- Q1. What is your outlook for net sales by segment in the third and four quarters of the fiscal year ending March 2023?
- A1. For the third and fourth quarters of the fiscal year ending March 2023, we anticipate that the foreign exchange rate will be 141.75 yen against the dollar in the third quarter and 130 yen in the fourth. Taking into account its impact, we forecast net sales to decline around 4% to 7% in the Passive Components segment, to decline around 12% to 15% in the Sensor Application Products segment, to rise nearly 3% to 6% in the Magnetic Application Products segment, and to decline approximately 29% to 32% in the Energy Application Products segment. On aggregate, the Company's net sales are expected to fall by slightly less than 120 billion yen.
- Q2. You said that you would post about 20 billion yen in one-time expenses including restructuring costs. What impacts will this have on profit in individual segments?
- A2. Around two thirds of the one-time expenses including restructuring costs amounting to about 20 billion yen will be appropriated to the Magnetic Application Products segment and the remaining one-third to the Energy Application Products segment.
With respect to segment profits, the Passive Components segment will see its operating profit fall more sharply than its net sales in the third and fourth quarters. In the Sensor Application Products segment, net sales will fall slightly. Operating profit will experience an impact of similar degree to that on net sales. In the Magnetic Application Products segment, operating profit is expected to stay almost unchanged from the third quarter, disregarding the one-time expenses, while it will increase by the portion arising from a slight growth in sales volume. In the Energy Application Products segment, a slide in the operation ratio due to a net sales decline of around 30% will have a significant impact on operating profit.
- Q3. You explained that around one third of the one-time expenses including restructuring costs of about 20 billion yen would be appropriated to the Energy Application Products segment. What is the purpose of this expenditure? Will it generate any cash outflow?
- A3. Specifically, we are thinking of spending it in relation to rechargeable batteries. Amid significant changes in the launch of rechargeable battery products for smartphones, those lines dedicated to products that have reached the end of the lifecycle will no longer be used in the future. We are now thinking of reconsidering valuation of individual facilities. We are expecting no cash outflow.
- Q4. What was the trend in orders received for MLCCs for the third quarter and what is your outlook for the fourth quarter?
- A4. Orders has been decreasing since the previous quarter. However, demand for MLCCs for electric vehicles (EVs) continues to be solid. We anticipate that orders in the fourth quarter will stay flat from the third quarter.
- Q5. What is the trend in sales volume of HDD heads in the third and fourth quarters?
- A5. We anticipate that HDD head shipments will improve in the fourth quarter from the third one and that the sales volume will be up a little less than 20% or so.
- Q6. What is your outlook for the profitability of the Magnetic Application Products segment in the next fiscal year after the restructuring?
- A6. We believe that the outlook for the total addressable market (TAM) for HDDs will be the greatest factor influencing the sales volume. Currently, we see that the recovery itself will be delayed to the second half of the next fiscal year, or to around October 2023 or later. We forecast that the TAM for HDDs will be at a low point in the period from the fourth quarter to the next fiscal year, and we are reconsidering our production system for a subsequent recovery. We believe that profit will rally gradually.
- Q7. What will sales of rechargeable batteries be like in the next fiscal year, in consideration of the effect from launching joint ventures (JVs)?
- A7. According to our projection related to rechargeable batteries for the current fiscal year, total demand for smartphones and other ICT items is expected to fall by a range of 10% to less than 20% year on year, and our shipment volume is expected to shrink in line with the market demand. Under these circumstances, we need to closely study and set a sales target for the next fiscal year in a situation where total demand for the period may possibly be equivalent or inferior to the current year's level.
As for medium capacity rechargeable batteries, sales of residential energy storage systems are growing in the current fiscal year. We estimate that we have a market share of 20% or more in the global market. We foresee that residential energy storage systems will also drive sales of medium capacity rechargeable batteries in the next fiscal year, but in light of the transfer of the business to the JVs, we forecast that our consolidated sales of medium capacity rechargeable batteries will decline around 20% from the level of the current fiscal year.
