Presentation Transcripts

As previously announced, we were aiming to boost our monthly production capacity of miniature and small-sized ball bearings to 345 million units by the end of this fiscal year but have decided to increase it to 365 million units. As noted in the diagram shown in the top right-hand corner of this slide, production capacity was 250 million units in 2017. Starting from there, we increased it to 285 million units via our initiative to improve productivity, which I myself was involved in, and to 315 million units via 8-billion- and 6.5-billion-yen capital investments designed to eliminate bottlenecks. The business unit's improved productivity then brought the capacity up to 325 million units. We made an additional 10-billion-yen capital investment last year, which upped the capacity to 345 million units. It will reach 365 million units with the latest additional investment of 10 billion yen. This decision was prompted by the extremely high demand for cars and fan motors. As I have said repeatedly, the volumes for miniature and small-sized ball bearings per car will increase with the shift to EVs. In fact, we have seen a tremendous increase in demand already, requiring us to increase our production capacity by more than 100 million units in the past four or five years.

Our recent decision to increase production will involve installing production facilities in the multi-purpose factory that is being constructed in Thailand. At the same time, we have been gradually making capital investments in the NHT factory which was built in Thailand in 2011. Since it's been 10 years since it was built, depreciation expenses for the factory will decline from now on. That means, even if we make a capital investment of 20 billion yen, depreciation expenses will not change much. I'd say we're seeing the beginning of a virtuous cycle. I am convinced that our bearings' competitive edge, as well as our supply capacity, is getting better and better.