Home Blog Minebea Reports Second Quarter 2009 Results

Minebea Reports Second Quarter 2009 Results

Release time : 2015-06-15 08:12:38
Minebea Co. Ltd. (Japan; TSE: 6479) reported financial results for the second quarter of fiscal 2009, period ending September 31, 2008, Minebea is a widely diversified manufacturing conglomerate, and also is the world's largest manufacturer of miniature precision and instrument ball bearings. Bearing manufacturing operations are Minebea Co. Ltd., New Hampshire Ball Bearings Inc., NMB-Minebea UK Ltd., NMB Singapore Ltd., Pelmec Industries Ltd., NMB Thai Ltd., Pelmec Thai Ltd., NMB Hi-Tech Bearings Ltd., and Minebea Electronics & Hi-Tech Components Ltd. Across all of its business units, Minebea said sales and income fell due to negative impacts from foreign currency exchange effects and higher raw materials costs, exacerbated by the global economic slowdown. Sales in second quarter were 76.6 billion (USD $845 million), down 11.5% from 86.5 billion in second quarter 2007. But sales were up 3.4% from first quarter, primarily reflecting foreign currency exchange rate effects. Second quarter's net income was 3.6 billion ($40 million), down 18% from 4.3 billion in second quarter 2007. But net income was up more than 36% from first quarter, reflecting, "company-wide cost reduction efforts." Minebea operates in two business segments: Machined Components, and Electronic Devices and Components. Bearing manufacturing (ball bearings and rod end bearings) is Machined Components' primary activity, accounting for 23 billion of the segment's 34 billion sales. After bearings at 18 billion, "information motors" are Minebea's second-largest sales at 17 billion. Income is what separates the two business units, however. Through the first half of the fiscal year, Machined Components reported operating income approaching 12 billion, as opposed to Electronic Devices and Components' cumulative loss of 218 million so far this year. In addition, Machined Components' sales are forecast to grow 5% in the second half of the year, while Electronic Devices and Components is forecast to shrink by 6%. For the year, Minebea has slashed its forecasts yet again, this time knocking expected sales down to 300 billion from earlier estimates of 330 billion, and off 10% from 2007 sales. Forecast net income for this year was knocked down even further, from the initial 17 billion estimate to 12.5 billion, which would be 23% below 2007's 16.3 billion return. Minebea said the leveraged 23% decline in net income from a 10% sales drop is due to "negative impacts from currency and from the global economic slowdown." Addressing the deteriorating business, Minebea said it is still working its plan toward a target 500 billion yearly sales, but that the target will be pushed back. Current directions include investing in growth businesses, improving manufacturing activity levels, improving company-wide energy efficiency, ramping up new product development efforts, and working to strengthen weak businesses. Minebea's new small ball bearing factory in Thailand was cited as an example of its new approach. Front-end processes have been integrated in order to improve energy efficiency, including 40% less electricity usage and improved cutting oil recycling. The Thai factory's raw materials efficiency is also a key focus, as is more efficient water recycling. Bearings are the main focus of Minebea's investments in identified growth businesses. The initiatives include expanding production capacity for medium-size bearings at its New Hampshire Ball Bearing plant in Chatsworth, California, and expanding capacity for aircraft roller bearings in Peterborough, New Hampshire. A new building at the Karuizawa, Japan rod-end bearing plant is expected to be complete by March 2009. And the company obtained Nadcap certification at its Thai factory, covering stainless steel ball bearings for aircraft applications.