Earnings Call: Q4 2021

May 7, 2021

Thank you very much for participating for the business results meeting for the fiscal year ended March 31, 2021 for the Minabell Mitsumi. First of all, let me introduce the participants from our company. From your right, Representative Director, CEO and COO, Yoshihisa Tainuma Director, Senior Managing Executive Officer, Katushiko Yoshida. First of all, Mr. Yoshida will make a presentation about the financial results And Mr. Kainuma will talk about the management policy and business strategy. After that, we will go into a Q and A session. We are planning to end this meeting by 7 p. M. For the financial statements, on the website, we have the financial data and the brief report of financial results. Please refer to that. On the screen that you're seeing on the lower part, we have a link to a questionnaire. This is a very precious feedback for IR activity. So we will appreciate your response to this questionnaire. For this meeting, including the Q and A session, we are conducting a recording of the audio and video for to look at it later on the website. Please understand. Mr. Yoshida, please. My name is Yoshida. Today, I would first like to explain the consolidated financial results for the fiscal year ended March 31, 2020 Q1. Consolidated net sales for the fiscal year ended March 31, 2021 totaled 188,004 4,000,000 yen while operating income reached 51,166,000,000 yen and profit for the period attributable to the owners of the parent was 30 1,759,000,000 yen These figures represent year on year increase of 1.0%, decreases 12.8% and 15.7%, respectively, for net sales for the period hitting record high. Operating income includes special expenses totaling approximately 7,600,000,000 yen incurred due to the impact of COVID-nineteen, etcetera. Operating income for the Q4 of the fiscal year also includes onetime expenses shown in the box at Bottom right on the slide. Onetime expenses include the PPA of approximately 2,100,000,000 for the Mitsumi business and the write off of molds and inventory in optical devices for major Chinese customers of approximately 1,900,000,000 yen. And the restructuring costs in the Europe, etcetera, approximately 4,300,000,000 yen in the Yushin Business segment, totaling approximately 8,300,000,000 yen These were not included in the forecast we revised in February. Foreign currency exchange rates are estimated to have a year on year impact of minus 20,300,000,000 yen and net sales of minus 3,600,000,000 yen in operating income. Moving on to the next slide, please. Consolidated net sales for the 4th quarter for fiscal year March 2021 was up 10.6% year on year and down 9.8% quarter on quarter to total 250,985,000,000. Net sales for the 4th quarter hit a record high. Operating income was down 30.2% year on year and down 55.9% quarter on quarter total 8,650,000,000. Profit for the period attributable to the owners of the parent was down 44.6% year on year and down 64.3 percent quarter on quarter to total 5,775,000,000. Operating income for this quarter includes special factors totaling approximately 1,200,000,000 yen due to the impact of COVID-nineteen. We estimate that the new currency translations, we have a year on year impact of minus 4,900,000,000 yen net sales and minus 1,600,000,000 yen in operating income. Quarter on quarter impact was plus 2,300,000,000 yen in net sales and minus 500,000,000 yen in operating income. We made a slight The changes to last fiscal year's financial statements due to the PPA for Yushin. Please note that figures on the following pages are revised figures. Next slide, please. This is the annual trend in net sales, operating income and operating margin. The bar graph on the left is net sales and the one on the right is operating income along with a line chart for the operating margin. The operating margin for fiscal year March 2021 was 5.2%, down 0.8 percentage points year on If the effects of the aforementioned onetime expenses were not factored in, the operating margin would 6%, almost flat from the previous year. Please note that figures of the fiscal year March Before are based on JGAAP and provided for your reference so they can look at the past figures. The same applies hereinafter. Next slide, please. This is a quarterly trend in net sales, operating income and operating margin. The operating margin for the Q4 was 3.4%, down 2.1 percentage points year on year and down 3.7 percentage points quarter on quarter. If the effects of the aforementioned onetime expenses were not factored in, the operating margin would be 6.8%. Moving on to the next slide, please. This slide shows the difference between the forecast as of February and actual results for net Sales and operating income by business segment for the Q4. Sales for the machine components segment exceeded the Forecast mainly thanks to robust sales of wall bearings to automotive industry and fan motors. Sales for the Electronic Devices and Components segment were higher than forecasted in general, including motors. Sales For the Mitsumi business and Yushin business was slightly higher than projected. Operating income for the machine components segment was higher than forecasted, thanks to the growing external shipment volume of ball bearings along with the improvement in productivity. Operating income for electronic devices and components are almost in line with the forecast. Although both the Mitsumi business and the Yushin business recorded lower than expected operating income, if the effects of the formation of one time expenses were not factored in, the Mitsumi business was almost as Expected and the Usim business was higher than expected, thanks to the recovery of the automotive industry. Next slide, please. Now let's take a look at the results by segment, starting with machine components segment. On the left is a graph indicating yearly net sales trends and on the right is a graph with a bar chart showing yearly operating income trends along with the line chart for operating margins. In the fiscal year March 2021, net sales were down 13% year on year to total 157,400,000,000 Sales of ball bearings decreased 6.8 percent year on year to reach 109,100,000,000 yen The monthly average bearing of sales volume totaled 208,000,000 units for an increase of 10.1% year on year. Looking at sales by application, we see the annual sales of ball bearings used in data centers increased year on year and flat for automobile applications, decreased for auto fixed automation equipment. Sales of rod and fasteners were down 29.1 percent year on year to total JPY 37,800,000,000 Sales of Keyboard Assemblies decreased 16.4% year on year to total €20,500,000,000 steadily contributing to our bottom line as we held on to a 80% plus market share. Operating income for the fiscal year totaled 31,200,000,000 yen putting the operating margin at 19.8%. We saw the operating income decrease 21.7 percent and the operating income margin declined 2.2 percentage points year on year. Looking at the year on year results per product, we see that the profits for rod ends and fasteners, ball bearings and pivot assemblies fell. For the fiscal year ending March 31, 2022, we can see strong uptrends in demand for ball bearings in a wide range of applications, mainly for automobiles and for servers. Sales for commercial aircraft, including rod ends and fasteners, are expected to remain at the same level as This is due to the fact that it takes time to adjust inventories in the supply chain, although there are signs of recovery in the aviation demand. For pivot assembly, we anticipate a decline in demand as the HDD market shrinks. Moving on to the next slide, please. This slide shows the quarterly trends in the machined components segment. 4th quarter net sales increased 11.1 percent quarter on quarter to total 44,100,000,000 yen Sales of ball bearings increased 11.8 quarter on quarter to 11.8 percent quarter on quarter to total 31 point 4,000,000,000 yen The monthly external shipment volume was up 9.5% quarter on quarter on an average of 243,000,000 units. We see strong demand increase in wide applications, including automobiles and data centers. Sales of aircraft bearings remained sluggish due to the stagnant market. Sales of rod ends and fasteners totaling 7,200,000,000 yen were up 14.8% over the previous quarter. Sales of pivot assemblies increased 3.4 percent quarter on quarter to total 5,500,000,000 yen Operating income for the quarter totaled 8 point 8,000,000 yen and operating margin was 20%. On a quarter on quarter basis, operating income rose 6 0.4%, while the operating margin dropped 0.9 percentage points. Looking at the results by product, we see that profits for ball bearings and pivot Assemblies rose, while purpose for rod ends and passengers fell due to the impact of temporary change of product mix. Next slide, please. Now let's look at the Electronic Devices and Components segment. In fiscal year March 2021, net Sales were down 4.1% year on year to total 3603,800,000,000 yen Looking at the results by product, we see the sales of motors increased 12.1% on year to reach 201,900,000,000 yen This increase was due to the recovery of all products from the impact from COVID-nineteen in the Q1. Electronic devices sales were down 23.2 percent year on year to hit 124,700,000,000 yen due to the declining number of sales units of models that use LED backlights at the major customers. Net sales of sensing devices totaled 32,600,000,000 yen increasing 0.4% year on year. Operating income increased 0.5 percent year on year to reach 17,600,000,000 yen while the operating margin rose 0.2 percentage points to reach 0.8%. Looking at the results by product, we see that the operating income was up with the motors and sensing devices, but down for electronic devices. But down for electronic devices. In the fiscal year ending March 31, 2020 2, we anticipate the growth of motors will accelerate and that sales and profits will increase significantly. For electronic devices, we expect a decrease in sales and profits due to a decrease in the number of units of models that use LED backlights. Sales of sensing devices will be almost flat, but profits are expected to increase due to improved profitability. From the fiscal year ending March 2022, we have changed our business segment classification for some businesses. I will explain in details later when we look at the slides forecast for business segment and changes to business segments. So in the square, we show the number in this slide. So please refer to these numbers in this Slide in the box. Going to the next slide. This is the quarterly trends in the Electronic Device and Components segment. Sales increased 4.7 percent quarter on quarter to hit 94,900,000,000 yen Looking at the results by product, we see that sales of motors increased 13.6 percent quarter on quarter to reach 60,500,000,000 yen This is because sales of all types of motors, including the Automobile application remained robust, thanks to the recovery in growth of the market. Sales of electronic devices were down 13.2% from the previous Quarter to total 24,400,000,000 yen This is because the peak demand period for our major customers' models that use our LED backlights came to an end. Sales of sensing devices totaling 8,900,000,000 yen were up 8.5% from the previous quarter. Operating came to 5,700,000,000 yen operating margin was 6%. On a quarter on quarter basis, operating income rose 32.1%, while the operating margin increased 1.3 percentage points. By product, we see that operating income was up for motors and sensing devices but down for electric devices. Please go to the next slide. Let's look at the performance for the Mitsumi business segment. Net sales increased 23.5 percent year on year to total of 361,000,000,000 yen in the fiscal year ended March 2021. Sales increased due to strong sales of mechanical components, thanks to grow in demand as more people around the world avoid a going out as well as strong sales of analog semiconductors including the new consolidation Of Ableic, operating income came to 19,800,000,000 yen and the operating margin was 5.5%. These figures represent a 5 0.9% year on year increase in operating income and 0.9 percentage point year on year decrease in the operating margin. Profits for Analog Semiconductors, Mechanical Components and Power Supplies grew while other businesses profits decreased. Onetime expenses incurred during the 4th quarter includes a PPA of approximately 2,100,000,000 yen And a write off of molds and inventory of optical devices for major Chinese customers of approximately 1,900,000,000 yen for a total of about 4,000,000,000 yen. If these are excluded, it will be 27% year on year increase in operating income 0.2 percentage point year on year increase in the R and D margin. If the fiscal year ending March 2022, We expect sales to increase mainly due to optical devices, but we expect sales to be on par with the fiscal year ended March 2021. Due to a conservative view of machined components, the business transfer in the Mitsumi business segment will have an impact of decrease of 19,500,000,000 yen in net sales for the fiscal year ending March 2022. I will explain about it later. Next slide please. Mitsumi Business segment quarterly trends. Net sales decreased 30.5% quarter on quarter to total €79,400,000,000 While sales of analog semiconductors increased, sales decreased for other products primarily mechanical components and optical devices As the peak demand period has passed, operating income totaled 800,000,000 yen while the operating margin was 1%. Operating income 91.8 percent and the operating margin declined 7.7 percentage points quarter on quarter. This was Due to decrease of profit along with the decrease of sales in addition to the effects of aforementioned one time expense. If the one time expense are not factored in, the operating margin would be 6.1%. Next slide please. Finally, let's look at Yushine Business segment. Net sales decreased 16% compared to fiscal year ended March 2020 to total 105,100,000,000 yen in the fiscal year ended March of 2021. The factors for this decrease include a significant slowdown in production mainly in Europe in the Q1 because of restrictions imposed on Operations due to COVID-nineteen pandemic. Operating loss came to 1,900,000,000 yen and the operating margin was minus 1 point These figures represent a 3.9 percentage point year on year drop in operating margin. Onetime expenses in card during the 4th quarter A total approximately 4,300,000,000 yen for restructuring Europe, etcetera. If these expenses were excluded, A decline in operating income would be 6% and operating margin would have risen at 0.2 percentage points. The fiscal year ending March 2022, we anticipate an increase in sales and an improvement in operating profit and loss Due to the impacts of the recovery in automobile market, regarding the restructuring in Europe, while we have reached agreements with employees, local governments, etcetera, about the details of structural reforms to be implemented, our personnel reduction plan will not be Therefore, we won't see a reduction in fixed costs until the next fiscal year, which is the fiscal year ending March 2023. The impact of the business transfer In the Yushin Business segment, there will be an increase of 28,500,000,000 yen in net sales for the fiscal year ending March 2022. Next slide, please. This shows Ryushin Business segment quarterly trends. Net sales increased 5% quarter on quarter to hit 32,300,000,000 yen Sales increased as the overall automobile market rebounded, although the level of recovery varied by region and customer. The operating loss came to 2,500,000,000 yen the operating margin was minus 7.9%. Operating margin was down 13.3 percentage points for the same period. Although the profitability improved due to the recovery in sales, our profits dropped due to the bookings of the aforementioned One time expenses. If these expenses were excluded, operating margin would be 5.5% and the operating margin would have risen 0.1 percentage points quarter on quarter. Next slide please. The bar graph here shows trends in profit attributable to owners of the parent. Why the line graph shows the changes in the profit for Period per share for the period was 38,800,000,000 yen Earnings for the period per share was 95 yen Next slide please. The bar graph here shows trends in quarterly profit attributable to owners of the parent by the line graph charts, changes in the profit for the The profit for the period was 5,800,000,000 yen Earnings per share was 14.2 yen Next, we have the cost of the inventory trend. At the end of the 4th quarter, inventory totaled 71,400,000,000 yen which is 2 9,000,000,000 less than what it was 3 months ago. This is due primarily to the fact that the inventory strategically accumulated was sold in phases as expected. While inventory needed to increase the sales that is currently expected, it has been secured. Next slide please. This graph contains a bar chart showing trends in net interest bearing debt, futures total interest bearing debt minus cash and cash equivalent Underlying chart indicating free cash flows. At the end of the 4th quarter, net interest bearing debt totaling 84,400,000,000 yen was up 9,200,000,000 yen from what it was at the end of the previous fiscal year. Next slide, please. This is a summary of the forecast for the fiscal year ending March 2022 net sales operating income and profit for the period are all expected to reach a record highs in the current fiscal year. Sales are expected to exceed a 1,000,000,000,000 yen with the decrease in LED backlights and mechanical components compensated by The increase in optical devices and motors. Operating income is expected to increase to a record high of 80,000,000,000 yen due to the expansion of profits Accompanying the growth of businesses such as ball bearings, motors, analog semiconductors and optical devices, the exchange rate is assumed to be USD 170. Next slide please. This slide shows the forecast by business segment. Next slide please. Now I would like to talk about all the changes to the business segment. The Smart Product business has been transferred from the Electronic Devices and Component segment to the Mitsumi business segment. Likewise, the Home Security Units business has been transferred from the Yuxin Business segment to Mitsumi Business segment. We made these changes in order to the relevant businesses and basic technologies into the Mitsumi business segment, this will allow us to strengthen our Our own EMS strategy and integrate the mechanical and electronic technologies that we have as an edge Device manufacturer with an eye to creating high value added products for key markets such as the IoT market, we will work To create greater synergy between related business and technologies, for example, we will turn conventional mechanical such as locks into IoT products such as the SARIOTE Smart Lock. We also transferred The Automotive business from the Mitsumi business segment to the Yuxin business segment, this will enable us to make production sales are approaching even more efficient by consolidating automotive parts sold as Tier 1 supplier. We are also aiming to create synergies between products for vehicles equipped with more automatic and Electrical components such as Yuxin's 3 core products, CSC, Flash Handles as well as E Latch and the high frequency technologies of our Automotive business to create the high value added products. The results for the fiscal year ended March These businesses that have been transferred are as shown on the slide. Next slide please. This slide shows the results for the fiscal year ended March 2021 that have been reacculturated to reflect the newly reorganized business segments. The numbers in the red frame are recalculated and redisplayed. This is This concludes my explanation. Thank you. Next, President Kainuma, please. Good evening, everybody. Kainamo speaking. I would like to talk about our business strategy, management policy and business strategy. So this is a summary of last fiscal year. So at the same time last year, things were very uncertain. The start of the fiscal year was uncertain. In terms of the operating income, It was reached the upper end of the original forecast range. The vaccines It was completed in last year as expected, but the vaccine program has been late to be deployed in Japan. That was unexpected. So putting that aside, So there has some write offs that we have been talking about this year. This 8,000,000,000 plus for extraordinary expenses that we have accounted for. So in reality, we have been able to see an increase in both sales and income. In terms of the summary of last fiscal year, one of the major topics is that in the ball bearings, March production and sales was a record high level. We have been able to smash the previous record high level as shown in the slide. So volume, The 336,000,000 of sales, that is, and production was 315,000,000 units. It was a very surprising increase in volume. So in motors, we have seen an improvement in the motors business and has progressed very smoothly. And number 3, and we have not expected to come to this level for the analog semiconductors, has been able to increase their operating income. So in a well balanced manner, we have been able to develop our business. And towards this fiscal year, I think we have been able to create a good trend. And I think that will be the summary of last fiscal year. So for this fiscal year, For our company, we are going to celebrate the 70th anniversary. So since I would have listed on the stock exchange, it will be the based anniversary. So this will be a watershed gear for us. So we would like to smash the record for the profit. And next year, we want to make this a year to make a to be a foundation. So in terms of operating income, JPY80,000,000,000 will be the target, but this is a very conservative target. So last fiscal year, I think As some of you remember, our operating income was between JPY 50,000,000,000 to JPY 60,000,000,000. That was the forecast for last fiscal year. So this was the kind of bottom up number. And at the same time, this We've got a stress on the maximum level of the operating income that we had the capability to generate. So we settled on the 50,000,000,000 to 60,000,000,000 of operating target for last fiscal year. So in terms of the stress, 2 years ago, it was €58,600,000,000 of operating income and that about €9,000,000,000 of COVID-nineteen related expenses and €55,400,000,000 for the retirement expenses for Thailand. So we rounded up to €81,000,000,000 was what we were able to achieve. But since then, everything started to bear fruit. And of course, this fiscal year, our capability is even more than this, And I will talk about that in detail later. But in reality, I think we'll be able to have the capability to have 100,000,000,000 of operating income. And I think we have been able to gain strength to be able to reach that level. In terms of the net sales, so 100 and 80,000,000,000 plus. So the past two times, we were not able to reach the 1,000,000,000,000 yen of onus sales. So we have not been able to achieved a couple of days' worth of sales to be able to increase this 1,000,000,000,000 yen So I think this is the 3rd time that we're going to target this 1,000,000,000,000 yen of net sales, And that is what we want to achieve. The last fiscal year, there was a very unclear situation that we cannot foresee. In the 3 year, we were not able to update a 3 year plan. So this year, As you can see here, this is what we are updating for the midterm business plan. So 1,280,000,000,000 Next year, 1,100,000,000,000 of operating income and the year after that, 1,200,000,000,000. So this will be the updated midterm plan target. So the next year's driver will be the aviation industry. So in the second half of next School year, I think this industry will start to recover. And new businesses, so There's a lot of those type of new businesses that's going to come up. Every year, new businesses will start to contribute. And the third point is that we are talking about the 3 Spears plus 1, ball bearings, Motors and analog semiconductors plus OIS. So this core business this creation of core business and the sub core business that I said OIS, with this in the center, this sustainable growth is going to be achieved. So next year, net sales is going to be we think that we'll be able to increase the sales by 100,000,000,000. So in terms of the RUB 100,000,000,000 of operating income will be a capability. We talked about that, but the ball bearings business is very strong right now. So once even with Aviation Industry segment, so 100,000,000,000 by quarter operating income will be achieved. So once the aviation business comes back and machine components, 52,000,000,000, the electronic components, Well, backlight business will be gone, but even so, JPY 25,000,000,000 will be achieved. And Mitsumi With the analog semiconductors, I'll talk about that later, 10,000,000,000 last year, We're able to go over the 10,000,000,000 yen. And this year, internally, we're talking about 15,000,000,000 of operating income. We haven't reflected that fully into our projection. So then that would be OIS and games And other businesses, that will be JPY 30,000,000,000 of income. You're seeing it's about JPY 8,000,000,000 of contribution. So 115,000,000,000 yen well, you have to subtract the 15,000,000,000 yen of the internal expenses, and that will reach this operating income level. And I will put stress factors into our outlooks. So if you consider this with aviation And the lack of components, that will mean that will put a downward pressure on the production. We have to factor that in. So we have to subtract that. So with that type of calculation, I think we'll be able to get the forecast. The currency situation is very good, and we have strong inquiries for our products. So this year, The in terms of the actual capability of our earnings under a stressed scenario, I think we'll be able to extract a very high level of our earnings for this fiscal year. So this is the growth of our ball bearings business. So last fiscal year, I said that we are not worried at all about the global business. We have some fluctuations, but this will grow steadily. And we have a very steady competitive capability in ball bearings. That is what I said. But if the customers stop their production, We won't be able to supply ball bearings. Even if the volume goes down, I said that please do not worry about that in the ball bearings business. And I think things turned exactly that way. And I said March in production, so The 1,000,000,000,000, 345,000,000 of sales. So 345 1,000,000 of the capacity has been increased up to that level, so that's a project that we have. And this project is going very steadily. And what I'm going to say later is about the quality of the ball bearings. We want to make that overwhelmingly strong. So the mass production technology, we have been able to reach the results. For the small diameter Ball bearings, in the carbon neutral society, what role it's going to play, we want to have an awareness in terms of product strategy. So the road ends from the first pull. We have been able to Change of the strategy and the U. S, in terms of the aviation industry, the demand in the U. S. Has started to come back very strongly. So if things go in this way, I think that there are some airplanes that have very old engines, but they have to replace that. So towards the carbon neutral society, with the this new aircraft that has new engines, So this will be going to be transferred to the double aisle to the single aisle airplanes. That will be the transition. And then the recovery is going to be very substantial. So I'm looking forward to what's going to happen for next fiscal year. Going to the electronic devices and components. Well, even if there is not a backlight business, we think we'll be able to improve earnings. This 8 Each business is being established and I think we have a very good business. And I am confident about that. Operating profit margin around 6% is our anticipation. And operating the highest Operating margin of Electronic Devices was March 2015, 8.9 percent. And operating margin back then was 30 7,000,000 yen 21,000,000,000 yen is The expectation and backlight operating margin is operating profit is limited. So led by a backlight, in the past, this business was making profit. However, now It can be compensated by other businesses more than compensate the decrease in the backlight business. So I think that we have finished that type of responses. So the backlights peaked in the past and therefore investors were concerned that what if it drops significantly. But the 3 spares plus 1, thanks to all those images, we can be finally freed from this problem of the backlights and sensors, EV And others backed by such a movement, I'm sure will make a huge growth. At Motor Business, we had a tough time in the past. However, centering around Automotive Products, Autonomous growth is now real, the grill, shutter, HVAC, such actuator products. In the new model, various new model programs, these products will be adopted, electric power brake And ADAS, rider related products and those Motor businesses, we have also gained. And the hard disk spindle production is increasing. In the past, our motor business had difficult time. However, this is now something that We can look forward to and we have sticked to second vendor strategy and we will keep doing so. And the Motor market will keep expanding. Likewise, our Motor business will keep expanding as well. Next, Mitsumi Business. So it's becoming stronger more than expected. The game business is very robust. So yesterday and day before yesterday, we heard some news reporting, but we have a conservative assumption of 20,000,000 pieces or so, so there should be some ups and downs. But even if game business declines significantly, Analogous Semiconductors and OIS. We'll be able to support robust growth and that is the characteristics of Mitsumi business. Analog, semiconductors, ABRIC, even without April profit of ABRIC, last year's 10,000,000,000 yen profit can be exceeded. As I said previously, I would like to aim for 15,000,000,000 Although the internal plan is JPY12 1,000,000,000 or so, in the past, the semiconductor was a problem child. However, Mitsumi is now leading it. Who could have ever anticipated this? And we would like to further strengthen strategic management in order to further strengthen this line of business. Next is the optical business For Optical Devices, OIS initially backlight as a subcore business, The backlight had solid sales. And therefore, we didn't want to excite much efforts OIS, that is what I said in the past. However, backlight sales are shrinking. And therefore, This is now positioned as a strategic growth product. 2 years ago, we reviewed the positioning of this business And we have implemented various growth measures like we were impacted By the U. S. China trade friction, however, development of new products or new customers is progressing very smoothly. So next year and the year after, we can expect a huge increase in sales. So we would like to make sure to make good products and keep the delivery time. And some are made in Thai plants. And eventually, in Philippines, and this is partly due to customers' wishes, we would like to make our products [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] For the North America, and we are investing about 10,000,000,000 yen for plant In Philippines, next is analog semiconductors. So semiconductor 8 Spears. Our semiconductor team put together these plans. So niche profit plans or strategies and we would like to achieve this as soon as we can. And if this is realized, we will be able to achieve 100,000,000,000 yen profit. In order to achieve that, what do we need to add both in terms of financial and human resources? We need to make a good decision. And as for the analog semiconductors, We need to gain all the potential rooms for improvement or growth In terms of the product, next is the Yuxin, Tier 1 Business. Since last year, we have been impacted by the pandemic. So particularly in the first half of last year. In the second half, we saw a rapid recovery. However, about 300 Positions in Europe will be laid off. And 2 weeks ago, We came to an agreement with a French labor union. So Logset business, which is business with low profitability, will be closed And we will shift towards a higher value added business in order to progress our efforts on that. And we cannot avoid the impact of a shortage of semiconductors to some extent. However, from April to June, So from April to June, we will be impacted by such a shortage. However, starting in June, we shall be able to recover. That is what we are expecting. From low priced goods to higher priced goods, So we are strengthening our sales activities and Smart Lock will be spin off spun off from Yuxin Business And retrofit smart lock 50 to 100 units per day, we are seeing steady sales. And we would like to keep watching this. And at appropriate timing, we would like to become more proactive in this area. So this is about multipropose factory being built. I would like to report to you, Other than acquiring companies in the past 12 years, 8 plants, 8 factories we bought or build. So we are making preemptive strikes because we want to grab orders whenever we see them in front of us. So we decided to build this factory in Thailand. And several years ago, we built another factory, which is now used for spindle motor production. So the Regardless of opportunity, only it has a 4 the hair on the forehead, so we need to grab it. And therefore, we are building this multipurpose factory. In May 12 years ago, when I was appointed CEO, for the first time I [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] I participated in this Analyst section, and I'm this is a promise I made in the past 12 years. In order to keep my promise, So I have been making steady efforts. And back then, it was 140,000,000,000 yen and now it's 1,250,000,000,000 yen So the market cap has increased by about more than 1,000,000,000,000 yen for which I'm very pleased. So going to the next slide, this is Slide 38. So this clearly highlights what has been achieved. So we have the first speaker. This is the backlight business. I think a lot of people were Focus on this. So this was unexpected. So this was a product that contributed a lot to our profit. And We will be pleased if this continued to go up, but things will not are unpredictable. So what I want to stress here is that In the IR meeting, in the previous IR meeting, I have said that in our business, We are like Uniqlo. So Uniqlo, if they were not able to sell leases, they were able to stably grow. The thing It goes to us. Even if we don't have the backlight business, we can continue to grow. That's what I said. I think the market has started to understand what I have been saying and that is reflected in this chart. Next slide please. And with this, this is the Matterhorn. I'm being the picture of Matterhorn. So This is one of the very difficult mountain to climb. So we have gone to maybe 80% climb 80% of Matterhorn maybe in with a 2 years delay. So next year, we want to achieve these numbers that are shown here. And the second promise I have made is that We want to lay down the foundation for the 100 year anniversary. For 12 years ago, we were Just before the 60th anniversary when I took the office of the CEO and we want said I wanted to lay the foundation to celebrate the 100th anniversary. So this 12 years, there were a lot of things that have happened. But that said, we by overcoming these adverse environment, I think we have been able to become stronger. So that means that if you go to Page 40 1, as I show here the sub core businesses, they have been shifting, becoming stronger as a Spears business. And I think that is the reason why we have been able to grow. And this business that can if we can leverage synergy, It will incorporate that and increase its peers in line 10. And by doing so, this will be laying the new foundation for our 100th anniversary. So from the back right to OIS, with the major transition taking place. So our sub core the Sobo sub core business, we will consider the overall balance and then we'll proactively integrate these businesses. So we have the core the subcorp business, we have to consider the balance and then move forward. With this, we will be looking at the new foundation for the and maximize the profit. So this is The second point about the new strategy, this QCDESD excuse the profit. So this is the second point about the new strategy. This ES it's QCDESS or QCDS, shall we say. So what this means is that In this carbon neutral society, we can't avoid a society going in that direction. So this is a mission that we have to achieve for the human being overall. So how are we going to respond to the carbon neutrality? That will be is a very important initiative. So the products that cannot contribute to carbon neutrality will be driven out of the market. That's what I think. So for instance, If we in terms of the ball bearings, so the accuracy of the ball bearings, so we had to fully enhance that and then differentiate. So 0.02 micron, when the President at that time when he entered the company Said that, that was accurate. So this accuracy, 3 times of that should be achieved. And by doing so, when the Energy when motor rotates, so that means there's a lot of energy saving. So the bearings technology and analog semiconductor the technology is going to be combined. And by doing so, we'll be want to achieve this as a technology. If we can achieve this technology, it means that Our product competitiveness, of course, we're going to sell it externally, but our product competitiveness is going to be Heightened, so not only motors, but ball bearings. We can sell ball bearings. In the semiconductors, we can sell it externally. So that is our growth strategy. So I want to focus on the strategy. In November, when we make our earnings results, We will disclose some data, and I will talk more in detail about the strategy in November. So 10,000,000,000 of share buybacks, we conducted that. But the liquidity was not sufficient. So We've not been able to fully buy back 10,000,000,000. So I'm not doing the day to day transactions. So I said this, we're going to do this in April. Basically, the security companies were in charge of this buyback, unfortunately. About 3,000,000,000, we have not been able to achieve 3,000,000,000 of this 10,000,000,000 framework. So how are we going to return our profit to our shareholders? Well, Conducting another round of 3,000,000,000 share buybacks, maybe that is one option. But I thought that So we have been able to reach this watershed. Minabera Mitsumi has been able to make a breakthrough As the President of this company, that is what I feel. So for a long period of time, for the Various shareholders who supported us for a long period of time, I wanted to return our shareholders. This will be a 70th anniversary dividend. So on the 31st March, we We returned our dividend as a commemorative dividend. So is it a one off thing? So our annual dividend will be If we are able to achieve this year's target, this level of dividends I think this is a message that this level of dividends can continue. So I hope that you understand this dividend as a message from us. This is about the ESG topics. So with this, I would like to end my presentation. Thank you very much for your attention. Next, we would like to have Q and A session. And Only the institutional investors and analysts who have registered previously and participating in the call conference We'll be able to ask questions. If you have questions, please press asterisk plus 1. And if you want to cancel your question, And I'm going to appoint you 1 by 1. So when your name is I have three questions. First, Takayama san. Thank you very much. Can you hear my voice? Yes, please go ahead. I have three questions. First, About bearing capacity, JPY340, is it going to make contribution? Or are you planning to build another new factory? So after 3.35,000,000, What is the future plan for further increasing capacity? At this point in time, this multipurpose factory will be A candidate. In the past, we have been thinking Where to build bearing factories like Myanmar, India, Bangladesh, We actually considered those allocations, but I truly feel that it was a good decision not to build factories over there. So taking into account various risks, rather than making quick decisions At the places that we know rather well And where we can make quick responses whenever it is needed, we are thinking about this multipurpose factory. If the situation changes and when the situation changes, to be quite honest, we would like to enter into a different country. But as of now, if there are some needs like that, we We'll use a multipurpose factory, but up until 345,000,000, we can do that with the existing plant. My second question is Mitsumi, the substance. So what is your image of increase in sales this year? To be more specific, actuators and semiconductors And the decline in game business, I think you mentioned a few hints, but Increase percentage of sales of those businesses. If you will, please, Yoshida would like to respond. First, OIS optical devices are expected to grow significantly, Probably almost double in terms of sales. That is our expectation. Semiconductors, Around 50,000,000,000 yen That is what we have been explaining. And it's likely to grow about 10%. And games, 25,500,000 units Sales volume announcement was made by one of our customers. And as Akainuma explained a while ago, In terms of our guidance, we would like to or we have a more conservative forecast, about twothree of that number. But of course, the intention of our customers is what it counts. And at this point in time, it may be too conservative. Thank you. Lastly, I would like to ask a question to Mr. Kainuma. So up So JPY 100,000,000,000 is now visible. But in the past, you said that the JPY 100,000,000,000 is not the final goal. So beyond that point is what I'm interested. So 4 drivers or 4 business segments. I think it was Slide 41. So the next So 2 or 3, the drivers of the business, what are your expectation? Or do you have high expectation for the So our formula for victory is to focus on M and A, Since the connector switch and power supplies and the wireless and switches, So we put up radars all the time in order to get Opportunities whenever we see them and we will continue such activities, but of course, there's the other party. And therefore, in what sequence, we don't know yet. But as you can imagine, these things, These areas, we are likely to see increase in number of opportunities going forward. So we would like to Shrinks in these areas and semiconductor and access and motor products, we would like to Consider M and A opportunities if we can strengthen our business businesses in these areas. And we are not prioritizing. It's sort of an opportunistic way, First come and first served. And whenever we see opportunities and if it gets in our scope, we will consider acquiring in order to grow further. But other than these, there are other areas, but we have not announced them. After completing such M and A, the 9th 1st beer or 10th beer, we will announce. Rather than sharing with You're where we are focusing on in order to ensure the shareholders' interest. So in terms of the priority, it's not that we have We are focusing on certain things. And Slide 28, the existing business. So this is without M and A. But in order to secure this, You want to carry out the 1 or 2 M and As when you are likely to exceed 100,000,000,000 yen Regardless of 100,000,000,000 yen this is something that we have been exerting efforts continuously. So in because of COVID, activities slowed down more than we anticipated Or some companies are trying to redo things. But as I said, there's the other party, So it's not that easy. Sometimes we may be able to do 3 deals a year or only one deal per year. So it's just how things have turned out. Let's go to the next question from Morgan Stanley, MUFG Securities. Sato san, please. This is Sato speaking. Thank you very much for taking my question. I have 3 questions. One is about the Motor business. For the Motor business, For FY 2020, sales were 20,000,000,000.21,000,000,000 is going to go up by 40,000,000,000. For the automotive and ACDs, if you divide by automotive, ACD and others, what is the changes in 2021? What will be the sales trends for these different applications for the motor business. So for the individual motor business, I cannot comment on these individual products per se, but in terms of what type of motors It's going to be the driver. Well, it's not one specific motor driving the business. For instance, as Mr. Kainuma said, various opportunities in automotive industry, we have been able to tap into that opportunity. And through these accumulation of these factors, It's going to grow. So JPY240,000,000,000 and next year is going to be JPY 265,000,000,000. I think that is the level of growth we can see for the motors business. So related to this, the 4th quarter motor sales is already over 60,000,000,000. For 2021, JPY240,000,000,000 seems a bit conservative. So for the Q4, were there any one off factors for the Q4? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Well, no one factor for the Q4, but we are being conservative. For FY 2020, we're conservative. So because it's only increase of JPY 40,000,000,000, but actually, internally, we have a higher target. But we have put in some stress scenarios in our outlook. And as Mr. Yoshida said, so it's the growth is across the board. So stepping motors, DC motors, air movers. So the growth is equal for each of these type of motors for this year's forecast. And I'm looking at the sales trend for March. So it's not a specific model being the driver. And this is a very good situation. The growth is very equal, even. Thank you. Next question is about analog semiconductors. So ABLIC and the existing Mitsumi business, How are you going to integrate this business? How are you going to do this integration. For this time being, so basically, They will be independent because both sides are supplying the products to the same customers, there will be a firewall. So the integration is not the end objective. The analog semiconductor business growth is objective. So our strategy is not putting the integration as a priority. But if they can collaborate and create new products. So maybe that will be we'll hand it over to the fabulous Industry. So I think my job is this physical and human resources should be captured and laid down the foundation for growth. I think that will be my job. And I would like to use my time to achieve this, and that's the current situation actually. Thank you. So if that is the case, for instance, The power supplies or the batteries, in those type of products, is Would it be Able Lake or Mitsumi, I think they have a high share, both of the companies or the businesses. So this analog semiconductors, what Applications of markets will be the targets for your growth. That's on Page 34. We talked about analog semiconductors. So it says here that the 8 Spirit for the analog semiconductors. So these are the areas that we want to grow, And our managerial resources will be focused on these areas. That will be our strategy for the analog semiconductors. Thank you very much. So lastly, so the Mitsumi's game business, the client supply business. For FY 2020 In FY 2021, can you talk about the businesses for FY 2020, FY 2021? FY 20 result was can you give me the full year figure or the full year? About 100,000,000,000 yen. For this year, outlook JPY 63,000,000,000 That is our forecast for this year. So if that is the case, So the sales decline in line with this is your assumption. In terms of our guidance, that's true. But as I said, the customers, Well, it seems to be a bit bullish, maybe. So 25,000,000 units outlook is that the customers are taking as an assumption. So from our point of view, we would like to respect that their outlook. So if that is the case, maybe what are the numbers I gave you will be a bit conservative. Understood. Thank you very much. Let us move on to the next question, SMBC Nikko Securities. Mr. Watanabe, please go ahead. This is Watanabe from SMBC Nikko. Can you hear my voice? Yes. I have three questions. 1, about analog semiconductors, 8 inches and 6 inches lines, I think 6 inches are your mainstay products. And I would assume that The only option for you to further grow your business is to acquire another company. But unless you become proactive, you may miss M and A opportunities. So are you just waiting for an Opportunity or are you going to be more proactive about finding opportunities? Thank you for your advice. So because we have a long standing relationship, and I think you know my personality and I cannot give you any more comments than that. Okay. Thank you. And I have high expectation for the industry consolidation. My second question is, you are now seeing signs Recovery for aircraft. And several years ago, aircraft business expansion, you explained. And is it going back to that? Or are there any changes to the plan right now? It's very difficult for me to be precise, but what I heard was The number of passengers for the U. S. Airlines is coming back to 80% level. And in the near future, it is likely to be back on 100%. So the vaccination rollout, The effectiveness of vaccination is quite real, and therefore, it's just a matter of time. And those people, in other words, the people who are holding themselves back From going out to other countries, we'll be traveling abroad. So ANA, Japan Airlines and other airlines are saying this out loud that Inefficient engines, the engines that emit a lot of COT, they are starting to discard such engines And they want to downsize because they want to have fully occupied aircraft. So double eye to single eye, I mentioned earlier, but this trend will become explosive going forward because if you look at Similar movements in Automotive Space. When various countries Welcome people from other countries. What kinds of contribution is made by 15, people from other countries. I think it's becoming very visible. And in order to achieve that, you need aircrafts, pilots, so on and so forth. And the plan we put together, The carve that we have anticipated will be followed. I see. Understood. Thank you. Now a follow-up on that. Ball bearings can contribute to reducing CO2 emission. I agree. But Customers, how do they evaluate these products? If If there's anything visible, please share with me. So unit price or market share or is it like a green procurement type of programs. To be quite honest with you, this is something we will take on going forward, But this is the type of trend we are anticipating. In other words, in order to achieve carbon neutrality, To reduce electricity charge, I don't think solar power can fulfill all the demands And wind power cannot fulfill all the demands either. And nuclear power generation I may be able to make contribution to Carbon Neutrality, but reduction, the huge reduction in actuality is rather difficult. If that is the case, we have no other choices but to depend on certain products in order to reduce Not just the part manufacturer like ourselves, but the set manufacturers also need to take that approach. In other words, people will have to buy eco friendly products. And this integration strategy, we will be able to capitalize on And increasing precision of bearings and analog motors, So our basic strength and capacity, we will be able to use. And we have not been approached by any of our customers. Capacity, we will be able to use. And We have not been approached by any of our customers and demanded for greener products, but The buy frame from 3rd party, not that kind of things, but To what extent we can impact CO2 emission reduction, that is a huge interest for us. And so we will be making a preemptive strike in order to win in this area as well. Just for confirmation, so RE100, various companies are signing RE100, but You are not coming up as Eco Friendly products. No, they are we have not been asked to bring Eco Friendly products, not just yet, But customers will be using more of such products like Intel INIT or Minnebeya Mitsumi in it. If that is realized, I think the situation will change. So inclusive of such education, You think you need to do? Yes. Vaguely, waiting for customers' request Vaguely, it doesn't get us anywhere because quality is something that we have been always good at. And supply ability and quality and the meaning of quality. So eco friendliness or green products is now one of the elements that and make quality. Let's go to the next question. From Mitsubishi of J Morgan Stanley Securities, Uchino san, please. This is Uchino speaking. Thank you for taking my question. I have 3 questions. The first one is about Well, I want to ask about analog semiconductors. So the previous person talked about there will be some increased production for the Amelike Semiconductors. Utilizing external resources, Including that aspect, how much capacity are you going to are you planning for this year, next year's capacity increase? So what is your outlook for that? That's my first question. Well, how much are we thinking? A lot. Let's say a lot. But the thing there are things that I can say, but there are things that I cannot say. Of course, Building a factory and then waiting for the demand to come and we are taking some preemptive strikes, I talked about that. But for the analog semiconductors, So the human resources and they have the physical resources as well, oil won't be able to drastically increase the capacity. That's the same goes for ball bearings and mortars as well. Everything in our business goes under that kind of formula. And In that sense, I think we are taking measures to be able to be ready. So for this year's plan, you have already prepared for that. Is that what you're indicating? Understood. My second question is that I talked about the aircraft, the demand recovery and has started to recover, but there's some inventory issues. You talked about that. So in terms of the customers' inventory level, in terms of the recovery timing of the recovery, do you have any outlook on that? So in terms of the aircraft business team, the inventory situation has been reported to me. For this fiscal year, I think recovery won't be happening. So for the second half of next fiscal year, gradually, the inventory will be going down And then the business recovery will start. That's what I have been told. So this fiscal year, I'm not putting much expectations on this business. That's true. So if things go well from October next fiscal year or by the end of next year, I think basically recovery will start. The full recovery of the aviation business will be 2 years from now. But Even so, things tend to happen earlier. To be frank, I it's difficult for me to say what's going to happen. Oh, I see. There is a possibility that the recovery is going to happen in the early period of next fiscal year. Yes, yes. That's what I'm saying. Understood. So my third question is about the consolidating the OIS business into the Philippines. So the OIS Customers, this what's the share outlook? What are the assumptions of share? And for the Chinese business, I think specific customers saw a huge decline in specific customers. But after that, for the Reconstructing the China business strategy, are you thinking about that? Maybe consolidating these Sites will be one of these things that you can refer to, please. In terms of share, I will not refer to that. But there was another previous question. The total sales, we want to double the sales. So this sensor shift or the new solutions, new mechanics is going to happening, The unit price is going to go up, but in terms of volume, it's going to increase as well. So towards the North American customers, that's what we're going to do. And For the other areas for this business, as Mr. Kainuma has said in his presentation, this new Structured new design is going to be provided from us to the customers. So this fiscal year's Q4 of this fiscal year, I think we're going to see some contribution coming. So our characteristic is that we offer the high function products To the high end products to the customers, so that's unchanged. So including a product line of our Customers, we are looking at their policy. So in the Q4 of this fiscal year, some Of that, strategy is going to bear fruit. That's what we're seeing right now. Thank you very much. Let us move on to the next question, UBS Securities. Mr. Murata, please begin. Hirata from UBS Securities. I hope you can hear my voice. Yes, we can. I have two questions. The first one is about mechanical components. In Q4, The sales in Q4, JPY44,100,000,000 and operating profit margin was 20%. And the guidance for this fiscal year, The 170,000,000 yen for full year and therefore, quarterly, 22,500,000,000 yen and the margin at 25%. In other words, you are expecting huge improvement in OP margin. So how sure are you? You have been reducing inventories and improving productivity among other things. But from 20% to 25%, how do you plan to achieved this improvement. First of all, the thoughts behind our guidance. As you may be aware, The demand is increasing, and that is reflected on the Q4 results And the outlook for Q1, compared with them, and the same applies to Motor business, in Q2 onwards, There will be, I mean, the figures are slightly conservative. And that is Q. If Q4 continues as the basis, the numbers may seem small, I would assume. And how shortes of semiconductors will be resolved? And that is one of the factors and there are other factors And how we interpret them is one thing. But recently, it's been very strong. But Q2 onwards, we put together more conservative numbers. Yes. Well, the profit, as Kainuma said previously, conservative view for sales forecast, But the profit reflects the recent strength, am I right? Yes. Well, the profit, as Kainuma said Previously, we are being a bit conservative as the time period. And for major customers, the increased share in major customers as well as new customers, what Is the anticipated contribution even without the new customers? Do you think you can achieve a strong growth? So can you share with me more details about this? First of all, this year, the North American customer We'll grow significantly and share will be much bigger, probably 91. And the next year onwards, Because of the road map, I cannot share with you details, but this So it's not that kind of growth from last year to this year will be repeated next year. And the customers, other than the North American, there are various programs that are going on. And next year onwards, And we will be able to secure a good business. As a result, North America and other regions, The ratio between the 2 will be changing next year onwards. That is the assumption we have. I see. Thank you. Let me repeat. It seems to be no questions or further questions. We'd like to end the Q and A session. This brings us to end for the business results meeting. In the screen, Please go to the link and answer the questionnaire. Thank you very much for your participation.