CFO Message

We have set a target of 2.5 trillion yen in net sales and 250 billion yen in operating income for the fiscal year ending March 2029. To achieve this, we are working to expand growth through execution of business strategies and to raise profitability, with an operating margin target of 10%. To achieve these targets, I have drawn on my experience since joining the Company in hands-on business management, overseas assignments, and business integration to closely identify issues and drive swift problem-solving.

Going forward, to enhance corporate value over the medium to long term, we will set various financial disciplines in our financial strategy and capital policy, thoroughly strengthen our financial position, thereby improving our ability to generate cash.

We will also set a clear cash allocation policy, managing generated cash appropriately to strengthen our financial base and increase shareholder returns. Furthermore, in considering our medium- to long-term portfolio, we will consider ROIC and other costs of capital, and will identify appropriate businesses in which to invest, dependent on their profitability. This will allow us to maximize investment efficiency and optimize management resource allocation to enhance corporate and shareholder value.

Executive strategies for enhancing profitability toward further growth

Initiatives to improve profitability

In the fiscal year ended March 2025, the Company achieved net sales of 1,527.7 billion yen and operating income of 94.5 billion yen. For the fiscal year ending March 2026, we are preparing two scenarios based on the impact of U.S. reciprocal tariffs: a base scenario and a risk scenario. Under the base scenario, we expect net sales of 1,520 billion yen and operating income of 100 billion yen. Operating margin stood at 6.2% in the fiscal year ended March 2025 and is planned at 6.6% in the fiscal year ending March 2026. We recognize there are many challenges to improving profitability. As one improvement measure, we are reforming our sales approach, moving away from a "sales-first" mindset to one that places operating margin at the center of our KPIs. Furthermore, to strengthen competitiveness in existing businesses and secure niche top positions in growth areas such as autonomous driving and robotics, management, sales, engineering, and manufacturing teams are working together using detailed data and real-time customer insights to drive rapid transformation and execution.

On the cost side, we are advancing labor savings through automation via AI and DX at manufacturing sites, while rigorously reducing material and factory costs and converting fixed costs into variable costs. In addition, as we expand through M&A, we are prioritizing the reduction of S.G.&A. expense ratio and implementing measures such as reducing labor and logistics costs.

Initiatives to improve capital efficiency

We have set ROE of 15% or more and EPS growth rate of 15% or more (10-year CAGR) as our target KPIs. Having made "strengthening our financial position" a basic policy, the MinebeaMitsumi Group has taken various steps, including engaging in efficient capital investment, asset management, and reducing interest-bearing debt. We have also established a hurdle rate of 8% for investment decisions, 2% higher than the estimated cost of capital of 6%. We are working to improve capital efficiency by understanding the cost of capital for each business and implementing appropriate financial strategies.

In the fiscal year ended March 2025, ROE was 8.2% (up 0.1 points year on year) and ROIC was 6.3% (up 1.0 points year on year).

We believe that improving business profit margins is the key to raising ROE, ROIC, and other capital efficiency indicators, thereby enhancing corporate value. For businesses that fail to meet hurdle rates, I and other members of management are deeply involved, holding thorough dialogues to drive structural reforms and improve profitability, thereby raising value creation capability Company-wide.

EPS in the fiscal year ended March 2025 was 147.58 yen (up 10.9% year on year), and we expect 176.80 yen in the fiscal year ending March 2026 (up 19.8% year on year). We will continue to communicate our corporate value and growth strategy to shareholders and other stakeholders, working toward appropriate stock valuation.

Cash-generating ability

We are enhancing profitability and growth potential, maximizing cash generation ability, and strengthening our financial structure. To this end, in addition to organic growth and M&A, we will focus on capturing new business opportunities, such as the development of products that contribute to resolving social issues. Operating income in the fiscal year ended March 2025 was 94.5 billion yen, and we expect a record-high 100 billion yen* in the fiscal year ending March 2026.

EBITDA is also expected to reach a record-high 167.0 billion yen* (up 6.3 billion yen year on year), with careful assessment of recoverability in capital expenditure.

Free cash flows was 7.9 billion yen in the fiscal year ended March 2025 despite continued capital expenditure for growth, and we plan a figure of 67.0 billion yen^* in the fiscal year ending March 2026. Net interest-bearing debt is projected at 200.0 billion yen in the fiscal year ending March 2026 (down 41.4 billion yen from the end of the fiscal year ended March 2025). While pursuing business expansion, we will maintain net interest-bearing debt at an appropriate level.

* Base scenario

Cash allocation policy and stability of the financial base

Cash allocation policy

50% of generated operating cash flows are to be allocated to capital expenditure to drive organic growth.

Of the remaining 50%, while half will be allocated to appropriate and flexible shareholder returns, we are proactively considering options to pursue M&A that enhances profitability and corporate value using the other half, together with borrowings, premised on the notion of maintaining financial discipline such that the net debt-to-equity ratio falls within the 0.2 times range.

Capital expenditure

To ensure achievement of our long-term targets for the fiscal year ending March 2029, we are making proactive growth investments while carefully assessing recoverability. Capital expenditures in the fiscal year ended March 2025 totaled 94.8 billion yen, mainly for growth investments across businesses. For the fiscal year ending March 2026, we plan 80 billion yen, remaining centered on semiconductor-related facilities and other growth investments.

Shareholder returns

To enhance returns to shareholders, we have raised our guideline for annual dividends to a consolidated dividend payout ratio of around 30%, up from the previous 20%. While we continue to prioritize growth investments in our use of funds, we aim to deliver greater returns to shareholders. We will continue to take a holistic view of the operating environment and aim for steady, sustainable dividends.

Accordingly, the annual dividend per share for the fiscal year ended March 2025 was 45 yen, an increase of 5 yen from the previous year. From the fiscal year ending March 2026 onward, based on a dividend payout ratio of around 30%, we will consider dividend increases flexibly in line with profit growth.

As for shareholder returns, the Company will provide dividends and carry out share buybacks under a similar policy.

Security of the financial base

We believe that accelerating the pace of business expansion, while simultaneously ensuring the stability of our financial base, is one of the most important priorities for our Company. We have received very favorable credit ratings from two credit rating agencies - A rating of "A+" from Rating and Investment Information, Inc. (R&I) and a rating of "AA-" from Japan Credit Rating Agency, Ltd. (JCR). JCR upgraded its rating in March 2025 from A+ to AA-. The upgrade reflects the outlook that we will maintain a robust business base over the medium to long term, deliver steady performance, and keep a sound financial profile.

Although our equity ratio may vary in the short term depending on status of M&A implementation, we will secure a stable financial base by maintaining an equity ratio of at least 50% over the medium to long term.

Business portfolio strategy

To realize sustainable enhancement of corporate value, we promote a disciplined portfolio strategy classifying businesses into core, sub-core, and non-core.

Core businesses

Our "Eight Spears" strategy and integration strategy are the drivers behind thoroughly strengthening our core businesses. Of the current Eight Spears, four confirmed spears with high profitability and growth potential, bearings, analog semiconductors, motors, and access products, will continue to receive focused resources to thoroughly strengthen competitiveness.

Below are our near-term operating income benchmarks for each segment.

Precision Technologies (PT)

Bearings are growing on the back of content growth in data centers (cooling fan motors) and automobiles, with both sales and production expected to hit record highs in the fiscal year ending March 2026. These applications are set to keep expanding, and over the medium to long term, we see new growth markets emerging, such as humanoid robots. We have already raised production capacity from 370 million to 400 million units without capital expenditures through productivity gains, preparing to meet future demand increases. Our aircraft business is also recovering from the demand slump caused by the COVID-19 pandemic. Expectations are rising for our Company, which has financial strength and can produce not only in Europe and the U.S. but also in best-cost countries such as Thailand and India, leading to our posting of record sales and profits. With aircraft manufacturers holding substantial backlogs, further growth is expected. We believe the segment operating income of Precision Technologies (PT) can rise to 60 billion yen or more in the near future.

Motor, Lighting & Sensing (MLS)

In motors as well, operating income of 30 billion yen is within reach thanks to content growth in automotive applications and strengthened competitiveness in non-automotive fields.

Semiconductor & Electronics (SE)

Our core business, analog semiconductors, is currently facing a downturn in the semiconductor market. However, our niche top strategy has been successful, and our potential to generate an operating income of 30 billion yen or more remains unchanged.

Access Solutions (AS)

In the automotive industry, the increasing electrification and sophistication of vehicles are expanding business opportunities for our company, which can offer integrated mechanical and electronic solutions. Furthermore, the development of high-value-added new products, such as wing handles, and the progress of our structural reforms have made it possible for us to project an operating income of 20 billion yen.

Sub-core businesses

Our basic policy for sub-core businesses is to continue them as long as a certain level of profitability is foreseeable. However, in practice, we do not make hasty "all-or-nothing" decisions that only seek short-term clarity. A decision to close or sell a business overnight may seem like a clear message at first glance. We, however, emphasize a soft-landing approach to business restructuring, which involves gradually downsizing and exiting a business while fulfilling our responsibility to supply products to customers until the very end and maintaining a relationship of trust. For example, when we exited the backlight business for smartphones, we used financial methods such as accelerated depreciation to avoid a sudden financial loss, while also successfully transitioning the business to tablets and automotive applications, exiting amicably without causing inconvenience to our customers. We believe that even when one business ends, the trust built through it is an intangible asset that leads to other businesses and new future opportunities.

Non-core Businesses

Low-profit businesses are defined as non-core and will be withdrawn from. While no business units currently fall into this category, we are constantly working to optimize our portfolio by identifying the "best owner" for smaller units, such as the sale of UK Subsidiary of HONDA TSUSHIN KOGYO CO., LTD. announced in July 2025.

Optimizing business portfolio with ROIC

To achieve net sales of 2.5 trillion yen and operating income of 250 billion yen, our Group uses ROIC, in addition to ROE, as a profitability management indicator for each business.

We have established a hurdle rate of 8% for investment decisions, 2% higher than the estimated cost of capital of 6%. The Company decides on R&D, M&As, and business withdrawal by checking whether or not the target profitability exceeds its capital cost and verifying the current status and outlook of individual businesses.

In addition, our approach to increasing profitability of individual businesses has involved improving profit margins and invested capital using a reverse ROIC tree approach. By enhancing profitability of each business portfolio, we strive to optimize invested capital on a Company-wide basis.

We will continue to formulate and steadily execute business strategies aimed at sustainable growth and medium- to long-term enhancement of corporate value. We will also engage in risk management practices for reducing capital cost and implement financial strategy which helps enhance our products' competitive strengths.

Review of fiscal year ended March 2025 and outlook for fiscal year ending March 2026

Fiscal year ended March 2025

In the fiscal year ended March 2025, net sales reached 1,522.7 billion yen, marking a record high for the 12th consecutive year (13 consecutive years of revenue growth). Operating income was 94.5 billion yen, with an operating margin of 6.2%. Core businesses, including Precision Technologies (PT), motors in Motor, Lighting & Sensing (MLS), and Access Solutions (AS)^*, all reached record highs. In Semiconductors & Electronics (SE), the core semiconductor business benefited from our strategy of being a top supplier in global niche markets, minimizing the impact of market stagnation. However, we fell short of our 100 billion yen operating income target. The main reasons were production issues in sub-core businesses, such as optical devices and game-device mechanical components. To address these challenges, we implemented improvement measures through "Chairman's Office ICU," a special project directly overseen by Chairman Kainuma.

* On an actual basis excluding special factors

Fiscal year ending March 2026

Core businesses are expected to continue steady growth in the fiscal year ending March 2026, but prospects remain uncertain due to sharp currency fluctuations and U.S. reciprocal tariffs. For this reason, as of August 2025, we have withheld updating our Midterm Business Plan.

Likewise, our earnings forecast for this fiscal year is disclosed under two scenarios, "Base" and "Risk," reflecting the impact of U.S. reciprocal tariffs.

Base scenario

Net sales are planned to be 1,520 billion yen, and operating income is planned to be 100 billion yen. Net sales are expected to decline due to yen appreciation, but the expansion of the data center market and content growth in automotive will continue, leading to a projected increase in operating income thanks to stronger profitability and competitiveness in core businesses.

Risk scenario

This incorporates the effect of tariffs, but cost increases are largely offset by our surcharge strategy. However, we anticipate reduced demand from price hikes, resulting in projected net sales of 1,500 billion yen and operating income of 90 billion yen.

In sub-core businesses, optical devices were impacted in Q1 by China's rare earth export restrictions, and mechanical components by sharp currency fluctuations. However, production issues in both businesses have since been resolved.

Going forward, we will continue to strengthen the competitiveness of core businesses, create new value through integration and work to improve profitability.

Engagement with stakeholders

Constructive dialogue with stakeholders, including shareholders and investors, is one of our most important management priorities. We actively communicate our initiatives to enhance sustainable corporate value. I personally participate in meetings with analysts and institutional investors in Japan and abroad, and also travel overseas to explain our business and financial strategies for accelerating growth.

One example was a small meeting on our semiconductor business held in December 2024. Analog semiconductors are now positioned as the second pillar of our "Eight Spears" core businesses after bearings, and have attracted strong interest due to their high profitability and growth potential. To meet such expectations, our IR and business divisions worked together quickly to organize this event, which provided an opportunity for highly meaningful dialogue.

In addition, reflecting requests from investors, we held a plant tour at our Chitose site in July 2025. We take pride in our IR strength of sincerely listening to our stakeholder's voices and swiftly executing initiatives that enhance corporate value.

Beyond financial activities, we believe the source of sustainable value creation lies in the integration of non-financial capital—human, manufacturing, and intellectual—with financial capital. We are also engaging in active dialogue with stakeholders on management strategies that encompass such non-financial capital.

This year, we reviewed our material issues (materiality) as a foundational strategy supporting our sustainable growth. In reviewing and refining key issues, we not only engaged in discussions among Directors and Outside Directors, but also incorporated feedback from a survey of 15 institutional investors with whom we regularly engage. In July 2025, we held our fourth dialogue between institutional investors and Outside Directors, providing a deeper understanding of the effectiveness of our governance framework. In this dialogue, we received questions such as whether the Board of Directors' oversight functions are effective under the strong leadership of Chairman Kainuma. At the meeting, Outside Directors themselves spoke in concrete terms about the lively discussions at Board of Directors meetings and the advice they provide on management issues from their areas of expertise, which we believe directly addressed investor's questions.

Furthermore, given our stable earnings base, we launched full-scale IR activities for individual investors starting in the fiscal year ended March 2025. We will reflect the valuable feedback gained through dialogue with our stakeholders in management, striving for the sustainable enhancement of corporate and shareholder value. We appreciate your continued expectations for MinebeaMitsumi's growth.

Related links

• CEO Message
• Integrated Reports
• Medium-term Business Plan
• Dividend/Share Repurchase
• Bonds/Ratings

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