Presentation Transcripts

Hello, I'm Yoshihisa Kainuma. First of all, I would like to go over the highlights of today's presentation.

What I would like to tell you is summarized in the "Overall" section of this slide.

First, operating income was in line with our earnings guidance. However, the ongoing downturn in the data center market is holding us back. Yet we believe that recovery is definitely just a matter of time, so we haven't made any changes to our medium- to long-term business plans.

We are seeing a slowdown in a wide range of industries, including mobile devices, industrial machinery, semiconductors, air conditioners, and office automation equipment. Since we supply high value-added products, such as bearings, motors and pivot assemblies for hard disk drives (HDDs) and fan motors, to the data center sector, we expect to experience a year-on-year drop in operating income. However, we see this as a temporary fluctuation in the economy and it should not be of much concern. Rather, when the market will recover is what we have to be worried of. Air conditioners, for example, are selling well now, but manufacturers are reducing their inventories. They will increase inventories in November and December when they start making their products again, so it will take a little more time. The overall market is affected by the global economy. The more it slows down, the proportion of fixed costs becomes higher. We expect that the market will definitely bounce back and our business will expand as planned.

What I would like to tell you today is that 10 billion yen in operating income for Access Solutions this fiscal year is now attainable. The business is making significant progresses. Although automobile production is still down to 80% of its peak, compared to the period of 40-50% lower than the peak, it is on a recovery track, which we expect will continue. We are finally seeing the light at the end of the long tunnel after the pandemic for Access Solutions.