Ques Questions & tions & Answers swers (Res (Results - - PDF document

1 July 28, 2005 Minebea Co., Ltd

Ques Questions & tions & Answers swers (Res (Results presen ults presentation for tation for the first the first quarter of f quarter of fiscal year scal year ended Mar ended March 31, 20 h 31, 2006) 06)

Some parts have been added and modified for a clearer understanding. Q : : T The t e total op l oper erating ing los loss of t

• f the t

e three u ee unprof

• fit

itable t e three b ee busines nesses w was 2 2.7 b billion illion yen in f n in first quarter , , a an inc increa ease of 0

• f 0.5 b

billion y illion yen in los n in loss fr from

• m t

the p e prev evio ious us q

• quarter. E

Explain r n recent nt situa tuations ions of

• f the thr

the three b ee busines nesses a and outlook f

• utlook for se

second q quarte ter o

• nwa

ward. . Are th they i in l line wi with th forecasts f from the b

• m the beginnin

ing of

• f the f

the fiscal y year? A : The keyboard business accounts for most of the increase in loss. There was no change in loss amount at Minebea-Matsushita Motor joint venture (MMMC). Loss at spindle motor business increased slightly due to a fall in sales. We expect increased production in second quarter will help improve profitability compared to first quarter. We do not expect large improvement at MMMC as structural reform will be underway until September. For spindle motor business, because sales of ROF has not yet begun, we do not expect large improvement until the next fiscal year or later, thus we forecast no change in performance in the second quarter. However, as we are implementing various measures to cut costs, significant cost reduction should be achieved even if the volume remains at the current level. Q : Q : Wh What wer were f first q t quarter ter s sales v volume a me and s d second q quarter ter es esti tima mate f te for s spindl dle moto e motors, pi , pivot t asse ssemblies, s, k keyboards, s, f fan m motors an and d bal ball be bear arings? A : Production and sales volume of ball bearings exceeded 180 million in June and production volume averaged 180 million per month in first quarter. We forecast around 175 million in second quarter as the quarter will be affected by summer holiday. Production and sales volume of pivot assemblies was 20 million per month on average in first

• quarter. We expect a 10% increase in second quarter.

Average monthly sales volume of keyboards in first quarter was 2.2 ~ 2.3 million in first quarter and is expected to be 2.3 ~ 2.4 million in second quarter. Sales volume of spindle motors was 4.4 million per month in first quarter. Based on current order inflow, we expect 4.0 ~ 4.2 million per month in second quarter. Fan motor business is robust. Sales volume in first quarter was around 8.5 million per month. We expect a further increase in seocnd quarter.

2 Q : : Ea Earnings g grow

• wth of m
• f machined

ined component

• nents s

segment ent a appears t to b be a at a a s standstill fo ill for t the la e last seve vera ral q quarters rs d despite s stro rong d demand fo for b r bearings gs fo for r co commercial a aircra craft ft a and go good o

• rders

rs f for r pivot a assemblies

• lies. I c

I conclud lude t that ea earnings of b

• f ball b

ll bearing ings a are not e not im improv

• ving
• ing. E

Explain t n the e reasons

• ns b

behind hind the r the recent p nt perfor

• rma

mance of e of the ma the machined ined c comp mpon

• nents

ents s segment. ent. A : Operating income of machined components segment was 5.1 billion yen in the first quarter, same as 5.1 billion yen in fourth quarter of the last fiscal year. Operating income of ball bearings

• increased. Increased production volume led to lower costs but this was partially offset by

unrealized profit. Sales and profit of rod-end bearings increased significantly on the back of strong aircraft market. On the other hand, profit declined for high margin fasteners for aircraft in first quarter, following seasonal peak in sales in fourth quarter of the last fiscal year. Defense-related special components business was also affected by lower sales after the seasonal peak at the fiscal year end. Earnings of pivot assemblies did not improve as expected because lack of improvement in earnings of pivot assemblies for 1.8" or small - caused by low production yield - more than offset stong performance by pivot assemblies for 3.5" and 2.5" HDDs. Q : : W Was im improv

• vem

ement ent in op in operating ing in income o

• f b

ball b ll bearing ings c caus used ed b by s sales les inc increa ease or

• r m

margin in inc increa ease? W Why d did op

• perating

ing m margin o in of m machin ined ed compon mponen ents ts s segmen ent dec t decline e compa mpared to f ed to first t qu quar arter o

• f t

the l last st f fisc scal al ye year ar? A : Compared to first quarter of the last fiscal year, average sales price was slightly lower. Because amount of decline in sales price exceeded that in production cost, profit fell compared to a year

• ago. However, we expect fourth quarter of the last fiscal year to be the bottom, with progress of

cost reduction in the first half. Meanwhile, sales and earnings of rod-end bearings for aircraft are steadily growing. Q : : W What is is t the p e pric ice t e trend end fo for b ball b ll bearing ings? A : We do not foresee a large price drop in the current stable market if we manage product mix. We can promote further cost reduction now that we have built a production system with monthly capacity of 180 million. Q : : D Did the p the price of e of ex external s sales les of

• f b

ball b ll bearing ings fall c ll comp mpared ed to f to four urth q th quarte ter of

• f the la

the last f fiscal ye year? r? A : Average sales price remained flat. Volume increase led to 4% increase in sales value from 4

• quarter. When production at full capacity of 180 million stabilizes, cost reduction should result in

higher profit. Q : : Aut Automated a assembly ly lines lines a are p e prob

• bably

ly us used ed t to inc increa ease p prod

• duc

uction c

• capacity. W

Will p ill prod

• duc

uction

• n

yield an d and pr d productivity r rise se f for sm smal all si size zed pi d pivot asse assemblies s by by u using au automated d asse assembly l lines? A : We are implementing more automation. Higher accuracy compared to manual operation leads to better yield, productivity and reduced costs.

3 Q : : When a When automa tomated ted a assembly ly li lines nes a are intr e introd

• duc

uced, I und I under erstand tha that p pilot lines ilot lines a are p e prod

• duc

uced ed a at Karuizaw awa a Pl Plan ant, qu qual ality i is c checked, d, t then m mass pr ss production l lines ar s are se set at at Th Thai ai pl plan

• ants. I

Is t the proc

• ces

ess s same f me for p pivot a t assemb mbly ly lines lines tha that a are b e being int introd

• duc

uced ed now now. A : The process is the same. Q : Q : Wh What i is pr producti tion v volume me o

• f b

backl klights o s of l lighti ting de device b busi siness? ss? Th There wa was a s a c comme mment i in the p the pres esenta entation tha tion that s sales les should

• uld in

increa ease f from

• m a

autu tumn mn o

• nwa
• ward. Wh

. What v volume me i is e expe pected for third qu d quar arter an and be d beyond? A : Average monthly production volume in first quarter was 4.5 million. We expect an increase to around 6 million in second quarter. Although there are uncertainties, we currently forecast monthly production of 7 ~ 8 million in the second half.