Presentation Transcripts

This slide shows the current performance of miniature ball bearings, our anchor product line.
The ball bearing business has been showing strong growth this fiscal year and is expected to grow further at a faster pace in coming fiscal years. Let's look at the factors behind this growth with a focus on sales volume, cost, and pricing.
Firstly, until last fiscal year, the external shipment volume grew 10 million units per month on average. This fiscal year it's increasing at a faster pace as you can see in this bar graph. This is just a preliminary figure but the shipment volume for January has already topped 200 million units.
The production volume has also been rising quickly. While the monthly production volume was 250 million units last April, it went to 282 million units in November and will reach 287 million units by the end of this fiscal year.
This jump was the payoff for our efforts to improve productivity. Next fiscal year, with the additional equipment worth 8 billion yen that we ordered last fiscal year, we will have enough production capacity to produce more than 300 million units in total. Behind it all are four strong winds in our sails that are pushing us forward, namely automobiles, data center fan motors, high-end home appliances, and small robots.
The increasing number of cars equipped with more sophisticated energy efficiency, safety, and comfort features as well as major and minor model changes has boosted the use of our bearings which are being used more and more for these automobile applications.
That's why our automobile bearings are growing at a rate that has far outpaced the increase in global automobile shipment volumes. The number of miniature ball bearings used per vehicle is also expected to rise at an ever accelerating pace due to the shift to electric vehicles and other innovations.
When it comes to data centers, there has been a sharp rise in demand for servers that has recently been characterized in the news as a "explosive shopping spree." Servers, whether they be HDDs or SSDs, must be absolutely reliable. The trouble is they generate lots of heat and that's where high function fan motors come into play to cool them down. Demand for these fan motors, employing our high performance bearings, is skyrocketing.
Another factor behind the jump in demand for bearings is the increasing number of high-end home appliances incorporating high-speed and DC brushless motors to enhance energy efficiency.
Likewise motors equipped with high performance bearings have been adopted in small robots, such as drones.
While we expect the internal sales volume of bearings for HDDs to decline over the long run, internal sales of bearings used for motors should continue to rise, keeping our ball bearing business performance up. We expect the total sales volume for next fiscal year will initially be 280 million units, with 200 million units sold externally and 80 million units sold internally, exceeding this year's level by a wide margin.
Secondly, looking at cost-related factors, one-time costs associated with our initiative to boost productivity, such as production line set-up and logistics costs, are expected to be eliminated after the fourth quarter, hence profitability should significantly improve beginning next fiscal year. However, due to rapid expansion of demand at present, we should continue boosting productivity and some part of one-time costs could remain in next FY.
Finally, we are looking to review our pricing policy. We will shift the focus from volume to quality requirement for pricing. Specifically, we will review the pricing of core parts and high quality products by proposing prices that are more in alignment with their added value.
All these factors, including sales, production, cost, and pricing, will drive growth of ball bearings even further next fiscal year and onward.