debt totaling JPY 179.7 billion was up JPY 92.8 billion from what it was at the end of the previous fiscal year. This is mainly due to the expenditure for the purchase of the new headquarters building, as well as the increase in inventories.
Of this amount, JPY 13.2 billion of CB euro-yen-denominated convertible bonds with stock acquisition rights has been almost all converted by the due date of redemption of August 3rd. At the end of the fiscal year ending March 2023, the net interest-bearing debt forecast is expected to increase from the end of the previous fiscal year. However, excluding the expenditures for M&A announced recently, the net interest-bearing debt forecast is expected to be at the same level as the end of the previous fiscal year. Although the first quarter results exceeded our initial estimates, we made no revision to the full year forecast for the fiscal year ending March 31st, 2023, taking a cautious view of inflation and other changes in the macroeconomic environment. The exchange rate is assumed to be JPY 115 to the U.S. dollar. Next slide, please.
This slide shows the forecast by each business segment. This is all for me.
Next, Mr. Kainuma, please. The floor is yours.
I would like to update you on the current situation and the management strategy. First of all, the impact of Shanghai lockdown. JPY 12 billion operating margin in Q1, I expect it. We had JPY 2 billion upside. JPY 14 billion or more than JPY 14 billion profit that we recorded, so I feel much better now. It lasted longer than expected. Last time I spoke with you in early May, and I was expecting that the Shanghai lockdown would be finished in middle of the month. However, it continued for two months, May and June. As a result, JPY 8 billion negative impact existed on the business. Without this, JPY 22 billion would have been recorded. Two months lockdown happened. Fortunately, bearing recovered very quickly.
The bearing customers we were able to supply from other plants. The fan motor Shanghai plant, unfortunately, a Cambodian plant was not able to offset the shortage, which was the biggest difference. The bearing profit recovered very quickly. The mechanical components profits because of the aircraft issues, which I will come back to later on. I think that the negative impact was not as bad as expected. The fan motors for two-month lockdown continued, and only 20% of the employees came to work at the plant and stayed there or lived there for some time. Still, we had the JPY 2 billion upside exceeding the plan. We made recently about the three M&As, mergers and acquisitions.
The COVID that was subsiding in May, I explained to you that the M&A activities became more active and deals progressed very quickly after that. Each deal took about two years. I mean, I was not able to pay a visit to the site, and some deals just didn't work out. I would like to explain to you the three deals later on. Month of June, more than JPY 8 billion operating income was generated, so maybe recovered to the original state. July to September, every month, revenue is likely to exceed JPY 100 billion. So, JPY 102 billion operating income will be achieved.
Mita Building selling process is approaching its final stage, and it's likely that we will enjoy gain on sale of our property. After the closing of an M&A, we may have a one-off profit. We have not been able to buy back our shares, but this is the situation we are in right now. In order to explain the situation, we added this page. Next. Three spears out of eight. Three plus one, this is sub-core. Regarding our business, I would like to share with you the current situation. First of all, ball bearing is very robust. Last year, the automotive bearings 14%, and this year 19% or bigger than 19% growth rate has been reported to me recently. Why? Why?
Because automobile production is not growing that much, but the per unit number of bearings used per unit of an automobile is increasing. We have been able to increase our share. That is our assumption. Without that, we could not have this much growth. Overwhelmingly a better quality of our products has been highly evaluated by the automobile market. I am very grateful about that. Many people said the data center business may be slowing down, but at least our bearing units show that it's not slowing down at all. In China, the fixed asset investment statistics I looked at, and the real estate is impacting a negative area, but the data communication in the first half of the calendar year had a 20% growth.
Centering around the Chinese market, data center investment is made quite actively, and the bearings are supplied. That I think is a positive move. Right now, there is nothing that you need to be worried about. On the other hand, aircraft are coming back. Particularly Airbus, it's recovering. Therefore, this year, of course, the situation is mixed, but the mechanical components has a very solid business, JPY 50 billion or more operating income. The investments, JPY 365 million, plus, JPY 50 billion, or JPY 70 million that has been finished. In the next one or two years, I think that the JPY 60 billion can be exceeded, which is one goal for mechanical components. JPY 60 billion can be exceeded. Next is the motor business.
As I said earlier, Shanghai fan motor plant, only 20% of the workforce was able to work. The plant was more or less stopped for two months, facing a very difficult situation. The overall motor business since June, July, and August, it is expected to recover, and the price increase is starting. We have requested our customers to accept the price increases, and it's been growing every month. In that sense, the situation is likely to improve going forward. Automobile business is improving. Office automation, because of a semiconductor issue, it's slow. Spindle motor, the overall business is soft. However, as you may be aware, helium and the nearline overall is at the core of our profit.
It is true that the units are falling in number. However, the profitability has not deteriorated that much. The motor business in the next few years, JPY 25 billion operating profit is a done deal. Analog semiconductors, it's doing extremely well at this moment. Recently, the smartphone volume is shrinking, so I heard, and I think it is true. However, the smartphone is not the only main business for us, but the IGBT we still have strong inquiries, and automotive and medical are still very strong. All of these are made in Japan, so we are in good position to achieve our goals. When Shiga plant starts its operation, 30% OP margin and JPY 100 billion operating profit.
The JPY 30 billion operating profit is likely, but some people are talking about the competition from China, but not at all at this moment. There are so many development activities that are going on internally, which I am really looking forward to. Mitsumi Semiconductor + ABLIC and Omron Shiga plant + 60 people, the semiconductor engineers have been at it. Our engineering capacity has been strengthened enormously. I have mentioned the JPY 25 billion, and this is JPY 30 billion. Maybe this is going to be a kind of opposite. Maybe in terms of the order of the Eight Spears, this is going to be a change in order. The ball bearings will be followed by analog semiconductors.
There is a possibility that this is going to happen. For the plus one business, that is the optical device business, the sales is going up, and new applications are starting, coming up. As a profit driver, I think this can be considered as a profit driver. If that is the case, the mechanical components is JPY 60 billion, and this can be achieved. On top of that, smartphone-related business, we are still engaged in the backlight business. I don't want to mention about this profit much. For the Eight Spears plus one, more than JPY 130 billion operating profit. In the near future, I think we will be able to achieve that. It means that our foundation business is ball bearings.
We have been focusing on the specific business, and that has been the source of our profit for the long period of time. At last, we have been able to, th rough the Eight Spears strategy, we have stable profit, earnings generating business. I think this has been started to become a reality. From this slide onwards, I would like to talk about the growth strategy from a new perspective, and that will lead to the background of an M&A. I would like to talk about this matter. This is a kind of a recap. I have been always saying that, when I'm asked what is management, I think I always say that it is to be sustainable and survive. Being sustainable, if you just look it up in the dictionary, it continues for a long time.
To survive for a long period of time, meaning that our company, we will have to sustain our company for a long period of time. I think that is the essence of management. If you look at the past couple of years, the aircraft business was bad, with the automobile business struggled, but we had this kind of stay at home demand that have been able to achieve a record high level of profit. People are saying that the stay at home effect is moving away, but what's happening, the aircraft business is starting to recover. Automobiles with new technology is going to come up one after the other. It means that the Eight Spears businesses is going to be utilized there.
This resilience, this essence of resilience is that basically we don't rely on one specific business. I have been saying that for a long period of time. I think I have been able to prove that what I have been saying is true. This is a recap, this Eight Spears. This is the era of VUCA. We have volatility, uncertainty, complexity, and ambiguity. This is a VUCA. It's unpredictable. We don't know what's going to happen next. I don't know how many industries there are in the world, but it's a mixed picture among all the industries. What we want to minimize the risk as much as possible. That is our focus.
In that sense, this Eight Spears strategy, it means kind of all over the place, but this Eight Spears is of our selection and concentration. That is what I want to stress today. These three points. I have been explaining about number one and two, the global GDP will grow. The disposable income per person is going to grow. This year's GDP is going to be a 3.4% growth. I think the most recent announcement is pointing to that number. Disposable income per person is going to go up. People want to buy better things, and better things will be provided. E-components will be necessary. That has been the driver of the growth. If you, this past 70 years, the bearing business has consistently grew.
This time around, the 24th and 25th since I became the president, M&A deal. JPY 650 billion worth of M&A. Well, I have been saying that JPY 500 billion was coming from M&A, but I think with this round, JPY 650 billion of revenue is coming from our M&A. The third point, I think going forward, this is going to be our driver. What I want to talk about today in terms of the M&A deals, this is very closely related to this. That is the reason why I want to talk about number three. We talk about social issues. There are some examples. Low birth rate and aging population issues, healthcare. There's a lot of these social issues to be solved.
If you look, well, I am, you know, a human, so to speak, and I realize. This is technology can explain these social issues. I thought that way. We are in the fourth industrial revolution. From the eighteenth century, at the end of eighteenth century and onwards, we've had the hydraulic going through the steam engine, we have this industrialization, and the beginning of twentieth century, there's electricity. In 1970s, we had automation. We have IoT, big data, AI, this fourth industrial revolution, this ultra-smart society. This is what is being said. Technologically, if you look at this closely, I think I can break it up into four areas, electrification, automation, ultra-high speed communication, and sensing. If you use these four technologies, the social issues can be solved.
However, the hurdles will be high, because of various requirements, high voltage, high current, high capacity, et cetera, et cetera. This will be unprecedented needs. For instance, the at-home 100 V was okay for electricity, but you have the EV. It means that you have to have a 100 V to charge those EVs. It's a completely different picture that is before us, that will come into the home. By focusing on these technologies, various social issues can be solved. Going to the next page. Well, simply put, the surgeon in Tokyo, they want medicine, they want to have surgery and the patient in Osaka, you have the power supply.
The Tokyo surgeon will move his finger sensors necessary and it has been converted to analog to digital using high-speed communication and have to communicate with AI microcomputer. This instruction goes to Osaka with high-speed communication. The instruction is given with the motor or the gripper; grippers are used. This will be robot that utilizes the sensor motions. The feedback is constantly given, and the surgery will go forward. If you look at this, every point is related to our Eight Spears. This, you don't have to have this high-end components or this very light compact, very high precision components. You have to have that or else you'll not be able to solve the social issues. Goes the same for automotive driving.
You have to use sensors to drive a car. This loop is basically continuous in the automotive autonomous driving, excuse me. Mitsumi's product going forward is going to be used, and that will be integrated or there'll be synergies from the sales perspective. I think I myself is very excited every day. That is what I am feeling every day. Based on what I have said, I would like you to listen about connectors. About two out of the three deals of our M&A is a connector business. For the Eight Spears, we want to make these spears thicker. We want to increase these Eight Spears, but that has to be areas that we can leverage our competitiveness and where we can leverage integration.
Connectors in the fourth industrial revolution will have a very important role to play. That's what I think. First, I would like to talk about Honda Tsushin Kogyo Co, Ltd. This is a listed company. The overseas operation is a small portion. Panasonic has about 21% of the shares of this company, but they think this is a non-core business for them. From Panasonic's point of view, in terms of the connectors with the ultra-high speed and high capacity, they want to grow, but they don't have. Excuse me, not Panasonic, but HTK. They want to build plants, but they don't have funds. I think basically they were able to agree with us.
If the TOB goes well with us, they will be able to go forward with the connector business. For more details, please access our website. Another SUMIKO TEC. the parent company has a copper mine, and it's in a copper smelting business. I would assume this was also a non-core business for them. This one doesn't have any overseas plants. However, my gut feeling is that this company has much more advanced technology regarding connector production. In Japan, they can make products that would meet the customer needs. However, other companies would take mass production orders. In that way, this company was operating.
If we get together, if you could move on to the next page, as you know, we have huge global network. Cambodia still has one-third of its total space empty. Thailand is very advanced. If they capitalize on these assets, and if a TOB becomes successful, this diagram becomes viable. It will be shown later on, but a super high-speed communication era is coming, and many special connectors will be needed. The Mitsumi connectors are like a Type-C, FAKRA type. Common connectors are made in huge volume. I wouldn't say red ocean, but it's rather difficult to make profit. Global niche top, so to speak.
By doing the same thing as what we did in the bearing business and semiconductor business, we should be able to enjoy a huge success once again. Japanese corporations, we have, a ffection for the Japanese traditional technology and technological capacity, we must work even harder in order to maintain them. In analog world, there are so many players, many of them are small sized, but I would like to lay the foundation for them so that the Japanese parts and components industry will be able to enhance its presence. I am recruiting the friends and the allies, and I think this company has agreed to my thought. On the next page is one example. Towards the post-industrial revolution, various devices will become smart devices, and remote medicine and automotive autonomous driving will employ those parts and components. Communication will become super high speed.
The types of the signals, or the downsizing of connectors and lightweighting and connections that suit applications will become necessary. In other words, diversification will take place, and the volume will increase. If you look at the CAGR, you can see that the 3D LiDAR, in-vehicle network, and sensing camera, radar sensor, these are the growth areas. Applications, dramatic changes of the applications and market expansion to be brought about, such changes, we would like to capitalize on. The next page is quite easy to understand. There are many synergies and no duplications or no overlaps. By pricing and quality, we will enhance our competitive edge. By these acquisitions, the connector lineup will be expanded enormously, which will lead to enhance the presence of our company. Next page, please.
Our initial goal, the JPY 33.8 billion is the total sum of the revenue under the COVID calamity. If automobile business recovers fully, I think it will be quite easy to achieve this. In other words, JPY 50 billion or plus. It says here in FY 2028, but I don't think it will take that much time. Probably, we will achieve this much sooner. For today, I wanted to share this graph with you. Now, Honda Lock comes into play at this juncture. Why, you may think. As I have been talking about bearings, increasing number of bearings are adopted in a car, and this trend is not ending. Semiconductors, IGBT, and the new type of vehicles will have even more bearings.
The motors, the same applies to the motors. No reasons why we do not do a connector business. We can capitalize on our competitiveness, and we can sell them together. Honda, as you may know, is aiming to create flying cars. Our rod-ends will be useful to Honda, and also what Honda is developing with Sony, they can use our products. The Japanese OEM, the platinum ticket, so to speak, we have again, the U-Shin, Mazda, and Suzuki. U-Shin has been always strong for those players, plus Honda and Nissan, we have always been Tier 1 supplier, like antennas that I will explain to you later on. The products that are demanded by the age or era, we will be supplying.
Another gate has been opened for us, which I am very grateful about. There's another thing I want to say, and that is U-Shin. In Europe, Japan, China, and Brazil, it has sites, but Honda Lock in the U.S. has plants and engineers. We now have completed the global network that we can supply products to automobile manufacturers in the U.S. A huge volume of cars are still being made in the U.S., and many of them are becoming electrified, and the new types of vehicles are being manufactured. Being able to get that site in the U.S., i s in fact another synergy and e xpansion of a Tier 1 business.
There are so many things, but what we supply as a Tier 1 supplier is U-Shin products and Honda Lock products. If TOB succeeds and the antenna, the sub-meter precision antenna, high precision. This is quite impressive. Nissan's Global Innovation Award, this product was awarded, and a major car manufacturer has placed a huge order for this and these types of things. Other companies, I mean, what the U-Shin is strong about the Honda and Mazda, and the resolver is another example. A secondary cooling fan and a charge port door for electric vehicles. When it's plugged in, the port will open automatically. There are various things that we can do together. Let's go to the next slide.
In terms of the access products, the OP margin 10%, the sales are JPY 300 billion. Already the simple aggregation is JPY 239.1 billion, adding these two. Under COVID, automobile industry has not recovered. With the conditions, JPY 239.1 billion. JPY 300 billion will be a high hurdle. It says FY 2028, but this is what IR people say. I think I'll be able to achieve this number far earlier than FY 2028. Just to give you some update and go to the next slide. This will be the new headquarters. We're going to call them MinebeaMitsumi Tokyo X Tech Garden. X Tech. You write X Tech or Cross Tech.
This will be the X Tech with AI and IoT, and then connecting with existing technology. This will be the integration of Sogo within our company. Not only technology, but people as well. Going forward, this will be the era of people. This is a clear target, clear landmark, that we're going to get engineers, get people to enhance that technology. The Tokyo X Tech Garden, this building we have here is going to move out. We're going to move into the Tokyo X Tech Garden. Obviously, Yoshida has talked about this. Convertible bonds, 99.9% was converted into shares. In practicality, this JPY 13.2 billion balance, this is our liability. This is the balance that we have as of end of June.
I took the figures I showed you was end of June. In terms of interest-bearing debt, maybe it is not accurate because there is a kind of a difference in the date or the schedule. I just have to inform you. Lastly, this is what I always say as lastly, but that is all from me. Thank you very much. Next, we'll go to the Q&A session.
We will be taking questions from the investors and analysts that have been registering from our telephone conference system beforehand. If you have any questions, please press star and then one on your telephone. After you press the number and want to cancel your question after star mark, press two. We will call on you in order, and if you are called upon, please ask a question. Please limit one question per one person. Let's go to the first question. Goldman Sachs, Takayama-san, please go ahead with your question.
Thank you very much. Can you hear me?
Yes, we can. Go ahead.
Thank you. I have three questions. Can you answer one by one? First of all, against the first half and the second half for the electronic components, it seems that the second half, in terms of the profit, you have to generate a lot of profit in the second half. For the motors, recovery, including profitability, how much can you achieve that? How much visibility do you have? Increasing the price increase, how much have you been able to negotiate about that as well? Can you elaborate on that?
In terms of the electronic devices and components, the first quarter OP was JPY 197 billion, and we have revised that. The second quarter is JPY 4.3 billion. Third quarter, JPY 8.1 billion. Fourth quarter, JPY 7.5 billion. That is basically the breakdown of the numbers. The first quarter, the backlight, we have motors, but the backlight, specifically LCD models, a reduction of production has had a huge impact. That is the reason why the decline in sales and decline in profit in terms of motors, as Mr. Kainuma has explained. Specifically, the Shanghai lockdown. Our Shanghai plant has had a decline in utilization. For the auto motors, the customers have received a huge damage.
There has been a very tough situation in terms of our income for us. On top of that, as you have pointed out, from the previous year, various material costs have been going up, and the business cost has been going up. We have been negotiating to pass it on to the customers. The results has started to come out. Towards the second half, on top of these factors, some materials cost is going to go down. We are anticipating that is going to happen. Copper, I think basically is going to go back to the $7,000 level.
Some materials will not go back to their normal level, but if that happens in the second half, I think that we will be able to see that contribute to the profit. In terms of the profit situation, I think it is quite achievable. That's all for me.
The way of thinking of this is that in the second half, the initial plan, you have not changed the initial plan. On top of that, the second quarter I talked about 4.3%, 8.7%, 7.5%. In terms of profit, the second half is going to go up by quarter by quarter. As a result, is there any type of some areas are higher, some areas are lower, but in totality you'll be able to achieve this? As you have said, the third quarter, fourth quarter. You have a certain visibility about the profit. What is the nuance behind your thoughts?
Well, in terms of production. The customer needs is very high. As Mr. Kainuma has explained, the current sales level is very high. Of course, the second half, specifically for the fourth quarter, it's very difficult to have a visibility about the fourth quarter right now. That said, the customer's forecast isn't showing a decline. For the automobiles, the North America inventory issues or various elements will come into play. For this fiscal year, if the semiconductor shortage is resolved, as long as this is resolved, we anticipate that a certain level of orders will come to us.
Based on the assumption, and we're looking at the exchange rate and the sales price and the raw material cost, that will be going down, partially going down in some areas. If you look at this in totality, the second half profit. It's not a stretch for us. I think this is a quite achievable profit that we are seeing right now. For the motor business, JPY 300 billion sales is what we are forecasting. If we consider this sales number, I think the profit number is very much achievable. May I follow up? As you have pointed out, of course, there is a different situation by part, by product category, by category, by aircraft or aerospace.
We didn't expect this recovery to happen that soon, but we have seen a dramatic recovery. The overall numbers, I think basically to a certain level of probability, we are confident that we can achieve this. If you look at it one item by item, and if you know, look into the breakdown, I think it's very difficult to mention about that because there are some various ups and downs depending on the industry, but it's in that range. If you understand it that way, I think that is quite understandable.
Understood. Thank you. My second question is, I would like to ask Mr. Kainuma. You talked about solving social issues, and I think that was very clear. Within that, the connector business, and I think the focus on connector business was very clear. Thank you very much for your explanation. Based on that, the FY 2028 connector business. The JPY 50 billion, what is the sector? Automotive, telecommunication. What will be the in terms of margins, if you look at the other companies, I think they have a higher margin. 10% I think is quite conservative from my point of view. What is your view about this?
In terms of sales, as I've said, I just take a simple aggregation under the COVID situation. If you just consider that, if the automobile industry recovers, I think basically we'll be able to achieve more than JPY 50 billion. As you have said, it's not the case that we just 10% is okay with us. We want to target a higher level. We think we'll be able to target a higher level of operating margin. I always say, well, every time I make a presentation, I will not give you a high number. We want to, I give you a number that we'll be able to surpass that target.
To be frank, this is the business, in business, there's something that you won't be able to know until you do it. The analog semiconductor has been better than we had expected. We have to acknowledge that. In this business, can we replicate the same thing that we did?
Of course, we have done due diligence, but if you look at each engineer. I think basically it will have to get motivations for each of the engineers. I think that is PMI. With Mitsumi, with ABLIC, with U-Shin, we have been doing that all the time. For the engineers, when they get fired up, or if the people working at the company is fully motivated, this niche business, I think it's safe to say that pretty much in 10% we'll be able to say have more. But I think it's meaningless to mention about that rather than that. With Spears plus one, mechanical components JPY 60 billion. It's going to go over JPY 130 billion. Talking about that, I think that is far more real.
Basically, in hindsight, you will realize that it has been much better than we had expected, and I think that's the best way. For motors, I think people said that it would be, not go well, but everybody thought so. I want, suddenly it was, doing very well. I think basically, our basic profitability will improve. I think we shouldn't really go into the details at the initial stage. I think you have to look at the overall industry, and you look at the overall trend in the world. Whether we can win or we cannot win, and I think basically, if you decide that looking at our track record and decide whether we're going to win or not win, I think that would be the better way to consider about this.
The connector business, is it the same image that you have acquired analog semiconductors, or is it closer to you did a big recovery on the Mitsumi?
I don't think that there is a profitability recovery that we have to do. They don't have a major factory, and basically, they don't focus on the cost conscious management. We have a large site in Southeast Asia, and every time I go, we don't have to send specific people like HR or the general affairs. We can send over the engineers and the staff, and then they'll be able to do work from day one. That's a strength. That is the way that we operate our large-scale factories. I want them to enjoy the cost efficiency, and then, if we go forward with that, I think they'll be able to generate a lot of profit, more profit.
Lastly, for the Honda Lock. This, in terms of the resolution, there's also issues within that trend. Maybe this is a bit different. U-Shin, I think it's U-Shin plus are going to add scale or are going to take scale or take integration, and then you just added it on. In terms of the profitability seems a bit low because, with the customer base. Is it going to be the end of these two companies, or is it going to be a further road ahead?
I would like to know the background of your thinking or the logic. Well, there are various ways to think about this. One, as I said, as I stressed, this will be a platinum ticket for the Honda Motor business. By becoming T ier 1 of Honda, it means that there'll be a lot of business opportunity. For example, the Honda Lock, they don't do latch. They don't produce latches. But latches, when we have an automobile door, it will always be there. And that would be, you know, you have to have electrical latches as well. In that sense, we have the technology. If U-Shin has the technology, it means that you'll be able to get a further customer. It's a synergy. This will be a gateway to go to Honda.
You have to have a customer to sell products, and the customers, they will have to recognize us to some, a certain level, or else they will not be able to sell all those type of products. Currently, I think what was good was that the U-Shin has a lot of people that used to work in Mazda. The reason we do this is that the Mazda has not understood the position of U-Shin, and they don't know MinebeaMitsumi at all. They don't know what we can do. First, by making them understand, it means that right now there's a lot of discussions that are coming out. That's not only for Mazda. You have to do this at Honda as well. Selling products that have to do that. We're talking about manufacturing, but we have to sell products.
We have to, I think basically cultivating that route, sales route is my job. We have the path in front of us. What we have to do is that to show our presence and try to appeal what we are doing. That's a big major thing. Secondly, I have always been saying that some motors that we already sell them, or the key sets, or that'd be wireless technology, or that can be utilized in homes. I think that's going to happen going forward because the momentum is there. For the home, the one issue there is that about the heat efficiency, specifically in Japan, there's a lot of you know gaps, and with the entrance there's a lot of gaps.
Have the simple automotive latch, there'll be a lot of sealant, it will be good. The heat efficiency will be good. I think this is a challenge for the social issues. Using it's not good, people tend to say that, and I think basically, where the automotive industry was not doing well. People saying that they are not engaging here, what are you doing? The semiconductor backing, and then people will just come out and criticize us. I think that it's already a given that where the world is looking at or going at. Taking initiatives one by one will lead us to a fruitful success. Using a Honda Lock is just an add-on for using? No, that's not the case.
This business area, potentially, there's a huge potential because the electricity cost is going up, and talking about solar power or solar power generation. On the other hand, we have to focus on how to enhance the energy efficiency, and that is the mission that each of the home appliance makers will have to cover. I think I'll be able to offer the solutions, and I think that's a gr eat thing.
Thank you very much.
Let us move on to the next question. Morgan Stanley MUFG Securities. Mr. Sato.
This is Sato. Thank you for this opportunity. I have three questions. One, Mitsumi's this year's plan, the revenue has been revised down and operating profit has been revised up. Product by product, can you tell me the changes compared with three months ago?
Regarding revenue forecasts, we have taken a conservative view. There are many assumptions that we employed, but compared with three months ago, for example, there is this Forex translation issue. There is a potential that sales will grow. Against that backdrop, semiconductors continue to be robust. Towards the second half, many things could happen.
I do think so, but at this point, as Kainuma explained earlier, the smartphone-related slowdown may take place, but IGBT and automotive battery can offset the decline. Therefore, regarding sales, we maintain the same view, so that is one of the reasons why we are taking conservative view. Regarding profit, the automobiles and Shanghai, these are the key areas for the first quarter for reduced profit. Mitsumi does not fall into either of them. The overall inquiries have been very active, and the profit projection has been upwardly revised. Camera actuators and gaming consoles, compared with three months ago, what is the current outlook?
The games, our customer announced its financial results. Very strong, 21 million. If this number is achieved, because we are taking conservative view, there may be some gap. Our customer has this projection. Therefore, that makes it more difficult for us to explain, but then there is a possibility for upside. Our numbers are a bit stressed. OIS optical devices production is progressing smoothly. Forex translation impact exists. We will be able to enjoy solid business and no other major changes.
Thank you. My second question is related to the previous question asked by another gentleman. The access product, the 10% OP margin, is a very high hurdle. Using a Honda Lock track records, how do you think you can raise OP margin to 10%, if you could share with us your measures?
I would like to respond. U-Shin. If you look at the U-Shin alone, it may be difficult. However, as I said, there are motors, antennas and analog semiconductors, plus the sensors. By doing this business, other divisions will be able to supply our products. That is our strength. For this, we integrated U-Shin, and we are integrating Honda Lock. Technologies already exist. I just cannot share with you. The door handles used to be very cheap, but the package, one unit of package is very expensive now. Set manufacturers and OEMs are really saying that the door handles have become very expensive because it's so high specifications, and the air resistance is almost at zero. You need to attach it with one finger in order to open it.
This is a trend, and other divisions can enter into this space. As a Tier 1 supplier, we can sell many other products. You have to look at the total picture, otherwise you get the wrong idea. I mean, if we are dealing with only access business, I would not do something like this. Because we are doing other business, we can put together this type of scenario. I have thought about many things. I may not be smart enough, but I do think about many things every day. I talk with the customers and develop things. I can see clearly that the things are moving towards that direction. Please keep watching. CASE era, and then automobile business declined. Many things happened.
The technology direction is very clear. We want to move towards the same direction in order to succeed, and we will succeed.
I see. Thank you. My last question is about the numbers. The bearings demand is very strong. April to June period, the external sales, internal sales results, and the outlook for July to September as well. Bearings. External sales from April, JPY 192, JPY 228, JPY 245. Internal sales, JPY 50, JPY 53, JPY 56. The total, JPY 242, JPY 281, and JPY 301. July onwards, JPY 245, JPY 251, JPY 276. External sales, I mean. Internal, JPY 52, JPY 47, JPY 55. The total, JPY 297, JPY 298, and JPY 331. Very strong demand we see. I see. Thank you very much. Let me repeat.
Please press star and one to ask a question. To cancel, please press star and two. Going to the next question. From Mitsubishi UFJ Securities, Goto-san, please.
Can you hear me?
Yes.
Please go ahead.
Thank you. I have three questions. The first question is the confirmation of the numbers. First quarter results compared to the initial plan, when you compare that.
The reason behind the overshoot and undershoot, can you explain that? Lockdown, exchange rate, and the business related, if you break that into factors, and in the business related factors, in terms of the revisions. I think in page six, you gave it by segment detail, but can you go into sub-segments and give me more detail?
Yes, would you please respond to this question first?
The first quarter, in terms of the decline in the sales and declines in profit, the Shanghai lockdown issue, and with that, as the Shanghai plant utilization rate has gone down. That is for ball bearing and for the motor business. That's what the sensing device. Part of the sensing device has been impacted by this. This is the reason number one.
Well, this will be the major reason. The automotive makers have seen a decline in their production. With that, we saw a decline in sales and profit. By segment, the situation, based on this situation, to give you an explanation, for the higher the exposure to the automobile sector, the more downward pressure. U-Shin had the biggest impact. Then next would be with the motors, the automotive business has been impacted. Some of the ball bearing business, that said, has been impacted as well. Conversely, with the Mitsumi business, all the segments have seen a better performance than the initial forecast. That has been reflected on the results of the first quarter.
On top of that, for the electronic devices and components, in terms of electronic devices, I have explained about this already. Within the smartphone, specifically for the models that use LCDs, the reduction of the production output has been larger. Because of this, I guess the initial plan that has been like seeing a more downward pressure. Does that answer your question?
In terms of the exchange rate, I think it's a positive impact.
Yes.
How was the magnitude of the impact coming from the exchange rate?
The breakdown of the exchange rate, we do not disclose about that. I would—Forgive me if I cannot answer you, but at the beginning, I have explained that in terms of the operating profit, quarter-on-quarter, about JPY 2.4 billion, and year-over-year, JPY 4.7 billion, has been through the currency translations. The Mitsumi business has been impacted the most. Mitsumi has a higher sensitivity towards the dollar-yen translation. Among, well, basically, Mitsumi has the biggest impact. Semiconductors is produced in Japan, and half of that is sold in dollars. Besides that, in terms of the profit structure, that is the situation for them.
Understood. Thank you. If that is the case, the foreign exchange first, Shanghai lockdown a bit, like a negative. From the actual business, it will be basically in line with the plan. Is that the right way to look at this?
I think basically depends on what you're going to take as a standard or the starting point. In terms of our actual business capacity, although the material cost increase and the various business cost increase, and towards the including electricity cost, that is, how far have been able to pass it on to the sales price, we can talk from that angle. Then there's another angle about the exchange rate, and then we have the lockdown, and we have the Russian-Ukrainian situation as well. How are we going to, you know, interpret all this? It's very difficult. I think the biggest impact will be coming from the Shanghai lockdown and the customers decreasing production. Some were offset by other areas.
They have the exchange rate, of course. The top line has gone down. We have not been able to compensate for the material cost in terms of the sales price. Basically, we have been able to catch up in terms of the passing on the material cost to the sales price.
Well, my second question is about Honda Lock, by acquiring Honda Lock. I think basically you'll be able to get. Are you going to get some fundamental technology they didn't have? Sales route, for instance, is that any synergies that you can expect by Honda Lock? The production side and the approach to Honda, I think that is what you have focused on. Are there other synergies that we can expect? Can you elaborate?
There's a lot of things that I can talk about. For example, the products that U-Shin does not produce. There are some products that Honda Lock makes. Mirrors I think is one example. We are going to go to e-mirror. We're going to do e-mirrors. Not all mirrors are going to be e-mirrors, but by 2030, about 20% of the automobiles will be using e-mirrors. That is my view. Honda, with Honda Motor, or excuse me, Honda, I think basically that is their plan. When I say Honda, they, I'm talking Honda Lock. Including this view, I think there's a lot of technological synergy that we can expect. As I have said, Honda Lock is not engaged in the latch business, but we produce latch.
Latches, at least have two on each car. In some cases, there are four latches on a car. Those are synergies, technologically speaking. Well, I think basically, we can actually provide each other with the technologies.
T hank you.
Let us move on to the next question. Mitsubishi UFJ Morgan Stanley, Mr. Ogino over to you.
This is Ogino. Thank you very much. My first question is as follows. About analog semiconductors. The private sector demand lithium-ion batteries, demand is declining, and IGBT is very strong. To what extent the slowdown in growth you're seeing, and the IGBT, to what extent is IGBT stronger than the expectation?
Shiga plant, I think you are engaged in starting up Shiga plant, and the mix may be changing, or is it changing?
Semiconductor outlook, if you could tell us about. Specific breakdown numbers I don't have, but the recent sales situation mainly for Chinese smartphones, a huge reduction in production happened. We have been assigning the production lines, and in a net, it's not going down. The plant is operating at the full capacity. In the first quarter as well as the second quarter, the situation is continuing. More than JPY 80 billion sales were expected for semiconductor business. That is what we explained. We are progressing on track towards that goal right now. What about the IGBT?
Offsetting is IGBT, automotive, and medical. Those are more than offsetting the decline in the smartphone. IGBT is very strong as well. In total, the capacity has been insufficient, but the plant is operating at full capacity, and therefore, even though the production has been reduced, no negative impact. That is right. We are operating at fullest capacity. At this point, we think that the situation is going to last for the entire year. The Shiga plant? We are preparing for the startup of the operation. Analog semiconductors are, because of the nature of the product, and we cannot start a full capacity production overnight.
There are entry barriers and the replacement risk is low. We are preparing for that steadily. In the second half of this year towards the first half of next year, the plant will be starting, so we have something to look forward to.
Thank you. My second question is as follows. Earlier, it was commented that passing on the incremental cost, material cost. What is the progress in the first quarter and quarter-on-quarter? I think that there will be an impact going forward, but how is it going to impact? That is my second question.
The material cost has surged. Looking back, what happened in the last fiscal year, the copper price went up and then steel and resin, with some time lag, various material costs increased. For each, we negotiated with the customer to pass on the incremental costs, but we were not fast enough. Now we are trying to remedy the situation. It's been pushed back from last fiscal year. Material costs. Before the material costs increased, being the floor, we are negotiating with the customers, and that, as time goes by, this is going to be a positive factor. That is the current situation. The materials themselves, when we put together the budget, this year, we think that, the prices will increase, or we thought the prices would increase.
However, the copper price and the non-ferrous materials, some of them are now declining. The relation with the selling prices, I think the profitability will improve in the second and third quarters. That is what I think. There is this lag in timing. When comparing the fourth quarter and the first quarter, how much cost increase occurred? It may be odd to make this comparison, but are you saying that you are catching up? As for the future outlook. You will enjoy the positive impact. Up until last year, you were impacted negatively, but this is going to return to positive impact. Yes. The balance between the increased cost and the passed on to the client, I think we are catching up in that sense.
There is a time lag in the second and third quarters. I think we will see some benefits in terms of the profit. Surcharge system is what we explained to you. At some point in the future, regarding the decline in the material costs, that we will change the selling prices again. When utilization of the plants have recovered, and most of them are at the full capacity, and how we should project the impact of the reduced production. As I said previously, we do not assume that there will be a huge reduction in production of automobiles, and therefore, the improvement in the profit we will be able to enjoy.
I see. Thank you. My third question is connectors. The total of these three companies will contribute, you said, and Honda Tsushin. Technological capability and engineering capability the company seems to have. What is SUMIKO TEC. the customized capability the manufacturing capability the company seems to have. What is your evaluation of their technological capabilities?
As Kainuma explained earlier, Honda Tsushin has excellent technological capability, and it is capable of making high value-added products. On the other hand, the overseas production and overseas marketing because of the size of the company, it has not been doing a good job, and it focus on the domestic market. That is what SUMIKO TEC, in terms of the production base, the same thing. Basically, the domestic production within such a framework, it is generating a good profit.
As you pointed out, terminals it's making in Japan, and it's one of the strengths. After the integration with us, they will be able to make products at a lower cost overseas. The feasibility of various businesses that will open up, which will be one of the positive factors for improving profitability. The technology of making products, the former Minebea's connector business and Honda Tsushin's connector business, the mutual supply will be possible, which will lead to a SUMIKO TEC. insert forming, is it good at things like insert forming? It's one of the technologies that the company is good at. That basically, as I said, the special connectors. It seems that the company receives various requests from various players.
Rather than the designing capability, huge volume of samples they can do, they can handle. When it comes to mass production, because of the limited capacity of the factories, they cannot make in Japan. Our huge factories can handle them. In the past, a customer came to them and asked to make a certain product. When the customer agrees to a certain product and 10 or 1 million or 1.5 million pieces orders, the company cannot handle, and therefore other companies took the order. Going forward, we would like to aim at forming one-stop type of business. Automobile customers and communication customers, that is one of the trends. Big names that you are familiar with, they are, I mean, very interesting or even odd-shaped connectors.
I mean, our idea of a connector is very simple, which looks like a connector. Their connectors is very complex and doesn't look like a connector. The company is good at making such things. We would like to mass produce such connectors in order to enjoy competitive edge.
I see.
The sample production, the company handles and then provide the design sheet to design drawings to another company, I guess.
I see. Understood.