Minebea Mitsumi Inc

TSE:6479

Earnings Call Analysis

MinebeaMitsumi Reports Record Sales Amid Mixed Market Conditions

In the second quarter of fiscal 2025, MinebeaMitsumi achieved record net sales of JPY 422.73 billion, up 11.3% year-on-year and 18.9% quarter-on-quarter. Operating income also reached a record high, totaling JPY 28.146 billion, a 29.4% year-over-year increase. Despite solid performance, profit attributable to owners fell by 26.1% to JPY 12.112 billion due to foreign currency losses. The company maintains its guidance for fiscal year sales and operating income of JPY 1 trillion, projecting an operating margin of approx. 10%. Challenges in specific product segments are expected, particularly in mobile and game-related products, while recovery is anticipated in aviation and automotive sectors.

Strong Sales Growth and Record Figures

In the second quarter of the fiscal year ending March 2025, MinebeaMitsumi reported consolidated net sales of JPY 422.73 billion, marking an impressive 11.3% increase year-on-year and an 18.9% increase quarter-on-quarter. Notably, both net sales and operating income reached record highs for this period, with operating income reported at JPY 28.146 billion, an increase of 29.4% year-on-year and 40.6% quarter-on-quarter.

Currency Impact and Inventory Trends

The company acknowledged a substantial foreign exchange impact, contributing an estimated JPY 25.5 billion to net sales year-on-year due to currency fluctuations. Additionally, inventory levels decreased by JPY 23.8 billion compared to the previous quarter, reaching JPY 335.8 billion, driven by foreign currency effects.

Segment Performance Divergence

Performance varied significantly across different business segments. The Precision Technologies (PT) segment saw net sales exceed forecasts, particularly in ball bearings, thanks to a recovery in data center markets. In contrast, sales in the Access Solutions (AES) segment were strong in U.S. and other markets but less favorable in China. In the Motors and Sensing segment, robust sales of motors, especially for automotive applications, were noted, although sales of electronic devices did not meet expectations.

Guidance and Outlook

Management confirmed that the guidance for net sales and operating income for the fiscal year remains unchanged despite mixed performances across segments. Operating income for Precision Technology is expected to hit JPY 56 billion, a record, while the overall forecast assumes stable foreign exchange rates at JPY 145 to $1. However, there is caution regarding weaker performance in the semiconductor and electronics segment due to market conditions.

Challenges Ahead

Companies like MinebeaMitsumi face challenges in the competitive landscape, particularly in the semiconductor market dominated by Chinese manufacturers. Management emphasized the need for differentiation and noted a downward trend in customer production volume expectations. Additionally, there are concerns about production adjustments from North American customers, which could impact future earnings.

Continued Investment and Future Innovations

MinebeaMitsumi is focusing on long-term growth by investing in new technologies and enhancing product lines, especially in the automotive sector where electronic components are becoming standard. The company aims to boost product margins, targeting a 10% operating margin in specific segments. Innovations in sensor technologies and new product developments are also underway, anticipating substantial market demand.

Share Buybacks and Market Confidence

In a move to boost shareholder confidence amid these fluctuations, the company has already conducted share buybacks amounting to JPY 10 billion, repurchasing approximately 2.57 million shares. This strategy underscores management’s commitment to returning value to shareholders while navigating market uncertainties.

Earnings Call Transcript 2025-Q2

[Unknown Executive]

So as the time has come, let us start the meeting. Thank you very much for participating in MinebeaMitsumi's business results meeting for the second quarter of fiscal year ending March 31, 2025, despite your busy schedule. First, let me introduce today's participants from the company. To your right, Representative Director, Chairman, CEO, Yoshihisa Kainuma; Director, President, Executive Officer, COO and CFO, Katsuhiko Yoshida; Operating Executive Officer of the COO and CFO, and the Fund Office of the Corporate Management, also from the Public Affairs and IR, General Manager, Yusuke Kataoka. Thank you very much.

First of all, all Yoshida will explain about our financial results and followed by Kainuma, who will explain about the business update and the management strategy. We will go into a Q&A session after that. We are planning to end this session by 7:00 p.m. Based on the environmental policy of the MinebeaMitsumi Group, we do not distribute paper presentation material. Please download the website from the QR code that is shown on the questionnaire paper that is on -- that was before you. And afterwards, please cooperate by answering to the questionnaire.

Today's meeting, including the Q&A session is streamed live on the Internet. It is also recorded so that it can be posted on the website. We ask for your understanding. If you're not a member of our company, please refrain from shooting photos or recording.

President Yoshida, please, the floor is yours.

[Katsuhiko Yoshida, executive]

Good afternoon. My name is Yoshida. Today, I would like to explain the consolidated financial results for the second quarter of the fiscal year ending March 2025.

Next slide, please. Consolidated net sales for the second quarter of the fiscal year ending March 2025 was up 11.3% year-on-year and up 18.9% quarter-on-quarter to total JPY 422.73 billion. Operating income was up 29.4% year-on-year and up 40.6% quarter-on-quarter to total JPY 28.146 billion. Profit for the period attributable to the owners of the parent was down 26.1% and year-on-year and decreased by 13.1% quarter-on-quarter to total JPY 12.112 billion.

Net sales hit a record high for quarter and the operating income was a record high for the second quarter. We estimate that foreign currency exchange rates have a quarter-on-quarter impact of plus JPY 2.3 billion, and year-on-year impact of plus JPY 25.5 billion in the net sales. Quarter-on-quarter impact was plus JPY 0.2 billion and year-on-year impact was plus JPY 4.9 billion in operating income.

This is a summary result for the first half. Net sales and operating income hit the first half record high. This is the quarterly trend in net sales, operating income and operating margin. The operating margin for the second quarter was 6.7%. This was up 1.0 percentage point year-on-year and up 1.1 percentage points quarter-on-quarter. This is the difference between the forecast as of August actual results for net sales and operating income by business segment for the second quarter and sales of PT exceeded the forecast for the ball bearings and pivot assemblies due to the recovery of the DA center market and the robust sales were aircraft applications.

MLS sales exceeded expectations for the motors, mainly HCT motors and motors for automotive applications, sales of electronic devices fell short of the forecast. SE sales was above expectations, mainly in mechanical components and optical devices. AES was above the expectations in the U.S. market and other markets, but below expectations for the Chinese market. Operating income for PT exceeded the forecast, mainly thanks to an improvement in production volume of ball bearings. MLS was fairly in line with the expectations. SE fell short of expectations for mechanical components and optical devices. AES was below expectations.

This slide shows the quarterly trends of the Precision Technologies segment. On the left is a graph indicating yearly net sales trends, and on the right is a graph with the bar chart showing yearly operating income trends along with a line [indiscernible] operating margins. Second quarter net sales increased 3.6% quarter-on-quarter to total JPY 64.9 billion. Sales of board bearings increased 3.7% quarter-on-quarter to total JPY 44 billion. The monthly external shipment volume was up 8.8% quarter-on-quarter for an average of 243 million units. This was due to recovery in fan motors mainly used in data centers. Sales of rod ends and fasteners totaling JPY 14.4 billion and remained flat from the previous quarter. Sales of PMC increased 12% quarter-on-quarter to total JPY 6.5 billion. Operating income for the quarter totaled JPY 14.7 billion, and the operating margin was 22.6%. On a quarter-on-quarter basis, operating income increased 12.8% and the operating margin rose 1.8 percentage points.

This slide shows the quarterly trend for motor biting and Sensing segment. Net sales increased 7.3% quarter-on-quarter to total JPY 106.4 billion. Looking at the results by product. Sales of motors increased 9% quarter-on-quarter to reach JPY 84.1 billion. This was mainly due to strong sales of motors for HDDs and solid sales of motors for nonautomotive applications. Sales of electronic devices were down 1.4% from the previous quarter to total JPY 11.2 billion. Sales of sensing devices were up 4.8% from the previous quarter to total JPY 9.6 billion. Operating income came to JPY 6.8 billion, and operating margin was 6.4%. On a quarter-on-quarter basis, operating income increased 33.1% and operating margin rose 1.2 percentage points.

This slide shows the quarterly trends for semiconductors and electronics segment. Net sales increased 51.7% quarter-on-quarter to total JPY 168.7 billion. This was mainly due to increase in sales of optical devices and semiconductors, which incorporated Minebea power semiconductor devices as a consolidated subsidiary, which was formerly [indiscernible] semiconductor devices as of May 2, 2024. Operating income totaled JPY 9.3 billion, while the operating margin was 5.5%. Operating income increased 96.7% and the operating margin increased 1.2 percentage points quarter-on-quarter.

This slide shows the quarterly trends for Access Solutions segment. Net sales increased 0.6% quarter-on-quarter. The total JPY 8 billion. This was mainly due to increase in sales in Asian market, mainly for motorcycles and automotive devices. Operating income came to JPY 3.5 billion, and the operating margin was 4.3%, up 17.8%. And 0.6%, respectively, quarter-on-quarter. 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 12.1 billion. Earnings per share was JPY 30. For the second quarter, foreign exchange losses amounted to JPY 9.6 billion due to a revaluation of foreign currency-denominated claims and debt.

Next, we have the quarterly inventory trend. At the end of the second quarter, inventory totaled JPY 335.8 billion, which is JPY 23.8 billion less than what it was 3 months ago. This is mainly due to foreign currency effects. 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 flows.

At the end of the second quarter, net interest-bearing debt total totaling JPY 260.5 billion was up JPY 51.9 billion from what it was at the end of the previous fiscal year due to many M&A-related expenses for minibar parts, semiconductor devices and other companies. Regarding the free cash flow, we expect JPY 24.7 billion for the fiscal year ending March 2025 as the Operating cash flow increased in the second half. We maintained the net sales and operating income forecast for the fiscal year ending March 2025.

The details by segment are shown on Page 17. Regarding the net sales, the PT segment has been revised up while the AIS segment has been revised down. For operating income, the PG segment has been revised up. and SE segment has been revised down.

As for the second half, the no revision for the operating income. ForEx assumption is JPY 145 to $1.

This slide shows the forecast by business segment. This chart shows a difference between the revised forecast this time and the forecast as of August.

This concludes my presentation. Thank you for listening.

[Unknown Executive]

Chairman Kainuma, please.

[Yoshihisa Kainuma, executive]

So let me give you a business update and management strategy. Sorry, my voice is disagreeable, but please forgive me. Let's go to Page 19. So what I wanted to say here is that thankfully in terms of net sales, as a quarter has been a record high. And operating income has been a record high for second quarter. For the first half, both net sales and operating income has been a record high level. Overall, what stands out is that the 8 spears has been very solid. But the subcore segment that before mobile phones, games, so in terms of products, so that will be backlight for tablets. OIS and game-related products. These products were lower than our expectations in the first half. In the second half, these areas will not be that strong. That is our expectations.

Let's go to the next slide. In the previous earnings announcement it was a coincidence, but the has been well fluctuations in the share market, and there has been more than JPY 10 of the port fluctuations. And today, we have been looking at the U.S. presidential elections and the yen has depreciated by JPY 2. It's very difficult to foresee what's going to happen in the future. So this time around, basically, we have decided not to revise our forecast.

And then going to the next slide. So the PT, which has done very well. In terms of the -- our forecast of today's operating income is about JPY 56 billion. So this is, of course, a record high. but it is equity by a large margin. So I have been saying this from before, but data centers the market has recovered and the content growth in the automobiles is continuing. On top of that, the aircraft business has started to recover. But in terms of the aircraft business, still to recover going forward. So in that sense, right now, we're seeing a very powerful recovery trend.

In terms of the aircraft business, in Thailand, India, there will be a transplant to these countries and the market is going to expand. And within the industry, we -- it is only us that we have this very broad production base. There's no other company that has this level of reduction basis. So I think going forward, in terms of the expansion of the aircraft business, this will be very effective.

Let's go to the next slide. Again, I think you already are aware of this in Post. This is my dream factory. I call it my dream factory. So this is a carbon-neutral plant. And this is a plan for the machine components. So the other day, we had the groundbreaking ceremony.

Then next slide, please. So the most uniqueness is that motor is the profit seems to be about JPY 27 billion for this fiscal year. So at last, we are able to see about a 10% level of operating margin. And these small motors, because the small robot market is going to develop, I mean that there are more needs grabbing or holding in terms of -- on top of that sensing functions will be asked for these small motors and sensors combined will be developing.

In terms of sensors, so this would be noted in the next page by bit sensors. We have been engaged in this business for a long period of time, but actually, we have been able to realize this as the product. And for Motors, so JPY 27 billion, if we are able to achieve the level of motors, I think the next stage will be to reach JPY 30 billion.

Next slide, please. Again, we have already announced this. But the Pasona Pavilion, we are going to exhibit this product. So I will be able to measure the SAS, and it was very difficult to measure the heart post. But this has been -- there has been a breakthrough within our development. And this is to be a very precise way to measure the deepness of sleep. So by July next year, it is decided that it will be launched commercially. And the Persona is going to build a hotel in Azusa, and this is going to be introduced to all of the rooms in the hotel. And I have been anticipating that this is going to happen. And we have been engaged in the development for a long period of time. But actually, we have started to see the fruition of our R&D internal development.

Next slide, please. Going to semiconductors. As you all know, the market is in the doldrums right now. And on top of that, we have some special factors for our company. So the former Hitachi power device customers. In terms of the -- there has been cancellation for the e-axle orders. We were planning to introduce our products, but the program in itself has been canceled. So we have not been able to introduce our products in our IGBT products. So right now, we are discussing with the Tier 1 companies in Europe and conducted various initiatives for them to be introduced our products, and we have been shipping samples. So if you start selling these type of products, the capacity will become -- we'll be able to fill the capacity, meaning that we will be able to powerfully go forward once again. So the former Omolon has been engaged in the business about rental business and has shrunk once, but we are trying to engage in this business again and we are shipping various samples to our businesses, and we have started to do business in small steps. So what we have to do right now is that in terms of. We have to change the port mix of IGBT and we will have to differentiate the analog semiconductors because China has started to come out with the a certain level of products, and we have to differentiate against these Chinese players. Technologically, there's a road map ready and we have been starting to install the equipment. So we will start to do that. And power device, we have to raise the prices or para devices. We're still doing that because you had to go down to the customers' customers and negotiate. So it will take some time, but we will follow through on these initiatives.

And going to the next slide. Again, we have already announced this. This will be the medical real business of social. Next, we will be buying at this business. And by doing so, we will be able to get the 64 channel technology. So the high picked accounts and deep imaging will be possible with the handheld devices. For instance, pregnant women when they become pregnant, they can utilize these devices. And every day at home, they will be able to check the status of the fetus every day. So I think potentially -- I've heard that it is potentially a huge market. So the core areas will be. This business we gained to [indiscernible]. So 30% of operating margins, the business is generating. We want to bring this close to 50% as much as possible. [indiscernible] is talking about this right now. So becoming the global top will be their objective.

Next page, please. So today, I really wanted to talk about this. access solutions, the times for Access Solutions will change. In other words, the game change is happening.

Finally, why automotive now many people asked me, but when I became the President, [indiscernible] Mechanics Solutions I registered as a trademark because I knew that it was a direction for us. Right now, you see many vehicles with door handles attached to the outside of the car, but it will cease to exist going forward. The door handles are no longer machined components, but it's going to be the electronic components with motors, sensors and antennas, very complicated components. And what is even more impressive is Match is becoming eLatch, not only soft closure, but automatic door opening. Such the components will be increasingly attached to high-end vehicles match was a safety device and spending a lot of money. And even if there are less expensive ones available in the market, the people didn't care to switch to the less expensive ones. But now the things have changed and the new vendors can enter into the market. So our motor combined with the large technology can be sold in the market as the new product. And what is very impressive is maybe I shouldn't say impressive. But the last week, I visited Europe, BMW's new door handle was launched.

On MAU, the European R&D group gave a presentation for a full day. Why we are getting so many inquiries. The European competitors are suffering very weak financial status covered and so forth, the markets are shrinking. And now game-changing electronics are needed more than ever. So we are getting so many inquiries and we cannot accept all of them. We do not have such engineering power or that many plants. I mean, we have many plants, but we don't have space to accommodate all of those inquiries and therefore, we need to select the orders. And we are also working to increase prices. And now customers are willing to accept our proposals. In the past, it wasn't like that, the customers sort of rejected a request for price hikes. But now because on the limited number of vendors can supply customers want. Our chief engineers is having a nervous breakdown sort of because they are getting so many orders. to sort out. But it's the biggest opportunity ever. Because once we get in, it will be an ongoing continuous business. So we would like to capitalize on this opportunity.

Next page, please. So integrated products only 2 products are listed here. But in addition to these, there are so more because the integrated products is the key word. It's a top line. This is the direction for us, the only direction for us to proceed. So we have been persuading the people inside the company and enlighting them, and it's making steady progress. And the motor driver, we now have a very good one. Not only 1 model, but the 1 driver can be used for many different applications and similar things will be developed 1 after another. So combine and integrate we will be able to have many more excellent drivers going forward.

Next page, please. In hindsight, when we had the JPY 1 trillion sales, we talked about JPY 1 trillion but it took us about 3 years to reach it. So JPY 998 billion or something like that for 3 years. But then all of a sudden, things are cleared and we achieved a target and now we are talking about the JPY 1.5 trillion. And the past, not so distant past, we were not able to exceed JPY 1 trillion. But the bearing -- if a bearing can reach JPY 56 billion, is very achievable. So analog, not so good, but still generate JPY 23 billion or JPY 24 billion sales and the motor JPY 27 billion we are talking about. That means JPY 30 billion is in the vision. So high-margin electronic parts coming in, then JPY 20 billion is quite possible. And subcore products, JPY 20 billion then JPY 160 billion, minus head office expenses, sometimes it's included and sometimes not, but overhead -- excluding overhead, JPY 130 billion is an easy game. So I think we are reaching a very crucial time.

So last page. Here, it's it hasn't been decided, but it will never be less than JPY 20 and the share buybacks, I don't know. It's for good or bad, but we have been able to buy back shares at much less price, 2.5 million or JPY 10 billion. Either 1 by October 31, out of upper limit of 2.8 million, 2.57 million shares have already been acquired. So we only have a small number remaining. Just for your reference, Well, there's 1 more page, but this is for your reference.

So I would like to conclude my explanation. Thank you for listening.

[Unknown Executive]

Next, we will go into the Q&A session. [Operator Instructions] So in the very front row in the middle, please.

[Daiki Takayama, analyst]

Takayama from Goldman Sachs Securities. And I have 3 questions. One is about the numbers, the assumptions of the numbers. In the second half, SE and Access Solutions, these 2 businesses. In terms of the profit amount, it seems it will increase. And you talked about the Access Solutions, you want to increase the prices there. And what -- basically, how will this contribute? In terms of SE, if you look at the business environment right now, the semiconductors are not as strong in the second half, are you assuming that it will be covered in the second half? I would like to get an explanation about how you're looking into the second half.

[Katsuhiko Yoshida, executive]

First of all, in terms of the assumption, as Kainuma has explained, the ForEx and the ForEx situation and the external environment is very difficult to see and the number in itself, we will not change. And we have changed our numbers. So first of all, please understand that. In terms of how -- in terms of the range that we're looking at, it is true that SCE-related business, as Kainuma has explained, within the SE business, game-related products and OIS, the business environment is not good. And our operation is not going as we have anticipated. So the numbers that we're showing you right now is slightly bullish. Or this is a number that reflects the nuance that we are seeing that I have explained.

In terms of the Access Solutions business, it is true that in the second half, there is some recovery. And the -- they are reflections of price increases or improvement of the productivity because the Chinese Japanese makers or Japan request in China. the production is going down. So we're not getting profit out of that business. But in place of China, North America market, including Mexico, that has started to recover. So although we have seen some decline in net sales in China, but we have offset that by the North American operations. And we think that this improvement in North America, we think we can continue.

So for SE. In terms of the future outlook, it may be slightly weak. But for the Access Solutions at this -- at the current point. In terms of the probability of achievement, I think we think that we are quite confident about that. So I forgot to mention this. But as I have in my explanation, so loss-making is good because it means that we can there's room for us to be profitable. So in China, it has gone down by 3%. And it was the most profitable factory in China. And so -- but the loss in the U.S. has gone and the Mexico plant loss has gone and we have been offset the loss in the Chinese market. So I think this was a good outcome ultimately. And what we're going to use going forward, you have already raised the prices. So that's the reason why we are saying that the second half will be better. So is that the case that the volume of automobiles is increased and the volumes going up, is the progress of the improvement of the product mix and the loss-making plants will be profit become profitable. So that will be the assumptions or background. So if that is the case, in terms of the nuance. So you haven't changed your assumption -- or you haven't changed your numbers in the second half. So there is some strong in precision or the motors, but there's some weakness. So that's the reason why we have decided not to change the numbers. Yes, the ForEx assumption would be the same for the assumptions that the ForEx level will be unchanged. And there are some external factors. If there are some external factors that you have to account for, will not -- maybe it will not be an exact number, but I don't think that there will be a wide variance against our outlook, but it's unclear at this point.

[Daiki Takayama, analyst]

My second question is that in terms of the Access Solutions business. So you have talked about price increases or replacing it for added value products, it means you said that your position is going to be very strong. So if you are able to generate a 10% margin on a revering basis, so when is the time they will be able to have the type of business?

[Katsuhiko Yoshida, executive]

So we are improving our productivity, and we have been able to come to a coin level. But in practicality, maybe 4% to 5%. I think that's what we're looking at. So to improve this, the product mix has to change. And of course, we have to increase the prices. So the product mix, when I say change the product mix is not the thing -- it's not the case that you can change immediately for next fiscal year. There's some products that we have started to make next year because from BMW products, it's going to stop 2 years from now. when we start shipping them. So if you consider that, so compared to general electronic components, it will take some time where the product mix change, maybe taking about 2 years.

[Daiki Takayama, analyst]

Lastly, I would like to ask about the semiconductor on competition with China. And I think you have mentioned that in your presentation. So in our semiconductor business, what is your exposure to China in terms of competition? In terms of differentiation and analog Paris semiconductors, I think it was strong. Depends what's strong in is areas and you were strong, but I think you have to more focus on differentiation right now. So how are you going to differentiate? What will be the focus?

[Katsuhiko Yoshida, executive]

So what's happening right now is that in terms of the quality is exactly the same, the similar products, the competitors start to come out with similar products. And on top of that, their competitors are selling at a low price. I think that's the point. So against that from our view we will have to differentiate so that we can get value out of our products. So we want to enhance the function of each semiconductors. I can't go into details about what it is exactly, but including various processing procedures, we had to change the way we process the semiconductors. And we do understand the design-wise. And by conducting these initiatives, we will improve the performance. So in terms of that methodology, I think that's a common practice because in various businesses, we is China. The core quality is lower, but the price is more far lower. So the clients will say they're not satisfied, but because the price is lower, they will go to Chinese products.

[Daiki Takayama, analyst]

But your company improving your performance, can you actually compete with them will you not be even disadvantaged even if you improve your performance of value, so I think you have competing with Chinese companies in various other areas. Based on the past learnings, is there any approach that you can take to win over Chinese competitors?

[Katsuhiko Yoshida, executive]

Well, I do not know about the details. But what I have been -- the semiconductor people have been expanding to me, by enhancing the performance. If we're looking at our volume of our products, we can differentiate and we can have a presence in the market. So if you look at in totality and look at China and in terms of where the markets that we compete with the Chinese competitors, so power device, if you look at power devices. So in terms of the future growth areas, will be EV market, that would be 1 target market for us. That's looking at the European players. So what I want to say is that within our current portfolio, in terms of competition with China, it's not the case of the majority of the markets that we compete with China. Even if [indiscernible] said, even if the scenario goes in that direction, as you mentioned, the damage won't be that large. Rather through differentiation, even if in the China market, even if you can compete in the Chinese market, these initiatives can be leveraged in other markets, and we can find business opportunities in other markets. So I do not think that this would be a major down. I think that will put a pressure on us.

[Unknown Executive]

Any other questions? So the person sitting near the aisle.

[Shoji Sato, analyst]

Morgan Stanley. My name is Sato. Thank you very much for your presentation. Let me confirm the numbers, if I may. The first 1 ball bearing, monthly production and external sales and internal sales, the actuals and the forecast. So July onwards.

[Katsuhiko Yoshida, executive]

That will be all right. Yes. So July production so the unit is million, 281, 276, 278 and the sales, external July 245, 277, 246. Internal sales, 55, 52, 52. So these are the actuals of Q2. As for the forecast, production in October, 284, 302, 300. And external sales 243, 247, 248. Internal sales, 49, 49, 45.

[Shoji Sato, analyst]

Thank you. So bearings capacity, what is the monthly production capacity of bearings right now? And how do you think the capacity will change going forward?

[Katsuhiko Yoshida, executive]

As you may be aware, our capacity is 370 million units. But we are continuously working on improving productivity. In other words, if really we need to, we can make more.

[Shoji Sato, analyst]

My second question is the sub core what you call subcore products, a camera actuator and a game-related and lighting devices. First of all, camera actuators. So Q1 to Q2, what changes you have seen? And what is your outlook for Q3? And game related from first half to second half, what changes you are expecting? And Lion devices, tablets. Regarding tablets, what kinds of business opportunities do you think you can obtain?

[Katsuhiko Yoshida, executive]

First of all, OIS the total numbers included Q2, the production and sales, both production and sales have grown significantly, vis-a-vis the initial guidance, there was an upside. And August, vis-a-vis the forecast we shared with you in August, there was an upside.

[Shoji Sato, analyst]

But what about going forward? And whether the shareholders will be satisfied. The quarterly results were not satisfying to the shareholders, the production. And the relative situation vis-a-vis the competitors, we were not able to do everything we wanted to do. And OIS second half?

[Katsuhiko Yoshida, executive]

The numbers remain unchanged. However, the customer's production volume expectations themselves are trending down. That is 1 thing. And towards the second half, we did not put together aggressive numbers to begin with. But to what extent we can achieve the targets. At this point in time, it's quite uncertain. So we need to pay due attention to this. Regarding game-related, the customers' road maps, there are things related to customers' road maps. And I can share with you only limited information. But from the first half to second half, well, how should I say -- the first half and second half, we believe that the second half numbers will go down. Based upon such assumption we put together plan and tablet the backlight. At the beginning of the -- we had certain expectations, but eventually, at least during this fiscal year, I mean, the work itself has started, but it's not reaching the level we expected regionally. In that sense, as Kainuma explained previously recently, it's been slightly trending down. And by the end of this fiscal year, we are not expecting major changes. But next year onwards, what kind of business we can gain, we would like to explore carefully.

[Shoji Sato, analyst]

I have another question, OIS on game related. What is your view at this point in time?

[Katsuhiko Yoshida, executive]

What we can say at this point is the customers' demands exist and we will serve our customers by supplying products and what the volume is likely to be and whether there will be new opportunities and whether the competitive landscape will change or not. If you are asking that I cannot give you clear answers. Likewise, the game related, the customer's development road map, it's related to. So I cannot comment on. But if customers are to start this work next yes, onwards, then we will follow up on that, and we will make contribution to customers' work. And that is the same stance.

[Unknown Executive]

Any questions? So the investor on the preferred row, please?

[Fumihide Goto, analyst]

Goto from Mizuho Securities. So I would like to ask a question about MLS and PT. First is about MLS. The first quarter, second quarter, the sales against the increase of sales, the profit increase seems to be smaller. And maybe this is the impact coming from the backlight. I would like to confirm the reason behind this? That's my first question.

The second question is, in the second half, plan towards our PT and MLS, how far more can we expect an upside for the PTS in the second half. I would like to ask your idea right now?

[Katsuhiko Yoshida, executive]

So there is a risk. In terms of the upside, do you think that there's enough upside to offset the risk on the SE for the second half from PTS? So within the MLS, in terms of the composition, water. We think sales and increase net income will increase and profitability has been improving. So for motors, so it will be more than on track. And she pointed out initially, lighting device we thought that there would be some opportunities, but that has been less than our anticipation. So that is the reason why the overall profitability compared to what Goto-san has anticipated, if it's lower, I think that's the reason behind this. Towards the second half. So the HDD market in itself is not that strong. That will be the latter assumption. In the mid- to long term, I think it will grow going forward. But for this fiscal year, no major improvements. No major increase in sales and profit is not our anticipation. So that would be flattish or maybe a site adjustment will be coming. And we talked -- I talked about the motor growth. It's in the nonautomotive applications. The third quarter to fourth quarter, I think there is a seasonality that we have to account for. So in that sense, the figures will not grow linearly, meaning that in terms of the potential upside. There is not that much of a potential upside for MLS for PT for the mid- to long term, as Kainuma has explained, whether it be aviation or bearings, I think there's a strong trend. But right now, in terms of the pulp bearing demand for data centers, is it going to recover 1 step or 2 steps further, no. And in terms of the content growth, it's not going to decline, but the macro market is -- or exclusion automotive market in itself is not strong. And in terms of the aviation, overall, I think it's strong. But among the North American customers, there is some talk of production adjustments, so that will impact us. So the numbers that we have shown you -- it is -- I think basically, it's within our target. But is it going to be higher than by a large margin. I think it's difficult to imagine that it's at the current stage. I answer your question. I think you talked about the room for upward increase. So PT was JPY 17.4 billion, is that you talked about in second quarter -- the third quarter to fourth quarter level. Is it the same level as the second quarter? Maybe the ForEx assumption will be slightly different. But in terms of the guidance, so we are using JPY 140 billion, JPY 130 for the third and fourth quarter. So the second quarter, we used JPY 147. So at least the number will be at the same level as the second quarter.

[Unknown Executive]

Any other questions? If not, this concludes the MinebeaMitsumi's analyst session. Thank you very much once again for attending the session. Before leaving, please do fill out the questionnaire survey. And also, those of you who are listening through the webcast, click the link, which is shown on the top right-hand side section in order to answer the questionnaire survey. Your cooperation is appreciated.