- Q1. Please describe the changes in operating profit under the base scenario from the FY March 2025 to the FY March 2026, on a per-segment basis.
- A1. Looking at the +20.8 billion yen of growth in real terms in the waterfall chart, major drivers behind the increase in operating profit include the recovery of passive components, as well as contributions from higher sales and profits for sensors. Our assumption is that sales of small capacity batteries will increase by around 4% each year. We see the impact from increased material prices and value added tax burden in the first quarter as minor, and assume that will continue in a similar fashion from the second quarter and beyond. However, we also anticipate stronger pressure on prices in the second half of the year, and expect to see fluctuations in sales prices that may end up reducing profitability slightly.
- Q2. If you split the base scenario between the first and second halves, what would the ratio be? Have you factored in greater risk in the second half?
- A2. In terms of the balance between the first and second halves, net sales is roughly even, but operating profit would be around 55% in the first half. We can see what is happening with the recent situation to some extent, but as there are still uncertainties about the second half, we believe that discounts on sales prices in particular will be somewhat weighted toward the second half.
- Q3. Are you currently seeing any impact form tariff measures? In addition, am I correct in understanding that this risk scenario is unlikely to materialize unless tariff measures are imposed across the board on countries other than China as well?
- A3. Fortunately, these risks have currently not materialized. The tariff risks we have presented this time are based on the assumption that the increases in tariffs would be passed on to sales prices, leading to a decline in demand in North America. Of the -45 billion yen in impact on operating profit factored into the risk scenario, a little under half would be the impact on the rechargeable battery business based on our projections.
- Q4. Per-segment Capex in the Medium-term Plan was changed. What was behind this change?
- A4. In Energy Application Products, we increased investment to adapt to new technologies, particularly in metal case-type products. In addition, we upped investment in our site in India this time. The increase in Magnetic Application Products is because the turnaround of HDD suspensions is complete, and with profitability having improved, we are planning to investment in increased production due to the expectation that demand will continue to rise going forward. Similar for HDD heads, we are also planning some advance investment with a view to heat-assisted magnetic recording, or HAMR. For Passive Components, we are in a temporary adjustment phrase, but we have already invested in increased production for MLCCs at our Kitakami Factory in Iwate Prefecture, and we are partway through that process. We are also investing in increased production of TMR sensors, and are in the process of ramping up production. To meet the growth of the AI ecosystem, we plan to make medium- to long-term investments not only in MLCCs in the area of Passive Components, but also in inductive devices, hybrid polymer capacitors, and in the case of sensors, TMR sensors and new products.
- Q5. How much growth do you anticipate in terms of net sales related to the AI ecosystem in the FY March 2026?
- A5. From the previous fiscal year and into this fiscal year, we do not expect to see that much growth. We are planning for significant growth not just in the current medium-term plan, but in the next plan and beyond that. We expect significant growth not just from our current MLCC products but Passive Components in general, along with magnetic heads and suspensions, as well as medium capacity batteries, particularly battery backup units (BBUs) and uninterruptible power supplies (UPSs). Over the next five to six years we also project dramatic growth in semiconductor manufacturing equipment—and area we have not promoted much up to now—as well as a software-driven business through a newly established company.
- Q6. You mentioned ending seven cash flow business units (CBUs). What impact will this have on profit and loss in the FY March 2026 and over the course of your Medium-term Plan?
- A6. This is not at the scale that would have a major impact on profitability company-wide, but we did announce business transfers of seven CBUs to the best owner, etc. that we were in a position to disclose as of today (April 28). As I mentioned on TDK Investor Day in May last year, business portfolio management is something that I (CEO Saito) will personally oversee as a top priority. We are currently in the process of implementing measures for early turnaround of the nineteen CBUs other than these seven. Basically, our top priority is executing a growth strategy that moves businesses into the top-right "Growing" quadrant of our two-axis business portfolio map. In implementing that strategy, we will continue to allocate restructuring costs so that we can reliably produce results. For the CBUs we have no choice but to shift to the lower left quadrant such as strategic restructuring, we will keep you updated this fiscal year or the next whenever we have results to share.
- Q7. What is the breakdown of the 15.8 billion yen in one-time expenses reported for the fourth quarter of the FY March 2025?
- A7. The per-segment breakdown is 11.3 billion yen for Passive Components, 600 million yen for Sensor Application Products, 600 million yen for Magnetic Application Products, 2.7 billion yen for Energy Application Products, and 600 million yen under Other.
- Q8. Regarding the fourth quarter profit in Passive Components, even when excluding the impact of the impairment loss on high-frequency products, was the decline still significant? It appears that the seasonal impact was within the normal range, but in addition to that, what expectations did you have in terms of the book-to bill (BB) ratio and utilization rate for MLCCs going into the first quarter?
- A8. There was not a significant deviation from our previous outlook. It appears to be a significant decline due to the recording of fixed asset taxes along with seasonal declines in volume and losses from operating activities, but performance was largely in line with expectations. We expect the BB ratio and utilization rate to improve heading into the first quarter.
