MINEBEA MITSUMI Inc. (6479) Earnings Call Transcript & Summary

Thank you very much for participating for the Business Results Meeting for the Fiscal Year ended Match 31, 2021 for the MinebeaMitsumi. First of all, let me introduce the participants from our company. From your right, Representative Director, CEO and COO, Yoshihisa Kainuma; Director Senior Managing Executive Officer, Katsuhiko Yoshida. First of all, Mr. Yoshida will make a presentation about the financial results, and Mr. Kainuma will talk about the management policy and business strategy. After that we'll go into a Q&A session. We are planning to end this meeting by 7:00 PM. For the financial statements on the website, we have the financial data and the brief report of financial results. Please refer to that. On the screen that you're seeing on the lower part, we have a link to the questionnaire. This is a very precious feedback for IR activity, so we would appreciate your response to this questionnaire. For this meeting, including the Q&A session, we are conducting a recording of the audio and video for the -- because -- for people to look at it later on the website. Please understand. Mr. Yoshida, please.

My name is Yoshida. Today, I would first like to explain the consolidated financial results for the fiscal year ended March 31, 2021. Consolidated net sales for the fiscal year ended March 31, 2021, totaled JPY 988.424 million while operating income reached JPY 51.166 million, and profit for the period attributable to the owners of the parent was JPY 38.759 million. These figures represent year-on-year increase of 1.0%, decreases of 12.8% and 15.7% respectively for net sales for the period hitting record high. Operating income includes special expenses totaling approximately JPY 7.6 billion incurred due to the impact of COVID-19 et cetera. Operating income for the fourth quarter of the fiscal year also includes onetime expenses shown in the box at the bottom right on this slide. Onetime expenses include the PPA of approximately JPY 2.1 billion for the Mitsumi business and the write-off of mass inventory and optical devices for major Chinese customers of approximately JPY 1.9 billion. And the restructuring costs in the Europe, et cetera, approximately JPY 4.3 billion in the U-Shin business segment, totaling approximately JPY 8.3 billion. These were not included in the forecast we revised in February. Foreign currency exchange rates are estimated to have a year-on-year impact of minus JPY 20.3 billion and net sales of minus JPY 3.6 billion in operating income. Moving onto the next slide, please. Consolidated net sales for the fourth quarter for the fiscal year March 2021 was up 10.6% year-on-year and down 9% quarter-on-quarter to total JPY 250.985 million. Net sales for the fourth quarter hit a record high. Operating income was down 30.2% year-on-year and down 55.9% quarter-on-quarter to total JPY 8.650 million. Profit for the period attributable to the owners of the parent was down 44.6% year-on-year and down 64.3% quarter-on-quarter to total JPY 5.775 million. Operating income for this quarter includes special factors totaling approximately JPY 1.2 billion due to the impact of COVID-19. We estimate that the foreign currency translations had a year-on-year impact of minus JPY 4.9 billion net sales and minus JPY 1.6 billion in operating income. Quarter-on-quarter impact was plus JPY 2.3 billion in net sales and minus JPY 0.5 billion in operating income. We made a slight retrospective changes to last fiscal year's financial statements due to the PPA for U-Shin. Please note that figures on the following pages are revised figures. Next slide, please. This is the annual trend in net sales, operating income and operating margin. The bar graph on the left is net sales and one on the right is operating income along with a line chart for the operating margin. The operating margin for fiscal year March 2021 was 5.2%, down 0.8 percentage points year-on-year. If the effects of the aforementioned onetime expenses were not factored in, the operating margin would be 6% almost flat from the previous year. Please note that figures of the fiscal year March 2018 and before are based on JGAAP and provided for your reference, so that you can look at the past figures, the same applies hereinafter. Next slide, please. This is a quarterly trend in net sales, operating income and operating margin. The operating margin for the fourth quarter was 3.4%, down 2.1 percentage points year-on-year and down 3.7 percentage points quarter on quarter. If the effects of the aforementioned onetime expenses were not factored in, the operating margin will be 6.8%. Moving on to the next slide, please. This slide shows the difference between the forecast as of February and actual results for net sales and operating income by business segment for the fourth quarter. Sales for the Machined Components segment exceeded the forecast, mainly thanks to robust sales of ball bearings to automotive industry and fan motors. Sales for the Electronic Devices and Components segment were higher than forecasted in general, including motors. Sales for the Mitsumi business and U-Shin business was slightly higher than projected. Operating income for the Machined Components segment was higher than forecasted, thanks to the growing external shipment volume of ball bearings along with improvement in productivity. Operating income for the Electronic Devices and Components were almost in line with the forecast, although both the Mitsumi business and the U-Shin business recorded lower than expected operating income, if the effects of the formation of one-time expenses were not factored in, the Mitsumi business was almost as expected and the U-Shin business was higher than expected, thanks to the recovery of the automotive industry. Next slide, please. Now let's take a look at the results by segment starting with Machined Components segment. On the left is a graph indicating yearly net sales trends and on the right is a graph with a bar chart showing yearly operating income trends along with a line chart for operating margins. In fiscal year March 2021, net sales was down 13% year-on-year to total JPY 157.4 billion. Sales of ball bearings decreased 6.8% year-on-year to reach JPY 109.1 billion. The monthly average bearing of sales volume totaled 208 million units for increase of 10.1% year on year. Looking at sales by application, we see the annual sales of ball bearings used in data centers increased year-on-year and flat for automobile applications, decreased for office automation equipment. Sales of rod-end and fasteners were down 29.1% year-on-year to total JPY 37.8 billion. Sales of pivot assemblies decreased 16.4% year-on-year to total JPY 20.5 billion steadily contributing to our bottom line, as we held on to 80% plus market share. Operating income for the fiscal year totaled JPY 31.2 billion, putting the operating margin at 19.8%. We saw the operating income decreased 21.7% and the operating income margin decline 2.2 percentage points year-on-year. Looking at the year-on-year results by product. We see that the profits for rod-ends and fasteners, ball bearings and pivot assemblies fell. For the fiscal year ending March 31, 2022, we can see strong uptrend in demand for ball bearings and wide range of applications mainly for automobiles and for servers. Sales for commercial aircraft, including rod-ends and fasteners are expected to remain at the same level as the fiscal year March 2021. This is due to the fact that it takes time to adjust inventories in the supply chain, although there are signs of recovery in the aviation demand. For pivot assembly, we anticipate a decline in demand as the HDD market shrinks. Moving on to the next slide, please. This slide shows the quarterly trends in the Machined Components segment. Fourth quarter net sales increased 11.1% quarter-on-quarter to total JPY 44.1 billion. Sales of ball bearings increased 11.8 quarter-on-quarter -- 11.8% quarter-on-quarter to total JPY 31.4 billion. The monthly external shipment volume was up 9.5% quarter-on-quarter from an average of 243 million units. We see strong demand increase in wide applications including on automobiles and data centers. Sales of aircraft bearings remained sluggish due to the stagnant market. Sales of rod-ends and fasteners totaling JPY 7.2 billion were up 14.8% over the previous quarter. Sales of pivot assemblies increased 3.4% quarter-on-quarter to total JPY 5.5 billion. Operating income for the quarter totaled JPY 8.8 billion and operating margin was 20%. On a quarter-on-quarter basis, operating income rose 6.4% while the operating margin dropped 0.9 percentage points. Looking at the results by product, we see that profits for ball bearings and pivot assemblies rose while profits for rod-ends and fasteners fell due to the impact of temporary change of product mix. Next slide, please. Now let's look at Electronic Devices and Components segment. In fiscal year March 2021, net sales were down 4.1% year-on-year to total JPY 363.8 billion. Looking at the results by product, we see the sales of motors increase 12.1% year-on-year to reach JPY 201.9 billion. This increase was due to the recovery of all products from the impact from COVID-19 in the first quarter. Electronic devices sales were down 23.2% year-on-year to hit JPY 124.7 billion, due to the declining number of sales units of models that used LED backlights at the major customers. Net sales of sensing devices totaled JPY 32.6 billion, increasing 0.4% year-on-year. Operating income increased 0.5% year-on-year to reach JPY 17.6 billion, while operating margin rose 0.2 percentage points to reach 4.8%. Looking at the results by product, we see that the operating income was up for the motors and sensing devices, but down for electronic devices. In the fiscal year ending March 31, 2022, we anticipate the growth of motors will accelerate and the sales and profits will increase significantly. For electronic devices, we expect a decrease in sales and profits due to a decrease in the number of units and models that used LED backlights. Sales of sensing devices will be almost flat, but profits are expected to increase due to improved profitability. From the fiscal year ending March 2022, we have changed our business segment classification for some businesses. I will explain in details later when we look at the slides, forecast by business segment and changes to business segments. So in this square, we show the number in this slide. So please refer to these numbers in this slide in the box. Going to the next slide. This is the quarterly trend in Electronic Device and Components segment. Net sales increased 4.7% quarter-on-quarter to hit JPY 94.9 billion. Looking at the results by product, we see that sales of motors increased 13.6% quarter-on-quarter to reach JPY 60.5 billion. This is because sales of all types of motors, including the automobile application remain robust, thanks to the recovery and growth of the market. Sales of electronic devices were down 13.2% from the previous quarter to total JPY 24.4 billion. This is because the peak demand period for major customers models that use our LED backlights came to an end. Sales of sensing devices totaling JPY 8.9 billion were up 8.5% from the previous quarter. Operating income came to JPY 5.7 billion, operating margin was 6%. On a quarter-on-quarter basis, operating income rose 32.1%, while the operating margin increased 1.3 percentage points. By product, we see that operating income was up for motors and sensing devices, but down for electric devices. Please go to the next slide. Let's look at the performance for the Mitsumi business segment. Net sales increased 23.5% year-on-year to total JPY 361.0 billion in the fiscal year ended March 2021. Sales increased due to strong sales of mechanical components, thanks to growing demand as more people around the world avoid going out as well as strong sales of analog semiconductors, including the new consolidation of ABLIC. Operating income came to JPY 19.8 billion and the operating margin was 5.5%. These figures represent 5.9% year-on-year increase in operating income and 0.9 percentage points year-on-year decrease in the operating margin. Profits for analog semiconductors, mechanical components and power supplies grew while other businesses saw profits decrease. Onetime expenses incurred during the fourth quarter include PPA of approximately JPY 2.1 billion and a write-off of inventory of optical devices for major Chinese customers of approximately JPY 1.9 billion for a total of about JPY 4.0 billion. If these are excluded, there will be 27% year-on-year increase in operating income and 0.2 percentage points year-on-year increase in the operating margin. If the fiscal year ending March 2022, we expect sales to increase mainly due to optical devices, but we expect sales to be on par with the fiscal year ended March 2021. Due to conservative view of Machined Components, the business transferred in the Mitsumi business segment will have a impact of decrease of JPY 19.5 billion in net sales for the fiscal year ending March 2022. I will explain about it later. Next slide, please. Mitsumi business segment quarterly trends. Our net sales decreased 30.5% quarter-on-quarter to total JPY 79.4 billion. While sales of analog semiconductors increased, sales decreased for other products, primarily mechanical components and optical devices as the peak demand period has passed. Operating income totaled JPY 0.8 billion, while the operating margin was 1%. Operating income decreased 91.8% and the operating margin declined 7.7 percentage points quarter-on-quarter. This was due to decrease of profit along with the decrease of sales in addition to the effects of aforementioned onetime expense. If the onetime expense are not factored in, the operating margin will be 6.1%. Next slide, please. Finally, let's look at the U-Shin business segment. Net sales decreased 16% compared to fiscal year ended March 2020 to total JPY 105.1 billion in the fiscal year ended March 2021. The factors for this decrease include significant slowdown in production, mainly in Europe in the first quarter because of restrictions imposed on operations due to COVID-19 pandemic, operating loss came to JPY 1.9 billion and the operating margin was minus 1.8%. These figures represent 3.9 percentage point year-on-year drop in operating margin, onetime expenses incurred during the fourth quarter totaled approximately JPY 4.3 billion for restructure in Europe, et cetera. If these expenses were excluded, decline in operating income would be 6% and operating margin would have risen 0.2 percentage points. In the fiscal year ending March 2022, we anticipate an increase in sales and an improvement in operating profit and loss, due to the impact of the recovery in automobile market. Regarding the restructuring in Europe, while we have reached agreements with employees, local governments, et cetera about the details of structural reforms to be implemented, our personnel reduction plan will not be completed until the end of March 2022 in order to avoid any impact on our business partners. Therefore, we won't see a reduction in fixed costs until the next fiscal year, which is the fiscal year ending March 2023. The impact of the business transfer in the U-Shin business segment will be an increase of JPY 28.5 billion in net sales for the fiscal year ending March 2022. Next slide, please. This shows U-Shin business segment quarterly trends. Net sales increased 5% quarter-on-quarter to hit the JPY 32.3 billion, sales increased as the overall automobile market rebounded, although the level of recovery varied by region and customer. The operating loss came to JPY 2.5 billion and the operating margin was minus 7.9%. Operating margin was down 13.3 percentage points for the same period. All the profitability improved due to the recovery in sales, profits dropped due to the bookings of the aforementioned one-time expenses. If these expenses were excluded, operating margin would be 5.5% and the operating margin would have risen 0.1 percentage points quarter on quarter. Next slide, please. The bar graph here shows trends in profit attributable to owners of the parent, while the line graph which are changes in the profit for period per share. The profit for the period was JPY 38.8 billion, earnings for the period per share was JPY 95. Next slide, please. The bar graph here shows trends in quarterly profit attributable to owners of the parent, while the line graph charts changes in the profit for the quarter per share. The profit for the period was JPY 5.8 billion, earnings per share was JPY 14.2. Next, we have the quarterly inventory trend. At the end of the fourth quarter, inventory totaled JPY 171.4 billion, which is JPY 2.9 billion less than what it was 3 months ago. This is due primarily to the fact that the inventory strategically accumulated were sold in phases as expected, while inventory are needed to increase sales that is currently expected has been secured. Next slide, please. This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest bearing debt minus cash and cash equivalents and the line chart indicating free cash flows. At the end of the fourth quarter, net interest-bearing debt totaling JPY 84.4 billion was up JPY 9.2 billion from what it was at the end of the previous fiscal year. Next slide, please. This is a summary of the forecast for the fiscal year ending March 2022. Net sales, operating income and profit for the period are all expected to reach record highs in the current fiscal year. Sales are expected to exceed JPY 1 trillion with the decrease in LED backlights and mechanical components compensated by the increase in optical devices and motors. Operating income is expected to increase to a record high of JPY 80 billion, due to the expansion of profits accompanying the growth of businesses such as ball bearings, motors, analogs semiconductors and optical devices. The exchange rate is assumed to be JPY 107 to U.S. dollar. Next slide, please. This slide shows the forecast by business segment. Next slide, please. Now I would like to talk about all the changes to the business segments. The Smart Products business has been transferred from the Electronic Devices and Component segment to the Mitsumi business segment. Likewise, the Home Security Units business has been transferred from the U-Shin business segment to Mitsumi business segment. We made these changes in order to consolidate relevant businesses and basic technologies into the Mitsumi business segment. This will allow us to strengthen our own EMS strategy and integrate the mechanical and electronic technologies we have as an edge device manufacturer with an eye to creating high value-added products for key markets such as the IoT market. We will work to create the greater synergy between related the business and technologies, for example, we will turn conventional and mechanical products such as locks into IoT products, such as the SALIOT smart lock. We also transferred the automotive business the automotive business from the Mitsumi business segment to the U-Shin business segment. This will enable us to make production and sales operate an even more efficient by consolidating automotive part, so that as a Tier 1 supplier, we are also aiming to create the synergies between products, vehicles equipped with more automatic and electric -- electrical components such as U-Shin's 3 core products CSD, Flash Handles as well as E-Latch and the high-frequency technologies of our automotive business to create high value-added products. The results for the fiscal year ended March 2021 as well as estimated sales for the fiscal year ending March 2022 for these businesses that have been transferred are as shown on the slide. Next slide please. This slide shows the results for the fiscal year ended March 2021 that have been recalculated to reflect the newly reorganized business segments. The numbers in the red frame are recalculated and redisplayed. This concludes my explanation. Thank you. Next, Mr. Kainuma, please.

Good evening everybody, Kainuma speaking. I would like to talk about our business strategy, our management policy and business strategy. So this is a summary of last fiscal year. So at the same time last year, things were very uncertain and the start of the fiscal year was uncertain. In terms of the operating income, it was -- we reached upper end of the original forecast range. The vaccines, it was completed last year as expected, but the vaccine program has been late to be deployed in Japan, that was unexpected. But putting that aside, so there are some write-offs that we have been talking about this year, this JPY 8 billion plus extraordinary expenses that we have accounted for. So in reality, we have been able to see a increase of both sales and income. In terms of the summary of last fiscal year. One of the major topics is that in the ball bearings, March production and sales was a record high level. We have been able to smash the previous record high level as shown in the slide. So volume 330 million to 336 million of sales that is, and production was 315 million units. It was a very surprising increase in volume. So in motors, we have seen improvement in the motors business and has progressed very smoothly, and number 3, and we have not expected to come to this level for the analog semiconductors has been able to increase their operating income. So in a well-balanced manner, we have been able to develop our business and towards this fiscal year, I think we have been able to create a good trend, and I think that will be the summary of last fiscal year. So for this fiscal year, for our company, we are going to celebrate the 70th anniversary. So since I have listed on the stock exchange, it will be the 60th anniversary. So this will be a watershed year for us. So we would like to smash the record for the profit and next year, we want to make this a year to make -- to be a foundation. So in terms of operating income JPY 80 billion will be the target, but this is a very conservative target. So last fiscal year, I think, as some of you will remember, our operating income was between JPY 50 billion to JPY 60 billion, that was the forecast for last fiscal year. So this was the kind of bottom-up number. And at the same time this -- the stress and the maximum level of the operating income, that we had the capability to generate, so we settle on the JPY 50 billion to JPY 60 billion of operating income target for last fiscal year. So in terms of the stress, the 2 years ago, it was JPY 58.6 billion operating income and that -- but JPY 9 billion of COVID-19 related expenses, and JPY 5.4 billion for the retirement expenses for Thailand. So we rounded up to JPY 81 billion was what we were able to achieve. But since then everything started to bear fruit. And of course, this fiscal year, our capability is even more than this, and I will talk about that in detail later. But in reality, I think we'll be able -- have the capability to have JPY 100 billion of operating income, and I think we have been able to gain strength to be able to reach that level. In terms of the net sales, so JPY 980 billion plus. So the past 2 times we were not able to reach JPY 1 trillion level in the sales. So we had not been able to achieve a couple of day's worth of sales to be able to reach this JPY 1 trillion. So I think this is the third time that we're going to target this JPY 1 trillion of net sales and that is what we want to achieve. So last fiscal year, there was a very unclear situation that we cannot foresee and it is, we were not able to update a 3-year plan. So this year, as you can see here, this is what we are updating for the mid-term business plan. So JPY 1.080 trillion last -- next year JPY 1.1 trillion, JPY 100 billion of operating income and the year after that JPY 1.2 trillion. So this would be the updated mid-term plan target. So the next year's driver will be the aviation industry. So in the second half of next fiscal year, I think this industry will start to recover in new businesses, so there is lot of those type of new businesses that's going to come up. Every year new businesses will start to contribute. And the third point is, that we are talking about the 3 spears plus 1, ball bearings, motors and analog semiconductors plus OIS. So this core business, 3 spears in the core business and the sub-core business-related OIS. With this in the center, the sustainable growth is going to be achieved. So next year, net sales is going -- we think that, we'll be able to increase the sales by JPY 100 billion. So in terms of the JPY 100 billion of operating income will be our capability, we talked about that, but the ball bearings business is very strong right now. So once -- even with aviation industry segment, so JPY 100 billion by quarter operating income will be achieved. So once the aviation business comes back and machine components JPY 52 billion, the electronic components, well, backlight business will be gone, but even so, JPY 25 billion will be achieved in Mitsumi, with the analog semiconductors, I'll talk about that later. JPY 10 billion last year, were able to achieve and go over the JPY 10 billion, and this year internally, we are talking about JPY 15 billion of operating income. We haven't reflected that fully into our projection. So then that OIS in games and other businesses, that will be JPY 30 billion operating income, U-Shin is about JPY 8 billion of contribution. So JPY 115 billion, well, you have to subtract the JPY 15 billion of the internal expenses and that will reach this operating income level. And we put stress factors into our outlook. So if you consider this with aviation and the lack of components that will mean -- that will put a downward pressure on the production, we have to factor that in. So we have to subtract that. So with that type of calculation, I think we'll be able to get the forecast. The currency situation is very good and we have strong inquiries for our products. So this year, in terms of the actual capability of our earnings under stressed scenario, I think we'll be able to expect a very high level of our earnings for this fiscal year. So this is the growth of ball bearings business. So last fiscal year, I said that we are not worried at all about the ball bearings business. We have some fluctuations, but this will grow steadily and we have a very steady competitive capability in ball bearings, that is what said. But if the customers stop their production, we won't be able to supply ball bearings. Even if the volume goes down, I said that, please do not worry about that in ball bearings business, and I think things turn exactly that way. And I said March in production, so the JPY 150 billion, so JPY 145 billion of sales. And we have 345 million of the capacity has been increased up to that level, so that's a project that we have and this project is going very steadily. And what I'm going to say later is about the quality of the ball bearings. We want to make that overwhelmingly strong. So the mass production technology, we have been able to reach the results. For the small diameter ball bearings in the carbon-neutral society what role that is going to play, we want to have awareness in terms of product strategy. So the right end we want the first pull, we have been able to improve -- change the strategy in the U.S. in terms of the aviation industry, the demand in the U.S. is starting to come back very strongly. So if things go in this way, I think that there are some airplanes that have very old engines, but they have to replace that. So towards the carbon-neutral society with this new aircrafts that was with new engines. So this will be a -- going to be transferred to double aisle to the single-aisle airplanes, that would be the transition and then the recovery is going to be very substantial. So I'm looking forward to what's going to happen for next fiscal year. Going to the Electronic Devices and Components. Well, even if there is not a backlight business, we think we'll be able to improve earnings. This 8 spears business is being established and I think we have a very good business and I am confident about that. Operating profit margin around 6% is our anticipation and operating -- the highest operating margin are the Electronic Devices was March 2015, 8.9% and operating margin back then was JPY 307 million and JPY 21 billion is the expectation and backlight operating margin is -- operating profit is limited. So led by backlight in the past this business was making profit. However, now it can be compensated by other businesses more than compensate the decrease in the backlight business. So I think that we have finished that type of responses to the backlights, that peaked in the past and therefore, investors were concerned that what if it drops significantly. But the 3 spears plus 1, thanks to all those images, we can be finally freed from this problem of the backlight on sensors, EV, and others backed by such movement. I'm sure we'll make huge growth. The motor business, we had a tough time in the past. However, centering around automotive products, autonomous growth is now real, the Grill Shutter hatchback, such actuator products. In the new model, various new model programs, these products will be adopted, electric power brake and ADAS LiDAR-related products, and those motor businesses we have also gained, and the hard disk spindle production is increasing. In the past, motor business had difficult time. However, this is now something that we can look forward to, and we have stick to second-vendor strategy and we will keep doing so, and the motor market will keep expanding. Likewise our motor business will keep expanding as well. Next Mitsumi business. So, it's becoming stronger more than expected but even if game declines significantly, analog, semiconductors and OIS will be able to support robust growth, and that is the characteristics of Mitsumi business, analog, semiconductors, ABLIC. Even without April profit of ABLIC, last year's JPY 10 billion profit can be exceeded. As I said previously, I would like to aim for JPY 15 billion and although the internal plan is JPY 12 billion or so, in the past the semiconductor was a problem child. However, Mitsumi is now leading it, who could have ever anticipated this, and we would like to further strengthen strategic management in order to further strengthen this line of business. Next is optical business or optical devices. OIS initially backlight as a sub-core business, the backlight had a solid sales. And therefore, we didn't want to exert too much effort for OIS, and that is what I said in the past. However, backlight sales are shrinking and therefore this is now positioned as a strategic growth product. 2 years ago, we reviewed the positioning of this business and we have implemented various growth measures like we were impacted by the U.S. China trade friction. However, development of new products for new customers is progressing very smoothly. So next year and the year after, we can expect a huge increase in sales. So we would like to make sure to make good products and keep the delivery time. And some made in Thai plants and eventually in Philippines and this is partly due to customers wishes. We would like to make our products for the North America and we are investing about JPY 10 billion for plant in Philippines. Next is analog semiconductors. So semiconductor, 8 spears. Our semiconductor team put together these plans, so niche profit plans or strategies and we would like to achieve this as soon as we can. And if this is realized, we will be able to achieve JPY 100 billion profits. In order to achieve that, what do we need to add both in terms of financial and human resources? We need to make a good decision and as for the analog semiconductors, we need to gain all the potential rooms for improvement or growth in terms of the products. Next is U-Shin, Tier 1 business. Since last year we have been impacted by the pandemic, so particularly in the first half of last year. In the second half, we saw a rapid recovery. However about 300 positions in Europe will be laid off and 2 weeks ago, we came to an agreement with a French Labor Union. So locks at business strategies, business with no profitability will be closed and we will shift towards higher value-added business in order to focus our efforts on that. And we cannot avoid the impact by shortage of semiconductors to some extent. However, from April to June, so from April to June, we will be impacted by such shortage. However, starting in June, we shall be able to recover, that is what we are expecting. From a low-priced goods to higher-priced goods, we are strengthening our sales activities and smart lock will be spun off from U-Shin business and a retrofit smart lock 50 units to 100 units per day, we are seeing steady sales. And we would like to keep watching this and at appropriate timing, we would like to become more proactive in this area. So this is about multi-purpose factory being built. I would like to report to you other than acquiring companies in the past 12 years, 8 plants, 8 factories rebuild or build. So we are making pre-emptive strikes because we want to grab orders whenever we see them in front of us. So we decided to build this factory in Thailand. And several years ago we built another factory, which is now used for spindle motor production. So the -- goddess of opportunity only has for -- their hand on the forehead. So we need to grab it, and therefore we are building this multi-purpose factory. In May, 12 years ago, when I was appointed CEO, for the first time, I participated in this analyst session and this is the promise I made. In the past 12 years, in order to keep my promise, I have been making steady efforts. And back then, it was JPY 140 billion and now it's JPY 1.25 trillion, so the market cap has increased by more than JPY 1 trillion. For which I'm very pleased. So going to the next slide, this is Slide #38. So this clearly highlights what has been achieved. So we have the first pick, this is the backlight business. I think a lot of people were focused on this. So this was unexpected. So this was a product that contributed a lot to our profit, and we will be pleased if this continue to go up. But things will not -- are unpredictable. So what I want to stress here is that, in the IR meeting, in the previous IR meeting, I have said that, in our business, we are like unicorn, so unicorn, if they were not able to self-resist, they were able to stably grow, the same goes to us. Even if we don't have the backlight business, we can continue to grow. That's what I said. I think the market has started to understand what I have been saying, and that is reflected in this chart. Next slide, please. And with this -- this is the Matterhorn, the picture of Matterhorn. So this is one of the very difficult mountain to climb. So we are going to maybe 80%, climb 80% of Matterhorn maybe with a 2-years delay. So next year, we want to achieve these numbers that is shown here. And the second promise I have made is that, we want to lay down the foundation for the 100-year anniversary. 12 years ago, we were, just before the 60th anniversary, when I took the office of the CEO and we want -- said I wanted to lay the foundation to celebrate 100th anniversary, so this 12-years, there were a lot of things that have happened. But that said, we're overcoming these adverse environments, I think we have been able to become stronger. So that means that, if you go to Page 41 as I show here, the sub-core businesses, they have been shifting becoming stronger as 8 spears business, and I think that is the reason why we have been able to grow. And this business is that can -- if we can leverage the synergy, it will incorporate that and increase the spears to 9, 10. And by doing so, this will be laying the new foundation for 100th anniversary. So from the backlight to OIS, with the great major transition taking place. So our sub-core -- the so-called sub-core business, we will consider the whole balance and then we'll proactively integrate these businesses. So we have the core and the sub-core business, we have to consider the balance and then move forward. With this, we will be looking at the new foundation for the 100th anniversary and maximize the profit. So this sub is the second point about new our strategy this Q, C, D, E, S, it's Q, C, D, E, S, S, so QC-DESS that we say. So what this means is that, this carbon-neutral society, we can't avoid the society going to that direction. So this is a mission that we have to achieve for the human being overall. So how are we going to respond to the carbon neutrality? That is a very important initiative. So the products that cannot contribute to carbon neutrality will be driven out of the market, that's what I think. So for instance, if in terms of the ball bearings, so the accuracy of the ball bearings, so we had to fully enhance that and then differentiate. So 0.02 micron when at that time when I entered the company, said that was accurate. So these accuracy 3x of that should be achieved and by doing so, when the energy, when you -- the motor rotates, so that means there's a lot of energy saving. So the bearing technology and analog semiconductors, the technology is going to be combined, and by doing so, we will be -- want to achieve this as a technology. If we can achieve this technology, it means that our product competitiveness, of course, we're going to sell it externally, but our product competitiveness is going to be heightened. So not only motors, but ball bearings, we can sell ball bearings in the semiconductors. You can sell it externally. So that is our growth strategy. So I want to focus on the strategy. In November, when we make our earnings results, we will discuss some data and I will talk more in detail about the strategy in November. So a 10 billion of share buybacks, we conducted that, but the liquidity, there was not sufficient. So we are not being able to fully buyback 10 billion. So it's not -- I am not doing a day-to-day transactions. So I said, we're going to do this in April, basically it is critical, but we're in charge of this buyback. Unfortunately, the 3 billion, we had not been able to achieve 3 billion of this 10 billion framework. So how are we going to return our profit to our shareholders? Well, conducting another round of 3 billion of share buybacks and maybe that is one option, but I thought that, we have been able to reach this watershed. MinebeaMitsumi has been able to make a breakthrough as the President of this company, that is what I feel. So for a long period of time, for the various shareholders have supported us for long period of time, I wanted to return our shareholders. So this will be 70th anniversary dividends on 31st of March. We want -- we returned our dividend as a commemorative dividend, so it is one-off thing. So our annual dividend will be JPY 36. If we are able to achieve this year's target, this level of dividend, I think this is a message, that this level of dividends can continue. So I hope that you understand this dividend as a message from us. This is about the ESG topics. So with this, I would like to end my presentation. Thank you very much for your attention.

Next, we would like to have Q&A session. And only the institutional investors and analysts who have registered previously, participating in the call conference will be able to ask a questions. [Operator Instructions] The first question we seem to have from Goldman Sachs, Takayama-san.

I have 3 questions. First, about the bearing capacity, 345 million, after that probably the timing is approaching to decide and probably space-wise, the new factory will make a contribution. So multi-purpose factory, is it going to make contribution or are you planning to build another new factory? So after 335 million, what is the future plan for further increase in capacity?

At this point in time, this multi-purpose factory will be a candidate. In the past we have been thinking where to build bearing factories like Myanmar, India, Bangladesh, we actually considered those locations. But I truly feel that it was a good decision not to build the factories over there. So taken into account various risks, rather than making quick decisions at the places that we know rather well and where we can make quick responses whenever it is needed, we are thinking about this multi-purpose factory. If the situation changes and when the situation changes, to be quite honest, we would like to enter into different country, but as of now, if there are some needs like that, we will use multi-purpose factory, but up until 345 million, we can do that with the existing plants.

My second question is, Mitsumi the substance, so what is your image or by increasing sales this year? To be more specific, actuators and semiconductors and declining game business, I think you mentioned a few hints, but increase percentage of sales of those businesses, if you will please.

I, Yoshida, would like to respond. First OIS, optical devices, are expected to grow significantly, probably almost double in terms of sales, that is our expectation. Semiconductors, around JPY 60 billion and that is what we have been explaining. And it's likely to grow about the 10% and games 25.5 million units. Sales volume announcement was made by 1 of our customers and as Kainuma explained a while ago, in terms of our guidance, we would like to, or we have more a conservative forecast. About the 2/3 of that number, but of course, the intention of our customers is what it counts and at this point in time, it may be too conservative.

Lastly, I would like to ask a question to Mr. Kainuma. So up till JPY 100 billion is now visible, but in the past, you said that JPY 100 billion is not the final goal. So beyond that point is what I'm interested. So 4 drivers or 4 business segments, I think it was Slide 41. So the next 2 or 3, the drivers of the business, what are your expectation or do you have high expectation for the existing businesses in order to go beyond the JPY 100 billion?

So, our formula for victory is to focus on M&A since connector switch and power supplies and wireless and switches. So we put up radars all the time in order to get opportunities whenever we see them and we will continue such activities. But of course, there is the other party, and therefore in what sequence, we don't know yet, but as you can imagine these things, these areas, we are likely to see increase in number of opportunities going forward, so we would like to strengthen these areas in semiconductor and access and motor products. We would like to consider M&A opportunities. So if we can strengthen our business -- businesses in these areas. And we are not prioritizing its sort of an opportunistic way, first come and first serve and whenever we see opportunities and if it gets in our scope, we will consider acquiring in order to grow further. But other than these, there are other areas, but we have not announced them. After completing such M&A, the ninth -- as the ninth spear or tenth spear we will announce, rather than sharing with you where we are focusing on in order to ensure the shareholders' interest. So in terms of the priority, it's not that we have -- we are focusing on certain things. And Slide 28, the existing business. So this is without M&A, but in order to secure this, you want to carry out 1 or 2 M&As when you are likely to exceed JPY 100 billion. Regardless of JPY 100 billion, now this is something that we have been exerting efforts continuously. So in -- because of the COVID, activities slowed down more than we anticipated or some companies are trying to redo things. But as I said, there is the other parties, so it's not that easy. Sometimes we may be able to do 3 deals a year or only 1 deal per year. So it's just how things turn out.

Let's go to the next question from Morgan Stanley MUFG Securities, Sato-san, please.

I have 3 questions, 1 is about the motor business. For the motor business, for FY 2020 sales was JPY 20 billion, '21 is going to go up by JPY 40 billion. For the automotive and HDD, if you divide by automotive HDD and others, what is the changes in 2021? What will be the sales trends for these different applications for the motor business?

So for the individual motor business, I cannot comment on this individual products per se, but in terms of what type of motors, it's going to be the driver. Well, it's not one specific motor driving the business. For instance as Mr. Kainuma said, various opportunities in automotive industry, we have been able to tap into that opportunity. And so these accumulation of these factors it's going to grow. So JPY 240 billion and next year is going to be JPY 265 billion, I think that is a level of growth that we can see for the motors business.

And so related to this, the fourth quarter motor sales is already over JPY 60 billion, for 2021 JPY 240 billion seems a bit conservative. So the fourth quarter, were they any one-off factors for the fourth quarter?

No one-off factors for the fourth quarter, but we are being conservative. For FY 2021 outlook, we're conservative. So because it's only increase of JPY 40 billion, but actually internally we have a higher target, but we have put in some stress scenarios in our outlook. And as Mr. Yoshida said, so the growth is across the board, so stepping motors, DC motors, air movers, so the growth is equal for each of these type of motors for this years forecast. And I'm looking at the sales trend for March, so it's not a specific motor being the driver and this is a very good situation, the growth is very equal even.

Next question is about the analog semiconductors. So ABLIC and amid existing Mitsumi business, how are you going to integrate these business, how are you going to do this integration? Next question is about the analog semiconductors. So ABLIC and amid existing Mitsumi business, how are you going to integrate these business, how are you going to do this integration?

For this time being, so basically -- they will be independent because both sides are supplying the products to the same customers, but there will be a firewall. So the integration is not the end objective, the analog semiconductor business growth is the objective. So our strategy is not putting the integration as a priority. But if they can collaborate and create new products, so maybe that will be handed over to the fabless industry. So I think my job is, this physical and human resources should be captured and laid down the foundation for growth. I think that will be my job, and I would like to use my time to achieve this and that's current situation actually.

So if that is the case, for instance, the power supplies or the batteries and those type of products is, whether be ABLIC or Mitsumi, I think they have a high share both of the companies or the businesses. So this analog semiconductors, what applications or markets will be the targets for your growth?

That's on Page 34, we're talking of analog semiconductors. So it says here that the 8 spear for the analog semiconductors. So these are the areas that we want to grow and our managerial resources will be focused on these areas. That will be our strategy for the analog semiconductors.

Let us move on to the next question, SMBC Nikko Securities, Mr. Watanabe.

I have 3 questions. One, about analog semiconductors. 8-inch and 6-inch lines, I think 6-inches are your mainstay products, and I would assume that the only option for you to further grow your business is to acquire another company. But unless you become proactive, you may miss M&A opportunities. So are you just waiting for one opportunity or are you going to be more proactive about finding opportunities?

Thank you for your advice. So because we have a longstanding relationship, and I think you know my personality and I cannot give you any more comments than that.

And I have high expectation for the industry consolidation. My second question is, you are now seeing signs for recovery for aircrafts and several years ago, aircraft business expansion, you explained, and is it going back to that or are there any changes to the plan right now?

Right now, it's very difficult for me to be precise, but what I heard was the number of passengers for the U.S. airlines is coming back to 80% level, and in the near future it is likely to be back on a 100%. So the vaccination rollout, the effectiveness of vaccination is quite real and therefore, it's just a matter of time. And those people, in other words, the people who are holding themselves back from going out to other countries will be traveling abroad. So in Japan Airlines and other airlines, saying this out loud, that inefficient engines, the engines that emit a lot of CO2, they are starting to discard such engines and they want to downsize because they want to have a fully occupied aircraft. So double aisle to single aisle, I mentioned earlier, but this trend will become explosive going forward, because if you look at a similar movement in automotive space.

When various countries welcome people from other countries, what kinds of contribution is made by accepting people from other countries?

I think it's becoming very visible and in order to achieve that, you need aircrafts, pilots so and so forth. And the plan we put together, the curve that we have anticipated will be followed.

Now, a follow-up on that. Ball bearings can contribute to reducing CO2 emission, I agree, but customers, how do they evaluate these products if there's anything visible, please share with me. So unit price or market share or is it like a green procurement type of programs?

To be quite honest with you, this is something we will take on going forward, but this is the type of the trend we are anticipating. In other words, in order to achieve carbon neutrality, to reduce electricity charge, I don't think a solar power can fulfill all the demands and wind power cannot fulfill all the demands either and nuclear power generation may be able to make contribution to carbon neutrality. But reduction, the huge reduction in actuality is rather difficult. If that is the case, we have no other choices but to depend on certain products in order to reduce, not just the part manufacturer like ourselves, but the set manufacturers also need to take that approach. In other words, people will have to buy eco-friendly products and this integration strategy, we will be able to capitalize on and increasing precision of bearings and analog motors. So, our basic strengths and capacity, we will be able to use. And we have not been approached by any of our customers and demanded for greener products, but the buy frame from third-party note that kind of things, but to what extent -- to what extent we can impact CO2 emission reduction. That is a huge interest for us. And so, we will be making pre-emptive strike in order to win in this area as well.

Just for confirmation so RE100, various companies are signing RE100, but you're not coming up as eco-friendly products.

No, we have not been asked to bring eco-friendly products, not just yet. But customers will be using more of such products like Intel in it or MinebeaMitsumi in it. If that is realized, I think our situation will change.

So inclusive such education, you think you need to do?

Yes. Vaguely waiting for customers' request, vaguely, it doesn't get us anywhere because quality is something that we have been always good at and supply-ability and quality, and the meaning of quality, so eco-friendliness or green products is now one of the elements that make quality.

Let's go to the next question from Mitsubishi UFJ Morgan Stanley Securities, Uchino-san, please.

I have 3 questions. The first one is about, well, I wanted to ask about the analog semiconductors. So the previous person talked about there will be some increased production for the analog semiconductors. Utilizing external resources, including that aspect, how much capacity are you going to -- are you planning for this year, next years capacity increase, so what is your outlook for that? That's my first question.

Well, how much -- we are thinking a lot, let's say a lot. But I think there are things that I can say, but things I cannot say. Of course, building a factory and then waiting for the demand to come, and we are taking some pre-emptive strikes, I talked about that. But for the analog semiconductors, so the human resources and they have the physical resources as well, or else we won't be able to drastically increase the capacity, the same goes for ball bearings motors as well. Everything in the business goes under that kind of formula. And in that sense, I think we are taking measures to be able to be ready.

So for this year's plan, you have already are prepared for that is that what you're indicating? Understood. My second question is, that you talked about the aircraft demand recovery, and has started to recover, but there is some inventory issues, can you talked about that. So in terms of the customers' inventory level, in terms of the recovery, timing of the recovery, do you have any outlook on that?

So in terms of the aircraft business team, the inventory situation has been reported to me. For this fiscal year, I think recovery won't be happening. So far in the second half of next fiscal year gradually the inventory will be going down and then the business recovery will start, that's what I have been told. So this fiscal year, I'm not putting much expectations on this business, that's true. So if things go well, from October next fiscal year or by the end of next year, I think basically recovery will start. The full recovery of the aviation business will be 2 years from now, but even so, things tend to happen earlier. To be frank, I -- it's difficult for me to say what's going to happen.

There is possibility that this recovery is going to happen early period of next fiscal year?

Yes, yes. That's what I'm saying.

So my third question is about the -- consolidating the OIS business into the Philippines. So the OIS customers, this -- what's the share outlook, what are the assumptions of share? And for the Chinese business, I think the specific customer, saw a huge decline in specific customers, but after that for the reconstructing the China business strategy, are you thinking about that? Maybe consolidating these sites will be one of these things, so that you can refer to please.

In terms of share, I will not refer to that, but there was another previous question on total sales, I want to double the sales. So the sensor shift or the new solutions, new mechanics is going to happening, the unit price is going to go up, but in terms of volume, it's going to increase as well. So towards the North American customers, that's what we're going to do. And for the other areas for this business as Mr. Kainuma has said in his presentation, this new structure, new design is going to be provided from us to the customers. So this fiscal year's -- fourth quarter of this fiscal year, I think we're going to see some contribution coming. So our characteristic is that we offer the high function products -- to the high-end products to the customers and that's unchanged. So including the product line-up of customers, we are looking at their policy. So, in the fourth quarter of this fiscal year, some of that strategy is going to bear fruit. That's what we're seeing right now.

Let us move on to the next question. UBS Securities, Mr. Hirata, please begin.

I have 2 questions. The first one is about mechanical components. In Q4 -- the sales in Q4, JPY 44.1 billion and operating profit margin was 20% and the guidance for this fiscal year, the JPY 170 million for full year, and therefore quarterly JPY 22.5 billion and the margin 25%. In another words, you are expecting huge improvement in OP margin. So how sure are you? You have been reducing inventories and improving productivity among other things, but from 20% to 25%, how do you plan to achieve this improvement?

First of all, the thoughts behind our guidance, as you may be aware, the demand is increasing and that is reflected on the Q4 results and the outlook for Q1, compared with them. And the same applies to motor business. In Q2 onwards, there will be, I mean, the figures are slightly conservative, and that is -- if Q4 continues as the basis, the numbers may seem small, I would assume. And how shortage of semiconductors will be resolved, that is one of the factors and there are other factors and how we interpret them is one thing, but recently the -- it's been very strong, but Q2 onwards, we put together more conservative numbers.

I see. So you have taken a conservative view for sales forecast, but profit reflects the recent strength, am I right?

Yes.

Well the profit, as Kainuma said previously, we are being a bit conservative as well.

I see. Understood. My second question is, actuator business in Mitsumi, the Page 33 of the slide shows a huge improvement in sales during this medium-term business plan period, and for major customers, the increased share in major customers as well as the new customers, what is the anticipated contribution? Even without the new customers, do you think you can achieve a strong growth? So can you share with me more details about this?

First of all this year, the North American customer will grow significantly and share will be much bigger, probably 9 to 1. And the next year onwards, because of the road map, I cannot share with you details, but this -- so it's not that kind of a growth from last year to this year will be repeated next year. And the customers, other than the North American, there are various programs that are going on, and next year onwards, we will be able to secure a good business. As a result North America and other regions, the ratio between the 2 will be changing, next year onwards. That is the assumption we have.

[Operator Instructions] There seems to be no questions or further questions. We'd like to end the Q&A session. This brings us to end of the business results meeting. Thanks, and the screen, please go to the link and answer the questionnaire. Thank you very much for your participation.