Nidec(US:NJDCY)2024-07-28 10:20Financial Data and Key Metrics - Net sales increased by 14.8% to JPY 648.2 billion, a record high [3] - Operating profit rose slightly by 0.1% to JPY 60.3 billion, also a record high [3] - Free cash flow improved significantly to JPY 167.2 billion, a record high [39] - Operating profit ratio was 9.3%, including the impact of NPe consolidation [157] Business Line Performance - Small Precision Motors saw increased profitability due to recovery in HDD motor demand and growth in water cooling module units [34] - Automotive Products reported a deficit of JPY 33.8 billion, but a positive JPY 6.3 billion was achieved in certain areas [6] - Appliance, Commercial, and Industrial Products experienced a slight decrease in profit due to restructuring costs of JPY 1.5 billion [35] - Machinery faced a temporary decline in profitability due to optimization and transfer of resources [7] Market Performance - In China, the company shifted focus to joint ventures, particularly with GAC, aiming to minimize deficits and generate profit from Q3 [13][14] - In Europe, the company is working to reduce deficits in the NPe joint venture, targeting profitability from Q3 [71] - India is a strategic market with rapid growth, and the company has expanded its presence with 14 different business areas [29] Strategic Direction and Industry Competition - The company aims to achieve JPY 10 trillion in sales by 2030, with JPY 7 trillion from organic growth and JPY 3 trillion from M&A [48][100] - Five business pillars have been identified: AI society, sustainable infrastructure and energy, pursuit of better life, efficient manufacturing, and mobility innovation [25][26][27][55][56] - The company is focusing on in-house production of critical components, such as quick coupling and water cooling systems, to improve margins [18][95] Management Commentary on Operating Environment and Future Outlook - The company is confident in achieving profitability in the automotive business in China and Europe from Q3 [14][71] - Management emphasized the importance of quality growth and enhancing corporate value, targeting a market cap of JPY 10 trillion [21] - The company is committed to achieving at least a 15% operating profit ratio across all business areas [137] Other Important Information - The company recognized a gain of JPY 10.1 billion from the step acquisition of NPe [4][32] - A stock split with a ratio of two for one common stock is planned, effective October 1, 2024 [85] - The company signed an MOU with Tata Elxsi to deepen collaboration in software programming [83] Q&A Session Summary Question: Update on water cooling module sales and operating profit forecast - The company expects to achieve more than double the initially planned operating profit for the fiscal year [65] - In-house production of components like quick coupling is expected to improve margins in the latter half of the year [128] Question: Visibility and M&A strategy for JPY 3 trillion target - The company has substantial visibility into its business pathways and is actively discussing M&A candidates, particularly in industrial and mechanical areas [101][109] Question: Profitability improvement through in-house production - In-house production of components is expected to contribute more significantly to profitability in the latter half of the year [128] Question: Traction motors profitability in China and Europe - The company is confident in achieving profitability in China from Q3 and in Europe from Q3, with Gen 3 products replacing older generations [96][97] Question: Restructuring progress and profitability in ACIM and MOEN - Restructuring charges were lower than planned, and the company expects improved profitability in the second half [129][132] Question: Long-term strategy and ROIC targets - The company aims for a 15% operating profit ratio across all business areas and is focused on achieving JPY 10 trillion in sales by 2030 [137][142]