Minebea Reports Third Quarter 2007 Results

Minebea Reports Third Quarter 2007 Results Minebea Co. Ltd., (Japan, TSE: 6479) reported fiscal third quarter 2007 financial results, for the quarter ended December 31, 2006. Sales in the quarter were up ¥ 2.4 billion (USD $20.6 million), or 3%, over 2006, to ¥ 83.3 billion ($716.1 million). Net income in the quarter jumped to ¥ 4.2 billion ($36.1 million), from 2006's ¥ 2.4 billion ($20.6 million). Minebea said third quarter Japanese economy continued moderate expansion, led by primarily by corporate earnings, higher levels of capital investment, and higher export activity. The U.S. economy exhibited stable growth based on personal consumption and business performance. European countries exhibited growth from domestic demand. Asian economies were generally solid. Given those world circumstances, Minebea said it strove to implement "sweeping" cost control and reduction programs, develop new technologies and high value-added products, and push existing opportunities for organic sales growth -- with an eye toward driving bottom-line earnings. Minebea is an industrial manufacturing and distribution conglomerate, made up of 47 companies operating in two business units -- Machined Components and Electronic Devices and Components. We will focus on the Machined Components Business, where bearing manufacturing and sales operations are contained. Ball bearings are the division's primary product, but it also includes mechanical components such as rod-end bearings for aircraft and aerospace, and pivot assemblies for hard disk drives. The business also produces screws for automotive aerospace, and defense-related devices and equipment. Machined Components accounts for approximately 40% of Minebea's worldwide sales. But, as in the most recent quarter, it has long produced all of the profits -- overcoming perennial losses from the Electronic Devices and Components unit. Second quarter, Electronic Devices turned in its first profits for a long time, but slid to a loss again in third quarter and for the year to date. Machined Components is also sitting on an order backlog double that of the Electronic Devices business unit. Minebea's 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. Machined Components sales in third quarter were ¥ 34.2 billion ($294 million), up 4% from ¥ 32.9 billion ($283 million) in 2006. Operating income from the Machined Components was ¥ 6.7 billion ($57.6 million), in the quarter, off 3% from 2006. Minebea said core ball bearing sales benefited from its renewed focus on "vigorous" sales activities; sales of rod end bearings also rose, primarily to the U.S. and European aerospace industries represented by Boeing and Airbus. Pivot assembly sales were also up. Even so, the rise in operating income was credited not only to higher production levels, but also to continuous cost reduction efforts, pursuing basic low-cost technologies, product development, and improving manufacturing techniques. Geographically, sales and profits were up slightly, but primarily credited to price increases on products it imports from other countries for sale in Japan. Asia other than Japan (Thailand, China, Singapore, Korea, Taiwan, and others) experienced strong growth as an increasingly important manufacturing base for Minebea customers migrating production from other countries. In particular, China's information and telecommunications industry grew strongly and demand from household appliance makers was also steady. However, competitive pressures in Asia, and China in particular, conspired to inhibit operating income, which dropped 8.2% from 2006. North America showed strong ball bearing and rod-end bearing sales into the aircraft and aerospace industry. Most of those components are manufactured in the United States. Operating income in North America was up 25% from 2006. In Europe, sales were moderate across the region, while ball bearing and rod end bearing sales remained steady. Operating income was essentially flat from 2006.