MINEBEA MITSUMI Inc. (6479) Q3 FY2026 Earnings Call Transcript & Summary

Hello. This is Yoshida. Today, I would like to explain the consolidated financial results for the third quarter of the fiscal year ending March 2026. Consolidated net sales for the third quarter of the fiscal year ending March 2026 was up 22.8% year-on-year and up 10.3% quarter-on-quarter to total JPY 453.9 billion. Operating income was up 17.8% year-on-year and up 14.3% quarter-on-quarter to total JPY 30.8 billion. Profit for the period attributable to owners of the parent was up 19.4% year-on-year and increased by 17.5% quarter-on-quarter to total JPY 20.8 billion. Both net sales and operating income exceeded our plan. We estimate that foreign currency exchange risk to have a quarter-on-quarter impact of plus JPY 12.8 billion and year-on-year impact of plus JPY 9.6 billion in net sales. Quarter-on-quarter impact was plus JPY 1.7 billion and year-on-year impact was plus JPY 0.2 billion in operating income. This is the quarterly trend in net sales, operating income and operating margin. The operating margin for the third quarter was 6.8%. This represents a year-on-year decrease of 0.3 percentage points and a quarter-on-quarter increase of 0.2 percentage points. This is a difference between the forecast as of November and actual results for net sales and operating income by Business segment for the third quarter. Net sales of PT exceeded the forecast primarily due to strong performance in bearings for data centers and automobiles. MLS performed solidly, primarily driven by HDD motors and lighting devices, exceeding expectations. In the SE sales, semiconductors such as lithium battery protection ICs and mechanical components performed well, exceeding the forecast. AS was also above expectations, primarily driven by automotive devices. Regarding operating profit, PT exceeded the forecast due to increased bearing production volume. MLS exceeded the forecast as lighting devices performed strongly. SE also exceeded the forecast as mechanical components showed steady performance. AS underperformed due to customer production adjustment following the suspension of semiconductor supplies from Nexperia for North American products. This slide shows the quarterly trends of the Precision Technologies segment. On the left is a graph indicating quarterly 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. Third quarter net sales increased 2.5% quarter-on-quarter to total JPY 70.1 billion. Sales of ball bearings increased 0.5% quarter-on-quarter to total JPY 46.2 billion. The monthly external shipment volume remained flat quarter-on-quarter, averaging 277 million units, driven by steady growth in the data center and automobiles, increased production and sales volumes contributed to this outcome. Sales of engine fasteners increased 2.8% quarter-on-quarter to total JPY 16.2 billion. Sales of PMC increased 15.4% quarter-on-quarter to total JPY 7.7 billion. Operating income for the quarter totaled JPY 15.3 billion, and the operating margin was 21.9%. On a quarter-on-quarter basis, operating income increased JPY 0.6 billion, and the operating margin was up 0.4 percentage points. These results include the figures of Minebea Linear Motion Inc. consolidated since October 2025. This slide shows the quarterly trends for Motor, Lighting & Sensing segment. Net sales increased 1% quarter-on-quarter to total JPY 114.2 billion. Looking at the results by product, we see that sales of Motors decreased 0.2% quarter-on-quarter to reach JPY 84.2 billion. While demand for HDD and automotive applications remained steady, overall results were impacted by decline in sales for OA motors due to customer production adjustments. Sales of electronic devices were up 1.4% from the previous quarter to total JPY 17.5 billion. Sales of Sensing Devices were up 4.1% from the previous quarter to total JPY 9.9 billion. Operating income came to JPY 8.3 billion, and the operating margin was 7.2%. On a quarter-on-quarter basis, operating income increased JPY 1 billion and the operating margin rose 0.7 percentage points. This slide shows the quarterly trends for Semiconductors & Electronics segment. Net sales increased 24.4% quarter-on-quarter to total JPY 186.7 billion. This was due to steady performance in optical devices and mechanical components in addition to analog semiconductors. Operating income totaled JPY 10.8 billion, while the operating margin was 5.8%. On a quarter-on-quarter basis, operating income increased JPY 3.4 billion, and the operating margin was up 0.9 percentage points. This slide shows the quarterly trends for Access Solutions segment. Net sales totaled JPY 82 billion with a quarter-on-quarter increase of 3.9%. Operating income came to JPY 3.3 billion and the OP margin was 4%. On a quarter-on-quarter basis, operating income decreased JPY 1.2 billion, and the OP margin was down 1.6 percentage points. Although impacted by the aforementioned issues related to Nexperia, performance is expected to recover from the fourth quarter onward. The bar graph here shows trends in profit attributable to owners of the parent, while the line graph chart changes in the profit for the period per share. The profit for the period was JPY 20.8 billion. Earnings per share was JPY 51.79. Next, we have the quarterly inventory trend. At the end of Q3, inventory totaled JPY 411.7 billion, an increase of JPY 9.6 billion from 3 months earlier. This is primarily due to the strategic buildup of inventory necessary to meet the anticipated sales growth starting in the fourth quarter. 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 flow. At the end of the third quarter, net interest-bearing debt totaling JPY 278.6 billion was up JPY 37.2 billion from the fiscal year March 2025. For the fiscal year March 2026, we expect to generate JPY 27 billion in free cash flow and forecast net interest-bearing debt of JPY 230 billion. This is the full year forecast for the fiscal year March 2026. We have revised both net sales and operating income upward from November forecast. Regarding operating income, we forecast JPY 101 billion, factoring in the recognition of approximately JPY 4 billion in restructuring costs. The exchange rate is assumed to be JPY 155 to the U.S. dollar. This slide shows the forecast by Business segment. This chart shows the difference between the revised forecast and the November forecast. This chart shows the annual trends for the net sales, operating income, operating margin and the real operating margin, which is the operating margin, excluding sales of supplied parts and components. The real operating margin for the fiscal year March 2025 was 7.3%. We also project a real operating margin of 7.6% for the fiscal year March 2026. This concludes my presentation.

Chairman Kainuma, please.

So for my part, I would like to explain today's point. This slide, I hope you will all read through this, so we talked about this bamboos. And then if the bamboo will grow and then there will be some blocks and then -- blockage and then grow again, this JPY 100 billion of operating income, we have been challenging this many times. But I think basically, we're not been able to overcome this type of block. But this time around, we have been able to go over this hurdle. So I think this is the biggest or most important message that I want to send out. So the Thai baht, so it's THB 36 to $1. But right now, it's about THB 31.5 to $1. It has been very strong and during the short space of time. Normally, in this kind of situation, our profitability is impacted by the fluctuation of the ForEx. But my feeling is that we have this strength to be able to overcome these type of situations. I think we have that strength. So going through this block or hurdle, I think growth will continue going forward. Let's go to the next slide. So this is the full year forecast for the 9 months. So net sales, operating income, profit before tax, all lines were at a record high level. The structural -- JPY 4 billion of structural reform cost, we have been booking that. If this wasn't there, so it would be JPY 105.5 billion. So it's only JPY 1 billion. We have conducted upward revision of JPY 1 billion. So it's going to JPY 105 billion, JPY 110 billion or JPY 120 billion. I think this is a kind of a marginal difference and the ForEx will change in any case. So it will be -- we'll be able to go beyond JPY 100 billion. So I hope I'll be able to get through the message. That will be the core message I want to send out. Next slide, please. So we have been improving our profitability, and I myself, feel that we have been able to see a robust growth, specifically in the PT business, the former machine components business. So this PT is becoming a great driver for our business. So Bearings, it is doing very well. So the December production 350 million. January external sales, 287 million. So it is a record high level. Specifically, for fan motors, this category; and automotive, this category, both in January, it's been able to record a historical high level. So what's great about this is that there's still room to grow. So I talked about December, 350 million production volume. So all in all, this fiscal year's average, 320 million. So next fiscal year, according to our current plan, so monthly average 350 million of production, that is our plan. So it means that we're going to bring up the production by 30 million per month. So that is the growth potential for Bearings. And on top of that, so the Aircraft and Aviation business, they're going to -- that's going to improve the profitability. So in this fourth quarter, the price adjustment has been conducted. And on top of that, the utilization for the plant that has a low utilization rate, it's not the case that they don't have orders, this is due to our issues about our operation. So we are focusing on enhancing the utilization rate in these type of plants. The order backlog, we have an abundant order backlog. So if we produce, then we'll be able to sell. But for instance, changing sets, lack of labor because most of this is produced overseas. So the production is not going according to our plan. But right now, the local head, we have changed the person in charge. It used to be the case at Fujisawa, we talked about from push to pull, and I have been the leader conducting the reform. And we have started to do the same thing in overseas plants. So with the growth potential of the Aviation business is quite substantial. In terms of the profit outlook for next fiscal year, maybe 10%, we're going to see a 10% increase. That is my view. So going to the next slide. So this is the Motor, Lighting and Sensing business. So if you look at the photo, as you can see, the AI servers, the MLS-related products for AI servers and the potential for increased sales, you can see that it's quite a high potential. For the fan motors, this fiscal year has been good. Next fiscal year, more than this year, we'll be able to sell. And the large fan motors shown in this photo, we have been able to get these orders. So motor-related business for next fiscal year is going to grow further. And additionally, spindle motors. So helium production, so 300,000, so 900,000 by quarter, 300,000 per month, 100,000 per quarter, we have decided to increase capacity and invested. So from October, that will start to contribute to our earnings. So the Motor business is going to grow very steadily. And Lighting devices, so the pillar-to-pillar is going to -- we're going to increase the capacity for pillar-to-pillar. So it was loss-making. So the tablet application volume was small. But now this pillar-to-pillar Lighting devices has started to be shipped and tablets volumes have started to recover. So this will contribute to our profit. Well, Sensing devices, I will touch upon this later. This strain gauge is going to be utilized for humanoid robots. For instance, the hands, the sensors that will be equipped will be kept on hands. So there's a lot of inquiries coming for these type of Sensing devices, and they will start to contributing to our profit. And going to the next slide, the Semiconductor and Electronics, SE business. So semiconductors over this fiscal year, next fiscal year, I think it will be flat. So about JPY 24 billion of profit is our outlook. So the power semiconductor, the Shiga plant, the full-fledged utilization, I think it will take some time for this to go up to full operation. For instance -- excuse me, so in that sense, within semiconductors, there are some differences. From Socionext, we have bought a Semiconductor business that will be a very -- so this will be a compact diagnostic equipment. So we start from Gen 1, and now we are at Gen 2. So we are not -- this has not been able to go to -- in terms of diagnostics, it's basically just on the surface of the body. So if we go to Gen 3, this will be able to go into deeper into the body. So that would be in January 2027. That is when the mass production is going to happen. Gen 4, that will be 2029, the image quality is going to be improved. So that point onward, we will make a full-fledged start. And ARC is doing extremely well. So that is the current situation. Optical devices and mechanical components, we did not expect a huge profit. So it's in line with the original expectation. Next page, please. AS, as you may be aware, there have been various headwinds. Chinese market for Japanese players has become a very tough market. And our customers, Nexperia, because of the shortage of Nexperia chips, our customers had no other choices but to stop production. So because of the external factors, we are going through a tough period. With regards to this, in the latter half, in the U.S., there will be a production for recovery. And therefore, the impact will be or impact was somewhat limited. But amidst this headwinds, JPY 16 billion profit that we have been able to record. So that means that we now have a better capability. And next year, we are expecting increased profit. Moving on to the next one, humanoid robots. On IR Day, I talked about this. So it may be somewhat repetitive, but the various parts and components will be used in humanoid robots. And bearings, quite a few bearings will be used in the hand, the ball bearings that we make will be used, but other parts, the special bearings are used. And now we are contemplating whether we should make them or not. On the next page, what we exhibited at CES, you can see a video. So there's music, but you cannot hear music today. So when the lid is opened, you can see the fingers moving very fast and accurately and people were quite surprised. One finger can tolerate up to 5 kg. And on the right-hand side, you can see a block device, and that is the monitor -- that is for monitoring fingers. If you move your fingers and then the robot fingers will move accordingly. In any case, the fact that we exhibited at the CES, and it was right at the timing, and we received many inquiries. And we would like to steadily contact each and every customer and ship samples and so-called high-end components that we make to what extent we can help those customers, we would like to judge in order to move forward. And we think that -- I think that this business has a very bright future. Next page, please. So it's my mistake, and I apologize. So 8 spheres and 5 pillars are rather difficult to understand. That is what was pointed out by some investors. So I try to put things into perspective. On the left-hand side, you can see 8 spheres. In other words, product portfolio. And as I always say, the various end products that move because of electricity, these are used in all of them. So definition of the spheres in a niche market we would like to demonstrate our strengths. And we were able to integrate our strengths and they do not cease to exist easily. So the integration and plus 1 or plus alpha. On the right-hand side, you can see 5 growth areas. In my terminology, there are 5 pillars. But if that is difficult to understand, I would call it the 5 growth areas going forward. So AI servers and commercial drones and humanoid robots and new mobility is somewhat new, and it can be defined in a different way. But because of the emergence of new mobility, the comfortability or comfort can be greater when a person moves from point A to point B. So various components will be used in order to realize that. So that is also a growth driver. So this is about structural reform that have been touched upon several times and production at the Malaysian site has been terminated and about JPY 2.5 billion of annual impact is expected next year. Next page, please. So fortunately, for 14 years back to back, we have been renewing the record sales. And next year, we would like to target at achieving the 15th year consecutive net sales growth and profit has increased for 3 years back to back. And the next year will be the fourth year. And frequently asked the question is that in March, we formulate the budget and then taking into account the various situation in the society and the market, we make several adjustments. And in May, at the earnings result announcement, we give guidance. We formally announced guidance. And people like you ask us, continuously ask us what about next year? So I would like to show that we are going to grow next year as well, and that is the reason why I put these numbers on the graph. So we have proceeded to the next stage of growth. So next year onwards, as I said previously, being sustained by 3 growth segments, we believe that we will be able to keep growing. So this message, I'm sharing with you for your reference. So I don't want you to scrutinize each of these numbers, but rather, I would like you to understand this as an overall image. So last page shows about the dividend, and I have no comments on this. This concludes my comment. Thank you very much.

So we'll go into the Q&A session. The first question is from Goldman Sachs, Takayama-san, please.

First, I would like to ask about for the next -- about the next fiscal year. So I have to ask this question, excuse me. But this number -- so from JPY 110 billion to JPY 105 billion, but you have got -- get back to that number. So in terms of the increment by segment, which is the high contributor? So SE you said it was flat. I would like to ask about that. And the range -- so the risk, what is the risk that things may change, for instance, maybe the material cost? So Mr. Kainuma, which area do you consider as the risk?

So in terms of range, I think there are a range of -- in terms of the risks that you take into account. So the floor, JPY 105 billion, I think that is okay. In terms of the breakout of increment, I think PT will be the biggest contributor. Next will be MLS, AS is in that order. That is what we assume that we think. Again, I have to repeat in March this year, we will scrutinize these figures, and we will brush up our plan outlook until May. So at the current point, roughly speaking, this is the kind of the image that we can give you. Well, if you are asking about risk, so as I've said previously, the big contributor or the business that is having a record high level and in terms of the 250 million of the production of bearings is necessary. So the driver will be fan motors, automotive applications. So the trend of this business will be a risk. But for AI servers for next fiscal year, I do not think that you don't have to be concerned about risk. I think rather than that, the automotive industry's trend is going to happen to rare earth, maybe the production is going to decline or is it not going to decline? I think that is the thing that we have to consider. So if that happens, AS will maybe that will be a risk for AS business as well. For SE, semiconductors will be the main source of profit and the subcore mechanical components and OIS. So smartphones are selling well. Games, I do not know how the momentum is going to hold, or that is one risk factor. But the profit contribution overall is very small. So I do not think that we have to consider specifically as a risk.

Understood. So overall, in terms of the material costs, including the cost of copper, so the including pass-throughs of the increased costs. So in terms of the margins, you don't think that it will be a risk to your margins?

Of course, there are risks, but in those type of situations, ultimately, we will have to ask consumers to bear that cost. So we have to negotiate with the clients, specifically the price that has shot up if you have a sudden spike in the cost. And if it stays at that level, I think there's no other way for us to cope with that situation. So in that way, that is the way we want to respond.

My second question, so it's about optical device actuator business. So the other companies said that the volume is going to increase in next fiscal year, they're talking about doubling the capacity. From your point of view, what is the positioning of this business? You said that it is strong, but for next fiscal year's way that you look at this business, what are your thoughts?

So about increasing lines, we will be doing that as well. And we do want to respond to this higher demand. Currently, that is all we can say.

Let us move on to the next question. Morgan Stanley MUFG Securities, Mr. Sato, over to you.

So this is Sato from Morgan Stanley Securities. I have two questions. One, ball bearing production, December 350 million -- it reached 350 million and Q3 monthly external shipment and internal sales as well as outlook for Q4, if you could share with me?

So Q3, did you say?

Q3 and Q4.

I see. From October, the unit is 1 million production, 322, 314, 351; January, 339; February, 306; March, 346. And sales: October, external shipment, 278; November, 275; December, 277; January, 287; February, 261, March, 293. Internal sales from October, 54, 48, 49, December and January, 47, 45 and 45. So that is the current outlook. Thank you.

And next fiscal year, the monthly production, on average, 350 million will be aimed at. And towards the end of next fiscal year, to what extent the production capacity or production volume will increase, I'm wondering?

So it depends on the utilization, and it may be premature to talk about that. But in terms of sales, at the end of the fiscal year, let me think about that, external shipment alone, it will be greater than 300. So that is what we are thinking, that is external shipment. And internal sales will be 50 or 60; and therefore, 350 million or 360 million. And Kainuma explained, it will be 350 million, but it depends on the months because the business days -- number of business days is different month to month.

And my second question is the impact of a shortage of memories. The increase in the memory price and the difficulty in sourcing memory, whether that impacts your business or not? And the customers, number of sets, how it is likely to impact, so if you can share with us your forecast at this point in time?

So right now, the people are talking about many different things. We are not making any products using the memories that are being talked about right now. And therefore, there is no impact on our business directly, but indirect impact, the customers' forecast have not changed and the various forecasts and projections exist, but the customers have not told us any actual impact of that, and therefore, I would like to refrain from making any comment on that.

Next fiscal year, the memory price increase and the shortage of the goods, am I right in assuming that you do not think it's going to be a risk for you?

At this point, there are uncertainties, but our assumption is the cheap ones with memories, the cheap products with memories may be impacted. But the high-end products, even if memory price increases a little bit, because it doesn't account for a huge portion of the total price, I don't think impact will be huge. And we are focusing on high-end products and high-end components, and therefore, at this point in time, as Yoshida said, our customers did not give any indications. And we do not supply our goods to low-end products much, and therefore, the impact shall be impacted. That is our assumption at this point.

[Operator Instructions] I would like to go to the next question. From Mizuho Securities, Goto-san, please.

So this is Goto from Mizuho. I have three questions. Number one is about the Bearings. So in the second quarter presentation, so in the second half, you said that the volume will stabilize. I think that has been your outlook, but for the -- look at January and the outlook for March, it seems to become higher. So compared to your previous understanding, the demand or the market situation for Bearings is there any change that is happening? That's my first question.

As you all know, and as I've said before, this -- so fan motors and automotive is the 2 drivers in this business. So fan motors, AI-related servers demand and the production of these products is gradually going up for automotives. From our point of view that -- the number of components that is included in one automobile, including for comparability usage is increasing. So that has become reality. So I think the growth is faster than we have initially anticipated. So we talked -- I thought that maybe JPY 60 billion would be a good level. Maybe it is -- we thought that maybe it will not be that high, but the current demand is quite strong. So to be frank, so that was kind of a minor surprise for us. So the organic trend is there. The underlying trend is there and it has become more and more relevant.

Okay. I understand. Understood. My second question is that the -- in terms of the third quarter results, your thoughts, so it is slightly over your expectations. But for AS, Nexperia's impact is there. So if you take that into consideration, so the JPY 2 billion understood in the AS but I think fundamentally, it was actually over your expectations, maybe that's way to interpret. So if -- I do not think that the fourth quarter is going to be pushed into the fourth quarter. So for this fiscal year, JPY 105 billion, it should have been higher than that. Is that the right way to interpret?

So for AS, for the second half, so for the next period incident, it will be recovered, but not fully for the second half. But March, in terms of the die & mold et cetera, various sales will be included in the March. So yes, we have to see some additional income. So the third quarter, the AS was under our target. But on the other hand, for the other segments, they outperformed. So the fourth quarter will be -- yes, will perform better and then achieve this JPY 105 billion. Maybe that is a story that you should consider.

So my third question is about CES, you displayed robot hands and you got good feedback. So I think you had communicated with the customer at CES. So within the industry, what is the positioning of your robot hand within the industry? Is it ahead? So I think do you have a clear understanding of how your robot hand is positioned in the industry? So have you become more confident based on your feedback? And in terms of the breadth of the customers, maybe is there a possibility they're going to have a more wider customer base based on this feedback?

So I think maybe the customers are being diplomatic. But they said that you were the best among the robot hands. There are some customers who give us that feedback. They say the reason is that the fingers were moving very smoothly and with one finger can support 5 kilograms. They were very surprised by that. I think that was their understanding. But the reason why we produce this is that not that we want to be very aggressively going to the robot hand business, we wanted to show that by using our components, although it's a little expensive, you can actually realize various movements. And if you put sensors on the hand, various sensing actions can be conducted. So it was a kind of a -- we wanted to appeal our capability. So in that sense, rather than trying to sell robot hands, we wanted to appeal about the components and parts that we use in this robot hands. So that has been our priority. So we have actuators, bearings.

So has there been some inquiries coming from new customers?

Yes, yes. I'm mistaken, yes, because -- but it's still -- it's only a month since we went to CES. We will just started to approach customers based on the list that we have compiled. And I think gradually, to be able to -- I think it will take a couple of months until actually this will show up in numbers.

Let us move on to the next question. UBS Securities, Mr. Hirata, over to you.

So I'm Hirata from UBS. I have two questions. One, SE operating profit, I think there has been an upside. And SE full year outlook has been revised up. And I would like to understand factors behind -- so the background of upward revision and the image for the next midterm plan. And the next year is likely to be flat, you said. So the reason why you are being so prudent after experiencing this much growth, if you can explain to me? Q3, SE, what was good?

So semiconductors had an upside. That is one thing. And also, we have a conservative budget, but for our game business and the game business did better than expected. So that is the current situation. And toward the next year, as Kainuma explained, I mean, he explained everything, the bearings are doing well and motors, there are many opportunities. And for AS, new program will come out and things will be very solid. The reason why we expect next year to be flat. We will be scrutinizing various elements going forward, but how the actual business will evolve apart from that, in terms of the guidance, game and optical devices, to some extent, we would like to present a rather conservative numbers.

A follow-up question. Regarding optical devices, you have gained back share and the rare earth issues have been resolved. So am I right in understanding it that way, and you are simply being conservative?

So how things will develop next fiscal year, we need to scrutinize going forward and share with you at a later point in time. And the rare earth related, so Q1 and Q2 as well as Q3, we had such a tough time, but that problem has been resolved. Next year, we are not anticipating to face the same problem. However, how we look at the business as a whole, we need to secure profit and make steady progress and the core business will grow. So centering around that, we will put together a plan.

My second question is a confirmation of the numbers, if I may. So restructuring reform number, so the JPY 4 billion from Q3, JPY 1 billion; and Q4, JPY 3 billion. And can you give me a breakdown by segment and AS Q4 the recovery of onetime expenses from our customers. Is it related to the die and mold? If you can give me numbers, I would appreciate it.

AS expenses, die and mold and the price adjustments from original transaction terms and conditions, the reality turned out somewhat different, and we made adjustments accordingly just like last year, and we are to receive such. Regarding the structural reform cost. So Q3, JPY 1 billion and Q4, JPY 3 billion. And if that is the split SE or correction, MLS and AS. With regards to the content because this is a structural reform, at this point in time, we cannot share with you proactively the numbers and content, but we are aiming to improve our structure. So we have put together a specific plan, but we are not able to share with you the plan yet.

Let's go to the next question. Nomura Securities, Akizuki-san, please.

So this is Akizuki from Nomura. First, so the third quarter, fourth quarter consignment numbers, the results and the outlook, can you give me that?

Third quarter, about JPY 54 billion, was quite large. Fourth quarter, about JPY 12 billion.

The consignment in the third quarter seems to be higher than your plan. Can you enlighten me how this happened?

So towards Christmas, so the third quarter, we had to build up the products and increase production. In the fourth quarter that we got over the peak of the seasonality and the production went down. So that is the reason why the number went down in the fourth quarter. So that is the reason why the mechanical components was better because the production was active. So the electronic components business was good. This is one reason, yes.

And again, this is a confirmation of numbers again. Fourth quarter AS, so structural reform. So if you add back JPY 1 billion, the operating income will be JPY 8 billion. So it seems to be quite a high level. So what you will not be able to produce in third quarter, so it is pushed out in the fourth quarter, that is the reason or is it a new products, better mix and the actual business situation has become better? But on the other hand, for next fiscal year, you're not anticipating a lot of increase on the products. So AS -- so when you -- the fourth quarter, if you consider as a base, what is your outlook of this business?

In the fourth quarter, there is some structural reform cost included. So if you exclude that, basically, the fourth quarter would be in line with the plan, for the full year, that is. So if you look at the third quarter and fourth quarter, the third quarter, as we have been doing, we had Nexperia issue and some of the customers have been struggling in terms of the production. And -- but this procurement of the components has improved, not all, but they are going to catch up in the fourth quarter, although not for all of that, their plan. So meaning that what there was a shortage in third quarter, that will be produced in the fourth quarter.

And in the fourth quarter so in terms of the mix, the improvement of the products is included?

Well, that's going to happen from now. For next fiscal year onwards, I think these types of changes will gradually happen. But as Kainuma has said in the beginning, for next fiscal year, we are being slightly conservative. That is due to the automotive industry, the China situation. It's very difficult to have visibility. So against this backdrop, we are taking a slightly conservative stance.

Lastly, so for MLS, the copper price has gone up and motors use a lot of copper. So how should I consider the impact going forward? Can you immediately pass through the increase of cost? How does this work?

It is true that the -- in terms of the copper cost, the price is very high, and we cannot deny that this has an impact on our business. So our motors are very small. We're focusing on small motors and the copper wires that we use is very fine. So if there are large motors and the copper coils against the product price is lower compared to -- because we are placing small motors. So currently, I do not think that this will impact the business. But that said, going forward, so the raw material besides copper, they are some are going up. We would like to negotiate with the customers and then ask them to bear that cost. By doing so, we want to protect our profits.

This concludes the Q&A session. And this concludes today's session. And after the session is concluded, you will see a question survey form. In order for us to do a better job in IR activities going forward, we would appreciate your feedback. Thank you very much once again for joining us. [Statements in English on this transcript were spoken by an interpreter present on the live call.]