Presentation Transcripts

In the Rotary Components business segment, first quarter net sales were 24.1 billion yen, up 8.9% from the previous quarter due to continuing recovery from the Thai Floods and increased sales of HDD spindle motors and other motors. Operating loss narrowed by 0.6 billion yen from the previous quarter to 0.5 billion yen. Operating margin improved by 2.7 percentage points to negative 2.3% from the previous quarter. There was an extraordinary loss on disaster of 0.8 billion yen in the HDD spindle motor business due to interrupted operations at the two parts factories which were hit by the Thai Floods.

Our Navanakorn and Rojana factories which were manufacturing HDD Spindle motor parts but were hit by the floods are expected to completely recover in September. Regarding the HDD market, there were production adjustments by HDD manufacturers in and after June, we expect that the market will be flat in the September quarter. However, it is expected that it will return to a recovery trend in the December quarter. Demand for high-end products which we are focusing on such as for servers and 7mm height 2.5 inch HDDs are expected to be steady. We are aiming at turning around the HDD spindle motor business in the September quarter and profit contribution onward by increasing shipment volume through utilizing outsourced base plate manufacturing capacity on top of the recovery of our own base plate capacity and improved efficiency, in addition to improving product mix.

Regarding the information motor business, fan motor sales continued to flounder due to the supply chain disruption by the Thai Floods. The vibration motor business was still losing money despite monthly improvement through downsizing measures. We will make all efforts to improve profitability by focusing on better production efficiency and lower fixed costs, in addition to shifting production to our new Cambodian factory.
We are aiming at turning around the Rotary Components business segment in the September quarter and continue to make stable profits afterward through those measures mentioned above.