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Ladies and gentlemen, thank you all very much for waiting. Thank you very much for joining the Teleconference Call for MinebeaMitsumi Inc. for the Third Quarter Results for Fiscal Year ending in March 2018. [Operator Instructions] And let me remind you that this broadcasting is recorded.
Now let us open the conference call. Let me invite Mr. Yoshida, Senior Executive Director of MinebeaMitsumi Inc. Please.
This is Yoshida. Good afternoon. Let me explain consolidated financial results for the third quarter for the fiscal year ending in March 2018. This is the highlights of our consolidated financial results for the first 9 months ending in March 2018. Consolidated net sales was total JPY 654,927 million, when operating income came to JPY 64,389 million, net income was JPY 51,555 million. That is year-on-year increase of 48% in net sales. And operating income was 85.5% and net income of 2.1x higher than the previous year's figures. Net sales, operating income, ordinary income and net income totaled for the first 3 quarters all significantly exceeded the previous record highs. This uptick was due to significantly improved productivity for the MITSUMI business segment, which was integrated with Minebea last January as well as steady business for major products such as ball bearings, motors and LED backlights. Currency fluctuations brought the net sales up by an estimated JPY 27.5 billion year-on-year positive and operating income up by an estimated JPY 2.3 billion year-on-year. Next slide, please. As for the consolidated financial results for the third quarter, net sales reached JPY 225.9 billion, where operating income totaled JPY 22,437 million and net income over JPY 17,278 million. Net sales increased 35.0% year-on-year, while operating income, net income were respectively 39.2% and 42% higher than the previous year's figures. Net sales operating income and net income respectively decreased by 4.2%, 9.9% and 14.0% on a quarter-on-quarter basis. All of which exceeded the previous third quarter record high by a wide margin. Factors behind these big year-on-year increase includes the steady business in machined components, mainly for ball bearings as well as a consolidation of MITSUMI business. Currency fluctuations brought the net sales up by an estimated JPY 3.2 billion quarter-on-quarter and up JPY 12.7 billion year-on-year. Foreign exchange rates brought operating income up by JPY 40 million quarter-on-quarter and JPY 500 million year-on-year. Next slide, please. This chart shows the trend in quarterly net sales. This quarter, net sales reached JPY 225.9 billion to significantly exceed the previous third quarter record high.
Next slide, please. This is the graph with the bar chart for quarterly operating income trends and line chart indicating operating margins. Operating income was JPY 22.4 billion, the highest ever for any third quarter by a wide margin. This was also the fifth straight quarter we saw operating income rise year-on-year.
Next slide, please. This slide shows the results for the machine component segment. On the left is the graph indicating quarterly net sales trends and on the right is a graph with a bar chart showing quarterly operating income trends along with a line chart for operating margins. Net sales for the third quarter were up 12% quarter-on-quarter to a total of JPY 46.7 billion, exceeding previous quarter record high. Please note that beginning of this third quarter, we have begun consolidating the results of C&A engineering in U.S. and Mach Aero in France as "other" in machine component segment. Ball bearings sales rose 3% quarter-over-quarter to a total of JPY 26.8 billion, the average monthly external shipment volume totaling 193 million units this quarter, which was up year-on-year for the 21st quarter in a row. This November, our monthly production volume hit an all-time high of 282 million units, almost achieving our April target of 285 million units.
The sales of rod-ends and fasteners totaling JPY 7.9 billion were up 1% quarter-on-quarter. Sales of pivot assemblies increased 4% quarter-on-quarter with JPY 8.2 billion in sales. Pivot assemblies steadily contributed to a bottom line as we held on to over 80% of the market share. Operating income for the third quarter totaled JPY 11 billion, exceeding previous quarter record-high, putting an operating margin at 23.6%. Operating income rose 2% quarter-on-quarter, while operating margin was 2.3 percentage points lower that what it was last quarter. Also, if we were to exclude the sales and operating income for C&A tool engineering and Mach Aero, the operating income for machine components would have been the same as the previous quarter. Looking at the results by product, we see the operating income for the ball bearing as well as the rod-ends and fasteners increase quarter-on-quarter, while pivot assemblies operating income was slightly decreased.
Next slide, please. This is the results of electronic devices and components segment. This quarter net sales declined by 16% quarter-on-quarter to a total of JPY 112.3 billion. Steady sales in automobile market kept motor sales up where they were last year at JPY 46.7 billion. Net sales of electronic devices were down by 27% quarter-on-quarter to a total of JPY 55.5 billion. Although we expected demand to peak and decline, demand for our LED backlights remained up and steady, resulting significant higher than expected sales. Sales for sensing devices decreased by 7% quarter-on-quarter to reach JPY 9 billion. Operating income for the third quarter totaled JPY 5.5 billion, putting our operating margin at 4.9%. Operating income decreased 52% quarter-on-quarter, while our operating margin dropped by 3.7 percentage points.
Looking at quarter-on-quarter comparisons by product. Operating income for motors remained steady, while profits for both electronics and sensing devices decreased.
Next slide, please. This slide shows the results for MITSUMI business segment. Third quarter net sales were up by 10% quarter-on-quarter to a total of JPY 66.7 billion. The factors behind this uptick included peak demand that significantly drove up the shipment volumes for the new game consoles on top of the increased sales of camera actuators to major customers. The third quarter operating income totaled JPY 9.8 billion, while operating margin reached 14.7%. That means operating income rose by 49% quarter-on-quarter, while operating margin grew 3.9 percentage points. This increase was due to the growing shipment volumes for the new game consoles and camera actuators as was mentioned earlier, in addition to further progress in boosting productivity across all product categories.
Next slide, please. This graph contains a bar chart showing quarter net income trends and a line chart indicating net income per share. Net income decreased by 14% quarter-on-quarter to hit JPY 17.3 billion, but still set the third quarter record-high. Net income per share was JPY 41.2 per share.
Next slide. Here you can see a bar chart showing trends in quarterly SG&A expenses and a line chart indicating SG&A expenses to sales ratios. Quarterly SG&A expenses decreased JPY 1 billion quarter-on-quarter to total JPY 24.4 billion, while the SG&A expenses to the sales ratio was 10.8% just as low as for the previous quarter.
Next slide. The quarterly inventory trend. As of the end of the third quarter, inventories amounted to JPY 152.4 billion, down JPY 10.8 billion from what it was 3 months ago, largely due to the diminished inventory of LED backlights, for which demand had peaked, despite a JPY 1.3 billion increase from the newly consolidated Mach Aero.
Next slide. A bar chart on the left shows capital expenditure trends and 1 on the right shows depreciation trends. The third quarter capital expenditures totaled JPY 36.9 billion, while depreciation and amortization expenses totaled JPY 23.1 billion. We will stick with this fiscal year's capital expenditures projections of JPY 48 billion and expect depreciation and amortization expenses to be at JPY 31 billion, which is lower than previously projected.
Next slide. Here, a bar chart shows trends in net interest-bearing debt, which is total interest-bearing debt minus cash and cash equivalents and a line chart indicates free cash flows. As of the end of the third quarter, net interest-bearing debt totaled JPY 63.8 billion, down JPY 7.1 billion from the end of March. This fiscal year, we expect free cash flows to increase as profits grow and net interest-bearing debt decreases even further despite increasing capital expenditures. In the meantime, we will continue to actively pursue M&A opportunities with an eye to medium-term growth.
Next slide. Here a summary of our forecast for this fiscal year. We expect net sales, operating income, ordinary income and net income to exceed previous record highs by a wide margin. In the fourth quarter, we expect strong ongoing demands for ball bearings, our core product line, enhanced production capacity and other factors to increase revenue and profit. In light of these factors and short-term demand trends for smartphone-related parts, et cetera, inventory adjustment and eliminated exchange -- or estimated exchange rates, which were adjusted to reflect the current rates, we have made upward revisions to the performance forecasts that were revised last November as follows. Net sales from JPY 810 billion to JPY 850 billion; the operating income from JPY 73 million to JPY 80 billion; the ordinary income from JPY 72 billion to JPY 79.5 billion and the net income from JPY 57 billion to JPY 62 billion, respectively.
Next slide. This slide shows the forecast by business segments. Next slide. Let me describe the shareholders' return. As announced last November, we are planning to significantly increase total dividends to JPY 26 per share. The total return ratio, including share buyback we completed last year, should reach about 30%.
Next slide, please. This slide shows the current performance of miniature ball bearings, our anchor product line. The ball bearing business has been showing strong growth this fiscal year and is expected to grow further at a faster pace in the coming fiscal years. Let's look at the factors behind this growth with a focus on sales volume, cost and pricing.
Firstly, on volume. Until last year, the external shipment volume grew 10 million units per month on average. And this fiscal year, as you can see from this chart, it's increasing at a faster pace than before. This is just a preliminary figure, but the shipment volume for January has already exceeded 200 million units. The production volume has also been rising quickly, while the monthly production volume was 250 million units last April, it went up to 282 million units in November and will reach 287 million units by the end of this fiscal year. This increase was paid off by our efforts to improve productivity, and next fiscal year with additional equipment worth JPY 8 billion, we ordered last fiscal year, we will have enough production capacity to produce more than 300 million units in total. Behind it all are 4 strong winds that are pushing us forward, namely automobile, data center [ for ] fan motors and the high-end home appliances and small robots. The increasing number of cars equipped with more sophisticated energy efficiency, safety and comfort features as well as major or minor model changes has boosted the use of our bearings, which are being used more and more for these automobile applications. That is why our automobile bearings are growing at a much faster rate than the increase of global automobile shipment volumes.
The number of miniature ball bearings used per vehicle is also expected to increase at an ever accelerating pace due to a shift to electronic vehicles and other innovations. When it comes to data centers, there has been a sharp rise in the demand for servers that has been recently characterized in the news reports as explosive [ shopping ] spree. Servers, whether they are the HDDs or SSDs, must absolutely be reliable. The trouble is that they generate lots of heat and there are high function fan motors required to cool them down. Demand for these motors employing high-performance bearings is skyrocketing.
Another factor behind the jump in demand for bearing is the increasing number of high-end home appliances, incorporating high-speed and DC brushless motors to enhance the energy efficiency.
Likewise, motors equipped with high-performance bearings have been adopted in small robots, such as drones. While we expect that internal sales volume of bearings for HDD to decline over the long run, however, internal sales of bearing used for motors should continue to rise, keeping our ball bearing business performance up. We expect that the total volume sales for next fiscal year will be initially be 280 million units, with 200 million units sold externally and 80 million units sold internally, exceeding this year's levels by a wide margin.
Next, looking at the cost-related factors, onetime cost associated with initiative to boost productivity, such as production line set-up and logistics costs, are expected to be eliminated after the fourth quarter, hence profitability should significantly improve at the beginning of next fiscal year. However, due to rapid expansion of demand at present, we should expect that the productivity will increase going forward. However, some time -- some part of onetime cost will also incur in the next fiscal years and onwards. Finally, we are planning to review our pricing policy. We will shift the focus from volume to quality requirement for pricing. Specifically, we will review the pricing of core parts and high-quality products by proposing prices that are more in alignment with their value added. All these factors, including sales production, cost and pricing, we will drive growth of ball bearings even further in the next year and year beyond.
Next slide, please. Let's take a look at next fiscal year's 5 major growth engines. Firstly, as we touched on with the previous slides, ball bearings will enjoy significant growth. Secondly, for rod-ends and fasteners, the efforts we've made to improve productivity will pay off and steadily enhance productivity. Additionally, increasing production of small and medium-sized aircraft will drive the demand up, so we can expect profits to soar next fiscal year.
Thirdly, regarding game consoles, we expect to see strong demand from the beginning of next fiscal year and we are steadily working to align production capacity with the growing demand.
The fourth engine is smartphone components. Since our ultra-thin LED backlights have been rated quite highly by customers in terms of cost, quality and supply, we expect demand to remain strong in next fiscal year. We also anticipate that more and more smartphones will be equipped with camera actuators as they become more luxury. On top of that, we will aggressively expand sales targeting the Chinese smartphones market, including the mid-range segment to achieve further growth. The final and the fifth engine is motors. We project that the motor business will generate over JPY 180 billion in sales this fiscal year and the figure will increase in the next fiscal year. The increase will mainly come from the automotive motors. We are planning to launch a number of new products, such as active grill shutter for luxury cars onto the market next fiscal year and years beyond. Motor business is expected to experience enormous growth over the long run.
As we can see, we have a strong product portfolio that can weather the changes in the market and customer trends. These products will enable us to sustain a healthy growth in the coming fiscal year. There will be no any product category which profitability will deteriorate significantly. We will go into more detail in the full year results announcement to be held in May.
Next slide, please. It's an overview of our ESG initiatives. The MinebeaMitsumi group is working hard to address ESG, or environmental, social and governance issues to sustain growth and respond to various social concerns. Let me describe the ESG issues we are focusing on and our specific measures. Starting with E for environment. First, most of our products are environmentally friendly, and by developing and selling them, we greatly contribute to solving environmental issues, such as climate change and waste reduction. Specifically, ball bearing helps a lot of products to save energy with its super-low friction provided by ultra precision machining technology, one of our advantages.
High-performance motors and LED backlights with ultimately higher energy utilization efficiency greatly contribute to energy-saving. For example, in Cambodia, we installed smart streetlights in areas around Phnom Penh and Angkor Wat under the Ministry of the Environment JCM project, carbon emissions trading with an eye to building a state-of-the-art smart city and reducing greenhouse gas emissions.
In addition, under the MinebeaMitsumi group environmental policy, we are promoting various environmental activities. For example, our factories are built for ultimate energy efficiency, where state-of-the-art 0-effluent systems collect and reuse all factory wastewater employing every possible technology designed to curb global warming, including LED lighting and thermal barrier coating. We are working to improve global environment and create economic values through activities to join development of infrastructure and industry in emerging economies and initiatives aimed at reducing the environmental footprint.
Moving on to S for social. We are rigorously promoting automation of production lines, including introduction of robots and rationalization, including in-house equipment production. We are also creating a flexible production system considering characteristics of products and customer requirements, such as production in cost competitive area for products suitable for labor-intensive. This variety and diversity in manufacturing are one of the source of our competitiveness.
To strengthen this competitiveness, we actively utilize and empower women work force. Our group employs about 100,000 people, and females account for about 70%. About 20% are on the managerial and supervisory positions. We actively hire women with outstanding skills based on characteristics of work to continuously supply high-quality products to customers around the world. Since the 1970s, we went into Singapore and Thailand as forerunner and continue to improve ultraprecision machining area technology and automation technology. We have been trying to shift the structure from labor-intensive production. In this process, we have fostered human resources through dispatching many local employees around the world, including Japan, to acquire techniques and skills.
Through these -- the DNA of manufacturing acquired by our group employees fundamentally supports our manufacturing capabilities. At recent years, we have hired a significant number of young workers in emerging countries around Asia, such as Cambodia and the Philippines, where we have implemented our regional training curriculum and employee benefit programs. In impoverished areas and areas where majority of people are engaged in agriculture, we provide employees with not only basic training on employment rules and work standards, but also pave the way to enhance self-reliance through educational initiatives focused on issues of hygiene control as well as food, shelter and clothing. In areas where primary education is lacking, we operate schools and provide education in the employee's native language to improve literacy rates. These activities are well appreciated by local governments and communities. They're closely linked to our business growth and add to the economic value of our group.
Finally, G for governance. Here, we are focusing on establishing and maintaining global risk management and compliance systems as we work to strengthen and improve our corporate governance and internal control systems. On the right side of the slide, you will see a major SDG items that are related to these activities. The slide, as you have seen on our press releases and others, we will continue to make efforts to thoroughly refine the difference that is the source of our competitiveness and strive to create new value as our corporate slogan.
This concludes my presentation. Thank you for your kind attention.
So let's move on to the Q&A session. [Operator Instructions]
This is Takayama of Goldman Sachs. There are 3 questions. First question is, fourth quarter of Aerotech that -- what is the fourth quarter forecast. For the last several months in terms of the model mix, [ OLED ] is not actually increasing and instead perhaps LCD is going to remain and are there any increasing trend in the volume and if you could elaborate on that? This is the first question regarding the rods and ends -- rods and fasteners.
First is, regarding the fourth quarter numbers, as is announced previously, regarding the sales, the seasonal adjustment is going to happen and that is the projection which we adopted for the fourth quarter of sales. In regard to the next fiscal year, as you are aware, to the extent that we can announce is very limited and as explained in the previous slide, on Page 19 -- excuse me, Page 18, performance is expected to be very robust. [ The LED or be OLED ] [ and so forth, ] perhaps you are aware, but we would rather not to comment on the breakdown.
Now LED devices and can you find it very hard to forecast for the fourth quarter in terms of the sales electronic devices fourth quarter forecast of your prediction fourth quarter?
Electronics devices, if you deduct that, JPY 43.7 billion, JPY 43.7 billion for the fourth quarter sales for electronic devices.
In addition, there is the second question. In electronics, fourth quarter profit seems to be increasing slightly, vis-à-vis the third quarter. What are the reason behind this?
In production, motors are performing quite well and sensing devices are a little bit struggling. And that productivity improvement is going to be made and therefore profits going to be increased. On top of that, in relation with the customers, probably some of the cost adjustment shall happen and that is projected into our current estimate.
Usually, for electronic devices, if the sales is declining by about more than JPY 10 billion, then in the third and fourth quarters, usually, the profit also declines as well. The motors and sensing probably the profits could not be declined, could not be offset fully. So are there any positive impact for the backlights [ and so forth ] on a onetime basis?
Yes. Part of the onetime impact of a backlight profit improve is actually projected.
So do you see that these numbers are quite assured?
Yes, that's our take.
The third question is regarding the bearing. Improvement to profits regarding bearing was actually not continuous in the April and onwards. Well, how would you describe the situation? How much of a point of profit improvement that you are expecting? This is a machine component segment and perhaps the -- what is the target of the percentage points improvement in profitability that you are projecting?
The [indiscernible] cost or the product mix? [ Will be ] price.
What is the uncontinuous improvement that you are seeing in the profit?
The details is going to be presented in May, that we are scheduling the full year results announcement to the analysts. And please allow us to explain that further detail at that occasion. But [ the ] trend, although we have not explained in the slide, however, at the time of the second quarter results announcement, there is -- was an image for the future growth. And that remains true. And even more robustly, we will be able to demonstrate a solid growth. And we are seeing a very strong cumulative sales at the most recent situation. So external sales for the January was very strong and our production capacity is prepared well at the time of the results announcement for the first half as we explained beforehand. Based on that particular number, you could actually make your own estimation. Although, I'm not able to comment on the specifics at this point in time. It's just a qualitative statement. But the performance is very robust. For instance, while JPY 8 billion capacity enhancement was implemented as I mentioned earlier. And for the capacity enhancement of JPY 8 billion, the production will soon start and we are preparing as we speak. And therefore, we are receiving very strong demand and we are taking countering measures to accommodate with that. That's our current situation.
Hirata from UBS securities. I have 2 questions. First, about the MITSUMI business segment. For the third quarter compared to the second quarter, sales JPY 5.9 billion higher and operating profit, JPY 3.2 billion increase in profit. So compared to the sales increase, the profit increase seems to have been large. That's my impression. So compared to the plan, how did it do, and by product group, how did it do? Now improvement in the profitability, is it game console, smartphone related or is it more related to connectors and other businesses? Are you seeing better productivity in those areas as well?
In conclusion, basically, productivity is improving in all areas, and therefore -- all product areas, profitability is improving. In particular, comparing second quarter to the third quarter, there were some drivers. Game consoles related business, in particular, has been the driver, but profit increased did not come only from that factor. In other product areas as well, we saw solid growth in profit, which resulted in JPY 3.2 billion increase in profit.
Smartphone-related and camera-actuator related business, did you see a big growth in profit as planned?
When you say planned, are you talking about the guidance at the second quarter briefing?
Yes, that's what I mean.
Well, in that sense, for optical devices, optical-related devices, sales, I believe, from the third quarter to the fourth quarter, there was some pushed schedule behind. So in terms of sales, it was short of the plan, but in terms of profit, we did see growth as expected, which contributed to the growth in profit that was mentioned earlier.
I see. My second question, this is related question actually. In the MITSUMI business segment from the third quarter to the fourth quarter, when you do the subtraction, looking at the figures you presented, I find that in the fourth quarter, those sales and profit are expected to decline. Now your fourth quarter projections have been retained. You're just looking at the increment in the third quarter for the revision of -- for the fourth quarter and the smartphone and game consoles related risks may be incorporated. Can you talk about that?
Well, it's the latter. So basically looking at more recent situations, we made the projections. And in light of the Chinese New Year's and other seasonal factors, in the fourth quarter, we incorporated that. And as for smartphones, as you know, some of the production landscape has changed. And that has been factored in, in making our forecast. As for game consoles, the strong business is expected to continue, for next fiscal year included. For a game console demand growth going forward in the next fiscal year -- from the beginning of the next fiscal year, we expect a high production level. For the fourth quarter, some of the seasonal factors have been incorporated. The days of operation will be affected partly due to the Chinese New Year's. But for the rest, the high growth in production is expected. And we are preparing for that.
I see. Actually, I have a third question as well, if I may. In ball bearing and pivot, the quarterly or monthly development, can you give us the details, the monthly figures?
Bearing October production volume up JPY 279 million, November JPY 282 million, JPY 272 million for October and December. And JPY 188 million external sales, JPY 198 million and JPY 193 million, respectively, internal sales. JPY 82 million, JPY 75 million and JPY 73 million sales, the total was JPY 27 million, JPY 28 million and JPY 266 million. That's for bearing. Pivot, October production JPY 25 million, November JPY 25 million, December JPY 25 million. Sales, October JPY 28 million, November JPY 29 million and December JPY 25 million.
Sato of Morgan Stanley. There are 2 questions. First, regarding MITSUMI, camera actuators, may I ask the following? The third quarter sales at the time of November plan wasn't actually achieved. In North America, customer, was that a major reason or was that because that the share of your company wasn't progressing as is expected? Was OIS production included, could you comment on that? That is the first question.
The optical device production, including OIS, as we have explained in the past, had improved significantly after integration and by accumulating day-by-day efforts, we are further improving the productivities of these production sites. As I have mentioned earlier, profitability is improving steadily. In regard to the volumes, share allocations, what had happened for that share allocations, which the company is not in the position to [ know fully ], however, there is no losses in the market share at this point. But as many products are starting out and there are some intermediary module makers in the [ win ] and perhaps inventory position of the intermediary asset maker and also the launch of the new products and [ sulfur sand ]. Perhaps material -- the timing of material in sales could be shifting forward or backward, and perhaps for this particular quarter, our delivery was slightly lower.
But was the delivery very small?
No, not at all. We were able to produce and be able to deliver in a steadfast manner and compared with the second quarter, this quarter, profitability is much better. Therefore, we are not very concerned about the situation.
For the sales to North America. For [ such new ] products, OIS shipment over a certain threshold was actually materialized, is that correct?
Well, when you look at the total of the third quarter and fourth quarter, we are in the right direction.
If you isolate the third quarter alone, what is the progress?
Like I have briefly mentioned earlier, because of the timing of the startup and also the inventory accumulation and also in the process of whole supply chain, the third quarter delivery was slightly lower than what was initially expected.
Understood. And the second quarter is regarding the next fiscal year. In the previous results announcement, President Kainuma mentioned that the operating income -- operating profit for the March 2018, at the time of the December forecast, probably the JPY 9 billion operating profit incremental growth could be achieved. And are you still stick with that idea at this point?
Well, there's no change. So therefore, there is absolutely no change in that forecast. As I have mentioned in the slide in the middle, our company towards the next fiscal year, whether are we projecting some negative aspects and so forth and then there is no negative factor at this point. Therefore, JPY 9 billion could be actually be incremental on the profits and in the situation for the next fiscal year. Of course, we will have to discern the situation quite well. However, at this point in time, JPY 9 billion or more is projected at this point in time.
Now regarding LED backlight as well, the largest customer for smartphones on that particular customer, backlight sales will not decrease. There will be more number of customers and application will increase, and therefore, there will be no negative impacts on your performance, is that your understanding?
Once again, regarding the comment on the particular customer, we are not allowed to make any comments. But for the overall LED backlight business itself, then as you pointed out, in the next fiscal year, we will be able to enjoy a solid business. That is our take at this point.
Akizuki from Nomura Securities. I'd like to start with actuators. Looking at different applications in terms of sale, OA and communications areas, quarter-on-quarter, sales have declined by JPY 20 billion, which is the same as it declined in backlight. So it appears the actuator businesses are growing. Now at the time of the second quarter, I think, Mr. Kainuma talked about a better ramp-up than expected. So I'm wondering if that really true for this business? Now in terms of sales, did it grow dramatically or not is the first question. And isn't the inventories building up in this particular business here, if the production capacity was increased, then it should mean that the inventory sales built up. So can you talk about that?
Well, sales growth or not, are you talking about second quarter to third quarter?
Yes.
So quarter-on-quarter, yes, sales grew. And as for inventories, looking at the inventory in the supply chain, we don't have exact figures, but inventories within our company.
Is it building up and not being consumed by the end of the fiscal year?
No, that is not what's happening.
Really? But inventories did build up, right?
Well, inventory total as was described from the end of the fiscal -- second quarter to the fourth quarter, yes, it did build up, but it was not a big jump.
So from the third quarter to fourth quarter, for MITSUMI business segment, do you expect the earnings to go down by JPY 6 billion or so?
I think that's your assumption.
Of course, I know that there are some conservative factors being assumed. But is it going to go down that large? Do you need to do that? What are the basic assumptions that you used to come up with this figure?
If I could repeat myself, Chinese New Year is just 1 factor. So the rate of operation in February is going to be lower. And the currency, foreign exchange assumptions have been revisited. I think that's the biggest factor. So we have made conservative assumptions. We believe that is the requirement when we look at this business. So overall, these factors were taken into consideration to come up with that forecast.
So as a directional direction, do you expect a decline in actuators or do you think what is [ penned up ] in the third quarter would be sold in the fourth quarter?
Well, looking at the market situation, many things are being said by different people. And so maybe we don't -- we're not in agreement with that. But as far as we are concerned, as we've been explaining, in the third quarter, some of the sales are expected in the third quarter was pushed back to the fourth quarter. So in that sense, these sales for the fourth quarter, of course, on a quarter-on-quarter basis, we are factoring a decline. But is it going to be a large decline? No.
I see. But the rate of operation, the utilization is expected to go down?
Yes.
Just one more question, if I may. Earlier, you said that for the fourth quarter as for the backlight related business, you said that some will be pushed back to the end of the fourth quarter. Let's say some of the negative factors in the third quarter, will they turn into positive factors in the fourth quarter, and therefore, it's not going to affect the full year forecast? Or is it that for some particular reasons, there were some revenues expected in the fourth quarter, which would be a pure increment in terms of profits?
Well, there are many things that we have to keep secret in relation to the customer, so we can't give you the specifics. But in essence, we have been in this business for a long time. And from this business, there are many difficulties that we are aware of in relation to this business. For example, specifications, determination. Through these, there aren't many gray areas and they are recognized within the projection in each quarter. That should result in this forecast. I'm not sure if this makes sense to you, but that's the situation.
So that would mean that -- I thought that the profit in the third quarter was too low in the electronics device, but you expect that would be absorbed in the fourth quarter?
No, it's not just for the third quarter. As has been reported on a full year basis, some of the expenses or costs might be -- might have the positive impact in the fourth quarter.
So in terms of the second and the third quarters for the past, the things that do you could have expected profit, but there is a [ word ] to be realized in the fourth quarter. Is that what you're saying?
Yes.
[Operator Instructions] Now we conclude the Q&A session. Lastly, we'd like to invite Mr. Yoshida of MinebeaMitsumi Inc. to make any closing remarks.
Well, today, thank you all very much for your participation and we look forward to working with you going forward as well. Thank you.
This concludes today's conference. Thank you very much for your participation.