MinebeaMitsumi Inc. · TSE:6479
MinebeaMitsumi — FY2016 Earnings Presentation
57 slides from MinebeaMitsumi's earnings presentation, May 9, 2017
Slide 1: Business Results, Fiscal Year Ended March 31, 2017
Business Re Fiscal Year Ended March MinebeaMitsumi Value through Difference sults 31, 2017 May 9, 2017 MinebeaMitsumi Inc.
Slide 2: 1. Financial Results 2. Policy and Strategy
1. Financial Results 2. Policy and Strategy May 9, 2017 2 MinebeaMitsumi fo Create Value through Differen
Slide 3: Financial Results
Financial Results Hiromi Yoda Director, Senior Managing Executive Officer May 9, 2017 3 MinebeaMitsumi Passion toCreate Value through Difference
Slide 4: Full-year results for fiscal year ended March 2017
Net sales for the fiscal year ended March 31, 2017 were up 4.8% year on year to reach 638,926 million yen. Operating income was down 4.7% to hit 49,015 million yen while net income was up 13.1% at 41,146 million yen. Despite the stronger yen, both net sales and net income hit record highs due to sol
Slide 5: Fourth quarter results
For the fourth quarter of the fiscal year ended March 31, 2017, net sales and net income were up significantly over the previous quarter due to the recent consolidation of MITSUMI ELECTRIC’s financial results, while operating income decreased as demand dropped due to normal seasonal fluctuation. The
Slide 6: Annual net sales
Net sales for the fiscal year ended March 31, 2017 were the highest ever. We expect net sales to grow even higher in the fiscal year ending March 31, 2018 due mainly to growth in our core businesses as well as the contribution from MITSUMI ELECTRIC after a full year’s consolidation, despite a decrea
Slide 7: Quarterly net sales
Net sales for the fourth quarter hit a quarterly record high. 7
Slide 8: Operating income
Operating income for the fiscal year ended March 31, 2017 fell 4.7% due to the effect of the stronger yen on profits denominated in foreign currencies, despite an increase in motor business profits. We expect operating income for the fiscal year ending March 31, 2018 to increase to 56.0 billion yen.
Slide 9: Machined components annual results
These graphs show annual net sales and operating income for the machined components segment. Net sales for the fiscal year ended March 31, 2017 were down 4.6% from the previous fiscal year to total 156.3 billion yen. Operating income decreased 4.2% to hit 39.1 billion yen while the operating margin
Slide 10: Machined components quarterly results
These graphs show quarterly net sales and operating income for the machined components segment. Fourth quarter net sales for the segment were up 7% from the previous quarter to total 41.3 billion yen. Operating income increased by 6% to total 10.1 billion yen and the operating margin decreased by 0.
Slide 11: Electronic devices and components annual results
These graphs show annual net sales and operating income for the electronic devices and components segment. Net sales for the fiscal year ended March 31, 2017 were about the same as the previous year at 441.6 billion yen. Operating income decreased 2% to total 21.9 billion yen, while the operating ma
Slide 12: Electronic devices and components quarterly results
These graphs show quarterly net sales and operating income for the electronic devices and components segment. Fourth quarter net sales for the segment were down 11% from the previous quarter to total 114.6 billion yen. Operating income decreased by 41% to total 5.6 billion yen and the operating marg
Slide 13: Mitsumi business fourth quarter results
These graphs show fourth quarter net sales and operating income for the Mitsumi business segment, whose financial results we’ve just begun consolidating since the business integration on January 27, 2017. 13
Slide 14: Mitsumi business quarterly results
These graphs show quarterly net sales and operating income for the Mitsumi business segment including its financial results before the integration. Although these fourth quarter results are based on unaudited management accountings, we see that net sales increased 11% from the previous quarter to to
Slide 15: Mitsumi business annual results
These graphs show the annual performance for the Mitsumi business segment including results before merger. Unaudited financial results for the fiscal year ended March 2017 show both net sales and operating income exceeding the previous fiscal year’s performance. In the fiscal year ending March 2018,
Slide 16: Annual net income
Net income for the fiscal year ended March 31, 2017 was up 13.1% year on year to total 41.1 billion yen while net income per share amounted to 107.3 yen. The biggest extraordinary gain was a negative goodwill of 14.6 billion yen resulting from the business integration with MITSUMI ELECTRIC. Extraord
Slide 17: Quarterly net income
Net income for the fourth quarter hit a quarterly record high. 17
Slide 18: SG&A expenses
Quarterly SG&A expenses totaling 23.3 billion yen increased 5.9 billion yen quarter on quarter due mostly to the recent consolidation of Mitsumi’s business results. The SG&A expenses-to-sales ratio increased 1.5 percentage points from the previous quarter to reach 11.9%. 18
Slide 19: Inventories
Inventories as of March 31, 2017 were up 23.7 billion yen quarter on quarter to total 120.4 billion yen due mainly to increase as a result of the recent consolidation of Mitsumi, while inventories for smartphone components declined along with seasonal drop-off. 19
Slide 20: Capital expenditures and depreciation
Both capital expenditures and depreciation and amortization expenses for the fiscal year ended March 2017 declined significantly due to completion of the major investment in expanding LED backlight production capacity last fiscal year. Mitsumi consolidation pushed up 2.9 billion yen for capital expe
Slide 21: Net interest-bearing debt and free cash flow
Net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents, was down 26.6 billion yen from the end of previous fiscal year to total 70.9 billion yen at the end of the fiscal year. This was due mainly to progress in cash conversion from LED backlights shipment wen
Slide 22: Forecast for fiscal year ending March 2018
This is a summary of our forecast for the fiscal year ending March 2018. We expect both net sales and profits to increase. Although sales for LED backlights are expected to decline due to invasion by OLEDs, production and shipments at many of our businesses, such as ball bearings and motors, are exp
Slide 23: Forecast by business segment
This slide shows the forecast by the business segment. 23
Slide 24: Management policies and business strategies
Now I would like to go over our management policies and business strategies. 24
Slide 25: Three focus areas and potential operating income
Today we'll look at three areas. That is the machined component business, which is focusing on increasing productivity to achieve an operating income of 50 billion yen, the electronic devices and components business, where motors business is on track toward becoming the number two profit generator,
Slide 26: Long-term targets from 2015 investor meeting
This slide was taken from the presentation material for the May 8, 2015 investor meeting. We announced then that we would aim to achieve 1 trillion yen in net sales or 100 billion yen in operating income by the fiscal year ending March 2021 and further expand the two main pillars of our business by
Slide 27: Mid-term business plan
While the cloud of uncertainty looming over LED backlights had made developing previous mid-term business plans difficult, we based our latest plan on the assumption that all our businesses, other than LED backlights, would grow. Net sales totaled about 640 billion yen last fiscal year. This fiscal
Slide 28: Operating income target for fiscal 2021
The 100-billion-yen operating income target for the fiscal year ending March 2021 will consist of 50 billion yen from machined components, 30 billion yen from current electronic devices and components, and 20 billion yen from the Mitsumi business. We will also work on M&As over the next four years,
Slide 29: Productivity improvement in machined components
After turning around a number of businesses that were running in the red, we went straight to work on improving Mitsumi's earnings, which is why we couldn’t focus on the machined components business. I’ve decided that now, after returning all of the money-losing operations of the motor and Mitsumi b
Slide 30: Ball bearing volumes and productivity
While we had expected external ball bearing sales for the fiscal year ending March 2018 to total 175 million units, we can add the amount shown in the area outlined on the bar graph with the dotted line by improving productivity. Demand has been very high, and our external sales volume grew substant
Slide 31: Miniature ball bearings for automobiles
Sales of miniature ball bearings for automobiles have also been very healthy. Monthly sales volumes have increased to 35 million and 45 million units over the last couple of years and will continue to grow. The monthly sales total for this fiscal year will be 55 million units during the first half a
Slide 32: Rod-end bearing productivity
We started an initiative to double per capita productivity for aircraft components such as rod- end bearings by checking all production processes with all managers just as we did for ball bearings. We will simultaneously implement this initiative at our Karuizawa and Thai plants first and later appl
Slide 33: Pivot assembly market share
Earlier I explained that we can make ball bearings at the cost of raw materials plus some expenses by improving productivity. Since two ball bearings are used in each pivot assembly, we will take advantage of that to increase our market share. 33
Slide 34: Electronic devices and components: motors
Moving on to electronic devices and components, I suppose many of you think that the bulk of the profits shown here come from LED backlights. Actually, sales of motors for automobiles rose significantly, so LED backlights are not generating as high a profit as you would imagine. We expect motor sale
Slide 35: Outlook for LED backlights
Amid a host of speculations about LED backlights, we don't believe that they will disappear any time soon. We've taken various measures and reduced the remaining book value of LED backlight-related equipment to about 4 billion yen. Since depreciation and amortization costs for this fiscal year will
Slide 36: Automotive LED backlights and Slovakia plant
We will be making a big shift towards LED backlights for automobile applications, which have ample room for growth. We had a groundbreaking ceremony for our Slovakian plant in early May and plan to put it into operation in January 2018. While the plant will be the production base for automotive moto
Slide 37: SALIOT and smart city project
We recently obtained a safety standard certificate for SALIOT in the U.S. and will work to expand sales there. We are also preparing for the launch of a SALIOT showroom near our Tokyo Head Office which is slated to open in August of this year. We have received positive feedback from customers and wi
Slide 38: I'll talk about automobile applications later on.
I'll talk about automobile applications later on. 38
Slide 39: Bed sensors and healthcare business
Let’s now look at the bed sensors shown on slide 39, which will finally be released soon. We plan to leverage these bed sensors to build a platform for our future healthcare business. They are currently used in nursing homes and nursing care facilities for clinical purposes, and we've made various d
Slide 40: Mitsumi business integration
Moving on to the Mitsumi business, I can say that we’ve taken all the right steps a manufacturer should take and our efforts have paid off which you can see reflected in our results. Prior to the business integration, we hired three major auditing firms to perform thorough audits, including an asses
Slide 41: Product portfolio review
You can see from this slide how we reviewed and revised our product portfolio. 41
Slide 42: Profit sources: core, sub-core, non-core
Profit sources for the core, sub-core, and non-core businesses are as shown here on this slide. 42
Slide 43: Seven spears concept
I recently shared the concept of MinebeaMitsumi’s seven spears with all employees. We believe the products in our business portfolio that we ought to focus on should meet the following three criteria. First, their market must be big. Second, the product must have a presence in niche markets. Third,
Slide 44: Sensors
When it comes to sensors, we will focus on strain gauge and MEMS technologies to expand the business. 44
Slide 45: Connectors and switches
For connectors/switches, we will leverage our ultra-precision machining technology with a focus on the challenging high-speed transmission field. 45
Slide 46: Power supplies
While we once withdrew from power supplies, we will work to expand the business and enhance purchasing power since Mitsumi has substantial technological capabilities that include quality, reliability, and expert engineering. 46
Slide 47: Wireless, telecommunications and software
Our strategies for the wireless, telecommunications, and software business, whose key product is antennas, can be seen here on this slide. 47
Slide 48: Analog semiconductors
Although I was skeptical about the necessity of analog semiconductors before the business integration, I now believe that analog and digital converters will be one of the most important components in the coming IoT era. We will focus on these products as we work to make analog semiconductors one of
Slide 49: Sub-core businesses
Our sub-core businesses include optical devices such as smartphone camera actuators and game consoles. The markets for these products can be a roller coaster ride or may disappear altogether as a result of technological evolution. That doesn't mean we are going to forget about them. We will move agg
Slide 50: Expanded product portfolio
As we have already announced, our product portfolio has been greatly expanded to include everything from input devices to conversion, control, and output devices as a result of the merger with Mitsumi, giving us a strong competitive edge. 50
Slide 51: New products and haptic devices
We are currently working on developing a wide array of new products, including the launch of haptic devices this year. Just as the slide says, we are re-entering the haptic device business. We were once the world's number one maker of vibration motors for mobile phones but posted a huge deficit due
Slide 52: Long-term vision for new modules
This is our long-term vision where we are looking at combining our strain gauges, haptic technology, and LED backlights to create new modules. We started marketing them to automakers and have been getting lots of inquiries. 52
Slide 53: Fusion with Mitsumi technologies
The fusion with Mitsumi's technologies will enable us to make new inroads into the automobile, healthcare, and infrastructure markets as a parts manufacturer that makes innovative devices designed to connect people to things and things to things. 53
Slide 54: Dividend forecast and share buyback
Over the last few years we didn't have dividend forecasts at the beginning of the fiscal year due to uncertainties in the smartphone market as well as other markets. For the fiscal year ending March 2018, we project the total dividend to be 20 yen, including an interim dividend of 10 yen and a year-
Slide 55: Net interest-bearing debt outlook
Net interest-bearing debt has been steadily dropping and should fall below 56.2 billion yen if we can reach our 60-billion-yen operating income target this fiscal year. I would like to reiterate something I have been telling you all along. That is, I didn't become president just to pay off our debts
Slide 56: Large-scale M&A in machined components
Now that we have a strong financial foundation, we will set our sights on large-scale M&As in the machined components industry. 56
Slide 57: MinebeaMitsumi Business Results
MinebeaMitsumi Passion to Greate Valve through Difference Business Results MinebeaMitsumi Inc. http:/Awww.minebeamitsumi.com/ Any statements in this presentation which are not historical are future projections based on certain assumptions and executive judgments drawn from currently available inform