Ladies and gentlemen, it's 6:00, therefore, let me start the meeting. Thank you all very much for taking time out of your busy schedule to attend our session for the second quarter results announcement for fiscal year ending in March 2018 of MINEBEA MITSUMI. Let me introduce the members of presenters today. To your right, the President and Chairman of CEO and COO, Mr. Yoshihisa Kainuma. Board Director, Senior Managing Executive Officer in charge of accounting and finance department, Mr. Hiromi Yoda. Managing Executive Officer and Deputy in charge of corporate management, Mr. Katsuhiko Yoshida. I will be serving as an emcee. My name is Yamaguchi of IR department. Very nice to meet you all. First of all, Mr. Yoshida will give you the overall brief about business results. Mr. Kainuma will address on the management policy and business strategy. After that, we will take some questions.
We are scheduled to finish this meeting by 7:30. Regarding for the retail of the financial statements, please refer to the supplemental financial data and the flash report, and please refer to this document. Also, please be reminded that we have distributed three press releases. Notice regarding the dividend on surplus, interim dividend of the revised financial results, dividend forecast, and a notice regarding the divisions of full year consolidated business results for the fiscal year ending in March 2018, as well as the notice regarding the acquisition of shares of Mach Aero Bretigny Rectification SAS. We have distributed a feedback form, and that will improve our IR activities. So please fill in and please leave the feedback form on your desk. This session is going to be streamlined over the internet, including the Q&A session. There will be some streamlined services on the website as well.
Please be reminded as well. Please refrain from taking photos or recording on the session in this hall. Now, without further ado, Mr. Yoshida, please. Good afternoon. I am Yoshida. I would like to explain the consolidated financial results for the first half of the fiscal year ending in March 2018. Now, here are the highlights of our consolidated financial results. Consolidated net sales for the first half of the fiscal year ending March 2018 was JPY 429 billion and 27 million, while operating income was JPY 41 billion and 951 million, and net income was JPY 34 billion and 276 million. That's a year-on-year increase of 55.9% in net sales, while operating income and net income were respectively 2.3 times and 2.7 times higher than the previous year's figure. Net sales, operating income, ordinary income, and income were all record highs as the half year results.
This uptick was due to the improved productivity for all of the products of the MITSUMI business segment, which was integrated with Minebea last January, as well as increased seasonal demand for products used in smartphones and game consoles. These factors significantly boosted our bottom line, while first, higher than projected sales of LED backlights and also ball bearing, which is our major product, contributed to the outstanding performance. Currency fluctuations brought net sales up by an estimated JPY 14.8 billion year-on-year. Operating income was up by an estimated JPY 1.8 billion year-on-year. Please move on to the next slide. Now, I would like to go over the consolidated financial results for the second quarter. Consolidated net sales reached JPY 235 billion, 823 million, while operating income was JPY 24 billion and 889 million, and net income was JPY 20 billion and 95 million.
Net sales increased by 52.3% year-on-year, both operating income and net income rose 2.1 times the previous year's figure. Net sales, operating income, and net income respectively increased 22.1%, 45.9%, and 41.7% on a quarter-on-quarter basis. Net sales, operating income, ordinary income, and net income were all the highest ever recorded in any quarter. Factors behind these increases include higher sales volume for LED backlights and smartphone components, such as camera actuators, whose sales were driven by the strong seasonal demand and the bigger shipment volume of game consoles due to growing demand and the robust sales of ball bearings as well as other machine components. Currency fluctuations brought net sales up by an estimated JPY 0.1 billion quarter-on-quarter and up by JPY 15 billion year-on-year on operating income.
The foreign exchange rates brought operating income down by JPY 1.1 billion quarter-on-quarter and up JPY 1.7 billion year-on-year. Next slide, please. This is the chart showing the trend in quarterly net sales. In this quarter, net sales reached JPY 235.8 billion, this was the highest quarterly figure ever recorded. We anticipated that net sales for the third quarter will decline from what they were in the second quarter, given the conservative forecast for smartphone components, which account for the bulk of the overall sales, even though demand for game consoles is actually expected to be strong. Let's move on to the next slide. Here's a graph with a bar chart for quarterly operating income trends and a line chart indicating operating margins. The operating income was the highest ever recorded for any quarter, the operating margin hit double digits to a total of 10.6%.
This was also the fourth consecutive quarter of positive year-on-year operating income growth. Just like net sales, we expect that operating income for the third quarter will drop slightly quarter-on-quarter, given the conservative forecast for smartphone components, even though demand for game consoles is expected to be strong. Next slide, please. This slide shares the result for the machine components segment. On the left is a graph indicating quarterly net sales trends, on the right is a graph with a bar chart showing quarterly operating income trend, along with a line chart for operating margins. Net sales for the second quarter were up 3% quarter-on-quarter to a total of JPY 41.7 billion. Ball bearing sales rose by 3% quarter-on-quarter to a total of JPY 26 billion.
The average monthly external shipment volume totaling 188 million units this quarter, which was up year-on-year for the 20th quarter in a row. We are making steady progress with boosting production capacity by improving productivity. This September, our monthly production volume hit an all-time high of 273 million units. Sales of rod ends and fasteners totaling JPY 7.8 billion were up 5% quarter-on-quarter. Sales of pivot assemblies remained the same as they were in the previous quarter at JPY 7.9 billion. Pivot assemblies steadily contributed to our bottom line as we keep over 80% of the market share. Operating income for the second quarter totaled JPY 10.8 billion, putting the operating margin at 25.9%. Operating income rose 4% quarter-on-quarter, the operating margin was 0.3 percentage points higher than it was last quarter.
Looking at the results by product, we see that operating income for ball bearings increased as well as operating income for rod ends and fasteners slightly recovered quarter-on-quarter, while pivot assemblies operating income remained flat. Moving on to the next slide, please. This slide shows the results for the Electronic Devices and Components. Second quarter net sales rose 28% quarter-on-quarter to a total of JPY 133.1 billion. Motor sales grew steadily, mainly in the automobile market, to hit JPY 46.5 billion for a 6% quarter-on-quarter increase. Net sales of Electronic Devices and Components were up 48% quarter-on-quarter to a total of net JPY 75.8 billion. While demand peaked in the second quarter, production of LED backlights for our major customers continued to move along smoothly. We expect both sales and profit to slow down in the second fiscal half.
Sales for sensing devices grew 17% quarter-on-quarter to reach JPY 9.7 billion. Operating income for the second quarter was JPY 11.4 billion, which makes the operating margin at 8.6%. Operating income rose 67% quarter-on-quarter, while the operating margin edged up by 2.0 percentage points. Looking at quarter-on-quarter comparisons by product, operating income growth for both electronic and sensing devices while remaining steady for motors. Please move to the next slide.
This slide shows the results for the MITSUMI business segment. Second quarter net sales were up 27% quarter-on-quarter to a total of JPY 60.8 billion. The factors behind this increase included peak demand that significantly drove our shipment volumes for camera actuators and new game consoles. Second quarter operating income totaled JPY 6.6 billion, and operating margin reached 10.8%. This means that operating income rose 72% quarter-on-quarter, while the operating margin grew 2.9 percentage points. This increase is thanks to the shipment volume increase in addition to further progress in boosting productivity in the whole product categories. Please turn to the next slide. This graph is a bar chart showing the quarterly net income trends, and the line chart indicates the net income per share. Net income jumped 42% quarter-on-quarter to reach JPY 20.1 billion, setting a new quarterly record high.
This figure far exceeds the previous quarter record set in the fourth quarter of last fiscal year, which included a gain on negative goodwill and other extraordinary gains and losses. Net income per share was also the highest ever at JPY 47.7. Let's turn to the next slide. This bar chart shows the trends in the quarterly SG&A expenses and a line chart that indicates SG&A expenses to sales ratio. Quarterly SG&A expenses rose JPY 1.5 billion quarter-on-quarter to total JPY 25.3 billion, while the SG&A expenses to sales ratio was down 1.6 percentage points from the previous quarter to reach 10.7%. Please turn to the next slide. This is the chart of the quarterly inventory trend. As of the end of the second quarter, inventories amounted to JPY 163.2 billion. The figure was up JPY 29.2 billion from what it was three months ago.
The increase was mainly due to an inventory increase of components for smartphones and game consoles. Inventories should reach an optimal level in the third quarter and onwards as demand peaks. Please turn to the next slide. The bar on the left shows the capital expenditure trends, and the one on the right is for the depreciation trends. Capital expenditures for the first fiscal half totaled JPY 22.3 billion, while depreciation amortization expenses amounted to JPY 14.9 billion. We will add JPY 4 billion to our initial capital expenditures projection of JPY 44 billion to make it JPY 48 billion due to aggressive investments, mainly in the MITSUMI business, while we expect depreciation and amortization expenses for this fiscal year to be in line with our initial projections. Please go to the next slide.
In this slide, there is a bar chart that shows the trends in the net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, and the line chart indicates the free cash flows. At the end of the second quarter, net interest-bearing debt totaled JPY 67.4 billion. It was down JPY 3.5 billion from what it was at the end of the previous fiscal year. Please note that share buybacks and M&A expenses were included in the second quarter. This fiscal year, we expect free cash flows to increase significantly as profits grow and net interest-bearing debt decreases even further, despite increasing capital expenditures. In the meantime, we will continue to actively pursue M&A opportunities with an eye to medium-term growth. Please go to the next slide.
As approved by the board of directors on February 13th of this year, we bought back 4,658,200 shares with a total value of JPY 8,351,607,184. Next slide, please. This is a summary of forecast for the fiscal year ending March 2018. We expect net sales, operating income, ordinary income, and net income for this fiscal year to exceed previous record highs by a wide margin. In the second half of this fiscal year, we expect the external shipment volumes of ball bearings, a core product line, to continue to grow. However, due to the uncertain outlook for the smartphone components, we are keeping our projections for sales and profits on the conservative side. In light of these factors and the impact they will have on our operations, as well as currency movements and customer trends, we made an upward revision to our performance forecast, which has been revised in August.
For the operating income, forecast was revised from JPY 67 billion to JPY 73 billion, ordinary income from JPY 66 billion to JPY 72 billion, and net income from JPY 50.8 billion to JPY 57 billion. Mr. Kainuma will elaborate on the reasons for these upward revisions later on. Please go to the next slide. This slide shows the forecast by each business segment. This concludes my presentation. Next, President Kainuma, please.
Let me describe the management policy and business strategy. I happened to catch a cold, and perhaps my voices are hard to listen to. Please bear with me for a moment. This is the results for the first half, which was just described earlier. I will skip this slide. In regard to the second half of this year, to be frank, in the way that we publish the guidance, we made a lot of discussions internally. As a result of that, what we have come up with was that in fact, for the smartphone components, which the market is not so clear at this point, where we decided to adopt a conservative approach for our forecast. Because of the various reasons overall, we came up with a very conservative approach to announce the forecast.
I need to apologize because the gap for the revise is very big and therefore we have actually applied the most conservative assumption applied at the foreign exchange rate at JPY 105 to the USD. Depending upon the situation, once we started to see the situation clearer, we will once again announce the updated forecast. Roughly JPY 42 billion, which is JPY 41.9 billion in the first half and also the second half is going to be JPY 31 billion. Last month was already being closed and probably JPY 0.8 billion is going to be shortcomings and therefore JPY 4.6 billion is the remaining balance that we need to achieve because we were able to achieve the JPY 0.8 billion. Looking at the overall progress and probably you will wonder, why do we have to apply such a conservative forecast?
We just want to emphasize that because the whole situation is not clearly visible at this point, and therefore as soon as possible, we will be revising the forecast so that you will see the final forecast from the company's point of view. MITSUMI business is making a great extent of contribution, that is for sure. As you can see from this chart, the former Minebea business, we're able to see a great extent of improvement. For example, machine components, first of all, has not yet achieved the best performance at this point, but seeing a major improvement. Also Electronic Devices, components such as LED backlights as well as motors mostly, are seeing some improvement as well. For today, I would like to give the overall picture about this fiscal year, but that's just been summarized on this slide.
I know it is slightly early, let me discuss more about the forecast for the next fiscal year. First, about the ball bearing. Thankfully, there was a big increase in demand for the external sales. In the September month, 195 million was the volume which we were able to achieve for the external ball bearing. In October, there were National Foundation Day, and therefore there were 186 million only. Once again this month, we were probably able to have a 190 million units per month basis and that's the indication so far, automotive, high-end home appliances, and that is of course is motor and number of demand for motors is increasing drastically. Also data centers are another drivers. Also small scale robotics, including drones.
Perhaps the pet robots is another thing, but there will be smaller robotics be penetrating in the market and lots and lots of motors is going to be used in the market. 258 million units for this month. However, a year ago in this month, we were trying to increase 10 million units for the capacity and therefore we have decided a CapEx. Therefore, gradually there will be the machines and facility to be installed by next year, we would like to achieve 300 million units. With the current capacity, next February, we will be achieving a 285 million units. What about the profitability of such products? Profitability starting from next fiscal year is expected to improve.
The reason behind this is such that, first of all, we are working on variety of productivity improvement projects, in order to optimize the productivity, we are realigning the production sites. Therefore there are some substitute production as well, logistic costs as well. We are seeing a production volume month-on-month, 278 million was already achieved very soon. 278 million is going to be achieved very soon, we are rapidly increasing the production volume. Once bearing be started for production to be completed for production, there are still the manual work when the workload increases we have to increase the headcounts we identify that particular challenge. How we're going to automate the manual processes is going to be a big challenge for our company, we shall be achieving the automation of the process this year.
Probably by the end of February, we will be finishing the realignment of the factories, we don't know for sure that how much inventory can we accumulate, if that happens, we will be able to reduce the air freight. We know this plan and therefore we would like to achieve this to the extent possible. That's overall situation for the ball bearing business. One point I would like to emphasize is that starting in April and onwards, which is the next fiscal year, we will start to bear fruit as of the 1st of April. It was the productivity improvement project started in the mid-February this year, is going to be completed before the end of this fiscal year, therefore that will make a full contribution in the next fiscal year. That's the message pertaining to the ball bearing business.
If this situation continues, that ball bearing factory will be fully operated capacity will not be sufficient. Today, we have decided that in Bang Pa-in , we will start building the front-end processes. We will probably bring all these part assembly to Cambodia. If that's the case, let's say that if we exceed the demand increasing 310 million for our company, we might have to think about the possibility of moving the assembly line to Cambodia. We have just hosted the board of director meeting, we have adopted that decision at this point. The LED backlight next is that about two years ago, as is discovered by the media, LG costing JPY 1 trillion, started to produce the OLED or LED, our stock price was plummeted from JPY 2,000 to JPY 1,300 per share level.
I've been insisting that their project is not very clear at this point in time, that remains true. What I can tell you today is that in the next fiscal year, there are various customers' indication and approaches that we are calculating, there will be no major decrease in the demand to our company at this point. We will expect that high level of demand is going to continue for a certain period of time. Your concern could be forgotten, that's a strong message. I cannot elaborate on this particular point for myself, therefore, please research into the markets, there might be some speculative information or perhaps there are some media coverage related to this issue as well. Please, perhaps, you may be able to investigate this particular information on your own.
That's the extent of what I can explain at this point in time. The next topic is quite a phenomenon, this is just a gauge of dreams that the company had worked over 15 years, perhaps you might be surprised that Minebea is working in this area for such a long period of time. We made a lot of efforts, trial and error many times, we are using J gauge, that's what is called an academic area. This is called N gauge. We were able to have a very super small, super sensitive sensor that we were able to develop by ourselves. Right outside of this conference hall, we are displaying the actual product, please take a look later. Application is expected to be in the automobile, mobile, wearables, and robotic sensors.
These are the targeted market, the tens of billions of JPY market sales is going to be expected. I would say that there will be JPY 100 billion level sales that I could expect. The sales is not going to be generated in the next fiscal year. It will be in two years' time that the company will enjoy some contribution from this product. The sample distribution has already been started to many potential customers. We will capture the customer's response, we will be updating you on the latest situation in the future meetings. Regarding MITSUMI business, JPY 2,000 reducing to JPY 1,300, JPY 650, negative JPY 10 billion loss-making company is becoming positive JPY 20 billion profit company this fiscal year. The record high results for MITSUMI was JPY 33.1 billion of operating profit before, currently, it was JPY 20 billion.
Therefore, JPY 33.1 billion operating profit that MITSUMI was generating, they were only counting on the single business. However, they are doing various smartphone business, also as the seven ROE businesses are representing, many product are enjoying high productivity, the power supplies business is on a full capacity at this point. It's not that the game industry is occupying the capacity. Rather, I have instructed them to catch and capture all possible of the sales and demand, therefore, the power supply is fully occupied. In Qingdao, there is one factory which we've built the building, lines are not fully installed, that's the only vacant capacity. For the all other factory, they are all operating on the full capacity basis. I will later mention, JPY 25 billion is expected, in my opinion, in the future.
From our point of view, JPY 33.1 billion need to be exceeded after integration with our company, and that's an internal target. I would say personally that we are able to achieve JPY 33.1 billion, and therefore, I hope that you will understand and expect this business to a great lot. Then in various areas, automobile. If you don't have a higher ratio reliance on the automotive products, then there will be no future, and that mass media is covering. Therefore, I have mentioned all possible products related to automotive area, AV ADAS or others. JPY 100 billion worth of sales is going to be growing to JPY 200 billion level. Such potential is now felt by myself. For the auto installed motors, mainly from the German automakers, we have been approached many times.
MITSUMI related coils or connectors or antennas, these are expected to be sold more, and penetrate into more OEMs as well. The luxury cars or luxury products being launched in the market, as a result of that, luxury components would also be launched in the market. That's the formula that we cannot deny. Electrification of the automobile is progressing, such as EV, ADAS, and also environment, energy consumption, safety, and so forth. Higher needs are observed in the market. As a result of that, our components will be automatically sold to the OEMs. That's the situation which we see.
Electrification of automobiles and the more high-end functions, this will be a following for Minebea, I mean, MITSUMI, without mistake. In the following years, this is a more short-term perspective, what will be the growth driver? We are going to come out with a revised version of three-year plan. As I've said, smartphones, I think that next year we will sell better than this year. Game consoles. This year, there was a situation in the supply chain for this year, but the market has high variations, game consoles will sell more. Machine components. 300 million units, we have that capacity. Automotive. We have these various components that we will be able to sell. What is most important is that these new products is going to go into the market.
I can't mention specifically about these, and so sorry to say, but haptics devices, six-axis sensors, high sensitivity, high resistance strain gauges, new SALIOT. We have the SALIOT showroom just across the street. If you have some time, please take a look at the functionality of SALIOT. You can experience the functionality of SALIOT. It's just across the street. I hope you'll be able to experience that. Bed sensors will come out. There's some things that are not included here, but they will come out into the market. These products will be driving the MinebeaMitsumi business going forward. If you go to page 29, this slide is the summary of the numbers I mentioned. The gray portion, we have the dark gray and the light gray.
This is what we have announced in this May, this three-year plan that we have announced, midterm business outlook for three years. Currently, FY 2018, March 2018, at least JPY 73 billion is what we are looking at. If we just put and aggregate that, this JPY 1 trillion, JPY 100 billion of OPI, I think we will be able to achieve this one year ahead of schedule. If things go well, maybe we will be able to achieve it next year. That is what I think. What I want to draw your attention to is this JPY 73 billion and the difference between JPY 20 billion and JPY 82 billion, there is a JPY 9 billion difference. I cannot give you the breakdown of this, but the smartphones will be selling better next year. Game consoles will sell more next year.
The bearings machine components is going to be much better than this year. Even these three combined, it will be able to have a plus JPY 9 billion. Maybe JPY 77 billion or JPY 79 billion if we just end at that level. There is a lot of potential for us to add another JPY 9 billion to that figure. Today, I talked about our outlook, but in terms of more detailed contents, currently, there is things that I cannot mention specifically. May next year, as always, we will revise and review these numbers, and then make a presentation to you. One year or maybe two year ahead of schedule, achieving these targets, the machine components, as we said, JPY 50 billion, but maybe JPY 51 billion is what we can achieve. If you recall, M&A, JPY 15 billion is what we have been saying. The other segments has become better.
C&A and Mach Aero, we acquired these two companies. By doing so, JPY 10 billion is what we can do for the future M&A. If we include that in the machine components, in this within three years, JPY 51 billion in these three years, I think this is a solid target. Electronic Devices and Components, the motor business is going to grow. Backlight business will continue to be strong. If you consider all these factors, JPY 33 billion, I think, will be achievable. MITSUMI is JPY 20 billion this year. We think there is a lot of potential for this to go up further. JPY 25 billion, it says here, but as I said, from my point of view, JPY 33.1 billion would be the numbers that we have in mind.
If you include all this, M&A JPY 10 billion and JPY 100 billion of operating profit, I think that level of numbers is quite achievable for us. Game consoles, it used to be the case that in the past, 110 million of units were sold, maybe each household had one game console. Now we are talking about one unit per person. We want to have look at the long-term growth reflected in our business going forward. The other day, we have made announcement about our acquisition of the C&A, all shares of C&A. Within 3D printing, for the first time, they have been approved by the FDA, these were the medical components that have been first ever to be approved by FDA. They have the technology to make these medical components.
This 3D printing, we have been thinking that we should spend the resources at early timing and using this as an opportunity. This 3D technology has become one of the technologies that we hold in our group, and I think this is a good contribution. Another acquisition is that this plant, the owner of this plant, in 2008, when the global financial crisis, after the global financial crisis. For the major plants, he bought it, but at a low price, and they're using part of it right now. The other spaces are available. This is NHBB, which is in New Hampshire. We want to expand the capacity of NHBB utilizing this space. Although we were talking about going to Mexico, but maybe I shouldn't refer to President Trump, but, well, we didn't go in that direction.
We have excess capacity here in this plant, and we can hire people. NHBB's capacity increase, how should we do it? There's one concern, but because we have C&A, in the natural transition, for the time being, we can solve that issue. I think that's the biggest topic here. I think yesterday, maybe two days ago, we have announced the acquisition of Mach Aero. This is a French company. They provide very important components to Airbus. They are a company that are engaged in producing core components to aircrafts. By acquiring this company, it means that the core component manufacturing technology, we can learn about that, but not only that. The relationship with the Airbus group is going to be very close. The sales synergy and product synergy is what we're going to get.
NHBB and Minebea UK, they are producing aircraft-related products. With the Mach Aero group, we want to leverage the sales synergy. Intec, basically, has a plant in Bangalore, in India. This plant and the Mach Aero's plant is in Bangalore. We want to make it our beachhead in India would be Bangalore. I think it's a natural transition or natural trend of things. Mach Aero and Intec, a very excellent and talented Indian people working there. With these Indian people, we would like to communicate and we would like to go into the Indian market under a long span. For the time being, if the ball bearing demand is going to grow rapidly, some of the things that we cannot produce in our current locations, we'll make components in Thailand and then assemble that in Cambodia.
For the time being, I think basically we'll be able to cope by taking those actions. The debt equity ratio, it was 103% when I became president, but we have been able to bring it down to about 20%. We are going to increase our dividend and the rating. We have been able to be upgraded to single A. In terms of the dividend policies, because we have some issues about borrowing, but not maybe conservative, but basically, we have been focusing on investing for the future growth. Of course, we'll be spending our money for future growth, but shareholder return, of course, is what we want to focus on. That's all from me. Thank you. Let's go to Q&A. We'll bring you over a microphone. Those who have questions, please raise your hand.
The questions will be specifically from institutional investors and analysts. Before you state your question, please state your company name and your name as well. Let's go to the person in the gray suit, center middle front row. Takae from Goldman Sachs.
I have 3 questions, would you please answer them one by one? Number 1 is that at the beginning, President Kainuma said that in the second half, it was difficult to take an outlook for the second half. There is a range that you have to consider. Would you elaborate, what is the range you're looking at? If it goes on the upward trend, what is a factor that will bring this up? In terms of the magnitude of the impact, could you give us some color?
Of course, the company plan, I think basically as your best guess, but if you make any assumptions, what type of discussions, what type of possibilities have you discussed internally? In terms of the way you thought about your outlook, can you elaborate a bit more? As you all know, the smartphone's actual numbers is going to come out from now. 2 years ago, what we have experienced is that there was an announcement that was conducted, and we're not being able to reach those announced figures. We were scolded severely. That was based on the best available information, and we came out with those outlook. Announcing that on the beginning of November, I think that was a quite courageous thing to do, based on my experience. That's the reason why I say it's very difficult, because we are not the customers.
We don't know how much smartphones is selling. We don't know how the market is going to react about these smartphones. We won't know. We discussed these from various aspects, but we said that let's be conservative, and when we have a better visibility, then we will revise again. Today's message is that this will be the minimal level. This is a very secure, solid number that we are announcing today. Maybe that's the message I would like to send out. The smartphones will be the biggest swing factor? Game consoles, what about those others? Well, the most volatile is the smartphone, yes. For the machine components, I'm not worried at all. Game consoles, it's on a strong demand cycle. We don't have to be too much concerned about the Game consoles.
For the other products, overall, if you look at the overall situation, there's not so many weak sectors right now. Well, if I dare to give you some explanation, maybe that would be the way I would explain the current situation. Well, my second question is that, the MITSUMI business, there has been a substantial upward revision in terms of the profit. The full year, JPY 5 billion plus, there was upward revision for the full year. If you break it out, is it from the Game consoles or for the actuators or from different products? What is the contribution of this increase of the profit? Well, in terms of the level of contribution, to be frank, basically it's equal. Well, that means Game consoles, smartphones, and others. Others maybe will be the biggest.
Maybe I should have reversed the order, but I think that's the image that you should have. Understood. The related question. With this, from next year onwards, in terms of the strategy that you want to have, for instance, game consoles, there should be a lot of demand for capacity. I think basically you understand the risk, and you have discussed how to do about that. For the actuators, if you focus on profitability, what is your strategy about share for next year? You have said between core, sub-core. If you have changed your strategy for next year, would you care to talk about that? Basically, our strategy is unchanged. The current share, the current condition, under this current condition, and based on the external factors, next year, plus JPY 9 billion is what we are connecting outlook.
It's not the case that we're going to take share aggressively by reducing the prices. We don't have to do that. That's number one. Another point is that our strength would be the diversification, because we have diverse type of businesses. I think it's difficult to understand that some are good and some are not that good. There's a range. But it's not the case that we rely on one or two specific products. Maybe octopus will not be a good expression, but we have multiple axes. That actually serves to mitigate, minimize the risk, and enhance the corporate value. That's a way of enhancing the corporate value. On top of that, from various customers, various type of development projects are being brought to us. That's because we are engaged in various types of businesses.
I think that's what we should be focusing on. Rather than trying, we don't feel the necessity to just focus on the volatile business and try to get market share in those specific products. Lastly, this is for you, President.
The business performance of MITSUMI is very superb. That's put aside. We believe that the performances are becoming better, but in fact, we'd like to pay attention to the fact that what President think about what is improving and what are the remaining challenges. If you're just simply looking at the business results then we will conclude that MITSUMI business has improved. However, what is the very nature of the business, and how do you evaluate the MITSUMI business? The only failure, or perhaps the largest failure that I made this year lies in the fact that we did not videotaping the operation before the improvement. If we're able to show the before improvement status, then once you visit our factory next time, no doubt you will understand the difference which we made so far.
The only thing we can describe is that productivity improvement was done, also the motivation of the workers is improved, and so forth. Of course, the looking is actually much convincing than listening to the words. In fact, the fact that I failed to take a videotaping is something that I regret to the largest extent, but I cannot explain very well, because a productivity improvement of a three times so large is actually very common. How to use the lighting in a factory is completely different, to be honest. It's beyond description, but a very superb, capable workers were in MITSUMI. That's quite clear, I highly praise the workers in MITSUMI, and they were superb. That's the only description that I put out. In fact, it is true that we supported them. That's one factor, of course.
I always discuss this with you, there were JPY 3 billion impairment loss that we had to incur, JPY 3 billion, that's a lot. Also to be very frank, there were internal R&Ds conducted on the side of MITSUMI, we have shortlisted the ones that we undertake on our side, the cost of that is amounting to JPY 1 billion and so forth. In various means and ways that we implemented the things that we needed to implement, the total of a cost of JPY 4 billion per se incurred. Other than that, it's all up to MITSUMI's own capability. In this regard, I appreciate the efforts made at MITSUMI very much. What are the challenges? Eight Spears need to be growing more.
Of course, they do not work on the bearing, so it's not as much as seven, the connectors, also IoT, also wireless technologies, among MITSUMI business, that relates to our core business. Also power supply is actually, in fact, on the full capacity situation, we need to increase such great performing products. Together with the production engineering of Minebea, I think MITSUMI were able to exert to its best. MITSUMI has a lot of engineers. The factory director is the engineer, sometimes there are some software engineers, I ask some of the workers in the factory and ask that, "What do you do?" They answer that they were in fact software engineer. I instruct them to go back to Tokyo.
There were some stretched allocation of human resources in the past, of course, we are dispatching production engineering people dispatched from Minebea is actually working in the MITSUMI's factory. For the future challenges, how we're going to differentiate ourselves and try to gain the markets, gain market share. That's the only thing. MITSUMI owns technology on its own, therefore, they are able to differentiate itself. I think they are actually demonstrating some differentiation factor, I'm looking forward to the results. The haptics sensor that they produced was actually designed by MITSUMI. Whether they can actually start production and be able to commercialize their products, I think that the Minebea's production engineers will have to support them, help support them to materialize such projects. I think these are the key factor.
Any other questions? The next, the gentleman in the next seat, please. Sato from Morgan Stanley Securities. Thank you so much for your presentation. In terms of the management integration with MITSUMI, improving the productivity of MITSUMI or through joint procurement, reducing costs, I think you have been more or less been able to go through that stage. In terms of technology, I mean, MITSUMI utilizing that technology and with your company coming out with new products, I think basically you have entered that stage. Through that, what type of products from next year onwards is going to be launched? How this will have an impact from your performance from next year onwards? Would you like to elaborate on that point?
Well, the most understandable, I think, would be.
Minege that I referred to. This is a gauge, this new gauge that I talked about. The gauge and the analog semiconductor, that's the combination of these two. An analog semiconductor is designed by MITSUMI. This is a collaboration. Of our JPY 3 billion investment, we have decided to invest about JPY 3 billion. Well, the Atsugi clean room is going to be used for that. It used to be to produce semiconductors. Minebea's gauge will be produced in the MITSUMI semiconductor factory, and MITSUMI's semiconductor will be put together and produced as a product. I think this will be the most understandable example that I can give you. I will just look through the presentation.
Well, it is not shown in the presentation, that type of product, PET sensors, well, this is basically MITSUMI's technology, and data logger box, the size has been more than halved. At the SALIOT showroom, you'll be able to see this will be a tracking SALIOT, and all the SALIOTs will be tracking me. Basically, this is MITSUMI's technology. There's a lot of examples that I can give you. In various areas, this is the scope of things happening here. Thank you so much. I have two other questions. This is on page 30, actually. March 2020 sales compared to 2019 is going to go down by JPY 13 billion. Operating profit will be flat at JPY 25 billion. Is it because in March 2019, the game business is going to peak in that year?
Is that the assumptions that you're making? This is a conservative outlook, where the games will be at the peak. However, maybe I should not be mentioning this, and maybe you at the market side should conduct a survey. In the previous game consoles, there was an announcement that the year-end, and 5 million was sold, and next year, 18 million, the next year, 26 million, and the next year, it go to 20 million. Those are publicly available figures. 110 million units were sold for the previous generation. I think it depends on how you look at this, but we do not belong to this world. Personally, I think the game console business is going to be strong at least for the following 2 years. If you look into the past figures of what happened in the past years.
I hope that you will look into these market outlooks. The third question I have is that the smartphone-related sales, FY 2018 will continue to grow, will continue to be strong. If you divide it between backlights and camera actuators, are they going to be growing in tandem? What is the probability that you think that you'll be able to forecast this? In terms of the backlights, I don't know what's going to happen, but I think our assumption is that it'll be flat. That's our image. For the other components, I think basically they're going to grow. Backlight will be flat, maintaining flat. The reason you say this is that the customer number, increasing the customer numbers or increasing applications, you'll be able to maintain the flat? I think it's both. Understood. Thank you.
Any other questions? The second row to the right. Thank you very much. This is Watanabe with SMBC Nikko. About the concept of new factory, I'd like to hear. There are existing factories with higher productivity enhancement, and is that going to be the concept, or perhaps you will introduce completely new concept to the new factory? That's one question. First question. Regarding the factory where we are working on the product improvement, and if necessary, immediately we will be able to launch exactly the same front-end processes. Looking at the drastic increase in bearing is not foreseeable, not precedented in the past. More than 20 million increase has been observed. In order to accommodate with the rapid increase in the demand, we may be lagging behind, and that is quite imminently felt because the number of motors increasing and because of the various factors as such.
In fact, building the building, we need to construct a building, and we'll have to make the space available because the bearing factory would have to have a strong supporting strength or power to support the floor. That's a critical issue. We can't just use a usual factory and therefore it's wise to start a construction work. In regard to the shares, if you don't make this investment and perhaps the share will be migrate to other company or perhaps the overall industry is on the full capacity and therefore you are trying to fulfill the responsibility as a top manufacturer, which one? The approaches are coming to our company too much, perhaps because that the customers are using our products in the high-quality products, which will be very sensitive to the quality of our products. For instance, automotive is one area.
From this point of view, it's not a sheer competition. In fact, we provide high-quality products with a certain sufficient supply capability. We need to prepare a sufficient supply capability that actually gives assurance to the customers, and feel safe to do a transaction with us. In the back-end processes, you decided that you will use the Cambodia. If infrastructure is not sufficient, for example, highways are not well-built and so forth, what is your insights in that? When the factory is fully operated, infrastructure is going to be fully prepared or do you see some risk? Well, infrastructure is okay. 400 trucks are going back and forth per month, I don't expect a lot of shortages. No problem. The roads on the Cambodian side, over 500 kilometers, may not be very smooth and flat.
It's not that custom clearance take a very long time, and the bearing is fit to this type of a road transport, there's no problem from our point of view. Thank you very much.
Any other questions? Okay, the gentleman in front. Akizuki from Nomura Securities. In terms of electric component sales, you have put this down into I think the first half it was under the target. I would like to hear the reason behind this. In terms of profit, it was over the plan. The sales has gone down, but profit was better than planned. I think that's the current situation. In terms of the sales and profit, would you explain about how this works? That's the first question.
In terms of sales, it is true that Sorry, the first half is slightly under our target, Electronic Devices and Components. What's different from last year is that the start was very smooth. In terms of profit, this year's first half has been improved. I think that's the biggest reason. Going to the second half, compared to before, well, basically, the peak is different. Where the peak is coming is different. The second half sales were conservative, but of course we have taken these into considerations.
In terms of the profit exceeding expectations, the backlight outlook, the better productivity, better profitability, that is the reason. Is that the way to understand that?
From April to June last year, we didn't produce anything. This year, there was no technological challenges that we had to face. In terms of the ramp-up, we were able to do this very smoothly. Without any drop in yield, we have been able to ramp up. From April to June difference, if you look at the full year comparison, this year is quite different from last year for the first quarter. That led to the situation first half.
Understood. Second half, even if the sales go down and the profitability is good, then the profit may go down. That's why you're conservative. If this grows, it's profitable, then there is room for the upper region.
Yes, maybe that is one factor.
Well, the second question is page 30 of your presentation. The midterm targets, I would like to hear your explanation about that. The MITSUMI business, JPY 220.4 billion. Next year, you're forecasting JPY 100 billion increase. Second half, at JPY 120 billion, if you deduct MITSUMI, I think in the second half, JPY 119.5 billion, about JPY 120 billion, I think that's what you're looking at. If you double that, in terms of sales, there's more than double this figure of the half-year figure. Haptic devices and new products, you mentioned those. What is the reason? That sales would be more than JPY 80 billion, then the double figure of the half-year figures.
Well, for the game consoles components, this will be supply parts is included. Well, what I mean to say is that we include the custom supply parts in our sales. Other companies do so. MITSUMI hasn't included that. We thought that we should treat them as the same as other companies. That's the reason why we decided to treat them this way.
Is it going to start from next fiscal year?
Yes. That treatment is going to start from next fiscal year. It shows a profit, the game console business is going to grow, of course, OA will be better than this year.
That is your assumption or for the overall improvement. The third question I have is that, again, this is going into detail again, but again, this is page 30, medium-term business outlook for the Electronic Devices and Components business. The next year, the sales is going to go down to JPY 393 billion from JPY 418 billion. Backlight sales is flat, is what you are looking at. Meaning that for the other, for instance, motors for automotive, the assumption is that's going to grow a lot. I do not know the breakdown of these sales. What is the breakdown of these sales figures?
Well, it's difficult. From our side, we cannot mention some things. Sorry, I cannot comment on that. If you look at the backlights, it's flat, there's some modules that is going to go down, the sales has gone down. In terms of the real profitability, the earnings is going to be the same and no comment from our side.
Understood.
Any other questions? Any other questions? Please. Thank you for your presentation. This is Hirata of UBS Securities. There are three questions. First, on page 27 of the slide, the automotive product sales is expected, a 26% per annum growth was expected, that is quite good. Particularly, Electronic Devices expect to be growing very rapidly, that seems to be your essential motor. Of course, motor is expected to grow, but 20%-30% growth was my image, perhaps that image could be wrong, perhaps the timing of a transformation is changing, or do you expect to see a launch of new products? Could you show more detail about this information?
Like I mentioned earlier, for motors and drivers, this is automotive. Car models, what year, how much sales we projected is already defined. In the third year, the new products that I mentioned earlier is included. If the component's being installed in the brakes, this is a high sensitivity. Therefore, braking performance will improve. The feeling of applying a brake, also the braking strength is also matching as well. Inclusive of all of it, Electronic Devices and Components is actually being generated. Please understand that there are multiple factors in Electronic Devices and Components.
Understood. The second question is regarding ball bearings, you mentioned about investment earlier, the front-end process factory is going to be made in Bang Pa-in, and Cambodia will be in charge of the back-end processes. When you build a bearing factory, you will have to make a significant CapEx. What will be the investment amount and how much capacity increase that you are expecting?
JPY 310 million, I mentioned earlier, by building this particular factory, how much of extra capacity you will enjoy in terms of the timeline. The current CapEx is not that significant. JPY 3 billion, I would say. Of course, the current front-end capacity exists, there are some facilities, of course, we will invest in the existing factory first, also any extra capacity required is going to be put into the new factory. JPY 330 million is the overall capacity, in my opinion. We have to prepare ourselves, unless so, we will not be able to make in time in the case of the flood in Thailand, we built a new factory in the past in 2011. Once we announced the start of the construction and it took
Six years, then the factory is on the full capacity. The project was started way before, therefore, we were able to have a successful case today. You don't know what would happen, therefore, at this point in time, the currently projected capacity would be sufficient. Of course, we would hope to build a completely new factory in, for example, places like India, but that is a tentative countermeasure. Therefore, CapEx is minimized to a smaller extent. Thank you very much. The third question is that regarding the smartphone, I will dive into the detail. The camera actuators, which MITSUMI was struggling in this area, because of integration with your company, the productivity is improving, the startup of production, also yield, as well as the second half projection, could you elaborate on that? The start of production is very smooth.
Ramp up is very good, also yield is very solid as well. I cannot disclose the specific %, I would say all these figures are showing a perfect situation. No comments at all. Well, we will be able to produce as much as we need if order be taken to our full capacity. Thank you.
Let's go to the next question. Second person from the right, please. Michino from Mitsubishi UFJ Morgan Stanley. Thank you so much. I have two questions. Number one, this fiscal year, smartphone related or the game console actuator, backlight, game related products, the first half. In terms of the assumption on the share that you had in the beginning of the first half, do you have any changes or maybe increase the share, doesn't haven't changed? Would you elaborate on how that has impacted your earnings? Well, no change in shares, basically. The share is basically the same as we have assumed initially. I've been saying, it's not the case that we don't feel it's necessary to go out and get share. Basically, it is as planned. In terms of the profitability, it has improved than you have assumed.
It's because, yes, volume has gone up. Of course, profitability, because of productivity improvement, it has improved considerably, and that's a fact. Thank you. In terms of game consoles, is it the same situation? Completely the same. There's no change in share. Understood. The second question is, you talked about Minege, which is the strain gauge. I think in terms of application and targets, there's a lot. In terms of timeline wise, which is going to grow first? You talked about JPY 100 billion, you'd be able to reach JPY 100 billion with this business. Why do you think so? As it's written here in this presentation, it's very small and high sensitivity. There's various applications that you can think of. For automotive, mobile, wearable, robotics, the main targeted markets, these would be what we'll be looking at.
If we can sell into one of these major markets, this will be a huge business. I told you so when we entered the backlight business, nobody believed me, but I think we have been able to show you a good track record, maybe you believe me. Well, we don't know whether these clients were using this, but in terms of potential, this has good potential. That's what I want to communicate with you. We're going to go and take orders, and we'll submit samples, and we get evaluation, and gradually things will be decided. On page 29, this will be a kind of an add-on for the page 29 numbers? Yes. For the third year, I think JPY 2 billion of profit coming from this is reflected to our midterm business outlook. Understood. Thank you.
Any other question? It seems that there is no further question. We would like to close this presentation session. Now we have highly sensitive strain, the gauge that we are demonstrating outside of this hall, and also if you're interested in the product presentation, we will be showing around the showroom for SALIOT. Please come and visit.