MinebeaMitsumi Inc. · TSE:6479
MinebeaMitsumi — FY2017 Earnings Presentation
57 slides from MinebeaMitsumi's earnings presentation, May 9, 2017
Slide 1: Business Results, Fiscal Year Ended March 31, 2017
Business Results Fiscal Year Ended March 31, 2017 MinebeaMitsumi Inc. May 9, 2017
Slide 2: Contents
Contents 1. Financial Results 2. Policy and Strategy May 9, 2017 2
Slide 3: Financial Results
Financial Results Hiromi Yoda Director, Senior Managing Executive Officer May 9, 2017 3
Slide 4: Summary of Consolidated Business Results
Summary of Consolidated Business Results Net sales and net income hit record highs FY3/16 FY3/17 Change FY3/17 February Forecast (Millions of yen) Full Year Full Year YoY Full Year VS. Forecast Net sales 609,814 638,926 +4.8% 630,000 101.4% Operating income 51,438 49,015 -4.7% 48,000 102.1% Ordinary
Slide 5: Summary of Consolidated Business Results for 4Q
Summary of Consolidated Business Results for 4Q MITSUMI consolidation boosts sales and profits FY3/16 FY3/17 Change (Millions of yen) 4Q 3Q 4Q YoY QoQ Net sales 135,599 167,375 196,418 +44.9% +17.4% Operating income 8,536 16,120 14,300 +67.5% -11.3% Ordinary income 8,215 15,857 13,621 +65.8% -14.1%
Slide 6: Net Sales Yearly
Net Sales Yearly Net sales hit record high 750.0 （Billions of yen） 638.9 609.8 500.7 371.5 269.1 282.4 251.4 228.4 Mar.'10 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17 Mar.'18E May 9, 2017 6
Slide 7: Net Sales Quarterly
Net Sales Quarterly （Billions of yen） Quarterly net sales hit record high 196.4 178.7 168.2 167.4 154.8 145.4 138.7 135.6 127.4 117.0 120.3 99.5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY3/15 FY3/16 FY3/17 May 9, 2017 7
Slide 8: Operating Income Yearly
Operating Income Yearly （Billions of yen） Operating income Operating margin 60.1 56.0 51.4 49.0 32.2 22.2 12.0% 8.2% 8.7% 8.4% 12.1 7.7% 7.5% 8.6 10.2 5.3% 3.4% 3.6% Mar.'10 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17 Mar.'18E May 9, 2017 8
Slide 9: Machined Components Yearly
Machined Components Yearly Net sales (Billions of yen) Operating income (Billions of yen) Pivot assemblies Operating income Operating margin Rod-ends/Fasteners 25.5% Ball bearings 24.0% 163.8 161.0 22.4% 25.5% 155.8 156.3 24.9% 25.0% 140.0 34.3 31.5 32.6 37.9 40.9 41.0 39.7 39.1 35.0 113.6 31.1 32.1
Slide 10: Machined Components Quarterly
Machined Components Quarterly Net sales (Billions of yen) Operating income (Billions of yen) Pivot assemblies Operating income Rod-ends/Fasteners Operating margin Ball bearings 41.9 42.3 26.4% 41.0 40.8 41.3 26.1% 26.0% 26.5% 40.2 39.8 39.2 25.1% 25.3% 24.7% 38.5 36.6 37.1 37.3 9.5 9.5 8.4 24.6% 24.
Slide 11: Electronic Devices & Components Yearly
Electronic Devices & Components Yearly Net sales (Billions of yen) Operating income (Billions of yen) Other Operating income Operating margin Sensing devices 445.5 441.6 Electronic devices 3.6 4.0 Motors 35.9 8.9% 38.3 397.0 4.1 5.0% 5.0% 4.2% 33.8 5.5% 344.7 5.2 13.4 -1.5% 30.7 245.0 241.0 184.3 23
Slide 12: Electronic Devices & Components Quarterly
Electronic Devices & Components Quarterly Net sales (Billions of yen) Operating income (Billions of yen) Other Operating income Sensing devices 137.8 Operating margin Electronic devices 0.7 11.1% Motors 9.4 128.7 125.8 1.2 9.0% 8.9% 7.3% 0.7 6.5% 8.5 5.5% 5.5% 9.7 117.4 114.6 0.9 11.7 8.9 1.3 5.4% 4
Slide 13: Mitsumi Business (consolidated portion in 4Q)
Mitsumi Business (consolidated portion in 4Q) Quarterly Net sales (Billions of yen) Operating income (Billions of yen) Operating income Both net sales and operating income are consolidated for Operating margin the period after business integration on January 27, 2017 40.3 5.7％ 2.3 1Q 2Q 3Q 4Q 1Q 2Q
Slide 14: Mitsumi Business (including pre-merger) Quarterly
Mitsumi Business (including pre-merger) Quarterly Net sales (Billions of yen) Operating income (Billions of yen) Both net sales and operating income in and before 3Q FY3/17 are pre-merger results. 4Q FY3/17 results are based on managerial accounting for the three months. 6.4% Operating income 7.1% 5
Slide 15: Mitsumi Business (including pre-merger) Yearly
Mitsumi Business (including pre-merger) Yearly Net sales (Billions of yen) Operating income (Billions of yen) Both net sales and operating income in and before 3Q FY3/17 are pre-merger results. 4Q FY3/17 results are based on managerial accounting for the three months. 191.2 Operating income Operatin
Slide 16: Net Income Yearly
Net Income Yearly Net income hit record high （Billions of yen） 41.1 41.5 39.9 Income attributable to owners of the parent 36.4 Net income per share (yen) 20.9 106.7 107.3 97.3 98.0 12.5 55.9 6.7 5.9 32.6 1.8 17.2 15.6 4.8 Mar.'10 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17 Mar.'18E May 9
Slide 17: Net Income Quarterly
Net Income Quarterly （Billions of yen） Quarterly net income hit record high Income attributable to owners of the parent 16.2 Net income per share (yen) 13.2 11.8 12.2 11.0 10.1 9.6 39.7 8.9 35.2 7.7 32.4 6.8 6.8 31.6 29.4 26.9 23.8 25.5 20.6 18.3 3.2 18.2 8.5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY3/
Slide 18: S.G. & A. Expenses Quarterly
S.G. & A. Expenses Quarterly (Billions of yen) S.G. & A. expenses S.G. & A. to sales ratio 23.3 18.4 18.7 18.3 18.1 17.4 17.4 17.0 15.4 15.9 14.9 13.8 14.5% 13.8% 13.3% 13.3% 12.8% 12.1% 11.5% 10.9% 11.9% 10.6% 10.3% 10.4% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY3/15 FY3/16 FY3/17 May 9, 2017 18
Slide 19: Inventories Quarterly
Inventories Quarterly (Billions of yen) 126.7 118.1 120.4 103.0 94.5 96.4 96.7 89.6 92.2 87.0 78.1 67.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q FY3/15 FY3/16 FY3/17 May 9, 2017 19
Slide 20: Capital Expenditure & Depreciation Yearly
Capital Expenditure & Depreciation Yearly (Billions of yen) Capital Expenditure Depreciation & Amortization Expenses 43.7 43.9 44.0 37.6 34.8 33.0 31.8 28.8 28.2 27.3 27.3 23.7 20.8 20.8 20.7 19.6 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17 Mar.'18 Forecast May 9, 2017 20
Slide 21: Net Interest-Bearing Debt/Free Cash Flow Yearly
Net Interest-Bearing Debt/Free Cash Flow Yearly （ (Billions of yen) 136.2 114.2 109.9 103.6 93.1 97.5 36.3 24.2 24.5 21.9 70.9 56.2 -1.1 -4.2 -8.8 -14.8 Mar.'11 Mar.'12 Mar.'13 Mar.'14 Mar.'15 Mar.'16 Mar.'17 Mar.'18 Forecast Net interest-bearing debt Free cash flow May 9, 2017 21
Slide 22: Forecast for Fiscal Year Ending March 31, 2018
Forecast for Fiscal Year Ending March 31, 2018 Expecting higher net sales & operating income YoY due to huge contribution from full-year consolidation of Mitsumi business FY3/17 FY3/18 (Millions of yen) Full Year 1st Half 2nd Half Full Year YoY Net sales 638,926 376,400 373,600 750,000 +17.4% Operat
Slide 23: Forecast for Business Segment
Forecast for Business Segment FY3/17 FY3/18 (Millions of yen) Full Year 1st Half 2nd Half Full Year YoY Net sales 638,926 376,400 373,600 750,000 +17.4% Machined components 156,310 80,200 80,800 161,000 +3.0% Electronic devices and components 441,615 202,500 194,500 397,000 -10.1% Mitsumi business 4
Slide 24: Management Policy & Business Strategy
Management Policy & Business Strategy May 9, 2017 Yoshihisa Kainuma Representative Director, President and Chief Executive Officer 24
Slide 25: Full-year forecast (FY3/2018)
Full-year forecast (FY3/2018) Turned-around money-losing businesses Focusing on strengthening money-earning businesses ! ●Machined Components : to boost productivity to ¥50 billion OP ●Electronic Devices & Components : Motors will be #2 profit generator ●Mitsumi business : will boost bottom line by
Slide 26: 1 and/or 100 by 2020
Challenge to ¥1 trillion sales and/or ¥100 billion OP From investor meeting 1 and/or 100 by 2020 presentation on May 8, 2015 Progressing as planned ! by 2020 3 Pillars including by 2017 new products w/ wireless or other by 2014 Enlarge technology 2 pillars Completion Mid-to-long-term of 2 pillars ta
Slide 27: 2020 goal benchmarks
New Mid-term Business Plan targets 2020 goal benchmarks (Billion Yen) New Mid-term Business Plan targets (Billion Yen) Sales Operating income M&A 1,000 100 Sales not-included in New Mid-term Business Plan New products 800 New products 80 800 80 750 720 600 60 638.9 63 56 49 400 40 200 20 0 0 FY3/17
Slide 28: Estimated breakdown of ¥100 billion OP in FY3/2021
Estimated breakdown of ¥100 billion OP in FY3/2021 Breakdown ●Machined Components ¥50 billion ●Electronic Devices & Components ¥30 billion ●Mitsumi ¥20 billion ●M&A ¥15 billion ●Headquarters ¥-15 billion Expenses May 9, 2017 28
Slide 29: Machined Components plan targets
Machined Components plan targets Aiming for ball bearing production capacity of 285 million units/month in FY 3/18 (Improving productivity to get 35 million units / mo ! ) (Billion Yen) (Billion Yen) 250 Pivot assembly sales Operating income Rod-ends / Fastener sales 75 Ball bearing sales 200 184 17
Slide 30: Ball bearing strategy
Ball bearing strategy Ample room to improve profitability ! External ball bearing shipments (million units / month) 250 1. No sign of slowdown in external demand Due to production capacity increases by 233 productivity improvement 2. Creating the capacity to make 285 million units/month by FY 3/18 +
Slide 31: Growth of miniature ball bearings for automobiles
Growth of miniature ball bearings for automobiles Environmentally friendly/ Energy saving Growth of miniature ball bearings for automobiles FY3/08=100 Exhaust Gas Recirculation Urea-based SCR 300 MinebeaMitsumi ball bearing Electronic Throttle Valve sales volume for automobile Turbo Charger etc. FY3
Slide 32: Aircraft component strategy
Aircraft component strategy Aiming to boost profitability Boeing & Airbus Commercial aircraft shipments (# of aircrafts) 2,000 1,600 ⓒAirbus 1. By changing the production system from beginning to end, we aim to 1,200 double per capita productivity. 2. While super large aircraft production is falling
Slide 33: Pivot assembly strategy (HDD)
Pivot assembly strategy (HDD) Focusing on market share to maintain profits ●Working in a gradually shrinking HDD market ●Taking advantage of high quality & lower production cost of ball bearings HDD market forecast (Million Enterprise Nearline 3.5"ATA 2.5”Mobile units) 500 426 400 400 374 352 330 30
Slide 34: Electronic Devices & Components plan targets
Electronic Devices & Components plan targets Motors will drive overall growth of #2 pillar (Billion Yen) (Billion Yen) 500 Motor Electronic Sensing 50 Other sales sales device sales device sales 441.6 Operating income 38.3 397 400 400 40 33.8 45 345 38 300 241 130 30 30 184.3 108 21.9 22 20.5 200 20
Slide 35: LED backlight strategy - 1
LED backlight strategy − 1 LED backlights move to matured stage 1. Sales will decline, but aim to maintain profits ●Growing market share in China will help make up for major customer’s declining order volume. ●Completion of accelerated depreciation will contribute to profits. 2. Shifting focus to au
Slide 36: LED backlight strategy - 2
LED backlight strategy − 2 Shifting focus to automobile applications 1. Further sales expansion of high-value-added products for high-end automobiles （Aiming for ¥16 billion sales in FY3/18） 2. Utilizing new Slovakian plant to go on line in early 2018 Growth of automobile displays Instrument Cluster
Slide 37: LED backlight strategy - 3
LED backlight strategy − 3 For SALIOT（LED lighting) and smart street lights 1. Aiming ¥5 billion SALIOT sales in mid-term ●Global sales network has been expanding. ●Strengthening product lineup further ●A new show room will be open in August this year. ２. Expanding smart street lights as next genera
Slide 38: Motor strategy
Motor strategy Profit growth from automobile applications ●Focusing further on automobiles, which are utilizing more & more motors ●Pursuing niche markets and cost advantages ●Utilizing new Slovakian plant in operation in early 2018 BLDC Motor PM Motor DC Brush Motor DC Brush Motor PM Motor PM Motor
Slide 39: Sensing device strategy (Minebea business)
Sensing device strategy (Minebea business) Stable growth in pre-acquisition businesses & synergy with Sartorius MT&H １． Stable growth in pre-acquisition businesses ●Promoting sales of passenger seat sensors for the North Seat sensors American automobile market and others ２． Synergy with Sartorius MT
Slide 40: Mitsumi business plan targets
Mitsumi business plan targets Becoming next pillar as profits surge this fiscal year (Billion Yen) (Billion Yen) Impacts of integration 75 250 Sales Operating income 1. Highly strengthened R&D capabilities 215 204 2. Positive impact on OP 191.2 60 200 ↓ 178 No more worry on dilutive impacts on profi
Slide 41: Reviewing product portfolio
Reviewing product portfolio − 1 Aggressive allocation of people & resources Core Sub-core Non-core Competitive Innovative Low margin in niche markets ＋ or + Non-permanent Price niche Permanent Improving profits & Next generation product Selection & Growth R&D concentration May 9, 2017 41
Slide 42: Reviewing product portfolio - Profit sources
Reviewing product portfolio − 2 Profit sources Industry staples Core Are a constant Smartphone components Sub-core Game consoles HDD components, etc. Low sales Non-core Low margin Low growth potential May 9, 2017 42
Slide 43: Seven Spears of MinebeaMitsumi
Seven Spears of MinebeaMitsumi The 1 Bearings 2 Motors 3 Sensors 4 Connectors/Switches 5 Power supplies Wireless/Telecommunications Spears 6 /Software 7 Analog semiconductors May 9, 2017 43
Slide 44: Seven spears - Sensors
Seven spears - 3 Sensors Centering on strain gauge and MEMS sensor technology ●Exploring possibilities of temperature/environment sensors ●Expanding business for key IoT components employing strain gauges Strain gauges Gauge pressure Air pressure Pressure sensors sensors sensors Temperature/environm
Slide 45: Seven spears - Connectors / Switches
Seven spears - 4 Connectors / Switches Key words are ultra-precision / water-proof ●Taking advantage of ultra-precision machining -Targeting hard-to-process components – ●Focusing on high-speed transmission (automobiles & USB Type-C) USB Type-C Automobile Automobile Automobile Tactile Connectors Con
Slide 46: Seven spears - Power supplies
Seven spears - 5 Power supplies Win the IoT era with high-quality / high-function ●Focus on lower than 70W products (quality / reliability) ●Build sales by exploring existing markets ●Optimize factory portfolio AC adapters for AC chargers for Power supplies for information equipment Li-ion battery p
Slide 47: Seven spears - Wireless / Telecommunications / Software
Seven spears - 6 Wireless / Telecommunications / Software Growth with automobile applications and responding to IoT ●Aim to capture market for combined components of ADAS (advanced driver assistance system) ●R&D of next generation antennas ●Utilize India / Slovakia factories Shark fin antennas Bluet
Slide 48: Seven spears - Analog semiconductors
Seven spears – 7 Analog semiconductors Analog semiconductors - the IoT entrance and exit ways ●Focus on high-value-added products (such as ADC, etc.) ●Accelerate R&D of next generation products ●Strengthen power semiconductor foundry operations Protection ICs for AC/DC Analog front-end ICs Li-ion ba
Slide 49: Basic policy of sub-core businesses
Basic policy of sub-core businesses Improve our competitive edge by boosting productivity across the board and developing new products with an eye to the risk of a shrinking market Optical devices 1. Expand OISs & VCMs for Chinese customers 2. Consider producing some products in Cambodia Mechanical
Slide 50: Developing strategic new products by fusion with Mitsumi
Developing strategic new products by fusion with Mitsumi’s technology/products Developing high value-added solutions that combine input, conversion/control, and output devices Product lineup Input devices Conversion/control devices Output devices ●Strain gauges ●Inverter circuits ●Motors ●MEMS senso
Slide 51: Re-enter haptic device business
Re-enter haptic device business Development of small actuators by sharing core technologies Small actuators Use in automobiles ●Linear actuators Electric toothbrush 2 − Sharing core technologies for 4 1 health care actuators 7 − Circular, Rectangular, Square 10 5 Beauty devices 6 8 3 9 1 Infotainmen
Slide 52: Development of haptic module
Development of haptic module Boost automobile device business via fusion with Minebea and Mitsumi technology/products Instrument Cluster Center Stack Display Strain gauges Actuators LED backlights Connectors Aim to expand as key IoT components May 9, 2017 52
Slide 53: Development of IoT-related products
Development of IoT-related products Many R&D projects enhanced by fusion with Mitsumi’s technology/products are currently in the works ! Main target markets for IoT products Automobile Healthcare Infrastructure New devices which connect people to things and things to things can become pillar #3. May
Slide 54: Financial strategy
Financial strategy 1. Use of cash - Current net interest-bearing debt level is appropriate. - Priority for cash usage is on growth (capital expenditures, M&As). - Next priority is returning cash to investors. 2. Dividend policy - FY3/2017 Interim ¥7/share, Year-end ¥7/share, Total ¥14/share (About a
Slide 55: Cash flow, debt, cap-ex and D&A plan
Cash flow, debt, cap-ex and D&A plan Net interest-bearing debt & Capital expenditures & Free cash flow plan Depreciation & amortization plan (Billion Yen) (Billion Yen) Net interest-bearing debt Cap-ex D&A 109.9 Free cash flow 97.5 43.9 93.1 44 43 37.6 38 36 36 34.8 70.9 318 33 28.8 28.2 56.2 50 23.
Slide 56: M&A strategy
M&A strategy Toward FY3/2021 targets, aiming to capture additional profit sources １．Aiming for M&As that will boost machined components business ２． Will explore M&A and alliance opportunities in specific fields and with an eye to particular targets May 9, 2017 56
Slide 57: Business Results
Business Results MinebeaMitsumi Inc. http://www.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 information. Please note that actual performance may vary signif