Presentation Transcripts

Sales of automotive ball bearings hit a record high of 60 million units last month. That means our annual growth rate was approximately 11%. I have been informed that sales should grow even further next fiscal year. The main factor behind the boost in sales is that all kinds of pumps, whether they be water, oil, or air pumps, are going electric. The growing use of electric components in cars is driving demand for higher quality and more durable ball bearings. We are the only manufacturer that has the kind of production capacity to meet this sharp increase in demand. We also made some price adjustments and saw a 2-yen-increase in the average price last month.

As for cooling fans, the development of base station infrastructure for 5G and ADAS will pick up momentum and surely drive demand up. They have to be high quality fans built to keep on running 24-7, which will require extremely durable ball bearings. We expect that sales of ball bearings for cooling fans will also grow annually by a two-digit percentage.

Super-efficient vacuum cleaners are another blockbuster development. Soon after a famous foreign manufacturer first came out with its vacuum cleaner that had incredible suction power, both Japanese as well as Chinese makers followed suit, and as a result demand for high-speed bearings is climbing. Sales have grown by 20%.

That's why we don't have any big concerns about ball bearings. If you look at the balance between production and sales, you'll see that we are currently producing more than we are selling, but on the upside we've finally reduced air freight expenses from 100 million yen to 60 million yen. We'll try to whittle this figure down to 20 million yen while working on keeping inventory at an optimal level.

We tend to spotlight ball bearings, but I have to say that our rod-end and fastener business is actually doing really great. As I have mentioned several times in previous investor meetings, we successfully improved productivity of ball bearings and boosted the monthly production volume by 35 million units via the same strategy used for the Mitsumi Business. We also made an investment that would enable us to produce an additional 15 million units, taking the monthly production volume from 250 million units to 300 million units. We then decided to do the same for rod-ends, and are seeing a steady payoff with last month's shipment volume hitting a record high at the Karuizawa Plant. Although last year I said that we would see about an 800 million yen uptick in profits this fiscal year, the complete turnaround for fasteners will put that figure even higher.

C&A and Mach Aero are also doing well, keeping our rod-end business in the U.S. booming. One big plus is that we are in the middle of negotiating prices with customers as their long-term plans are replaced with new ones. This means that the upswing won't end anytime soon. Since we will be selling to our customers at higher prices for a while under new long-term contracts, annual operating income for machined components, which was initially projected to be 50 billion yen, should reach 55 billion yen this year, if we were to annualize last month's operating income figure. We can expect to see 10% growth for machined components again next fiscal year.