Minebea Aktie

Thank you. This is Yoshida speaking. I'd like to explain the overview of our financial results for the fiscal year ended March 31, 2026, and the medium-term earnings forecast for the fiscal year ended March 31, 2027, and beyond. Consolidated net sales for the fiscal year ended March 31, 2026, increased by 9.3% year-on-year totaling JPY 1,664.4 billion. Operating income increased by 10.1% year-on-year, totaling JPY 104 billion. Profit for the period attributable to owners of parent increased by 66.6% year-on-year totaling JPY 99 billion.

Both net sales and operating income exceeded the plan. Operating income includes structural reform expenses of approximately JPY 2.6 billion. The additional profit for the period attributable to owners of parent includes special factors. Details will be explained later in the slides.

Due to the appreciation of the yen, there was a negative foreign exchange impact on the previous year decrease in net sales by JPY 1.2 billion and operating income by JPY 10.7 billion. Consolidated net sales for the fourth quarter of the fiscal year ended March 31, 2026, was up 15.3% year-on-year and down 4.8% quarter-on-quarter to total JPY 432.2 billion, operating income was up 31.5% year-on-year and down 9.5% quarter-on-quarter to total JPY 28.3 billion.

Profit for the period attributable to owners of parent was up 2.9x year-on-year and up 2.3x quarter-on-quarter to total JPY 49.2 billion. As mentioned earlier, profit for the period attributable to owners of parent for the fourth quarter includes special factors. We estimate that foreign currency exchange rates had a quarter-on-quarter impact of plus JPY 12.2 billion and year-on-year impact of plus JPY 13.6 billion in net sales.

Quarter-on-quarter impact was plus JPY 0.1 billion and year-on-year impact was minus JPY 1.6 billion in operating income. This slide shows the difference between the forecast as of February and actual results for net sales and operating income by business segment for the fourth quarter.

For net sales, PT sales were higher than expected, primarily due to strong performance in bearings for data centers and aircraft products. MLS sales were higher than expected due to steady growth, mainly in motors for HDDs and electronic devices. SE sales were higher than expected due to strong performance in Mechanical components and optical devices. AS sales were above the forecast mainly for automotive devices.

With regard to operating income, PT exceeded the forecast due to an increase in production volume of bearings and other products. MLS was below the forecast due to the impact of soaring material prices for motors and other products. SE exceeded the forecast due to steady growth mainly optical devices; AS, exceeded our forecast due to steady growth mainly for Europe.

This chart shows the annual trends for sales, operating income and operating margin. The bar graph on the left shows net sales, and the graph on the right shows operating income and line graph indicates the operating margin. The operating margin for the fiscal year ended March 31, 2026, was 6.2%. This slide shows the quarterly trend in net sales, operating income and operating margin. Operating margin for the fourth quarter was 6.5%. This was up 0.8 percentage points year-on-year and down 0.4 percentage points quarter-on-quarter.

Next is illustration of each business segment, starting with the Precision Technologies segment. The graph on the left shows annual net sales trends. The graph on the right. The bar chart represents operating income and the line chart indicates operating margin. The fiscal year ended March 2026, net sales increased by 10% year-on-year, totaling JPY 281.2 billion.

Sales of ball bearings increased by 8.5% year-on-year to reach JPY 186.4 billion, the monthly average of external bearing sales volume totaled 277 million units, an increase of 16.9% year-on-year. By application, sales of products for data centers increased driving overall growth. Sales of rod ends and fasteners increased by 11.7% year-on-year, totaling JPY 66 billion. Products for aircraft applications showed a strong performance.

Sales of PMC increased by 16% year-on-year totaling JPY 28.7 billion. Operating income for the fiscal year ended March 31, 2026 totaled JPY 62.2 billion with an operating margin of 22.1%. This represents a year-on-year increase of 11.8% in the operating income and an increase of 0.3 percentage points in operating margin.

By product, operating income for all products, including bearings, rod-ends and fasteners and PMC increased, reaching a record high. For the fiscal year ending March 31, 2027, Ball bearings, we expect volume growth for data centers due to continued demand and steady growth for automobiles due to continued content growth. In our aircraft-related businesses, including rod ends and fasteners, we will improve profitability through strong aircraft demand and price adjustments and accelerate earnings growth by strengthening our supply system.

For PMC, we expect sales to increase, primarily driven by automotive components for LiDAR. This slide shows our quarterly trends. Fourth quarter net sales increased 11% quarter-on-quarter to total JPY 77.8 billion. Sales of ball bearings increased 9.4% quarter-on-quarter to total JPY 50.6 billion. The monthly external shipment volume increased 3.9% quarter-on-quarter averaging 287 million units. Sales showed steady growth driven primarily by applications for data centers.

Sales of rod ends and fasteners increased 17.4% quarter-on-quarter to total JPY 19 billion. Sales of PMC increased 7.3% quarter-on-quarter to total JPY 8.2 billion. Operating income for the quarter totaled JPY 17.7 billion, and the operating margin was 22.8%. On quarter-on-quarter basis, operating income increased 12.2% and operating margin was up 0.2 percentage points.

Please note that due to the PPA of Minebea Linear Motion Inc., we made a retrospective adjustment approximately JPY 0.5 billion to the operating income for the third quarter of the fiscal year ended March 31, 2026. Next is the Motor, Lighting and Sensing segment. For our fiscal year ended March 31, 2026. Net sales increased by 12% year-on-year, totaling JPY 456.5 billion. By product, sales of motors increased by 5.6% year-on-year to reach JPY 340.3 billion. This was due to steady growth in motors for HDD as well as automotive and nonautomotive motors.

Sales of electronic devices increased by 65.2% year-on-year totaling JPY 68 billion. Sales of sensing devices increased by 4.5% year-on-year totaling JPY 38.5 billion. Operating income was JPY 26.9 billion with an operating margin of 5.9%. This represents an year-on-year increase of 17.2% in operating income and an increase of 0.3 percentage points in operating margin.

Please note that the fourth quarter includes onetime expenses of approximately JPY 1.6 billion. This is due to the recording of structural reform expenses in the European sensing business. For the fiscal year ending March 31, 2027, we expect motors to show steady growth driven by server demand. We also expect an increase in sales for both electronic devices and sensing devices.

These are quarterly trends for the Motor, Lighting and Sensing segment. Net sales increased 8.6% quarter-on-quarter to total JPY 124.1 billion. By product, sales of motors increased 9% quarter-on-quarter to total JPY 91.7 billion. Sales of electronic devices increased 5.3% quarter-on-quarter to total JPY 18.4 billion. Sales of sensing devices increased 7% quarter-on-quarter to total JPY 10.6 billion.

Operating income for the quarter totaled JPY 6.3 billion, and operating margin was 5.1%. On a quarter-on-quarter basis, Operating income decreased 24% and operating margin was down 2.1 percentage points. The aforementioned onetime expenses of JPY 1.6 billion were recorded in the fourth quarter. Excluding this expenses, operating income was JPY 7.9 billion, and operating margin was 6.4%.

Next, I will explain the Semiconductor & Electronics segment. In the fiscal year ended March 31, 2026, net sales increased by 11.9% year-on-year, totaling JPY 590.3 billion. This is primarily due to an increase in sales of mechanical components. Operating income was JPY 26.7 billion. Operating margin was 4.5%. This represents a year-on-year increase of 21.1% in operating income and an increase of 0.3 percentage points in operating margin.

Please note that operating income includes special factors of approximately JPY 1 billion. Excluding these factors, operating income was approximately JPY 27.7 billion. This is due to the recording of structural reform expenses in our power supply business. For our fiscal year ending March 2027, also we expect a decrease in net sales due to lower sales of mechanical components. We expect optical devices and semiconductors to show strong performance, resulting in an increase in operating income. This shows the quarterly trends for the Semiconductor & Electronics segment.

Net sales decreased 26.9% quarter-on-quarter to total of JPY 136.4 billion. This was due to seasonality as sales of mechanical components decreased in the fourth quarter. Operating income for the quarter totaled JPY 6.2 billion and operating margin was 4.5%. On a quarter-on-quarter basis, operating income decreased to 43% and operating margin was down 1.3 percentage points.

And finally, I will explain the Access Solutions segment.

In the fiscal year ended March 2026, net sales increased by 1.3% year-on-year, totaling JPY 332.2 billion. This was due to factors such as increased demand for communication antennas and industrial equipment components. Operating income was JPY 17.1 billion with an operating margin of 5.1%. This represents a year-on-year increase of 7.3% in operating income, an increase of 0.2 percentage points in terms of operating margin. For the Fiscal year ending March 2027, we expect an increase in operating income due to acceleration of mass production of high value-add products. .

This slide shows the quarterly trend for the Access Solutions segment. Net sales increased 12.9% quarter-on-quarter to JPY 92.5 billion. Operating income for the quarter came to JPY 6.7 billion, and operating margin was 7.2%. On a quarter-on-quarter basis, operating income approximately doubled and operating margin was up 3.2 percentage points.

In addition to recovery from Nexperia related impact in the previous quarter, seasonal factors such as [indiscernible] sales in March boosted earnings. On this slide, the bar graph shows the trend in profit attributable to owners of our parent and the line graph is showing other trend in earnings per share.

Profit for the period was JPY 99 billion, and earnings per share was JPY 246.6. Please note that profit for the period for the fiscal year ended March 2026 includes profit impact of approximately JPY 25.2 billion, resulting from valuation of financial assets held by the company at fair value. Excluding this factor, profit for the period on a real basis was JPY 73.8 billion, and earnings per share was JPY 183.87.

This slide shows the quarterly trend Profit for the period was JPY 49.2 billion, and earnings per share was JPY 122.46. These special factors of JPY 25.2 billion I mentioned earlier were recorded in the fourth quarter. Next, this slide shows the quarterly inventory trend. At the end of the fourth quarter, inventory totaled JPY 391.3 billion, which was a decrease of JPY 20.4 billion from the JPY 411.7 billion recorded 3 months earlier. Compared to the end of the previous fiscal year, which was JPY 350.9 billion, this represents an increase of approximately JPY 40 billion. However, approximately JPY 26 billion of this was due to the depreciation of the yen, meaning that the increase on a real basis was approximately JPY 14 billion.

This was primarily due to factors such as the buildup of necessary inventory as sales are expected to remain strong in the first half of the next fiscal year.

This slide shows the trend in cash flows. The bar graph on the left shows operating cash flow. The bar graph on the right shows the investing cash flow and the line graph is representing the free cash flow. The adjusted free cash flow, which excludes onetime factors such as M&A expenditures, is shown in red.

During the fiscal year ended March 2026, the strong business environment continued through the fourth quarter. Consequently, accounts receivables increased at the end of the fiscal year and the timing of cash collection was deferred to the following fiscal year. As a result, free cash flow for the current fiscal year decreased temporarily. Please note that these receivables will be converted into cash throughout at the fiscal year ending March 2027, and we expect cash flow to improve significantly. This slide shows the trends in return on invested capital. The line graph on the left shows the annual trend and the line graph on the right that shows the quarterly trend.

Company-wide ROIC has been on a gradual recovery since bottoming out in the fiscal year ended March 2024. On a quarterly basis, it has been showing a steady improvement. I will explain the segment changes, beginning with the fiscal year ending March 2027, We'll make the following changes. First, the large-sized machine components for aircraft and other applications, which previously belong to the MLS segment will be transferred to the PT segment. Second, within the PT segment, name of the subsegment as previously referred as Rod Ends and Fasteners will be changed to aerospace.

From this page onwards, I will continue to present by explaining the medium-term business forecast for the fiscal year ending March 2027 and beyond. This slide summarizes the earnings forecast. From the current fiscal year ending March 31, 2027, through to fiscal year ending March 2029. The fiscal year ending March 2027, we are assuming an exchange rate of JPY 155 to the U.S. dollar.

This slide shows the forecast by the business segments. This slide summarizes the trend in cash flow forecast from the current fiscal year ending March 2027 through to fiscal year ending March 2029. We expect operating cash flow to expand along with growth on net sales operating income. Regarding investing cash flow, we expect -- well, we anticipate it to remain at approximately JPY 90 billion to JPY 92 billion under a disciplined capital expenditure plan.

As a result, we expect to see steady improvement in free cash flows. I will explain our medium-term cash flow allocation plan for the 3 years from fiscal year ending March 2027 to fiscal year ending March 2029. Our basic policy 50% of generated operating cash flow will be allocated to capital expenditure for organic growth of the remaining 50%, half will be allocated to shareholder returns and the other half will be earmarked as a budget for potential M&A investments.

We anticipate a cumulative operating cash flow of over the next 3 years of this total, approximately JPY 270 billion will be invested as capital expenditures to support the growth of our Eight Spears core products and approximately JPY 80 billion will be allocated for dividend payments. We will consider the remaining JPY 150 billion as funds for M&A investments and share buybacks. Furthermore, we will flexibly consider the use of debt financing for large-scale projects.

Finally, I will explain the medium-term ROIC forecast. While we place the highest priority on improving our profit margins, we are also focusing on improving capital efficiency as one of our key management metrics. Over the next 3 years, we will strive to further improve capital efficiency by focusing on key drivers, earnings growth in our core business and the combination of disciplined capital expenditures and the optimization of inventory levels given the current environment of rising interest rates. It is clear that higher capital efficiency than ever before is required. We are committed to achieving profitability that on consistently exceed the cost of capital, and we'll continue to strive towards enhancing our corporate value. This concludes my presentation. Thank you.

Next, Mr. Kainuma, over to you.

So I'd like to talk about management policy and business strategy. First. As an overview of FY March 2026, in general, things were doing very well and going forward. The 5 growth areas plus 1 that we say. We are sure that this will strongly support our company. I'm sure about it. This time, TOSHIBA'S market capitalization was -- we had instruction from the accountant. So the figure was considered in a conservative manner, but please read the details on this page.

Next page, operating income this fiscal year we'll start with a figure of JPY 120 billion. Q1, fortunately, in a very strong manner, we could start Q1 and all sectors we can say, are doing well. If we achieve JPY 120 billion, not only sales, but operating income or the reoperating income without making the revaluation of financial assets, we can expect increasing sales and profit for 4 consecutive years.

Now next page. For PT, there are many inquiries, a lot of inquiries for bearings. And in particular, for data centers, bearings for data centers, it is more than 3x the level we had 3 or 4 years ago. In our case, not only quality, but the ability to provide supplies. The supply capability is our strength. When customers want large volume, we can prepare and provide that volume required. That is what is of utmost importance. So we will expand production capacity of 40 million units per month. Currently, the current production capacity depending on the month, the months that we can operate in full and the months that we cannot. So on average, it might be about 404 billion units.

But by March 2027, we'll increase 30 million to achieve a capacity of 434 million. And in January of the following year, already obsolete facilities must be replaced and there must be new facilities built. And with that, we want to have production capacity of 442 billion -- 442 million units. And in the latter part of 2028, we want to have production capacity of more than 460 million. And frankly speaking, going forward, by looking at the future trend, we will make the appropriate judgment where appropriate timing comes.

This year, operating profit of JPY 62 billion was achieved through bearings or through PT. In the past, we said JPY 10 billion per quarter. So operating profit of JPY 40 billion was the size of the business. But now it is more than JPY 60 billion. And this year may go beyond the JPY 70 billion. In 3 years, at the moment, we can say that we are quite sure we will achieve JPY 80 billion.

Next page. Motor, Lighting & Sensing segment. There are many products here, and this variety of products will enter into mass production stage. Hard disk spindle motors is a good example. AI data centers are growing steadily. So demand for hard disks increase, we have a helium type motor. We already made investment to increase production capacity by 300,000 per month, operations will start. So that will be 3.6 million units for a year. And also, fan motors is very popular among our customers and also DC motors that we are trying to improve profitability and [indiscernible] in Europe. Improved profitability in this sector.

And as I mentioned, later sensing devices for the joints and fingers of robots, our sensors will be used. All these together, if all these grow together, we don't have a big star, but we can certainly develop together with 5 growth sectors. As I mentioned, the thin film sensor. I'm saying 2 million units now. But if we increase the volume of electronic property testers, it may be possible to increase to 4 million per month. Currently, it is the start of humanoid robots.

Many sensors are experimented. And in there, our thin-film sensor, the [indiscernible] which we introduced before. This is used for buttons of mobile phones, use pressure -- pressure is conducted to the mobile phone. That is what we were developing. In a different form now, this is leading to response to inquiries about thin film sensors or humanoid robots. So [indiscernible] is completed, so we will start production. If this becomes a mainstream sensor, this will become a very big business for us in the future.

And so not written here, battery protection modules. Here, building #14 of the Philippines, a new factory and also factory in Mexico will be built. We'll building these products. it's not that we have one big star, but many components are included in the 5 growth sectors. So MLS will be interesting.

Next page. For SE, the message today is that finally, we will be able to realize a profit-making situation for a single month for Shiga factory there was 2.3 billion or 2.4 billion negative figure per year continuously. We're supposed to handle semiconductors, but that was canceled by the customer and capacity is left open. So we were trying to fill that so the MS, microphone sensor or earphone sensors, we tried and fabless -- production of companies shifting from China will be accepted at our Shiga factory.

And of course, power modules that we're handling already, power devices will gradually grow, so achieve a single month profit situation this year and total profitability next year. Profit is aimed for semiconductors, currently is about JPY 24 billion or so, so increase of JPY 15 billion is expected. One more thing, a big message here. Optical devices, we call it subcore optical device and mechanical components for games. For this, until now, we were reluctant in our 8 spares were our policy for growth in the future.

And actually, that is what we're doing. But now our customers had a strong request for us to do this to continue to do this. So a model up to 2030, we are already receiving inquiries. So if that is the case, we will introduce our resources to make our products. So the driver here One is semiconductor and other is optical devices.

Next page, Access Solutions. As you know, among us, this is the area with the strongest headwind such manufacturers or OEMs. What should be the future movement. They are not sure and the China market -- and the emergence of a Chinese automotive market, they are facing a lot of difficulties under such a situation. This is the nature of this segment. However, we will try many things. And among them, we want to earn profits. And we have been doing that.

One thing is under such a situation, including wing handles, as you can see here, automated motor [indiscernible] for 4 wheels, many components that we have developed so far is now being introduced. So we are component manufacturers. So we sell many parts and components to many companies. And our difference is recognized by our customers. And by doing so we are going to survive. So this year also, we will aim at increased sales and profit.

In Europe, structural reforms are implemented. And by doing that, slightly less than JPY 2 billion, improvement in profitability is expected through structural reforms. We are not doing this forever, but things that we believe is better to be closed -- were closed. And at this time also, we want to implement this type of structural reform. So next is the medium-term earnings forecast.

I have here plan A. 7 years ago, I said 2029, 10 years later as a goal, what kind of growth are we going to aim for? Overall picture was indicated under Plan A. And then, organic growth and M&A -- one M&A of a scale of MITSUMI. As a time, we would be already JPY 1 trillion. So a larger size M&A to be implemented and then achieve net sales of JPY 2.5 trillion, operating income of JPY 250 billion. So I have always been showing this chart.

Time passes very fast. It is now 2026. So in 3 years, we will be achieving in 2029. So we have to prepare our plan B. So next page. This is Plan B. What is plan B? Mitsumi scale or even larger scale M&A. If there is no such M&A of that scale, small-scaled M&As that we have been doing recently in addition to that organic growth what we can achieve under such an assumption. We are not giving up Plan A.. That is a matter of chance.

If there's any opportunity or chance, of course, we intend to do such an M&A, but we may not be able to find the appropriate counterpart. So we must also have a Plan B, even medium-term plan. So here, sales, JPY 1.9 trillion. Currently, it's about JPY 1.6 trillion or so or about JPY 1.7 trillion this year. So JPY 1.1 trillion in 3 years, I think there's no doubt about that figure.

The problem is Operating income, JPY 168 billion. Can this be achieved. JPY 168 billion at JPY 1.29 trillion. This means that parts will be purchased and add our parts and sell back to our customers, which is included in sales. When this figure is deducted in the sales figure, 10.1% operating profit is aimed to be secured. So it means that the images increased about JPY 20 billion every year, and that is included in this medium-term plan.

Next page. A very rough image for 3 years. How are we going to achieve it? There is a typographic mistake MLS on the left. It says incremental sales of JPY 100 billion. It should be JPY 150 billion. As I mentioned, spindle fan, DC motor, intact better protection modules. These items are included here. So incremental sales should that figure. That is overall image. Bearing JPY 84 billion. So this year may achieve about JPY 72 billion and add JPY 12 billion in the next 3 years.

Humanoid robots are emerging in the world. So humanoid robots will now face a problem of credibility. So that is when high-end components will play a role. Because of time limitations, I will skip this page. Please read this later.

Next page. This is the high growth areas plus 1, how much growth can we achieve through that about JPY 170 billion related to the 5 areas. As you know, recently, Morgan Stanley says that by 2050, humanoids and industrial robots together. 1.4 billion units of robots per year will be manufactured. And bearings in that case, we will be 40.4 billion and motors 27 billion and decelerator of 14 billion. Those are the figures mentioned. I don't know what will be the real figure, but the magnitude is very big. So including these, I have some pieces about the drivers for the midterm earnings forecast. Next page.

This is something I've already explained as part of the 5 growth areas. I'm not going to explain about it today on the next page. For this fiscal year, we have various structural reforms here and there. So we've done a number of those, and we expect about JPY 2.5 billion of improvement for the fiscal year. And if you could also read through this. So how are we going to achieve 10% operating profit margin. So this explains how we're going to get there. Just 1 point. So after becoming the CEO, we have conducted the 30th the M&A, and the net sales is about JPY 32 billion. And so from Panasonic industry, we have acquired the motor business.

And one of the major reason for this is the hybrid type EV. They will use fan motors. And we have quite a high market share in this area now. And the expected life for this is extending now. So we wanted to capture this part. At the same time, and we need to work on the fluid dynamic fans. And looking at the robots, we purchase number of robots. I've seen them in operation. But they still do create quite a loud noise and so thermal technology going forward. And so for humanoid robots to become human, they cannot produce the level of noise that they are producing right now.

And so with that, so we have several dozens of several tens of engineers in this area. So we will utilize these engineers to work on undertaking development in this area. And these are the key points from today. So the major points are summarized on this space. So if you'd like to read through this in your own time later. And so on this occasion, and when we announced the full year result in May, we say 25% or 30% return. That's what would normally say and it's not included.

But as an indication of our confidence, we want to announce an increase of our dividend of JPY 10. And so from our perspective, we want to certainly take good care of the individual investors as well. And so we need to be thoroughly mindful of dividend as we operate going forward. And that is the basis upon which we have decided to increase our dividend.

And nothing much more. And this is the environment-related matters. If you could read through this in your own time. One just -- one news. So what Nikon was doing previously, but this is the world championships for skateboard. And this is a perfect sport for us in one sense. And this sport has also been nominated as an official event for the Los Angeles Olympic Games. And so this is also something that we intend to do. So that's it. Thank you very much for your attention.

Next, we'd like to have a question-and-answer session. The first question from Goldman Sachs, Takayama-sen.

I have 3 questions. One, Mr. Kainuma, about the general way you think last year on the IR Day, you mentioned about the best case in case of organic growth. And this time, you have accumulated figures for 3-year spend. During this period, there was anything that became more visible were more realistic figures accumulated. Why is it that you came up with these 3 years figure? And these 4 segments, among the 4 segments what is the segment that you're most confident amount about? And any segments that you include a challenging target. Could you introduce a background for each segment?

Thank you for your question. Your first question, why is it possible to add up those figures? Currently, what we are feeling by ourselves is that we now have a lot of inquiries. There's a lot of inquiries right now. Frankly speaking, so every day, I'm receiving such reports. And I feel how pressing they are. So related to your second question as well. For bearings, I believe for sure that the target will be achieved. This supply capability to deliver to the customer in a short period of time as required by the customer, there is no other company in the world with such a capability.

And I believe that is our responsibility. There's a large wave. I was talking about it in today's executive meeting. We have to ride on this big wave. We should not be left behind after this big wave goes away. So we have very strong bearings. This is our big pillar. And this is a background for the confidence. I'm always asked why are we doing so many things. But -- the 5 growth areas. For instance, [indiscernible] is a product that's already over. And this would not come back, it would usually be discontinued.

But we have been pursuing this. And differentiation that others cannot do is something that we can do. That is why we have so many inquiries. So this is the impressions that we have. And I said that, of course, bearing is the strongest. And of course, there are ups and downs, something goes up and something is worse than expected. But during past 15 years, we have been growing by overcoming this. That is how I feel right now. I mentioned before, JPY 100 billion is a node and we'll be able to overcome that node and move forward. And that is my feeling.

So second question is more to do with individual businesses, but strategy related to optical area. I think you have adopted somewhat of a different tone on the occasion. And by 2030, the road map until 2030, you shared that with us. And I understand you feel that you're able to generate profits there. But -- And on what basis have you decided that are you going to focus on this area? And what type of profit margin do you expect to be able to secure.

And what was the basis on which you have made that judgment. If you could explain the background a little bit?

Well, profit margin more than 7%, as I've been saying before in the past. This is something that I say to customers as well. But this is something that I have continued to say and I went to the states. And I talked like that. and I have communicated directly with our customers and explained about the challenges that we face right now and sought their understanding or gaining the understanding, and that is the kind of activity that I've been doing all along. And in that kind of conversation, the trust from the customers towards us strong trust from our customers is something that was able to feel very strongly. And so from our perspective, we've decided that this is something that we should work on. And I apologize for not being very succinct. But this is people -- people -- person-to-person relationship, and we have gained that kind of feeling. And so we wanted to respond to the request of our customers. We wanted to make effort to enable that.

In 2030, we believe that technology may be quite different? And is there anything that you expect profitability or in human relations maybe there could be a new president by then? And do you expect some changes in your way of thinking about manufacturing?

Well, frankly speaking, if we have proper capacity and we can secure our own productivity. I think we will not feel well, we must be very cautious and move forward carefully.

Yes. And lastly, about semiconductors, you said profit from JPY 24 billion to JPY 40 billion within SE. This might occupy a large share in terms of profit, and you also mentioned about Shiga plant achieving a single-month profitability for the year-ended March 2029. In semiconductor sales, what will be driving the growth? This year, slightly more than JPY 24 billion. And that profit includes a negative JPY 2.3 billion or JPY 2.4 billion. And that is not included then at plus or minus 0, we can start a JPY 26 billion to JPY 27 billion and then another JPY 13 billion, how can we make the remaining JPY 30 billion profit.

There are 3 points, Minebea power device, MPD and including FinSIC, SIC and a foreign company which we receive fabless work orders and we make products for and earn profit. Besides power device, [indiscernible] a handy ultrasound device to see inside of a body of an expected matter, there's a lot of growth expected. So that is why we can expect profit.

I'd like to go to the next question from Morgan Stanley MUFG securities.

Sato-san, please go ahead.

This is Sato speaking. Please allow me to ask 3 questions. The first question is on Page 34 of the presentation material in regards to SE.

For March 2027, net sales will come down. And the profit in comparison to other segments, it is not growing. And if you could explain the reasons for this, explaining from the semiconductor, optical device and mechanical component perspective. And you're going to redefine optical devices strategically but for March 2029, JPY 583 billion.

How much contribution are we expecting from optical devices and also JPY 245.5 billion of profit, how we are expecting to this increase in CapEx?

Well, first of all, starting with the net sales are not increasing, but coming down. This is game. The game of profitability is very limited. And so this will lead to the net sales coming down notably, but they will gradually recover. But that's not due to gain, but we're expecting something else to come in. And that is the assumption there. As for the optical devices, the contribution to the performance. Well, Unfortunately, I'm unable to say that here as to how much it is included, but we essentially don't business unless we are able to generate operating profit, as I said before.

So at the minimum, we want to secure 7%. So I just wanted to confirm, for March 2029, the numbers shown here, our optical device numbers are included to a certain extent Or is it going to be additional an upside contribution? Is that the potential? How should I understand that?

This is Yoshida speaking. Please allow me to respond. As for the actual business, as Mr. Kainuma has explained, we do have certain confidence. But the numbers included in the guidance. If we talk about that, we have been very conservative as for optical devices for the 3-year period. The plan is essentially flat. The 4 numbers both in terms of sales and the profit, we have essentially included a flat number. And the reason for the decrease is, as Kainuma-san has explained so there is [indiscernible] seasonality. It's in the second year. And so the total production volume assumed is essentially been adjusted here.

And the profit increasing more notably, in optical devices considered conservatively in that number, but time for semiconductors as Kainuma-san has explained, we have reflected a certain level of profit increase. And so those factors are essentially constitute at the overall numbers here. Thank you very much.

My second question about our questions about the figures. Ball bearings Q4 external sales, internal sales, production monthly figures and the forecast for Q1. Could you tell me that?

Yes. Ball bearings, do you say Q4 production in unit of millions? 339, 302, 335 and external sales, 287, 265, 309 for January, February and March; internal sales, 47, 47, 51 and Q1 production, 322, 356, 372; and external sales from April 304, 315, 323; internal 48, 48, 48. And last point, the material cost increase, how did that impact the results for the year-ended March '26? And how is that included in the forecast for this fiscal year. So which is the floor that you are going to use to calculate.

It may be dependent on that. But the largest impact in our case based on copper from $10,000, it's up to $13,000 around the end of last year. So that part might be about JPY 1.5 billion.

For this year, at that level, might continue, so not up to JPY 10 billion, but somewhere close to JPY 10 billion. So that high material cost hike is increased. And as countermeasures, to our customers for the price increase of copper, we want our customers to bear that cost. So we are negotiating with our customers right now. Under our guidance, slightly more than half, well, basically -- our policy is to have a customer pay for the total amount. But as a guidance policy, figures assumptions that we want to collect about half of that.

And the Strait of Hormuz for oil and naphtha that situation may have an impact. And at the moment for resin-related products, prices are not yet getting higher. That may happen going forward, but not yet. So that impact is not yet included.

If we see such an impact just like copper, how are we going to negotiated with our customers, we will have the same policy in negotiating with our customers.

So I would like to go to the next question from Nomura Securities, Akizuki-san.

This is Akizuki from Nomura Securities.

First question, you said that the demand was very strong in the first quarter and the bearings is showing very strong demand right now. But Mr. Kainuma, I think you are very good at forecasting the macro situation. And for this year, what is generally being said is that there is a concern of and lack of material procurement. And so there is a voice to say that the demand may have been brought forward, but there is a pickup in the semiconductor as well, the macro and the data center investment in U.S. has started to spill over. And so then we are starting to see the economic condition recover quite widely. So I think this is the macro perspective.

So Kainuma-san for this year and next year, the demand for your product, particularly the bearings, how are you assessing the demand environment?

Well, on a B2B area, and particularly the technology related for us, the 5 -- the growth field or apply. But there and with the oil stopped. And after a number of months, the situation could end up being different, but large negative impact may not be experienced, and that is my view. So our forecast for now, is not reflecting a large negative in that sense. So basically, the increase in cost of materials leading to rapid shrinkage of the market is not something that we're assuming at this point in time.

So CapEx by companies, yes. So CapEx, I think that is very strong. Is that the sense that you're getting?

Yes.

Yes. So one cannot be left behind in the competition. So those companies not doing robots. When I say not doing robots, those at the tail end of our competition. And even those customers are trying to rush and that is the sense I'm getting something in the technology area. And related to the 5 growth fields, I feel that we are not going to incur a large impact. So it's more home appliance, the general consumer area. We may see a sizable impact in the future there.

But even if that eventuate, then strongest will be, I suppose, in a better position. Well, consumers, the high end is showing strong demand and particularly stronger in the high-end area. I would expect you to be able to overcome the kind of situation. So the second point.

I have a question about figures. Maybe you have already mentioned. Year in March 2027 on bearings and SE consignment results and for Q4 or first half or second half, what are the assumptions for consignment? And for confirmation. For opticals, last year and this year, are your assumptions that sales will remain flat First, about opticals. The figure is in the guidance for optical is that, well, we assume a slight increase in this figure of sales. The average unit price may get higher or the volume offset itself, what will be the assumption for that?

That may lead to differences. But we assume that the total volume we are a little conservative, and we believe that average unit price will be slightly higher. So we have assumptions that sales will slightly increase. And for consignment First half and second half, and also figure for the fourth quarter also.

Katsuhiko will explain for Q4, slightly less than JPY 20 billion. And this fiscal year, year ended March 2027, first and second half, first half, about JPY 45 billion, second half also a similar level JPY 90 billion for the full year.

For bearings, for the full year, are you asking for year ended March 2027, what is your forecast? The total volume for the full year year-on-year, we expect an increase of about 15%. That is in terms of volume of bearings?

Yes. Data centers will expect higher growth. So on average, for bearings. On a volume basis that is the growth we expect.

Is that external sales?

Yes.

And lastly, for Access Solutions, could you let me know -- you have some specific customers, and you have factories for specific customers. And we thought it would be high this year, but in your plan, you expect growth in sales and profits. So I have 2 questions related to that. Is there a new program that was canceled and is absorbed or maybe there's nothing like that happening. And in growing profit, you mentioned the structural reform of Europe will be an effect of about JPY 200 million. Besides that, what are the drivers that will lead to profit.

Yes, there are some items where the programs itself disappear. Expected projects that disappear. For that part, we will take actions to recover. And for that part, the positive contribution asking for a compensation. That's not included -- that was not included in the plan. The kind of payment was not included in our plan and in growing profits. Integrated products are increasing. In particular, the major OEMs are facing difficulties in China, then are we having one single way of doing that work? No, that's not the case. Let us say instead the 2-wheeled vehicles are doing well or North America, though there might be a cap is moving on steadily, or there may be other customers. It's an average of everything. So it's not that in 1 location of 1 customer will lead to a large drop in profits.

I'd like to move to the next question from U.S. Securities. Hirata. .

This is Hirata from UBS Securities. I have 2 questions. First question is for the SE segment this fiscal year in particular semiconductors .

In the third quarter, I think you said it's going to be flat. But for this fiscal year, you have given more aggressive explanation increase of the medium-term plan. For March 2024 what is your views on net sales and profit?

Generally speaking, so low-end Android smartphone is impacted by the increase in price of memory. And that is the concern in the share market. But for you, semiconductor battery and ICT, you do have high market share. And so how will you experience this impact for the low end smartphone manufacturers.

And so the customers are experiencing 10% droppage to maybe 30% droppage in other customers, it's quite varied. But that has been included in an assumption. But in the end, being able to secure memory, how much will go to smartphones? And this is an area that is very difficult to assume. But based on the memory, the sourcing, the customers, I suppose, securing the memories, we'll make up for the gap, and so we are not expecting the overall decline. So that's the assumption. And for the semiconductor sales forecast for this year.

And if I can give you numbers there, the net sales is expected to grow slightly, not flat, but for we are not assuming to achieve a large growth in net sales this fiscal year. For profit, as Mr. Kainuma has explained before, improvement in the Shiga plant or other initiatives. The profit margin itself is expected to improve this fiscal year. But on the top line side, it's not the case that we are going to generate a strong profit -- the revenue driver on the top line side.

And the second is on Page 20 in regards to the free cash flow in the 3 years until the fiscal year that has just recently ended, free cash flow has been somewhat low. But from this year, in the medium-term plan period, we expect to see a large increase. But last 4 years, the free cash flow has been somewhat low. What was the background? And what will change from this fiscal year. And if you could kind of explain about the management of the free cash flow, please.

Well essentially, the year in which we have conducted M&A if we actually reflect that, then the free cash flow will deteriorate quite significantly. But if we compensate for that and in the diagram, March 2023, we have purchased the Tokyo headquarter office and acquisition of real estate. So if we compensate for those, then we would have been able to generate a strong cash flow. However, now in the last number of years on the backdrop and the cash allocation for the 3 years is what I've explained before, but we have been undertaking quite an aggressive CapEx. And that -- in the next midterm period, of course, there are kind of businesses that will require further investment like bearings.

But overall, the trend is for us to enter into a period of recovery. And so if we achieve this profit plan, then for March 2027 onwards, the free cash flow level should make improvement. And just for this fiscal year, as I explained earlier and the fourth quarter. And the cash -- the collection cycle, there is a seasonality there, whether it be games or they'd be smartphones, and there are seasonality there.

And normally, January to March quarter is a cash collection period. But in this fiscal year, and the net sales were very strong in the fourth quarter and for various products. And as a consequence, some of the collection timing has been deferred to the next fiscal year and said JPY 161.4 billion of the operating cash flow here. And so these delays are reflected there. So if we're able to adjust for that, then the part of this fiscal year, would have been, I suppose, generated in the previous fiscal year. That would be one way to kind of interpret the situation.

Well, thank you very much. So this concludes the questions-and-answers session. And this concludes today's briefing. After it is closed. You will see a questionnaire screen. We are looking forward to your valuable feedback. Thank you very much for your participation.

Hello. This is Yoshida. Today, I would like to explain the consolidated financial results for the third quarter of the fiscal year ending March 2026.

Consolidated net sales for the third quarter of the fiscal year ending March 2026 was up 22.8% year-on-year and up 10.3% quarter-on-quarter to total JPY 453.9 billion. Operating income was up 17.8% year-on-year and up 14.3% quarter-on-quarter to total JPY 30.8 billion. Profit for the period attributable to owners of the parent was up 19.4% year-on-year and increased by 17.5% quarter-on-quarter to total JPY 20.8 billion. Both net sales and operating income exceeded our plan.

We estimate that foreign currency exchange risk to have a quarter-on-quarter impact of plus JPY 12.8 billion and year-on-year impact of plus JPY 9.6 billion in net sales. Quarter-on-quarter impact was plus JPY 1.7 billion and year-on-year impact was plus JPY 0.2 billion in operating income.

This is the quarterly trend in net sales, operating income and operating margin. The operating margin for the third quarter was 6.8%. This represents a year-on-year decrease of 0.3 percentage points and a quarter-on-quarter increase of 0.2 percentage points.

This is a difference between the forecast as of November and actual results for net sales and operating income by Business segment for the third quarter. Net sales of PT exceeded the forecast primarily due to strong performance in bearings for data centers and automobiles. MLS performed solidly, primarily driven by HDD motors and lighting devices, exceeding expectations.

In the SE sales, semiconductors such as lithium battery protection ICs and mechanical components performed well, exceeding the forecast. AS was also above expectations, primarily driven by automotive devices. Regarding operating profit, PT exceeded the forecast due to increased bearing production volume. MLS exceeded the forecast as lighting devices performed strongly. SE also exceeded the forecast as mechanical components showed steady performance. AS underperformed due to customer production adjustment following the suspension of semiconductor supplies from Nexperia for North American products.

This slide shows the quarterly trends of the Precision Technologies segment. On the left is a graph indicating quarterly net sales trends. And on the right is a graph with a bar chart showing yearly operating income trends along with a line chart for operating margins. Third quarter net sales increased 2.5% quarter-on-quarter to total JPY 70.1 billion.

Sales of ball bearings increased 0.5% quarter-on-quarter to total JPY 46.2 billion. The monthly external shipment volume remained flat quarter-on-quarter, averaging 277 million units, driven by steady growth in the data center and automobiles, increased production and sales volumes contributed to this outcome.

Sales of engine fasteners increased 2.8% quarter-on-quarter to total JPY 16.2 billion. Sales of PMC increased 15.4% quarter-on-quarter to total JPY 7.7 billion. Operating income for the quarter totaled JPY 15.3 billion, and the operating margin was 21.9%. On a quarter-on-quarter basis, operating income increased JPY 0.6 billion, and the operating margin was up 0.4 percentage points. These results include the figures of Minebea Linear Motion Inc. consolidated since October 2025.

This slide shows the quarterly trends for Motor, Lighting & Sensing segment. Net sales increased 1% quarter-on-quarter to total JPY 114.2 billion.

Looking at the results by product, we see that sales of Motors decreased 0.2% quarter-on-quarter to reach JPY 84.2 billion. While demand for HDD and automotive applications remained steady, overall results were impacted by decline in sales for OA motors due to customer production adjustments. Sales of electronic devices were up 1.4% from the previous quarter to total JPY 17.5 billion.

Sales of Sensing Devices were up 4.1% from the previous quarter to total JPY 9.9 billion. Operating income came to JPY 8.3 billion, and the operating margin was 7.2%. On a quarter-on-quarter basis, operating income increased JPY 1 billion and the operating margin rose 0.7 percentage points.

This slide shows the quarterly trends for Semiconductors & Electronics segment. Net sales increased 24.4% quarter-on-quarter to total JPY 186.7 billion. This was due to steady performance in optical devices and mechanical components in addition to analog semiconductors. Operating income totaled JPY 10.8 billion, while the operating margin was 5.8%. On a quarter-on-quarter basis, operating income increased JPY 3.4 billion, and the operating margin was up 0.9 percentage points.

This slide shows the quarterly trends for Access Solutions segment. Net sales totaled JPY 82 billion with a quarter-on-quarter increase of 3.9%. Operating income came to JPY 3.3 billion and the OP margin was 4%. On a quarter-on-quarter basis, operating income decreased JPY 1.2 billion, and the OP margin was down 1.6 percentage points. Although impacted by the aforementioned issues related to Nexperia, performance is expected to recover from the fourth quarter onward.

The bar graph here shows trends in profit attributable to owners of the parent, while the line graph chart changes in the profit for the period per share. The profit for the period was JPY 20.8 billion. Earnings per share was JPY 51.79.

Next, we have the quarterly inventory trend. At the end of Q3, inventory totaled JPY 411.7 billion, an increase of JPY 9.6 billion from 3 months earlier. This is primarily due to the strategic buildup of inventory necessary to meet the anticipated sales growth starting in the fourth quarter. This graph contains a bar chart showing trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents and the line chart indicating free cash flow.

At the end of the third quarter, net interest-bearing debt totaling JPY 278.6 billion was up JPY 37.2 billion from the fiscal year March 2025. For the fiscal year March 2026, we expect to generate JPY 27 billion in free cash flow and forecast net interest-bearing debt of JPY 230 billion. This is the full year forecast for the fiscal year March 2026. We have revised both net sales and operating income upward from November forecast. Regarding operating income, we forecast JPY 101 billion, factoring in the recognition of approximately JPY 4 billion in restructuring costs. The exchange rate is assumed to be JPY 155 to the U.S. dollar.

This slide shows the forecast by Business segment. This chart shows the difference between the revised forecast and the November forecast. This chart shows the annual trends for the net sales, operating income, operating margin and the real operating margin, which is the operating margin, excluding sales of supplied parts and components. The real operating margin for the fiscal year March 2025 was 7.3%. We also project a real operating margin of 7.6% for the fiscal year March 2026.

This concludes my presentation.

Chairman Kainuma, please.

So for my part, I would like to explain today's point. This slide, I hope you will all read through this, so we talked about this bamboos. And then if the bamboo will grow and then there will be some blocks and then -- blockage and then grow again, this JPY 100 billion of operating income, we have been challenging this many times. But I think basically, we're not been able to overcome this type of block. But this time around, we have been able to go over this hurdle.

So I think this is the biggest or most important message that I want to send out. So the Thai baht, so it's THB 36 to $1. But right now, it's about THB 31.5 to $1. It has been very strong and during the short space of time. Normally, in this kind of situation, our profitability is impacted by the fluctuation of the ForEx. But my feeling is that we have this strength to be able to overcome these type of situations. I think we have that strength. So going through this block or hurdle, I think growth will continue going forward.

Let's go to the next slide. So this is the full year forecast for the 9 months. So net sales, operating income, profit before tax, all lines were at a record high level. The structural -- JPY 4 billion of structural reform cost, we have been booking that. If this wasn't there, so it would be JPY 105.5 billion. So it's only JPY 1 billion. We have conducted upward revision of JPY 1 billion.

So it's going to JPY 105 billion, JPY 110 billion or JPY 120 billion. I think this is a kind of a marginal difference and the ForEx will change in any case. So it will be -- we'll be able to go beyond JPY 100 billion. So I hope I'll be able to get through the message. That will be the core message I want to send out.

Next slide, please. So we have been improving our profitability, and I myself, feel that we have been able to see a robust growth, specifically in the PT business, the former machine components business. So this PT is becoming a great driver for our business. So Bearings, it is doing very well. So the December production 350 million. January external sales, 287 million. So it is a record high level.

Specifically, for fan motors, this category; and automotive, this category, both in January, it's been able to record a historical high level. So what's great about this is that there's still room to grow. So I talked about December, 350 million production volume. So all in all, this fiscal year's average, 320 million.

So next fiscal year, according to our current plan, so monthly average 350 million of production, that is our plan. So it means that we're going to bring up the production by 30 million per month. So that is the growth potential for Bearings. And on top of that, so the Aircraft and Aviation business, they're going to -- that's going to improve the profitability. So in this fourth quarter, the price adjustment has been conducted.

And on top of that, the utilization for the plant that has a low utilization rate, it's not the case that they don't have orders, this is due to our issues about our operation. So we are focusing on enhancing the utilization rate in these type of plants. The order backlog, we have an abundant order backlog. So if we produce, then we'll be able to sell. But for instance, changing sets, lack of labor because most of this is produced overseas.

So the production is not going according to our plan. But right now, the local head, we have changed the person in charge. It used to be the case at Fujisawa, we talked about from push to pull, and I have been the leader conducting the reform. And we have started to do the same thing in overseas plants. So with the growth potential of the Aviation business is quite substantial.

In terms of the profit outlook for next fiscal year, maybe 10%, we're going to see a 10% increase. That is my view.

So going to the next slide. So this is the Motor, Lighting and Sensing business. So if you look at the photo, as you can see, the AI servers, the MLS-related products for AI servers and the potential for increased sales, you can see that it's quite a high potential. For the fan motors, this fiscal year has been good. Next fiscal year, more than this year, we'll be able to sell. And the large fan motors shown in this photo, we have been able to get these orders. So motor-related business for next fiscal year is going to grow further.

And additionally, spindle motors. So helium production, so 300,000, so 900,000 by quarter, 300,000 per month, 100,000 per quarter, we have decided to increase capacity and invested. So from October, that will start to contribute to our earnings. So the Motor business is going to grow very steadily.

And Lighting devices, so the pillar-to-pillar is going to -- we're going to increase the capacity for pillar-to-pillar. So it was loss-making. So the tablet application volume was small. But now this pillar-to-pillar Lighting devices has started to be shipped and tablets volumes have started to recover. So this will contribute to our profit.

Well, Sensing devices, I will touch upon this later. This strain gauge is going to be utilized for humanoid robots. For instance, the hands, the sensors that will be equipped will be kept on hands. So there's a lot of inquiries coming for these type of Sensing devices, and they will start to contributing to our profit.

And going to the next slide, the Semiconductor and Electronics, SE business. So semiconductors over this fiscal year, next fiscal year, I think it will be flat. So about JPY 24 billion of profit is our outlook. So the power semiconductor, the Shiga plant, the full-fledged utilization, I think it will take some time for this to go up to full operation. For instance -- excuse me, so in that sense, within semiconductors, there are some differences.

From Socionext, we have bought a Semiconductor business that will be a very -- so this will be a compact diagnostic equipment. So we start from Gen 1, and now we are at Gen 2.

So we are not -- this has not been able to go to -- in terms of diagnostics, it's basically just on the surface of the body. So if we go to Gen 3, this will be able to go into deeper into the body. So that would be in January 2027. That is when the mass production is going to happen. Gen 4, that will be 2029, the image quality is going to be improved. So that point onward, we will make a full-fledged start. And ARC is doing extremely well. So that is the current situation. Optical devices and mechanical components, we did not expect a huge profit. So it's in line with the original expectation.

Next page, please. AS, as you may be aware, there have been various headwinds. Chinese market for Japanese players has become a very tough market. And our customers, Nexperia, because of the shortage of Nexperia chips, our customers had no other choices but to stop production. So because of the external factors, we are going through a tough period. With regards to this, in the latter half, in the U.S., there will be a production for recovery. And therefore, the impact will be or impact was somewhat limited.

But amidst this headwinds, JPY 16 billion profit that we have been able to record. So that means that we now have a better capability. And next year, we are expecting increased profit.

Moving on to the next one, humanoid robots. On IR Day, I talked about this. So it may be somewhat repetitive, but the various parts and components will be used in humanoid robots. And bearings, quite a few bearings will be used in the hand, the ball bearings that we make will be used, but other parts, the special bearings are used. And now we are contemplating whether we should make them or not.

On the next page, what we exhibited at CES, you can see a video. So there's music, but you cannot hear music today. So when the lid is opened, you can see the fingers moving very fast and accurately and people were quite surprised. One finger can tolerate up to 5 kg. And on the right-hand side, you can see a block device, and that is the monitor -- that is for monitoring fingers. If you move your fingers and then the robot fingers will move accordingly.

In any case, the fact that we exhibited at the CES, and it was right at the timing, and we received many inquiries. And we would like to steadily contact each and every customer and ship samples and so-called high-end components that we make to what extent we can help those customers, we would like to judge in order to move forward. And we think that -- I think that this business has a very bright future.

Next page, please. So it's my mistake, and I apologize. So 8 spheres and 5 pillars are rather difficult to understand. That is what was pointed out by some investors. So I try to put things into perspective. On the left-hand side, you can see 8 spheres. In other words, product portfolio. And as I always say, the various end products that move because of electricity, these are used in all of them. So definition of the spheres in a niche market we would like to demonstrate our strengths. And we were able to integrate our strengths and they do not cease to exist easily.

So the integration and plus 1 or plus alpha. On the right-hand side, you can see 5 growth areas. In my terminology, there are 5 pillars. But if that is difficult to understand, I would call it the 5 growth areas going forward. So AI servers and commercial drones and humanoid robots and new mobility is somewhat new, and it can be defined in a different way. But because of the emergence of new mobility, the comfortability or comfort can be greater when a person moves from point A to point B.

So various components will be used in order to realize that. So that is also a growth driver. So this is about structural reform that have been touched upon several times and production at the Malaysian site has been terminated and about JPY 2.5 billion of annual impact is expected next year.

Next page, please. So fortunately, for 14 years back to back, we have been renewing the record sales. And next year, we would like to target at achieving the 15th year consecutive net sales growth and profit has increased for 3 years back to back. And the next year will be the fourth year. And frequently asked the question is that in March, we formulate the budget and then taking into account the various situation in the society and the market, we make several adjustments.

And in May, at the earnings result announcement, we give guidance. We formally announced guidance. And people like you ask us, continuously ask us what about next year? So I would like to show that we are going to grow next year as well, and that is the reason why I put these numbers on the graph. So we have proceeded to the next stage of growth. So next year onwards, as I said previously, being sustained by 3 growth segments, we believe that we will be able to keep growing.

So this message, I'm sharing with you for your reference. So I don't want you to scrutinize each of these numbers, but rather, I would like you to understand this as an overall image. So last page shows about the dividend, and I have no comments on this.

This concludes my comment. Thank you very much.

So we'll go into the Q&A session. The first question is from Goldman Sachs, Takayama-san, please.

First, I would like to ask about for the next -- about the next fiscal year. So I have to ask this question, excuse me. But this number -- so from JPY 110 billion to JPY 105 billion, but you have got -- get back to that number. So in terms of the increment by segment, which is the high contributor? So SE you said it was flat. I would like to ask about that. And the range -- so the risk, what is the risk that things may change, for instance, maybe the material cost? So Mr. Kainuma, which area do you consider as the risk?

So in terms of range, I think there are a range of -- in terms of the risks that you take into account. So the floor, JPY 105 billion, I think that is okay. In terms of the breakout of increment, I think PT will be the biggest contributor. Next will be MLS, AS is in that order. That is what we assume that we think. Again, I have to repeat in March this year, we will scrutinize these figures, and we will brush up our plan outlook until May.

So at the current point, roughly speaking, this is the kind of the image that we can give you. Well, if you are asking about risk, so as I've said previously, the big contributor or the business that is having a record high level and in terms of the 250 million of the production of bearings is necessary. So the driver will be fan motors, automotive applications.

So the trend of this business will be a risk. But for AI servers for next fiscal year, I do not think that you don't have to be concerned about risk. I think rather than that, the automotive industry's trend is going to happen to rare earth, maybe the production is going to decline or is it not going to decline? I think that is the thing that we have to consider.

So if that happens, AS will maybe that will be a risk for AS business as well. For SE, semiconductors will be the main source of profit and the subcore mechanical components and OIS. So smartphones are selling well. Games, I do not know how the momentum is going to hold, or that is one risk factor. But the profit contribution overall is very small. So I do not think that we have to consider specifically as a risk.

Understood. So overall, in terms of the material costs, including the cost of copper, so the including pass-throughs of the increased costs. So in terms of the margins, you don't think that it will be a risk to your margins?

Of course, there are risks, but in those type of situations, ultimately, we will have to ask consumers to bear that cost. So we have to negotiate with the clients, specifically the price that has shot up if you have a sudden spike in the cost. And if it stays at that level, I think there's no other way for us to cope with that situation. So in that way, that is the way we want to respond.

My second question, so it's about optical device actuator business. So the other companies said that the volume is going to increase in next fiscal year, they're talking about doubling the capacity. From your point of view, what is the positioning of this business? You said that it is strong, but for next fiscal year's way that you look at this business, what are your thoughts?

So about increasing lines, we will be doing that as well. And we do want to respond to this higher demand. Currently, that is all we can say.

Let us move on to the next question. Morgan Stanley MUFG Securities, Mr. Sato, over to you.

So this is Sato from Morgan Stanley Securities. I have two questions. One, ball bearing production, December 350 million -- it reached 350 million and Q3 monthly external shipment and internal sales as well as outlook for Q4, if you could share with me?

So Q3, did you say?

Q3 and Q4.

I see. From October, the unit is 1 million production, 322, 314, 351; January, 339; February, 306; March, 346. And sales: October, external shipment, 278; November, 275; December, 277; January, 287; February, 261, March, 293. Internal sales from October, 54, 48, 49, December and January, 47, 45 and 45. So that is the current outlook. Thank you.

And next fiscal year, the monthly production, on average, 350 million will be aimed at. And towards the end of next fiscal year, to what extent the production capacity or production volume will increase, I'm wondering?

So it depends on the utilization, and it may be premature to talk about that. But in terms of sales, at the end of the fiscal year, let me think about that, external shipment alone, it will be greater than 300. So that is what we are thinking, that is external shipment. And internal sales will be 50 or 60; and therefore, 350 million or 360 million.

And Kainuma explained, it will be 350 million, but it depends on the months because the business days -- number of business days is different month to month.

And my second question is the impact of a shortage of memories. The increase in the memory price and the difficulty in sourcing memory, whether that impacts your business or not? And the customers, number of sets, how it is likely to impact, so if you can share with us your forecast at this point in time?

So right now, the people are talking about many different things. We are not making any products using the memories that are being talked about right now. And therefore, there is no impact on our business directly, but indirect impact, the customers' forecast have not changed and the various forecasts and projections exist, but the customers have not told us any actual impact of that, and therefore, I would like to refrain from making any comment on that.

Next fiscal year, the memory price increase and the shortage of the goods, am I right in assuming that you do not think it's going to be a risk for you?

At this point, there are uncertainties, but our assumption is the cheap ones with memories, the cheap products with memories may be impacted. But the high-end products, even if memory price increases a little bit, because it doesn't account for a huge portion of the total price, I don't think impact will be huge. And we are focusing on high-end products and high-end components, and therefore, at this point in time, as Yoshida said, our customers did not give any indications. And we do not supply our goods to low-end products much, and therefore, the impact shall be impacted. That is our assumption at this point.

[Operator Instructions]

I would like to go to the next question. From Mizuho Securities, Goto-san, please.

So this is Goto from Mizuho. I have three questions. Number one is about the Bearings. So in the second quarter presentation, so in the second half, you said that the volume will stabilize. I think that has been your outlook, but for the -- look at January and the outlook for March, it seems to become higher. So compared to your previous understanding, the demand or the market situation for Bearings is there any change that is happening? That's my first question.

As you all know, and as I've said before, this -- so fan motors and automotive is the 2 drivers in this business. So fan motors, AI-related servers demand and the production of these products is gradually going up for automotives. From our point of view that -- the number of components that is included in one automobile, including for comparability usage is increasing. So that has become reality.

So I think the growth is faster than we have initially anticipated. So we talked -- I thought that maybe JPY 60 billion would be a good level. Maybe it is -- we thought that maybe it will not be that high, but the current demand is quite strong. So to be frank, so that was kind of a minor surprise for us. So the organic trend is there. The underlying trend is there and it has become more and more relevant.

Okay. I understand. Understood. My second question is that the -- in terms of the third quarter results, your thoughts, so it is slightly over your expectations. But for AS, Nexperia's impact is there. So if you take that into consideration, so the JPY 2 billion understood in the AS but I think fundamentally, it was actually over your expectations, maybe that's way to interpret. So if -- I do not think that the fourth quarter is going to be pushed into the fourth quarter. So for this fiscal year, JPY 105 billion, it should have been higher than that. Is that the right way to interpret?

So for AS, for the second half, so for the next period incident, it will be recovered, but not fully for the second half. But March, in terms of the die & mold et cetera, various sales will be included in the March. So yes, we have to see some additional income. So the third quarter, the AS was under our target. But on the other hand, for the other segments, they outperformed. So the fourth quarter will be -- yes, will perform better and then achieve this JPY 105 billion. Maybe that is a story that you should consider.

So my third question is about CES, you displayed robot hands and you got good feedback. So I think you had communicated with the customer at CES. So within the industry, what is the positioning of your robot hand within the industry? Is it ahead? So I think do you have a clear understanding of how your robot hand is positioned in the industry? So have you become more confident based on your feedback? And in terms of the breadth of the customers, maybe is there a possibility they're going to have a more wider customer base based on this feedback?

So I think maybe the customers are being diplomatic. But they said that you were the best among the robot hands. There are some customers who give us that feedback. They say the reason is that the fingers were moving very smoothly and with one finger can support 5 kilograms. They were very surprised by that. I think that was their understanding. But the reason why we produce this is that not that we want to be very aggressively going to the robot hand business, we wanted to show that by using our components, although it's a little expensive, you can actually realize various movements.

And if you put sensors on the hand, various sensing actions can be conducted. So it was a kind of a -- we wanted to appeal our capability. So in that sense, rather than trying to sell robot hands, we wanted to appeal about the components and parts that we use in this robot hands. So that has been our priority. So we have actuators, bearings.

So has there been some inquiries coming from new customers?

Yes, yes. I'm mistaken, yes, because -- but it's still -- it's only a month since we went to CES. We will just started to approach customers based on the list that we have compiled. And I think gradually, to be able to -- I think it will take a couple of months until actually this will show up in numbers.

Let us move on to the next question. UBS Securities, Mr. Hirata, over to you.

So I'm Hirata from UBS. I have two questions. One, SE operating profit, I think there has been an upside. And SE full year outlook has been revised up. And I would like to understand factors behind -- so the background of upward revision and the image for the next midterm plan. And the next year is likely to be flat, you said. So the reason why you are being so prudent after experiencing this much growth, if you can explain to me? Q3, SE, what was good?

So semiconductors had an upside. That is one thing. And also, we have a conservative budget, but for our game business and the game business did better than expected. So that is the current situation. And toward the next year, as Kainuma explained, I mean, he explained everything, the bearings are doing well and motors, there are many opportunities.

And for AS, new program will come out and things will be very solid. The reason why we expect next year to be flat. We will be scrutinizing various elements going forward, but how the actual business will evolve apart from that, in terms of the guidance, game and optical devices, to some extent, we would like to present a rather conservative numbers.

A follow-up question. Regarding optical devices, you have gained back share and the rare earth issues have been resolved. So am I right in understanding it that way, and you are simply being conservative?

So how things will develop next fiscal year, we need to scrutinize going forward and share with you at a later point in time. And the rare earth related, so Q1 and Q2 as well as Q3, we had such a tough time, but that problem has been resolved.

Next year, we are not anticipating to face the same problem. However, how we look at the business as a whole, we need to secure profit and make steady progress and the core business will grow. So centering around that, we will put together a plan.

My second question is a confirmation of the numbers, if I may. So restructuring reform number, so the JPY 4 billion from Q3, JPY 1 billion; and Q4, JPY 3 billion. And can you give me a breakdown by segment and AS Q4 the recovery of onetime expenses from our customers. Is it related to the die and mold? If you can give me numbers, I would appreciate it.

AS expenses, die and mold and the price adjustments from original transaction terms and conditions, the reality turned out somewhat different, and we made adjustments accordingly just like last year, and we are to receive such. Regarding the structural reform cost. So Q3, JPY 1 billion and Q4, JPY 3 billion. And if that is the split SE or correction, MLS and AS.

With regards to the content because this is a structural reform, at this point in time, we cannot share with you proactively the numbers and content, but we are aiming to improve our structure. So we have put together a specific plan, but we are not able to share with you the plan yet.

Let's go to the next question. Nomura Securities, Akizuki-san, please.

So this is Akizuki from Nomura. First, so the third quarter, fourth quarter consignment numbers, the results and the outlook, can you give me that?

Third quarter, about JPY 54 billion, was quite large. Fourth quarter, about JPY 12 billion.

The consignment in the third quarter seems to be higher than your plan. Can you enlighten me how this happened?

So towards Christmas, so the third quarter, we had to build up the products and increase production. In the fourth quarter that we got over the peak of the seasonality and the production went down. So that is the reason why the number went down in the fourth quarter. So that is the reason why the mechanical components was better because the production was active. So the electronic components business was good. This is one reason, yes.

And again, this is a confirmation of numbers again. Fourth quarter AS, so structural reform. So if you add back JPY 1 billion, the operating income will be JPY 8 billion. So it seems to be quite a high level. So what you will not be able to produce in third quarter, so it is pushed out in the fourth quarter, that is the reason or is it a new products, better mix and the actual business situation has become better? But on the other hand, for next fiscal year, you're not anticipating a lot of increase on the products. So AS -- so when you -- the fourth quarter, if you consider as a base, what is your outlook of this business?

In the fourth quarter, there is some structural reform cost included. So if you exclude that, basically, the fourth quarter would be in line with the plan, for the full year, that is. So if you look at the third quarter and fourth quarter, the third quarter, as we have been doing, we had Nexperia issue and some of the customers have been struggling in terms of the production. And -- but this procurement of the components has improved, not all, but they are going to catch up in the fourth quarter, although not for all of that, their plan. So meaning that what there was a shortage in third quarter, that will be produced in the fourth quarter.

And in the fourth quarter so in terms of the mix, the improvement of the products is included?

Well, that's going to happen from now. For next fiscal year onwards, I think these types of changes will gradually happen. But as Kainuma has said in the beginning, for next fiscal year, we are being slightly conservative. That is due to the automotive industry, the China situation. It's very difficult to have visibility. So against this backdrop, we are taking a slightly conservative stance.

Lastly, so for MLS, the copper price has gone up and motors use a lot of copper. So how should I consider the impact going forward? Can you immediately pass through the increase of cost? How does this work?

It is true that the -- in terms of the copper cost, the price is very high, and we cannot deny that this has an impact on our business. So our motors are very small. We're focusing on small motors and the copper wires that we use is very fine. So if there are large motors and the copper coils against the product price is lower compared to -- because we are placing small motors. So currently, I do not think that this will impact the business.

But that said, going forward, so the raw material besides copper, they are some are going up. We would like to negotiate with the customers and then ask them to bear that cost. By doing so, we want to protect our profits.

This concludes the Q&A session. And this concludes today's session. And after the session is concluded, you will see a question survey form. In order for us to do a better job in IR activities going forward, we would appreciate your feedback. Thank you very much once again for joining us.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon. I am Kainuma. Usually, we have twice a year a presentation of financial results to introduce our company. But time is limited, and we were not able to communicate what we wanted to tell. And in January this year, a sell side analyst issued a report that MITSUMI's future growth drivers are not visible. So it seems that my way of explaining was not good. So today, as a special event, we ask for your participation on our presentation and also want to introduce to you what we are actually doing, development of products and sales products. I want you to touch them by yourselves and see by yourselves. We have arranged this opportunity today. So I hope you will enjoy. And I hope you will be able to take back with you the feeling of our actual growth capability.

So today, this is the agenda for today, management policy, growth drivers and competitive advantages towards achieving sustainable corporate value enhancement. There are three parts in my presentation. And I, myself, I will cover number one and two. And number two will be presented by our CTO, Mr. Suzuki. There will be Q&A later. And he is very much familiar with technology than myself. So please ask questions directly to Mr. Suzuki to have a better understanding.

Now as a summary, let me introduce briefly our management policy. Recently, we are saying we want to become an indispensable company by driving the world forward. That is what we say. Intentionally, since I became the President in various sectors, we have expanded the scope of sales of our products. You can see from the left, automotive and up to home appliance, there are various industrial sectors. And in there, by providing our products, we want to secure sustainable growth. And if there are many events in a certain market, that risk can be covered by other sectors towards growth. In the last 17 years, I have been working, keeping that in mind. And to a certain extent, we are having results up to the present.

Next page. So this is also a summary. I became President on the 1st of April 2009. And I started my first year from JPY 225 billion, and you see growth. The content is greatly changing through growth. We're aiming at March 2029 to achieve net sales of JPY 2.5 trillion, operating income, JPY 250 billion. We are working hard towards this goal. Later, I would like to cover the details of these figures at the end.

This, as I always mentioned, our growth strategy, we always had a growth strategy. One is organic growth. As global GDP grows, disposable income increases. And with that, more premium lifestyle, premium products will be required, and we will provide the key components. And by doing so, it is possible to achieve sustainable growth. Since building the company, 60 companies and since I assumed this position, 30 M&As were achieved. That is the core of our strategy. And recently, as a third point, developing products and supplying components for addressing social issues. From about 3 years ago, I have been using this sentence. So today, I want you to see the products that will solve social issues.

So these three goals. In addition to that, we want we have a business structure that only us can do as represented by Eight Spears, various products and element technology accompanying that is available. And by combining that, we want to provide new products. We take more time than usual to introduce to you our integration products. So I call it 3 plus 1, 3 pillars plus 1. This is our growth strategy. And from here, I can say that many things start from here. So I don't think it's not necessary to repeat about Eight Spears. It's explained here. In a big market, we want to target a niche market, and niche products are things that will not disappear easily and our competitiveness, the source of competitiveness can be used and it is possible to integrate combined with other products. Those are the Eight Spears. Some people say this is too much. There may be criticisms. But today, I want you to see the sixth floor. And by doing that, I hope your concerns will be resolved.

This is our future of Eight Spears, eight businesses, which we call core businesses. There are also core technologies accompanying that. And by combining those, we provide new products to the market. So I would like to repeat that I briefly gave you a general overview, and then I'd like to ask Mr. Suzuki to continue. Mr. Suzuki, over to you. Now I'd like to invite Mr. Suzuki to deliver his presentation.

Yes. This is Suzuki. Let me talk about the growth drivers and competitive advantages. Next, please. This slide shows, as Chairman Kainuma just mentioned, the organic and the resolution of social issues, products to resolve the societal challenges. These are what we are aiming for. And in addition to that, the areas that we expect to grow, the growth areas with high potential. One is AI server, another is humanoid robot and the fully autonomous driving commercial drones, these products that can address social issues with the [ center 1 plus 1 ] integration products, we are trying to take on this challenge. Next, please.

Let me start from AI servers. This shows the market outlook of AI servers. I hate to preach to the choir, but using AI, the power demand will increase exponentially and AI server investment will accelerate. But there is this growth pain or challenges that come with this growth. First of all, the explosive growth of heat issues with GPU and the cooling challenge. And the motor rotation goes up, so noise problem and because the storage problem because of the explosive growth in data volume and as data needs to speed up, so the high speed communication demands and battery. These are the challenges that need to be addressed, which is obviously our business opportunity.

So for the challenges that I mentioned earlier, we have various products. For example, for thermal heat dissipation measures and the liquid cooling systems and the leakage, liquid leakage. Through our various products, we can offer solutions. And this is the AI server as a whole. This is how our products are incorporated into AI servers. There are these many. So by showing this, we will appeal our potential to the clients and show that we can offer this one stop shop solution. And with that, this is the image of our growth. By 2029, JPY 100 billion is the target. And the breakdown of the business portfolio is shown in the pie chart on the right.

Next, humanoid robots. Humanoid robot market, there are various views in the market. But in our case, we think by 2035, more than 10 million humanoid robot increase will be seen. By 2035, average 108% CAGR is expected. And these are the challenges for the humanoid robots to work like humans. Of course, the durability, reliability, power and the sensitivity that humans have and the noise and battery life are the challenges for humanoid robots to evolve further. And for these challenges, we have various products and key technologies. We can combine them and offer solutions. So these developments are ongoing. So this is like AI server and data center, humanoid robot has many of our machines and potentiality. We show that there is a big potential for us. So machine product sensing, motors, we will contribute to the ideal humanoid robot development. This shows the humanoid robot growth image, our image. Plan A and B are shown here. CAGR 47% and 65%. With these two cases, our image is JPY 100 billion and JPY 200 billion by FY '35 and '25. The product portfolio, this is the content, the breakdown by 2035.

Next, commercial drones. I mentioned commercial drones here, mostly logistics. The commercial drones in logistics will grow at CAGR of around 10%. For drones, it flies. So there are regulations associated with that and delivery in case of delivery, commercial use, it has to be operated properly. So the autonomous operation needs to be fully established, and that is the challenge. Now as the solution required by the market, we have these potentials. Bearing and motor are easy examples and camera, actuator to operate cameras. You can see GNSS antennas here. This uses our high frequency technology to establish this GNSS antenna. It is like GPS. We it picks up the satellite signal to help the accurate operation.

And on the lower half, you can see applications. Drones are electronically operated. So it needs to be charged. So charging station is shown by these markers and the chargers. We have inquiries and the developments are ongoing. And environmental sensors, it flies. So it is expected by the wind. So we are preparing for that situation. These are the examples, applications. As I mentioned earlier, we have pretty much all the key parts. And this is our growth image of the commercial drones, CAGR of 10%. We will grow together. And our product portfolio are shown on the right pie chart.

Next is fully autonomous driving, mainly LiDAR sensor. Next, please. So this is autonomous driving Level 3, 4 and 5 growth outlook. CAGR of 48% is expected in San Francisco robot taxis are emerging. So we think this trend will accelerate. And these are the challenges. To prevent accidents, the space needs to be recognized, special recognition. This is the key for the sensing of autonomous driving, and we are trying to contribute to that and development is ongoing. And these are the key products. The upper half are LiDAR. The necessity of LiDAR. There are various views on this. But from the current technology, the high speed, long distance, 300 meter long distance sensing, for accurate sensing, we need these LiDAR technology. And we think that will be the growth point. And from the autonomous driving perspective, the cars will not just be driven, it will be a place to stay. So human machine interface and seats, comfort are the roles we need to pursue further. And this is an example of LiDAR. We have various types of LiDAR actuators.

FDB, the motor that rotates without touching. So within the car, there are more layouts increasing LiDAR sensors. So this has contributed to reducing noise. And generally speaking, BLDC this image of a polygon to rotate the mirrors. Our cartridge bearings we can secure the bearing system. How disk pivot technology can also be applied and our super bearing, high precision bearing, which rotates smoothly can be used to achieve a silent state. And also LATM is our unique product. Polygons uses hexagonal mirrors, for example, but with the same resolution, space is recognized, but LATM will go back and forth flatly and also speed can be changed. If you want to look at the details, it will move slowly. If you can move fastly, it is possible to use at higher speed. So this is the LiDAR fully autonomous driving growth image. We believe this will start in a full-fledged manner. So we expect a CAGR of 30%. And at that timing, our portfolio, as you can see on the pie chart to the right, we assume this portfolio, and we are going on with developments for this purpose.

Now I'd like to talk about integration products. Integration, which only we can do, what is the position of this product. So what is the method I'd like to explain the features and the differences. This slide explains almost everything about integration. In 2010, BMS, Electronics Mechanics Solution, this name was registered for trademark. And this indicates our direction of future developments. Electro Mechanics Solutions is what this is, various components are combined together. And by doing so, mechanics and electronics, both are used together to improve value added. And in 2017, the company was integrated with MITSUMI and we became MinebeaMitsumi. As you can see below from input to conversion, output and systems, the product lineup has been developed.

And during this, to strengthen this trend, M&A was also advanced and in a very strong manner, the necessary elements have been arranged. And among the Eight Spears, our element technology is completed through vertical integration in case of bearings, for example, we can design the steel material or the grease oil or lubricants also can be handled. And for analog semiconductors in the preprocess and post process, we have these processes internally, and we do conduct design process in the company. And for motors, we have ball bearings and magnets are also made in house, and we do have semiconductor technology. So motor drivers can also be structured and developed in house. So we have vertical integration elements. So Eight Spears don't mean 8 types, but there are multiple parameters. And we use these parameters to provide the elements or the needs of our customers. So we can provide the best fit to the customers, and that's the strength of our integration.

We are experienced in component manufacturers, module manufacturers and set manufacturer as I'll explain later by using ECA. Systems can also be built. We can face the customers from a best position. And in that sense, we have multiple variation in terms of technology and products that we can provide. That is a major feature of our company. This shows the integration products. One example, integration products from existing markets to new technologies, how can we grow from existing technologies to new technologies. We also have components and products within ourselves. Inner sourcing can be maximized. And by doing so, as I have mentioned, by changing parameters, we can make combinations to increase value. That is a major area of products. And by doing so, new functions, new user experience can also be provided. So that is the general image of our integration products activities.

This is a wing handle. This is something to provide a new user experience. I would like to show a video later to show the image, our sensor technology and motor technology and handle technology, and though not included here, not a mere combination of this and is a switch to open. But for example, you cannot open when you are washing the car or when there is a wind. So to guarantee the correct movement, you must have close discussion with the customer. We are working this with BMW, a top German manufacturer. So fine tuning is made with the customer. And the ECA background is used for this technology.

This is industrial power supply module. One of our Spear is power source. This is centered on adapters so far. The power device company joined our group. And in the company, high performance power device, power semiconductors are available. So we have to use that technology. We do have a power supply element technology. And by adding this new technology, we want to achieve a top efficiency in the industry, 96% to 97%. You may wonder if there is such a big impact. If you think of a loss, 4% loss goes down to 3% loss, which means loss declines by 25%. That's the level of impact. So AI servers consuming large power, if this is used, it is very effective. If you use of automotive use for electric purposes, you can enjoy this level of effects.

This is a bed sensor system. Our product, our actuators are used in combination. At Osaka Expo, we displayed this product. A gauge is put under a bed to measure the weight. This is just like having four house meters under the bed. And the data is collected, and using the data, the vital measurement is taken. So you don't have to attach any equipment to get your vital signals. It's noninvasive, even without using cameras, your position of sleeping and also when you wake up with high precision sensors and using the output, unlock data from the sensors digitalized, input into a farm and then the data information can be used and the breath or the heartbeat of a person sleeping can be sensed. And depending on that situation, the angle of a bed can be changed, and the time to wake up comes, a relaxing or a fresh music can be played or a good smell can be sensed. This was displayed at the expo. It was very welcome. We had a lot of inquiries on when this will be available.

Now another growth driver. The biggest area is automotive. In our Eight Spears, this is the fourth. AS, Access Solutions. It's Spear, but this is our integration field of our integration activity. It was we were originally the mechanical key manufacturer, and this becomes electrified. Of course, we knew that this trend was coming. So we used our key element of technology and products, integration parts. And that's why this became a part of our group. So this AS categories future will be shown in the video. Please take a look.

Now in our growth, we have this kind of growth image to develop the growth market. So this is the wing handle how it is used. So with a finger, a light touch, you hold the wing handle and door gets unlocked. For this function, various products of ours are used. So this is how we offer our solutions. Next, please.

So this is related to drone logistics in delivery, delivery box. So the variation of the location, it's not always the home. So maybe the car that is parked can be the delivery box. So our key element technology and solutions and antenna technology can be applied. And our technology, our product used, our technology and parts are used. And this can complete in a one stop shop fashion. After the delivery, of course, the notice comes. In the notice, the person can come. This is our step gate function. The bumper, there's one where you move the foot under the bumper, but it's not sensitive enough. This one is very sensitive. Now we are mass producing this compact spindle drive open the back door. This is the front door version, and it's already incorporated in our design. So this is available. We can offer this.

Now this is the electric car charging port. You may think humans can open this. But once you are used to this, you cannot go back. So this is an automatic open actuator. Our grille shutter was the original product. This is an application of that. And for the charging, we added additional necessary function. Various products are contributing to this solution. Last example is AS, stands for Access Solution. Access is access to car. So this flow is made seamless. This is what we are trying to do. So the automatic car movement, automatic open of the doors. So for vehicles, there are various challenges, but we have the Tier 1 position and can gain various information. This is fed back to the development and studying various challenges to offer solutions.

For autonomous driving, the safety, comfort, energy conservation and thermal, we have various products potential products in the lineup. Pillar-pillar display, pillar-to-pillar display. This will be incorporated in the next generation car. It is the front glass windshield display technology. And this backlight manufacturing has started. Other than that, we have the existing automotive onboard products. In addition to what we have, we're adding sensor and communication inquiries are coming. So we plan to add value. And this is inside the cabin. So it is moving from the driving space to relaxing space. So products and technologies are developed to achieve that goal. In automotive, we are aiming for new growth. planning to increase by JPY 210 billion. And the portfolio is on the right pie chart. As I showed you in the video, AS is accounting for a big portion. Next, please.

The other growth drivers, we are trying to improve our profit margin as a company. So how we generate high margin products is the key. So this is the aircraft. Aircraft is a very stable business for us and is expected to grow by 8% CAGR going forward. There is a high entry barrier. So our precision machine components and accurate delivery are favored, and that is backing up our growth driver. Now this is our growth image. In 4 years' time, we plan to increase by JPY 50 billion sales, mechanical drive. Rod end, our original product is connected to complete ring rod. We acquired this through an M&A. Now we have this in house. So using these as a lever, we will continue growing.

Next is home appliance, air conditioners. Air conditioners is growing rapidly. In power device, air conditioner related semiconductor is owned. So using that semiconductor, our content growth will be achieved. So air conditioner market is another focus market for us. In these home appliances, we are aiming for 10% growth and JPY 30 billion through the products in the pie chart on the right. And other businesses, these are for the future, medical market and industrial equipment market. Our technology development is moving in this direction. So I would like to declare this today. Our sensors are suitable to get the vital data using including bed sensors. We understand that from our technological development.

And other than that, bearing and machine components, we have communication routes, channels. So we can capture customers' information quickly. And with our integration capability, we can deliver good products that meet their requirements. And industrial machinery, robots, it may come before humanoid robots. So sensors, grippers and arms, actuators, these developments are also ongoing. We have already installed this in house. On the sixth floor exhibition, you can see an example of that. And in this business as well, it takes time to enter into this market, but we want to achieve a growth of JPY 100 billion. And in this high margin market, we develop a variety of products. Now last but not the least, Mr. Kainuma, back to you.

So as we have introduced to you, there are many opportunities. So far, through our growth, there was a variety of technological innovations, video, old example of video or DVDs, 8 millimeters video, mobile phones, every time at each stage, technological innovation happened, leading to our growth. But only 1 or 2 products were used. Almost all of them were bearings for 8 millimeter videos and DVDs. Looking back, it was mainly bearings. And in case of mobile phones, backlights and switches started to be used, and there were about two parts used. But what we introduced to you today, with one innovation, it's not only one component that will be used, but there are so many business opportunities. In my career of over 30 years, I think this is a very epoch making era. However, it's not that everything will grow as we had expected. What is the CAGR? I think only god can imagine what will happen. So there may be upsides and downsides. Variety of scenarios possible. But based on the current best available information, how much sales can we expect? I try to calculate that. So let me introduce that.

Next page. It's a busy chart. I apologize for that. In today's presentation, I said five pillars, starting from AI. And until fully autonomous driving and there are other automation, not including the five pillars, but conventional technology that we can expect growth in the future. I will try to separate into these two. By March 2029, if we see the best scenario, these are opportunities that we can expect in case of five pillars, JPY 140 billion; and for others, JPY 400 billion. So in total, about JPY 540 billion of growth opportunities can be expected. Of course, I don't mean that we are quite sure that this will be achievable. But in the current scenario, based on the figures we collected internally, if we use these figures, this is the sales increase that we can expect. So this is organic growth that we expect.

And the next page, by March 2035, business scale in growth areas might be about JPY 300 billion with fully autonomous driving, LiDAR, JPY 100 billion; humanoid robots, JPY 100 billion to JPY 200 billion; and drones, JPY 20 billion. This is the image. And with this in 10 years, we expect a positive growth in terms of sales.

Now in more concrete terms, the next page shows the image. For the four Spears plus others, how much would that be is shown here. As I have mentioned, by March 2029, bearings or the PT, including everything, about JPY 400 billion is projected and operating margin then would be 25% unlike semiconductors are facing difficulties now, but Shiga part is covered and the current growth, JPY 200 billion will be achieved margin of 30%, JPY 60 billion operating income; motors, JPY 440 billion; 12% Access Products. This year, about JPY 340 billion is projected. And this, we are receiving orders smoothly. So we expect JPY 420 billion. If we add all those, the image of the operating income is about JPY 270 billion. But as written below, from here, there are various adjustment items. Then in terms of operating income, projection would be about JPY 20 billion. This is the overall image. There may be company-wide expenses, common expenses deducted and also stress will be applied, which I will show towards the end.

And next page, with the sales growth, this is operating margin improvement that we expect. And as represented by the Eight Spears, the elements here, we will focus on getting the high margin business. Then ROE was very high in the past, but now we will aim at ROE of 15% or more. And I believe this is within our reach in reality. And the last page, we want to become a company indispensable to drive the road. So by using the growth strategy that I introduced, by March 2029, we aim at a net sales JPY 2.5 trillion and operating income JPY 250 billion. But as I have repeatedly mentioned, in case there is a MITSUMI-scale M&A, without that, it may not be possible to achieve JPY 2.5 trillion.

Former MITSUMI but there were changes in business portfolio in the past. But former MITSUMI now has a net sales of about JPY 540 billion expected. If there is this size of M&A, this is achievable. 10 years after I became the President, I assume there will be this scale of M&A on the following 10 years, and I mean this plan. But if that does not happen, net sales of JPY 2 trillion and operating income of over JPY 200 billion by deducting the corporate expenses of JPY 40 billion and applying stress, this is a scale that we project. So these are the figures that I'm introducing today. But in any event, development is advancing at a very fast speed. We have new business talks with new customers starting. So these are goals that I want to achieve as soon as possible and ask for your understanding and cooperation. Now I would like to have a Q&A. And then I would like you to experience our products. Thank you very much.

Now we will have a Q&A session. Institutional investors and analysts please ask your questions. [Operator Instructions] The front row in the center, please.

Goldman Sachs, Takayama is my name. I have three questions. First, year ending March '29, you have various products that will contribute to your growth. What will be the biggest contributor? Is it AI server? If you could elaborate, I would like to take a look at this slide and information once again. And what is the probability? What will contribute how much? If you could elaborate, please? So for JPY 200 billion, I want to know the biggest driver and the biggest contributor, the elements that will be understandable and feel that we are realistic.

So the way to look at this table, on the far left, PT, JPY 255.7 billion. This is this year last year's segment sales. So that is the year ending March '25. And AI server and bearing so AI server, humanoid robot, commercial, fully autonomous, the five pillar. So this will grow by JPY 250 billion, and the underlying premise is, as I mentioned earlier. So five pillars: AI server, JPY 100 billion; humanoid, JPY 10 billion; and drone, JPY 10 billion; and JPY 20 billion for drone AI server; PT, JPY 10 billion; motor, JPY 40 billion; and others, JPY 50 billion. So this is the growth opportunity. And on the right side, you can see other applications. In the same term in automotive, JPY 220 billion PT, plus JPY 20 billion. So Access, plus JPY 90 billion, net sales opportunity; and aircraft, JPY 50 billion; home appliance, JPY 30 billion; and others, JPY 10 billion.

As I mentioned earlier, by product, there are different time lines. In case of data center, the growth boost is front loaded is in the short term. Humanoid drone, on the other hand, will take a little longer. So on the same time line, this is how the number looks like. So total JPY 140 billion plus, JPY 400 billion. So JPY 540 billion organic growth potential. So to answer your question, the biggest one is automotive, followed by AI server. These are where we see the biggest big business opportunity. And when you develop these numbers, it's still unforeseeable, but you need to quantify. And there are already growth you're seeing with your existing business. So depending on products, there are some with higher visibility, some with not so high visibility.

What is the most visible part that you factor in? Which part is most certain if you add up the market assumption is difficult in some area, easier in others. In case of automobile, the development period is relatively longer than other sectors and the preparation needs to be made more. So visibility or the realizability of the business is relatively higher. So if you could take a look like that. And here, in this case, automobile and aircraft, aircraft build rate, aircraft build rate has solid data. And of course, supply chain parts shortage. And therefore, the aircraft manufacturers are manufacturing lower than the build rate. So how can we engage evolve with which program? We have solid rationale in this area. On the other hand, AI data center are very quick, faster. The changes are more volatile and quicker. So the numbers shown here are the assumptions for the market growth changes more and the firm numbers for year ending March '29, so the industry situation is different. And on the prior page, we show you the assumptions that we based behind the outlook.

But in AI and data center, motor, HDD motor and other motors. In HDD motors, visibility is fairly high. On the other hand, the bottom part, which we think has the biggest growth potential. I will answer this first because I think you have this question. For example, the battery protection modules for the battery storage, battery based on customers' forecast, we came up with this number. So what is the probability of the growth here? There are many moving parts. But we have all these assumptions and add them all up, and we rounded up the numbers somewhat, but that is how we formulate this forecast.

Understood. And my second question to have increased net sales and increased operating income. My question is about this business model. I think that so far, there was most production of single items. And I think this will continue, but to manufacture small volumes of large variety of products. In that case, you maybe you have to start by consulting directly with the customers. And there may be a lot of such cases included. If you want to increase sales and income through that method, the way you make your teams and conduct sales activities and the way you try to have return on your investments, to achieve the JPY 200 billion, I think you have to change the culture within the company and the way to approach the customers may change and the people will have to change and the method might have to change. What do you think of that?

Well, it's not that everything is made in small lots of large variety of products, but we have sort of criticism or more support from others asking us to further increase the operating income margin. With only the business model that I mentioned before, it's not possible to increase the profit margin. We must be able to provide the customers the products that the customers require. That is the method that we have to market. Otherwise, we cannot increase greatly the per capita profit. And what we do is a company-wide change in awareness in terms of sales activities. All of the sales persons must be aware of their margin. We have introduced such a system. If how much profit did person A achieve last year? We have information about sales. But in the existing system, we didn't know how much profit was generated. But we had at Minebea software solutions included. And now we have 200 system engineers. As in house made products, they developed a sort of ERP by having a consultant. About 1 year was spent to work on this. And on a tentative basis, we have already started this operation.

So to be able to see the profit and information, what I say, people selling bearings had only to sell bearings, but now they have to go to sell bearings. But if they have any information, that information must be notified to other salespersons. That must become an incentive. So this is a change in the system of sales or marketing. By making such improvements, we will be selective in the inquiries. High margin, high volume products will have priority. That is one thing.

And another point is that, as I will introduce to you today, for example, LiDAR, the current cartridge bearings, why is it that everyone wants to have that product? If the access changes, the accuracy of LiDARs will change. They vibrate, they keep moving. So the level of vibration is very important. And that is where we can use our strength. As I said before, this started from the VTR to make smaller 8 millimeter video cartridges were developed for the first time. That is to reduce the accuracy to improve accuracy and reduce vibration in case of mechanical 8 millimeter videos. And the same thing is happening in LiDARs. And bearings, as you will see later. Robotics, all the bearings must be thin. If they are thinner, it seems to be more difficult to achieve the accuracy. Now so far, they were only used on here, but there is a big hole made in very thin bearings. From 1951, we have been making bearings, and we have our know how.

So to give a simple answer to your question, to reform the awareness of everybody and accompanied with development or reform of the system. And if high margin products that only we can produce are used. For instance, in the case of door handles, we have a lot of that business now. From December or January, the new door handles, everything uses flash, but there's a lot of such door handles. We have motors, sensors. We have so many factories around the world. There are no other cases like us. This may be because of external environment, component manufacturers in Europe are facing difficulties. The same for China, EVs are also performing poorly. And if they borrow money, there is an interest rate of 8%. So for customers, more than ever, they come to companies like us. They more orders to us with a firm financial position.

So it may be difficult to believe, but we are sure we can do this because I said motors JPY 200 billion before, but everyone was laughing at us. But as you can see, March 2025 is JPY 224 billion. So March 2025, JPY 235 billion for the term that has ended. So if we can pursue our strength, these figures can be achieved. We can make these figures. And the reason I mentioned from a variety of perspectives, we can explain this right now. So we are confident in making the investments. I think that is the best way to answer this question.

Any other questions? So to the window, the front row, please.

Goto from Mizuho Securities. I have two questions. Earlier, you talked about cartridge bearing, your superiority. In many product lines, you have strength that are different from your peers and therefore, growing. So your individual competitive advantage, I want to know more once again, one by one. So that's my first question.

PT, as you know, this is bearing, mainly bearing. And so we have the strength that I mentioned earlier in aircraft, club member. Unless you're a club member, the business cannot start. We started doing global business before others in India and Thailand, the factory in Thailand. We're mainly U.S. companies now, but there are no other companies that are developing the business like this. So as of now, our PT will continue growing going forward. And in addition, as I mentioned earlier, there are new products like the LiDAR. We have the plant in Cambodia that manufactures this now. So we think we have a good chance of growing here. The profitability is quite high. It is our core of the core business. So this part, I think we are all in agreement. And there are things we can say and cannot say. For example, filling the plants in Shiga, our situation is dramatically changing. And this helps us offer new products to our customers more quickly. In motor, we have the integration technology, which includes bearing and motor driver. Our true capability is now being recognized.

We are enjoying the tailwind in the competitive landscape. So as I said earlier, in the year that just ended, motor, JPY 320 billion. When I became the President, it was total JPY 230 billion in total, but now motor alone is JPY 320 billion. And the strong part is our supply capability and our motor technology, which is focusing on the small sized precision motors. So we have honed our technology specifically in this area. So that is our strength, Access. I mentioned earlier. So this is where we are.

My second question is towards the year ending March '29, you are trying to achieve the net sales and operating income target. So what will the investment look like? Including investment, how will the profitability improve in the rotary and the net sales and operating income? How do you see the profit growth? How what the trajectory will look like?

ROE, this is the only number we're showing you now, the profitability. And I'm sorry, this will be somewhat quantitative, but we need to create capacity. So in aircraft, we already have plants in India and Thailand, large plants in these two countries. And in Cambodia, we have a new plant, which is starting its operation very soon. And in the Philippines, semiconductor and battery module plants are being completed very soon. So the factories that we had to prepare early on are pretty much ready. Now I don't think this will cover all these numbers yet, but a big part of the investment is already completed. Next, the production facility and equipment needs to be installed.

We will do this one by one. And as explained in the cash allocation, the operating cash flow, about half of the operating cash flow CapEx will be continued. This will be within that range and be it AI server and other domain that I just explained, the customers that we have had as our key customers and in our co collaboration efforts, we are assuming that the margin will improve through these activities, existing activities. So by continuing this, without any financial burden, we will achieve these targets. I hope this answers your question.

Any other questions? The person over there.

My name is Sato from Morgan Stanley Securities. I have one question. Your company is some Nidec competes in some products and they face a variety of issues. In the future, to avoid such problems from happening, in your case, what are you doing to avoid such problems? And this may be a difficult question. Mr. Kainuma's successor, how are you developing your successors? Or do you plan to develop your successors going forward?

Well, I don't know if that is related to IR Day, but let me answer the question. About other companies, I'm not familiar with the content, so I don't know very well. But within ourselves, I myself, I feel unfortunate that we are not working so hard. It's only JPY 2 billion more than we need, but why we can't achieve that. I often feel that. But within the company, I think that something like that is not taking place within our company, but you may be just your view, what is the truth, you may wonder. But I believe to quite a large there's a quite large probability that such a thing is not happening.

And about my successors, as I have always been saying, at the moment, high potential future leader or next leaders, there are three stages. To collect human resources within the company, and we are training them, educating them. So through these three layers, there's concentrated training. And from time to time, I myself or Mr. Yoshida or Mr. Iwaya, the Vice President, the three of us, the trainees come just next to us for training. It continues throughout the year. It's not that they are always with us, but to my place in total, I think about 50 people came to my place, maybe at Mr. Yoshida's place, there are more trainees meeting him. So the management posture and what we are being careful about, we are trying to show them directly. These are type of training that we are doing.

But I always feel that it's not that you can do that just through training. It's not necessarily so. If you have a proper training system, education system, is that person successful as a leader of economic activities? That is not always true. So ultimately, it's up to the company as to whether there is such a leader available in the company or not. But what we can do is to show to the next generation what we can do, and we must wait and see. Of course, the people come from outside the company as well. So including those, I think we will decide the future leader.

Any other questions? From the corridor, second from the front, please.

Nomura Securities. So you talked about the year ending March '29 and the breakdown of the net sales. Access Solutions is JPY 90 billion net sales growth. There are two main products, flash handle and digital key. You talked about those two. Could you elaborate on how much contribution you're expecting from these two products? Now on that basis, one more question is this digital key. Will this be delivered to Tier 1 automotive manufacturers? The software and security are very difficult in these keys. So will you handle the entire system, or in Germany, there are continental and Tier 1 manufacturers. So the Tier 1 manufacturer will handle the system and you will manage the software that will make the system viable, how are you involved? How are you working on this project?

First of all, the breakdown of JPY 90 billion in the software will be explained by Suzuki san. So we do not disclose the breakdown of JPY 90 billion, I am sorry. But the majority is, as I've explained in the past, flash handle and CSV. It's hatchback open closed system. It is now electrified. So the hatchback and trunk room too and eLatch. Latch is now shifting from mechanical to electrical. So these are all integration products. And these combined the degree of integration, the more complex it becomes as the automotive business, as you know, the development cost happens first. So the required development cost, the upfront investment becomes bigger. The financial burden becomes bigger.

So as Kainuma san said, our peers the competitors do not have strong technological or financial capability, especially in Europe. Not many others have a solid technology and financial capability. So the degree of integration, the products with a high degree of integration comes to us, which means higher unit profit, unit price and higher margin. So that is the background to these numbers.

And my second question to your second question, we are very flexible now. And the key element, technology are with us already. So we support from that standpoint. And when we there are negotiations with Tier 1 now. So as you mentioned in your question, the safety or the cyber or the OTA version, there are various points that we need to address. So we are addressing, exploring all this possibility, and we are flexible. We can meet their demand in all stages. So the general direction is for Access Solutions, are you trying to do everything as software, but that will become bigger development. So it really depends on the client. During COVID 19, there was chip shortage, semiconductor shortage. And now there is a heavy dependence on China. Japanese companies tend to want this domestically. So we are receiving strong inquiry. So in that case, we have a good prospect of doing this in collaboration. So if that is possible, we will try to do mainly that Tier 1, 2, 3 and 4.

So my second question to either Mr. Kainuma or Mr. Yoshida. Today, you introduced a lot of your products. I could have an understanding of your products. But for example, the development process or in terms of operation, in these areas for the next 3 years or 5 years, are there any changes that you plan and evolution that you plan? Could you tell me that? In terms of operation, what do you mean by that? For example, to strengthen production in Asia or have more local production or automation. In terms of automation to greatly increase automation, reduce manpower so that you can manufacture anywhere. If you manufacture the same thing, profit margin will not get that high if you keep making the same product.

So for instance, to change the place you manufacture or to change the method you manufacture, how do you plan to increase the profit or increase your superiority with the same product? In terms of development process, sort of DX perspective. Is that what you mean? Yes, including DX. In your case, in case of motors, you're very strong at making developments in Europe and you get a lot of good business. That's my impression. But as Mr. Yoshida said, it seems that in Europe, competition getting more relaxed. So maybe you may be thinking of increasing development manpower.

In Europe, in terms of resources all over the world, we are trying to increase worldwide. But in each location, there are differences in roles. Europe and Japan are collaborating in making new developments. Part of development organization in Europe is my organization. And after making developments, for example, China or in the future, maybe India, in these places have a perspective of local production, local consumption. So the future challenge is to expand in this way and the so called security control of the like-minded countries, security control in places that you must be careful about, based on that to increase technological development.

If I may add, for example, as you mentioned, development in Europe is centered in Germany, then well, Germany, as a snapshot right now, their economic situation is bad. So hiring new engineers might be possible, but there may be a problem of cost. And we now have a satellite in Slovakia. So how to strengthen Slovakia or software there may be software required, then the development satellite could be made in India, for example, or in general, how to strengthen the overall human resources. From that perspective, the Philippines, there is abundant manpower available at a lower cost, then physically or maybe develop a development center, we are taking such measures to make such developments. They are all advancing in a combined manner.

And in terms of operation, as a place for location for production from the U.S. and China, China is concluded in China. So for the Chinese customers, Chinese engineers strengthening sales, manufacturing in China and other places. Based on request of our customers, there may be developments. But in our case, our strength is the production capability in Southeast Asia. So among the requests from the customers, production in North America is being requested increasingly, but we must be careful about considering this. So that is our major movements.

And under such a situation, how to increase our productivity, there are a variety of initiatives taken, promoting automation. And so I say automation with so many production sites and through M&A, we have many new colleagues. So before integration, each company has their own strength. So we want to extract those strengths and deploy those strengths horizontally and automation or increase utilization rate. In the same way, we want to be more comprehensive and in all ways, introduce various measures and strengthen our cross sectional organization to implement those measures. I don't know if I was able to answer your question. But we are working with a variety of initiatives in parallel.

It is time, so we will close the presentation and Q&A session. Thank you very much for your attendance and for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]