Thank you very much for coming to MINEBEA MITSUMI analyst session for financial results for the year ended in March 2019, despite your busy schedule. First of all, I would like to introduce to you the participants for today. To your right is Representative Director, CEO, and COO, Yoshihisa Kainuma. Managing Executive Officer, Katsuhiko Yoshida. My name is Yahiro. I am a member of Public Relations and IR, and I will serve as the moderator for this session. First of all, Yoshida will explain about the financial results. Kainuma will talk about management policy and business strategy. We will have Q&A after that. We are planning to end this session at 7:00 P.M. For more details of the balance sheet, please refer to Financial Data and Financial Flash Report.
Of press releases made today, the notice regarding difference between non-consolidated earnings for fiscal year and those for previous fiscal year, as well as notice regarding repurchase of our own shares, and the notice of personnel changes have been distributed to you. Also you should find a questionnaire survey form, and it will provide us with valuable feedback for our future IR activities. Please fill out the form and leave it on top of the desk. This session is live cast on internet and for the website viewing, it's also recorded. I hope to have your kind understanding, and please refrain from taking photos and sound recording this session, unless you are a member of the company. Mr. Yoshida, the floor is yours.
This is Yoshida. I would like to explain the consolidated financial results for the fiscal year ended March 31, 2019.
Consolidated net sales for the fiscal year ended March 2019 totaled JPY 884,723 million, while operating income reached JPY 72,033 million. Profit for the period attributable to the owners of the parent hit JPY 60,142 million. These figures represent year-on-year increase of 0.4%, 4.5%, and 19.5% respectively, with net sales, operating income, as well as profit for the period hitting record highs. FX rates are estimated to have a year-on-year impact of minus JPY 2.4 billion in net sales and minus JPY 1.8 billion in operating income. Next slide, please. In the 4th quarter of fiscal year, we recorded net sales of JPY 185,785 million, operating income of JPY 6,994 million. Profit for the period of JPY 9,109 million. Net sales decreased 17.2%. Operating income increased 8.4%.
Profit for the period rose fivefolds year-on-year, respectively, as well as net sales decreased 25.6%. Operating income decreased 77.5%. Profit for the period decreased 62.3% quarter-on-quarter, respectively. Operating income for the current quarter includes restructuring-related expenses of about JPY 3 billion. We estimate that the foreign currency translations have year-on-year impact of minus JPY 0.4 billion in net sales. Plus JPY 0.2 billion in operating income. Quarter-on-quarter impact was minus JPY 3.8 billion in net sales and minus JPY 1.6 billion in operating income. 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 right one is operating income along with a line chart for the operating margin. The operating margin for the year ended March 2019 was 8.1%, down 0.9 percentage points year-on-year.
Please note that the figures of the fiscal year ended March 2018 and before are based on JGAAP and are provided for your reference so that you can look at the past figures. The same applies here thereafter. Next slide, please. This is for quarterly trend in net sales, operating income, and operating margin. The operating margin for the fourth quarter was 3.8%. Next slide, please. Here shows the difference between forecast as of February and actual results for net sales and operating income by business segment for the fourth quarter. While net sales for the Machined Components segment were almost on par with the forecast. Sales for the Electronic Devices and Components segment were lower than forecast, mainly due to order decrease in Electronic Devices. The MITSUMI business sales were lower than projection, mainly due to decline in the shipments of smartphone-related parts.
Operating income for the Machined Components was slightly below forecast due to inventory adjustments in the ball bearing market. The Electronic Devices and Components segments underachieved, along with sales decrease, and the MITSUMI business segment was about the same as projected. Profit for other business segment and adjustment combined were slightly better than expected. Next slide, please. Here shows the difference between the initial forecast as of May 2018 and actual results for net sales and operating income by business segment for the fiscal year 2019. While net sales in the first quarter were almost as expected, it went below the forecast at the end of the third quarter and stayed that way. In the fourth quarter, sales were lower than projected due to changes in the external circumstances.
Operating income remained roughly in line with the forecast until the third quarter, but could not reach the forecast in the fourth quarter, along with sales decrease. Next slide, please. Let's take a look at the results by segment. Starting with Machined Components segment. On the left is the graph indicating yearly net sales trends, and on the right is a graph with a bar chart showing yearly operating income trends, along with a line chart for operating margins. Net sales increased 7% year-on-year to reach a record high of JPY 188.3 billion in the fiscal year. Sales of ball bearings increased 15% to hit JPY 121.2 billion.
This increase was due to an average monthly sales volume increase to 196 million units, 3% over the previous fiscal year, in addition to approximately JPY 10 billion increase in sales from CNA, as well as continued strong demand in a wide range of markets, particularly automobiles. Sales of rod-ends and fasteners increased 18% to hit JPY 37.6 billion. Pivot assemblies declined 6% to reach JPY 29.5 billion. Our market share has remained about 80%, keeping earnings stable. Operating income reached a record high of JPY 47.8 billion in the fiscal year, and our operating income margin was 25.4%. This represents a 12% increase in operating income and 1.2 percentage point increase in the operating margin. By product, operating income increased for ball bearings and rod-ends and fasteners, but decreased slightly for Pivot assemblies.
In the fiscal year ending March 2020, we anticipate increase in profit, thanks to sales increase in ball bearings for aircraft applications, our product mix improvement due to the fact that the products sold in the market where the sales volume is declining are relatively low price, and cost reduction with optimizing operation, including overtime worked by plant, in line with some production adjustments for ball bearings. Also, we expect an increase in both sales and profits for rod-ends and fasteners, and decreases in revenues and profits for pivot assemblies due to the contraction of the HDD market. Beginning the fiscal year ended March 2019, CNA has been included in ball bearings, and Mach Aero has been included in rod-ends and fasteners. Next slide, please. This slide shows quarterly trends in the Machined Components segment. Fourth quarter revenues decreased 4% from the previous quarter to hit JPY 45.5 billion.
Sales of ball bearings decreased 3% to reach JPY 29.4 billion. The number of ball bearings sold outside the group totaled 178 million units on average per month. Net sales of rod-ends and fasteners totaled JPY 10.1 billion, an 8% increase quarter-on-quarter. Pivot assembly sales declined 21% to total JPY 6 billion. Operating income totaled JPY 10.7 billion, and the OP margin was 23.5%. Operating income declined 17%, a 3.6 percentage points in operating margin quarter-on-quarter. By product, the rod-ends and fasteners saw a quarter-on-quarter increase in profits, while ball bearings and pivot assemblies experienced a decline in profits. Next slide, please. Now, let's look at Electronic Devices and Components segments. Net sales for the fiscal year were JPY 387.3 billion, a decrease of 14% from the previous fiscal year. By product, sales of motors increased 3% to reach JPY 188.1 billion, mainly for automobiles.
Electronic Devices sales were down 30% from the previous fiscal year at JPY 158.5 billion. This decline was due to a decrease in sales resulting from a drop in paid components and a lower sales volume of LCD in the products for major customers. Sales of sensing devices increased 2% to total JPY 36.4 billion. Operating income was JPY 16.9 billion, and the operating margin was 4.4%. Operating income declined 46%, and the operating margin fell 2.5 percentage points. By product, the profit was almost unchanged for motors and dropped sharply for Electronic Devices, but were higher for sensing devices. For the fiscal year ending March 2020, motor sales and profits are expected to increase along with growing demand, mainly in the automotive sector.
In the Electronic Devices, we anticipate an increase in sales due to the transfer of our battery module business from MITSUMI business segment, and an increase in profits due to improved LED backlights productivity. In sensing devices, we expect a slight increase in net sales and an improvement in profit margins. Next slide, please. This is the quarterly trends in Electronic Devices and Components segment. Net sales decreased 18% quarter-on-quarter to reach JPY 93.7 billion. By product, motor sales decreased 5% quarter-on-quarter to JPY 44.9 billion, while Electronic Devices were down 30% at JPY 39.6 billion. This decrease was primarily due to a significant decline in shipments of new LED backlights to our major customers. Sensing device sales decreased 14% to JPY 8.3 billion. Operating income totaled JPY 0.4 billion, and operating income margin was 0.5%.
Operating income declined 96%, operating margin fell 3.7 percentage points compared to the previous quarter. By product, profits declined in Motors and Sensing Devices, and significantly in Electronic Devices as well. Next slide, please. Finally, let's look at the performance for the MITSUMI business segment. Net sales increased 23% year-on-year to total JPY 308.4 billion in the fiscal year March 2019. If it weren't for the increase in sales that came with a change in a customer contract, sales would have fallen 6%. Operating income was JPY 22.3 billion, and the operating margin was 7.2%. Although operating income improved by JPY 0.8 billion year-over-year, approximately plus JPY 5 billion of extraordinary expenses and losses were booked in the third quarter.
This includes profits of JPY 6.7 billion due to personnel system reforms , including the extension of the mandatory retirement age, one-off expenses from operating losses due to the Hokkaido earthquake, as well as expenses related to the disposal of some inventories. In terms of net sales for the fiscal year ending March 2020, sales are expected to decline mainly due to a conservative outlook in shipment of some OEM products, in addition to the transfer of Battery Module businesses to the Electronic Devices and components segment. Operating income is expected to increase due to an increase in shipments of Camera Actuators. This is the MITSUMI business segment quarterly trends. Net sales decreased 47% quarter-on-quarter to total JPY 46.3 billion. This drop was mainly due to the seasonal downturn in demand for game machines and Camera Actuators. The segment recorded an operating loss of JPY 1 billion.
Please go to the next slide. The bar graph here shows trends in the profit attributable to owners of the parent, while the line graph charts changes in the profit for the period per share. The profit for the period hit a record high JPY 60.1 billion. Profit for the period per share was JPY 143.9. Next slide, please. This is the quarterly trends. The profit for the period decreased 62% quarter-on-quarter to total JPY 9.1 billion. As mentioned previously, the profit for this period includes approximately JPY 3 billion of restructuring cost. Earnings per share was JPY 21.9. Please go to the next slide. We have the quarterly inventory trend. At the end of the fourth quarter, inventories totaled JPY 141.4 billion, which is JPY 15.4 billion less than it was three months ago. Although bearing inventory increased to obtain a reasonable level, inventory amount decreased in total.
Let's go to the next slide. This graph contains a bar chart showing trends in net interest-bearing debt, which is a total interest-bearing debt minus cash and cash equivalents, and a line chart indicating free cash flows. At the end of the fourth quarter, net interest-bearing debt totaling JPY 21.5 billion was down JPY 29.8 billion from the end of the previous fiscal year. In the fiscal year ending March 2020, net interest-bearing debt is expected to increase due to the payment for TOB of U-Shin and consolidation of U-Shin.
Next slide, please. This is a summary of the forecast for the fiscal year ending March 2020. Net sales, operating income, and profit for the period are all expected to reach record highs in the current fiscal year. As a result of growth in the automotive and aircraft businesses, as well as the integration of U-Shin, we expect overall sales to increase. Operating income should exceed JPY 1 trillion. Operating income forecasts are highly uncertain due to extreme fluctuations in the foreign exchange market and the smartphone market. We expect the total to increase to JPY 77 billion due to the aforementioned growth in the automotive and aircraft businesses. In addition to improved profitability, mainly for ball bearings. The forecast for Electronic Devices and components in U-Shin are on the conservative side. The exchange rate is assumed to be JPY 110 to a US dollar. Next slide, please.
This slide shows the forecast by each business segment. Next slide, please. Let's turn to our shareholder return policies. As we explained at the second quarter financial results briefing last November, we increased our dividend to JPY 28 per share in the fiscal year ending March 2019. The total return ratio, including the share buyback program implemented last year, was approximately 37%. Next slide, please. This chart shows ROIC trends by segment. The figures on the left are on an annual basis, and those on the right are on quarterly basis. Despite quarterly seasonal fluctuations, the company's overall ROIC remained in the double digits on the annual base and was 12.4% for the fiscal year ending March 2019. By segment, Machined Components had a stable ROIC, reaching 31.1%.
Likewise, Electronic Devices and components maintained a steady double-digit annual ROIC, while the MITSUMI business segment also improved significantly since the business integration. Please note that these figures of U-Shin are pre-merger results and based on JGAAP, and the annual figures are calendar year basis. This concludes my presentation. Mr. Kainuma, the floor is yours. I would like to talk about management policy and business strategy. It's been 10 years since I assumed the office of the president, and fortunately, I have been able to enjoy a rather steady business. We have provided lots of materials today. In addition to the last fiscal year's performance, I would also like to talk about how we want to be in the next 10 years. As I only have limited amount of time, I would like to focus on the important things.
First of all, the summary of the last fiscal year. Operating profits of JPY 100 billion. I secretly thought that we would be able to achieve this number this time last year. That is what I thought. Up till December, the performance was more or less in line with the forecast. In Q4, the huge production decrease really hit us hard, but on a monthly basis, some months had a very good profit that would bring us to JPY 100 billion. In Q4, we were faced with such problems as the U.S.-China trade war, in addition to various other factors. We didn't see as much momentum as we thought. Coupled with other factors in Q4, we saw a more decline in profit than we expected initially. How long this is likely to continue, I don't know, but I will talk about that more later.
Probably this summer, things will start picking up. The highlights of the plan for this year, as you heard, JPY 72 billion operating profit, and revenue is likely to exceed 1 trillion JPY. Why operating profit will be only 77 billion JPY or JPY 72 billion ? There are various factors. In April, a new law was enacted in Thailand, and a shortage of a pension fund of 3 billion JPY had to be recognized. 80 billion JPY is what we anticipated. What this means is, JPY 72 billion
Because of various factors, probably the realistic performance would be 62 billion JPY. That was a starting point. The 8 billion JPY from U-Shin and Machined Components, the ball bearings units will decrease, but due to various measures, the profits will increase. Electronic Components, the motors and backlights, mainly motors and backlights, Electronic Devices will see a growth. MITSUMI, very conservatively, we scrutinized the business, and 77 billion JPY operating profit is announced as a forecast. 100 billion JPY, unless we see a huge improvement and recovery, 100 billion JPY may not be possible this fiscal year, but the next fiscal year, we would like to achieve this goal. Probably by that time, U.S. or China trade war would have been resolved, and ADAS, 5G, big data, various new technologies will be driving the growth.
The 1 trillion JPY revenue, we are sure to exceed that number in the next fiscal year. Operating profit in March 2021, we shall be able to achieve the goal. Machined Components, the increased profit is anticipated. What is going down is low-end bearings. The product mix, due to the improvement in product mix, average unit price is increasing. We are reducing overtime and changing shift. We will be fully operating inexpensive plant, while will not fully operate expensive plant. Aircraft business is doing good. The 3 billion JPY increase in profit is anticipated from Machined Components segment. Electronic Devices, the motors are electrified, and such a trend is not to be stopped. Backlight yield is very good from the beginning of this year, and compared with the previous fiscal year, we will have increase in profit.
In Chinese market, smartphone pop-up camera actuators are booming. Plant in Cambodia is being very busy, pushing up revenue and profit. MITSUMI business, there may be various rumors, but our gain will remain similar to what we sold this year, in other words, a peak out. OIS, compared with the previous year, we are definitely going to see improvement. U-Shin operating profit, 8 billion JPY is the forecast. At this point in time, no major decrease in revenue. Various synergies and immediate synergy, like logistics and materials, taken into account those synergies, I think there is at least 1 billion JPY upside. This time, we forecast 8 billion JPY. That is the plan. Please look at this. U-Shin. With regards to U-Shin, I have spoken about many times, so I don't want to go into details, but we are focusing on PMI and U-Shin.
Yesterday or the day before yesterday, moved into the upper floors of our company in Japan and Europe. I will visit Europe probably next month, PMI is succeeding quite significantly at this point in time. The revenue, because it's automotive business, we cannot expect an increase in revenue all of a sudden. It takes time. Having said that, however, productivity and synergy, we would like to capitalize on to the extent possible. Next year, well, previously I said three years later, next year we can aim at achieving JPY 10 billion. This I would like you to look at during your leisure time. Smart house, likewise, please look at later. Please read it.
Later. The biggest message for today is MinebeaMitsumi is moving on to the new stage. That is the message. We have no intention to slow down growth. I will come back to this point later on, when I joined the company, the revenue was JPY 200 billion, the debts amounted to JPY 400 billion. Now it's JPY 1 trillion company, the month of February alone, we have no debts, no borrowings. Going forward, we will see additional cash flow generated. I will give you more details later on. Going forward, we will continue to generate good performance. Of course, I would like to announce about a proactive shareholders return policy afterwards. The dividends, this about a 20% payout ratio, will be the target. We decide this based on the business environment every year. Currently, this is not determined yet.
In terms of the share buybacks, we announced that. For this action, so I am talking about a proactive shareholder return policy that we'll elaborate later on. This is one of the items, we took a resolution on this. We have decided on the framework, in terms of this amount, it has a one-year window actually buyback will be conducted during the year at the optimal timing. Currently, using inventory issues we're using, the third-party committee is conducting some certain investigations about that. The squeezed-out period, because of this, is undecided. It won't take much longer, as long as this issue is pending, because this relates to the insider information, the lawyer has advised us that we cannot conduct share buybacks during this investigation is ongoing. Within this year, at the optimal timing, we would like to conduct the share buybacks.
I went through this very quickly, this is this fiscal year's topics and our status quo. Specifically, what I want to send a message to you is the slides that are going to touch upon this slide. The last decade and next decade, in the next decade, what we will be. We have a new emperor in Japan, the imperial era has changed from Heisei to Reiwa. The 10th year of the Reiwa era for us. Concluding the summary for the past 10 years, I would like to talk about the 10-year vision for us. Let's go through this. Operating profit, we are targeting this level. This is a track record of our past 10 years. This is what we are showing.
What I want to stress in this slide, using is for the consolidated, but if we assume that we have been able to achieve JPY 1 trillion. When I became a president, 2003, JPY 200 billion was the revenue. It means that JPY 770 billion as revenue or sales has increased, out of which we have conducted 17 M&As. The sales coming from these M&As is about JPY 500 billion. This means that organic growth will be, JPY 230 billion became JPY 500 billion. It is about 2.1 times of organic growth. For the remaining JPY 400 billion was conducted through M&A. I think that that will be the picture. One thing I want to brag about is in this slide. This JPY 500 billion M&A, the cash that we spent for this is about JPY 58 billion. The goodwill on the gross is JPY 15 billion.
They have some negative goodwill is included. In total, it is a negative of JPY 3 billion. The negative goodwill is JPY 0.3 billion. With that, we have been able to achieve a JPY 500 billion of revenue. I think this has been a very good achievement. JPY 40 billion of tax offsets have come with this. I think this is something that I can be proud about. If you look at the breakdown of organic growth, machine components, JPY 55 billion, motor, about JPY 100 billion, Electronic Devices, about JPY 130 billion. This is a breakdown for organic sales growth. Looking to the next 10 years. The data that we have in hand, these are the data that we can rely on. What I am focusing most on is the last line, the population income exceeding $35,000 in emerging countries, what will be called as wealthy people.
This is going to increase from 300 million people to 600 million people. I have always been saying that if the income level increases, people want high-end products. To produce high-end products, you need high-end components, meaning that there will be more opportunities for us in business. I have been saying that from the past. As you can see in this chart. The sales of JPY 1 trillion, even if we achieve an organic growth of plus JPY 1 trillion, that means JPY 2 trillion. It is not actually far from the reality. For instance, the following 10 years, India is going to grow, and Africa in 10 years, this will become a good market. For the Japanese component manufacturers, there are ample opportunities, and the peak of those opportunities will be coming in the following 10 years.
The Electro Mechanics Solutions, since I became the president, I made this a trademark. I want to be a company that comes out with only one product. We want to combine all the technologies. I think I have been able to lay down the foundation for this. Going forward, I want this curve to go up exponentially. This will not be a linear track. If you look at the past 10 years' sales, for instance, the first four years, the sales has not changed. The JPY 700 billion of sales was achieved in the latter six years of these 10 years. Currently, we are preparing a lot to achieve this growth. I do not think that this will go up very diagonally, like 45 degrees, for this couple of years.
Maybe we'll be at a plateau, because it will be a kind of a very clean curve. In any case, if you look at the following 10 years, I think we'll be able to grow to a good level. In terms of the strategy, this is the four strategies that I think I can talk about. We used to have seven spheres, we're going to change it to eight spheres, because using is one of consolidation. The Access Products, as this will be one of our spheres. As I said, these eight spheres, for the previous seven years, the market is huge, and it won't go away easily. In this niche market, we can leverage our strength. For instance, the ultra-precise processing technologies. Another point is integration. We can leverage our integrated strength, we want to focus on those areas.
We will launch new products. For instance, the technology drivers, there are a lot in the pipeline. We will be launching new products appropriately in line with this roadmap. Medical infrastructure, home equipment, where we are weak, we will be proactively going into this market. Of course, we'll be aggressive in M&As. In the following 10 years, what I think will be the biggest challenge for us will be the personal development. Because the company is growing very rapidly, the current management has become older, it means that how are we going to nurture the next generation and hand over our baton to the next generation? Simultaneously with the growth of the company, this is a challenge that I have to address. For M&A, I think we have been able to lay down the foundation for achieving JPY 1 trillion.
I think we have been able to have a good focus. With the era changing dramatically, there will be a lot of companies that will just fall behind and be left behind. It means that we will be a vehicle to receive these companies and leverage our integrated capability. I think a lot of these opportunities will show up in the following 10 years. If you look at number 4, aggressive M&A, I think that I want to focus in this area as well. If you put all this into thought, in the next decade, our sales maybe can reach about JPY 2.5 trillion. If you look at the past 10 years, we have conducted JPY 500 billion of M&A, so we have a foundation of JPY 1 trillion. Of course, JPY 500 billion to JPY 800 billion M&A.
Under the backdrop, achieving this M&A, I don't think this is an outrageous idea. In terms of organic growth, I said that JPY 230 billion has become JPY 500 billion. Based on that precedent, I think maybe 1.8 times, maybe below 2 times, I think we can do 1.8 times. The breakdown is Machined Components, JPY 200 billion, motors, JPY 100 billion, remaining 6 spheres or the new products, JPY 500 billion.
This is what we hope to achieve in the next 10 years. Machined components, the bearings and aircraft that will not suffice. We need a new pillar in machined components of business. We must find new pillars. Regarding motors, we already have a roadmap in place. JPY 200 billion is not that difficult to achieve. What is most challenging is the remaining 6 spheres and others to generate JPY 600 billion, and OP a margin of 10% shall be the target. Aircraft, 10 years from now, in total, JPY 100 billion sales is likely. I heard and sensing can also aim at JPY 100 billion revenue. This is something that I already shared with you with regards to our growth strategy. Eight arrows or 8 spheres. We have added the Access Products shaded in yellow.
Access Products have affinity with all other spheres, and they are differentiated from other company's products. The next 10 years in the market, please read through during your leisure time and all this information I am sure you are already familiar with, I would like to dispense this lengthy explanation regarding these. The core and sub-core, to give you some image, this is the image for 10 years from now. The biggest message I want to convey to you today is MinebeaMitsumi wants to become a new company, different from how it was. Cash and EBITDA JPY 100 billion. EBITDA, a company that can generate JPY 100 billion EBITDA. When I joined the company, the company had JPY 400 billion debts, and we were sort of traumatized. The question is how wisely we can use this much cash flow in order to grow.
That is the next challenge for us. This chart I wanted to show to you today. We have JPY 100 billion, and half of the generated EBITDA should be spent to ensure future growth. In other words, CapEx. Remaining JPY 50 billion. 50%, nearly 50% return, we are thinking about as for the shareholder return. Share buyback may be one of the measures, or increasing dividend is another thing we are contemplating. What we have done in the past 10 years, in other words, invest in very effective M&A. As you may have noticed, JPY 2.5 trillion. When we reach JPY 2.5 trillion, that we may have JPY 300 billion of debt. Instead of accumulating capitals excessively with no debt, we would like to keep providing return to the shareholder as we grow. That is the biggest message I want to share with you today.
That is what is depicted by these two pie charts. For the interest of time, I talked very quickly, and if you have any questions, I will be happy to answer. This is the end of my explanation. Thank you for listening. Next, I would like to go to the Q&A session. The questions will be limited to the institutional investors and analysts. Please state your company name and your own name before you ask your question. We will bring you a microphone, if you have a question, please raise your hand. At the very front row, please.
Thank you. Takayama from Goldman Sachs.
At first, the JPY 3 billion pension shortfall, this was unexpected, you said. In terms of the segment, is it in the others or is it under adjustment? This year's JPY 3 billion expense you are talking about, JPY 2.5 billion plus this backlight besides that is in MITSUMI. Understood. Second question from me is that I want to ask the president, this is on page 30 in your slide, I assume. You talked about the eight spheres. In a couple of years overall, you have said that it will not be growing, but in the MITSUMI business, I think in these recent figures, the eight spheres results will be showing up. For looking at 2022, the jump up of the MITSUMI business, what is the breakdown? This is not OIS or games as a comparison business.
There are some new areas that will bring up this performance. I would like to go into more detail, know more in detail about the MITSUMI business.
First, I would like to explain about the numbers first. The assumption is that the OEM
Including the game business, the OEM products, these are the conventional main business. The customers for this fiscal year, we think they will be strong this year, and we will just follow. The customer says it will be difficult to comment on this, but we have not assumed that it is going to grow at this pace going forward. In terms of OIS related business, the Chinese smartphones, in terms of they want a lot of added value on the lens. We think the business at a certain level will continue at a certain level. At the third year, the numbers jumping up, relating to your question about that point. New products that we have not introduced, the sales will start to be generated, and they will start contributing to our profit. That will be the breakdown.
Not only these three years, but within MITSUMI, what was most promising is the analog semiconductors. They have a very good technology surrounding this area. Currently, they are clarifying the strategy, and they are expecting where to focus on. The profit coming out of the semiconductor business or the sales coming out of the semiconductor business, I'm looking forward to what's going to happen in this area. IGBT, and personally, what I think I'm most excited about is the analog-to-digital converter. For all the assistive devices, or basically, it comes in analog because it deals with the 5G. It's a very high speed, you understand that. But the first sensing portion, this is analog. You have to convert that to digital signals. If that speed is slow, however fast 5G is, it's meaningless. We want to focus on those areas.
I call this a stealth product. We asked about this product 21. This stealth project, we have these type of projects. Because for the customer's agreement, we can't discuss about these, including these type of products. MITSUMI will be growing based on these type of products. If you look at these numbers, it seems to be quite aggressive for JPY 15 billion-JPY 29 billion. Operating profit is going to go up, sales is going to go up by a little under JPY 100 billion. It's not games or OIS. These are new products like analog semiconductors. The growth is mainly coming from these products. These are new products. What segment this is going to be included?
It's not decided, because we have Minebea, the former Minebea products, or the Machined Components, Electronic Devices, and the MITSUMI business, or with U-Shin, we are going to have some household related products. This is not a very accurate number, but roughly speaking, this is what we think we'll be able to achieve. You said that you are anticipating recovery starting from this summer. I know it's very difficult to foresee the situation, but what is the reason why you think recoveries will start from this summer? I think you have various applications, a lot of products, and I think you have a good exposure to the customer's movement. As I said in the very beginning, in the fourth quarter, and the previous year's fourth quarter, a lot of things happened at the same time.
Of course, the mobile phones and games, and in terms of seasonality, the fourth quarter was a slow season. Recovering from summer, I think that's a natural trend. That's a kind of an underlying situation. At the same time, the current U.S.-China trade friction, the slowdown that we're experiencing, maybe the inventory has piled up, but this will go down. For instance, if there are some unprecedented items, for instance, President Trump talked about raising the tariff to 25% and this continuing. If that type of thing happens, it means that from a different perspective, this will have a negative impact on the economy. Based on the assumption that those things will not happen, I think recovery will happen. We talked about hard disks. I have a dinner with the president of a hard disk drive company.
The lead time for hard disk drives is five months to six months. Maybe that is basically why the inventory has piled up, but this will gradually go down. That is the reason why at the end of summer, we anticipate that recovery will happen. That said, I'm not God, so I can't say specifically whether this will happen or not. Our plan is based on these assumptions.
Are there any applications or products that may have a fast recovery, or do you think everything across the board will recover in a similar manner?
As I always say, it may not be backed by solid ground, but based upon my experience, bearings are the first ones to recover.
Sometimes I hear that the bearings are maybe the last ones to recover. Bearings were the last to drop this time. Probably, we should focus our efforts on bearings. Understood. Thank you. Thank you very much. Any other questions? The person in the front row. Sato from Morgan Stanley. Thank you for your presentation. I have three questions. The first one is operating profit, JPY 77 billion, JPY 27 billion in the first half and JPY 50 billion in the second half. What is the reason why profit increases significantly from first half to second half, and what are the likely split? First, volatility. High volatility in smartphone and game console business. The Q1, our anticipation is that the Q1 will be very slow. That's one thing, but whereas Q2, because new models are to be launched and the customers' inventories shall build up.
In Q3 and Q4, with regards to those products, the result shall be within the expectation. Another change is, as Kainuma touched upon slightly, hard disks and overall inventory, particularly for ball bearings in Q1 and Q2, to some extent, our forecasts are at a low level. But the Q3 and Q4, those inventories shall be consumed, and the ball bearings consumption may increase due to the electrification of automobiles. The ball bearings will be selling more than our expectations. On data center related, the inventories will be consumed, and therefore, various other products and components will be shipped. Based upon such a scenario, this type of balance between first and second halves seem realistic. What about the Q4? What is your anticipation for Q4? Q4 numbers basically are based upon the forecast provided by our customers, and the market trend is also taken into consideration.
Vis-à-vis Q3 and Q4, the Q4 will go down. Thank you very much. My second question is about ball bearings. In fiscal 2018, JPY 121.2 billion, and it's going to increase to JPY 125 billion in 2019. Minebea, the parent company, and New Hampshire, a ball bearing, if two entities are separated, what kinds of changes is Minebea going through in 2018 through 2019? Original Minebea ball bearings, so to speak, on year-on-year, it'll increase slightly. The first and second halves are due to inventory and so forth. The numbers are as I stated before. As Kainuma explained, it includes ball bearings for aircraft. Those are ball bearings that will grow, and at the outset or at the entrance, the video about the aircraft, the ball bearing is shown, and that is the business that is growing.
Ball bearings, the medium-term growth rate, what is the medium-term growth rate you anticipate? Page 53. In the next 10 years, CAGR of 8%. Based upon that premise, the overall numbers were estimated. A key word is automobile data center, high-end home appliance, and labor saving and automation. Ball bearing, as the staple product for industries, will grow. That is the same as overall trend. The volume grows by 8% per year. What will be the increase in value? It's rather difficult for us to give you numbers, but automobile unit price, it's very expensive, and high-end home appliance, high-precision bearings. We have high market share, and that is the overall trend, so the average unit price will increase. Of course, we must negotiate with our customers, and therefore I cannot share with you exact numbers.
I see. Thank you. My third question is about the MITSUMI business. In fiscal 2018, JPY 22.3 billion was the operating profit, which included the JPY 5 billion, the special factors. What was the reason for decline the profit? I think you assume that the decline, the profit, the trend will continue in this year, March of 2020. JPY 5 billion, in two, three, JPY 6.7 billion.
The retirement benefit system review and the earthquake-related expenses. In net-net, all those factors added up to JPY 5 billion, and in Q2, there was impact of earthquake amounted to JPY 1 billion. In full year, JPY 4 billion. That number comes from a special factor. Based upon that premise, JPY 22 billion, and the difference is JPY 18 billion, and JPY 15 billion this year. How realistic this number is, I guess that is your question, and if I may respond, the customer's situation. Because of the customers, it's rather difficult for us to share with you specific situation of each product. For specific customers, we have a conservative estimation, and therefore, this year, the number will be lower than last year. On the other hand, the OIS, inclusive of Chinese smartphones, we will have more business opportunities.
The conservative estimation for a certain customer, plus increase in OIS, in net, JPY 15 billion, we came up with as a conservative estimation.
For March 2019, the profit went down. That is because of the decline of specific customer. The camera actuator has gone down as well. Is that a correct understanding? For the smartphone-related products, towards the end of the year, it has declined. For the smartphone-related components, not only for OIS, including we do other components as well, maybe profit declined in those smartphone components. If that is the case, the specific customers and the smartphone-related and camera actuators, if we exclude those products, towards 2018 and 2019 was basically flat. From 2020 onwards, it's going to jump up dramatically. Is that the assumption that you're taking?
As Kainuma has explained, this seven-sphere MITSUMI-based products, including semiconductors, it will start to contribute in terms of the profit. That's one aspect. New products, new business, we call it stealth projects. These products will come out as specific real projects into the second and third year.
Thank you.
Thank you. Next person. We'd like to take the question from the next person. Let's go to the second row.
Thank you. Otanario from SMBC Securities. The synergy with U-Shin. I want to confirm when the synergy is going to be achieved. I looked at the displayed products. They use motors, and they have a lot of gearboxes using extrusion manufacturing. Of course, if there's internal productions as here, you expect a lot of cost synergy. Of course, with the timing that you get the customer's approval, that's another point. If you look at the three-year plan, I do not think that you are reflecting a lot of synergy coming from U-Shin. Is it correct to say that U-Shin will not contribute that much in the following three years?
Well, the automotive customers, it's exactly what you have said. Up until 2023, they have already locked in their vendor sourcing. Changing motors and then selling these internally made components, selling back to the automotive customers will be very difficult. Going beyond 2023 for the new models that will come out
These kind of comprehensive products or integrated products, we'll be selling that to the automotive customers. You're correct in that sense. Synergy will not be limited in the automotive sector. For instance, how are we going to categorize those sales, whether it be at MITSUMI, whether it be at U-Shin? I think that's a completely different argument. For the non-automotive areas, in terms of synergy, well, to be frank, that'll be the household areas. That will be appearing. We want to achieve that in the second half of this year. We are focused on accelerating those achievements.
The second question is that the ball bearing, what will be the timing for the next capacity increase?
8% CAGR growth in terms of volume, maybe if the pivot is going to go down.
I think even so, you have to include the capacity at an early timing. In the next mid-range management plan timing, you have to select where the next plant is going to be. What is your idea surrounding this? Currently, we are facing this situation. We are not thinking immediately building a new plant. I think I have talked about this in previous meetings. We have already prepared the machines, and we have abundant and appropriate capacity already.
I think the next question is how the recovery is going to happen.
On average, this is what it's going to look like. This is what we're seeing. In practicality, maybe the curve will be looking a different way. We will be closely analyzing the market and make the decision based on our market analysis.
Conversely, within this 12-month window, I think basically you'll be able to operate within the current capacity.
Yes, I understand. The third question is about the smartphone products. We have actuator, we have pop-up cameras included. As the market has started to mature, it's a subcore business for you, with this industry maturing, how are you going to maintain profitability because you'll be receiving more downward pressure on the pricing?
As you all know, we have not imagined this to happen, there's a lot of trends that are coming, and I think our strength is that we can actually follow all these trends. For instance, I talked about the pop-up cameras, the actuators used for that. The Chinese smartphone makers, basically most of them are utilizing that.
Even if you say smartphones, you say that everything is going south, you get these new technologies. Another point is this 5G-related development is happening. A lot of development is happening related to 5G.
I think the next question is how this is going to be used, how the market is going to be created, and with what speed is this going to be disseminated.
You have to look at the market. There will be a lot of new trends that'll be coming up, and we will be supplying products to that market. I think we can consider that. We have a very close relationship with the smartphone makers. We have a lot of stealth products. We are not assuming that the subcore market is going to disappear completely. I cannot say things right now clearly.
It's very difficult to give you some figures or give you some visibility. The opposite things may happen. Maybe even if we start selling the products, they won't sell as we have anticipated. We have that experience in the past. Including those type of background, I think for smartphones, I think we can continue to focus on the market and expect growth in the market. The person in the third row. Microphone is not on.
Thank you for your presentation. This is Hirata from UBS Securities. I have three questions. The first question is, in page 29 of the slide, in the Electronic Devices, JPY 158 billion-JPY 161 billion, the increase is anticipated, and that is partly attributable to the transfer from MITSUMI and the impact on backlight and the market share and the customers. What is your anticipation? March of 2021, I think the alternative technologies will be pretty much adapted. What is your expectation for profit and revenue?
What you are interested is the current smartphone backlight expectation. This year, we will handle all the new models, and all the models, we would like to secure some market share, some share in business. Beyond that timeframe, the backlight will-
Not cease to exist. Based upon that assumption, how volume is to now change, we don't know. We do not expect the volume to be big. The sales decrease, is it only this much? That is probably your next question. The battery module product from MITSUMI. This year, it will be transferred from MITSUMI to Minebea, and the starting amount will be JPY 10 billion, and that will be now growing. As I have been explaining, things like SALIOT and other new products sales towards March 2022, the numbers shall grow in order to achieve these numbers. Electronic Devices profit, although revenue will go down. You think that you can ensure profit? Yes, because we don't think backlights will cease to exist.
In this midterm plan, we took a conservative view and, thanks to products other than backlights, we should be able to achieve these numbers. The motors will, of course, grow in order to grow profit. On top of that, what I have just explained, that will be added.
Thank you. My second question is ball bearings inventory adjustment you touched upon. By an application, I would like to know more. Automotive, probably unit price is high, and inventory adjustment is not conducted to a large extent. What kind of phase are your customers in terms of inventory adjustment and related factors?
First of all, automotive. Automotive market as a whole, how is it like? Our automotive ball bearings external sales went down. The total volume went down towards the Q4. Automotive ball bearings were flattish, and that trend should remain. In the second half of this year, automotive ball bearings should grow. What decreased significantly was fan motor type of products. In the second half of the year, we shall see a recovery. That is the assumption we have right now.
Thank you very much. My third question is as follows. Mr. Kainuma, U-Shin, you said U-Shin, as well as European sites, have some issues. Issues and opportunities, at what kind of time horizon do you think you can realize those opportunities?
There are various issues. For example, yield must be improved, and quality must be improved. New products, we need to get customers involved in an early stage for new products in order to get orders. Those are the three major things. This time, I was very much pleased because our German team had high involvement. All kinds of improvement activities are conducted through the German team. Going through a German team means that we have one single channel, and the local people in Germany have arrangements. U-Shin, the Hiroshima site, and we will provide support and backups. From Minebea, we dispatch Japanese people in order to improve quality and yield. That is what is taking place. It's a very international team that is working on this matter. I visited the site the other day, and I will visit again next month.
They seem so cheerful. Our comments and instructions, they listen very attentively. I have a positive feeling. They are very cooperative, and nobody left the company. I am confident that we can create an excellent team.
Thank you. Any other questions? Please raise your hand if you have questions. Any other questions from the floor? If not, we would like to end the presentation. Outside this room, we have a display of the U-Shin products. We will continue to display this even after this presentation. For the LED lighting products, for the SALIOT showroom, we will be open until 7:30 P.M. The people who want to take a look, please drop by. Thank you very much for your participation.
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