Nidec Corporation

Dear all, thank you very much for joining Nidec's conference call. I'm Yoichi Orikasa, General Manager, Kyoto branch of Mitsubishi UFJ Morgan Stanley Securities.

As we kick off the conference, I'd like to ask you to make sure all the materials are ready in front of you. If not, please download the files on Nidec's homepage right now.

Mr. Jun Seki, Representative Director, President and Chief Operating Officer.

Hello, everyone, Jun Seki.

And Mr. Akira Sato, First Senior Vice President and Chief Performance Officer.

Good evening, everyone.

First, Mr. Sato will make a presentation.

After his presentation, we will move on to a Q&A session, and Mr. Seki and Mr.

Sato will answer your questions. Mr.

Sato now presents Nidec's Q4 fiscal year 2020 results, future outlook and management strategy. Mr.

Sato, please go ahead.

Thank you very much. Good day, everyone.

Welcome to today's conference call. My name is Akira Sato, Chief Performance Officer of Nidec.

Today, Mr. Jun Seki and myself will be your main speakers and answer your questions.

And joining us also is Mr. Masahiro Nagayasu, General Manager of Nidec's IR team.

For the forward-looking statements, please see Slide #2, our view -- our presentation material for details.

Now I will review our key figures. Please see Slide #3 for the fiscal year 2020 full year results.

As show on Slide #4, 12 months' net sales stood at record high, around JPY 1,618.1 billion, 5.4% higher year-on-year. The operating profit for the corresponding period increased 47.4% year-on-year to JPY 160 billion.

The last quarter's operating profit ratio hit 10.3% due to enhanced profitability through WPR4 program implemented since the start of fiscal year 2020. And the sales recovery.

And double-digit operating profit ratio is successfully maintained for 3 consecutive quarters.

Profit attributable to owners of the parent for the full year increased 108.7% year-on-year to JPY 122 billion.

On Slide #5 and 6, you have step charts showing the net sales and operating profit year-on-year and quarter-on-quarter, respectively. By product groups with exchange rate effect, eliminations and structural reform expenses.

As you'll see, Slide #5, despite the decline in exchange rate fluctuation, all of the business segments made an increase in net sales year-on-year. And for the operating profit as now, the decline in exchange rate and automotive have been covered by the remaining businesses -- business segments, the significant year-on-year increase of operating profit has been achieved.

Slide number -- please see Slide #9. For the fiscal year 2021 forecast, we are aiming for net sales of JPY 1.7 trillion; operating profit of JPY 180 billion; and operating profit ratio of 10.6%.

Please see Slide #11. The net sales target of the fiscal year 2020, which was the final year of our midterm plan called Vision 2020, has been expected to reach JPY 2 trillion.

However, it was not achieved due to the Chinese economic slowdown, followed by COVID-19 that happened during the period. We will continue to challenge this JPY 2 trillion target in fiscal year 2022.

Please see Slide #12. Due to the net sales recovery and the contributions from the WPR4 program, the quarterly operating profit ratio is on its way to steady improvement after forming the bottom in the March quarter of fiscal year 2019 and have achieved double-digit operating profit ratio for 3 consecutive quarters.

Please see Slide #13. In order to overcome the rapid shrinkage of the hard disk drive motor shipment, our small precision motor division is implementing our business portfolio transformation.

As you see Slide #14, the R&D function has been reorganized since the start of fiscal year 2019 to create new businesses and grow further.

As you also see Slide #15, we are starting to focus on the launch of mass production in new business areas, such as mobility, including mini electric vehicles, electric motor drone, electric scooters, electric-assisted bicycles and so on for our midterm goals.

Slide #17. In order to prepare for rapid increase in demand, we are currently laying the groundwork for E-Axle production of 2.5 million units in fiscal year 2025 and 10 million units in fiscal year 2030.

On the financial side and following the yen-denominated green bonds issued in November 2019, the euro-denominated green bonds were also issued last month to fund this production plan.

Please see Slide #18. Two new models have been added to the EVs using other E-Axles compared to the previous quarter.

And cumulative volume has reached almost 130,000 units.

As you see Slide #19, the new EV model called Aion Y, which was launched by a Chinese company called GAC Aion NE has adopted Nidec's Ni100Ex, which is our first 100 kilowatt E-Axle. We started mass production of -- in November 2020.

Please see Slide #20. As green transformation is accelerating in automotive industry, various newcomers are starting development of EV platform-related products.

Nidec is leading the EV era as a company who triggers creative disruption and goes beyond the industry tradition.

Please see Slide #23. In Europe, where environmental regulations and major countries' automotive CO2 emission regulations are becoming increasingly stricter, demand is expanding for automotive motors and related products and for high-efficiency brushless DC motors for home appliance businesses.

Under such circumstances, in order to build an efficient system to supply those products in Europe, we have decided to open new factories in Serbia to consolidate the Nidec Group's production activities in East European region, so that our automotive division and group companies will be able to launch multiple assets in the future.

Our One Nidec's multiple businesses will be operated at the same site to seek synergies by sharing the same production infrastructure and back office. The new business bases will engage in supplying products to the European market, while looking to design and develop products locally in Serbia, which is a country abundant in people in the field of science and engineering who are fluent in English.

In the past, we established an economic development zone in the city of Pinghu, China for multiple businesses. And the site is now home to 12 such companies that develop, produce and sell our products, enhancing our presence in Chinese market.

Now in Europe, as a part of our growth strategy based on synergies within Nidec Group, we are ready to utilize our new spaces in Serbia as the core hub of our European businesses.

Please see Slide #24. We entered into a stock purchase agreement to acquire the shares of Mitsubishi Heavy Industries Machine Tool.

The acquisition of machine tool business is very much useful and mutually complementing with our existing businesses. Nidec has been actively engaged in manufacture, sales and [indiscernible] associated with reduction gears and press machines through our subsidiary called Nidec-Shimpo.

After completion of this acquisition, Mitsubishi Heavy Industries Machine Tool will become Nidec-Shimpo's third main business. Furthermore, we expect to utilize Mitsubishi Heavy Industries Machine Tool's technology for our future in-house production plan.

As we aim to extend the sales of E-Axle, which is module consisting of a motor and inverter and gear, it is crucial for us to strengthen manufacturing capabilities of gears. In this regard, this latest stock acquisition will form other important steps to help us secure highly skilled personnel and their expertise for our E-Axle strategy.

Please see Slide #25. We have clarified new corporate philosophies in order that all the employees share the Nidec Group's mission, vision and its direction.

In accordance with the new corporate philosophies, we'll make a strong step forward for the 50th anniversary of the founder in 2023.

Please see Slide #26. We are currently undergoing a personnel system reform in preparation for net sales of JPY 10 trillion in fiscal year 2030.

We will aim to become a company that is respected and admired as a group of talented people through our merged system.

Please see Slide #27. We have identified ESG materiality and clarified it into 5 categories that are environment, quality and technology, human resources, supply chain and corporate development.

And into a theme, action plan, we will enhance the possibility of sustainable development of the business by incorporating ESG materiality into mid- to long-term goals.

Lastly, on behalf of the entire management team, we would like to thank our customers, partners, suppliers for their support and commitment as well as our shareholders.

At this time, we would like to open up the call for all your questions. Thank you for all your attention.

Thank you very much, Mr. Sato.

Now we would like to turn to the Q&A session. Mr.

Seki and Mr. Sato will be pleased to answer your questions.

[Operator Instructions] Okay. Our first question today is from James Pulsford of Alma Capital.

Could I ask a couple, if I may? The first one is very simple.

Your R&D spend last year, I think you were targeting -- expecting to spend JPY 85 billion. You actually only spent JPY 67.3 million.

I think also the capital spending you made last year, JPY 89 billion, was rather lower than your plan. I know this year, you're expecting to spend more.

Could you just comment on that, please?

Yes. First of all, R&D it has been down to that level you mentioned, mainly due to the more efficient R&D activities.

For instance in European region, we have reorganized the R&D activities into one. And also, we utilized a kind of shared service activities.

And also, some R&D activities such as testing, that is we are testing inside of the our R&D department rather than outsourcing to a testing company. With those measures to reduce R&D costs that the total expenditure for R&D has been decreased.

And capital expenditure, as you see, that's significantly down to less than JPY 100 billion in fiscal year 2020 mainly due to, of course, some delay to install other machine, but that our main portion is price down of the machine. Market is very soft, that's why we were able to get the kind of lower price where we procured other machine.

That's kind of my point. Maybe I answered to your question.

Is it fine?

That's fine. And can I ask a separate question, please?

I wonder, is it possible to comment on the current status of orders and new orders that you may have received, looking out a number of years for your E-Axles and traction motors? So if you have figures you can share with us of, for example, cumulative orders set by a certain year or things like this, this would be very helpful.

Okay. This is Jun Seki.

Thank you for your questions. Let me introduce several numbers.

In fact, we always been following ordering [indiscernible] and possible ordering -- high possibility ordering [indiscernible] 2025. Our target is 2.5 million.

Actually, what we're receiving and high possibility of receipt is already reaching 2.8 million, with compression that's still 70%.

So if we use year-end number customers giving us is already exceeding 5 million, 3 million. That's sustained us.

So time by time, it's increasing, but we don't change our number of 2.5 million. The reason why is actually current orders only from customer looks too optimistic.

So like the 2020 results showing much far lower than what we received. So of course, in current same situation and same situation in '25 is very different, we believe.

Current service is still shy because they have weekly prices, very hard. And year by year, 4 years from now, we are 100% sure it's going down.

Some through batteries, some through our components. Also lots of customers starts to compromise confirming the auto [indiscernible] that makes batteries smaller such as such.

So therefore, volume reliability in '25 is not like a [ culled ], but we're still trying to be more conservative side. That's why we didn't change 2.5 million.

Once we see more reliability of their volumes, we'll shift to high end. And once we shift higher volume, of course, we have to change the target in 2030.

That's first number.

Second number, last time, we introduced [ orebodies ] or like RFQ number in 1 quarter, right? Still increasing.

And then customers this year becoming in the long run longer. So what we have been making out of hand, projects that customer request us to quote, or where you already quoted and waiting for their conclusion, is 65.

We have 65 programs in our hand. So time will tell to increase it.

And then information suite, this is actually not number, probably, not sure your questions, from where we are having with those orders. Majority are coming from Chinese automotive and European automotive together with European Tier 1 suppliers.

So roughly 60% of those volume are top line volume of our traction motors, maybe 30%, 40% is motor alone. So those are combination of it.

All are motor for EV or plug-in hybrid.

So those are situations. Am I replying in enough information?

That's great. Could you just repeat the first one?

I couldn't quite catch some of the numbers. You mentioned the 2.5 million targets.

You're already at 2.8 million. Then you gave a couple of other figures on which I'm afraid I couldn't catch.

Right, right, right. I did, I did.

2.8 million means 70% completion resumes. Yes, so therefore when we calculate quickly in sales -- yes.

So it's 3.5 million or something, 2.8 million divided by sales...

Or more.

or 4 million, so yes. At this moment, I have still very optimistic volumes.

So that's why stayed with 2.5 million.

Mr. Pulsford thank you very much for your questions.

Our next question is from Ramsai Neelam of State Street Global Advisors.

Jun Seki [indiscernible] congratulations on your upcoming position. I wish you all the best for that.

My question is around, I mean, just want to follow up the previous question. You mentioned the mix of traction motors in E-Axles.

So that is 60/40. Can you confirm that?

Yes, so I'm talking about pure EV and plug-in hybrid. Therefore, it's purely driven by motor, yes.

And then I'm not -- I'm excluding motor for hybrid, micro hybrid.

With that assumption, total number we are receiving is 2.8 million with compression receipts. And then it's roughly, I would say, 70% on structure motor assets, 30% motor alone.

Okay. Great.

And slightly on different topic, so I was kind of expecting impairment in the precision motor segment because we have Seagate departure in the last quarter. So I mean, can you give us some color on the impairment costs related to this production capacity that is allocated to Seagate in HDD motor segment?

Yes, this is Sato speaking. This -- in March quarter, we posted around a JPY 1.3 billion of this structural reform in the expenses and still modeling.

And back in Q3 '19 -- JPY 1.9 billion. So total is JPY 3.2 billion of kind of an impairment cost or our retirement package for -- related to kind of Seagate business.

So -- and also maybe June quarter, maybe we will post a little more for kind of the departure of the Seagate business, maybe JPY 2 billion or something like that. So total may be JPY 5 billion to JPY 6 billion of impairment cost or disruption cost will be posted by departure of Seagate business.

Is that fine?

Yes, yes, that should help. And on the similar lines, can you give the profit breakup between the HDD and non-HDD and also the price for HDD?

I mean average ASP?

So you need the hard disk drive ASP situation?

Yes, I mean, I want to know the operating profit margin for HDD and non-HDD within small precision motors business.

So small precision motor business, the OP margins on the hard disk drive was a -- for the fourth quarter, that was a 31.3%. And the overall margin was 15.82%.

Then the rest is we do have something 8 -- roughly 10%. Is that fine?

Hang on. Yes, yes, that should be fine.

And on the ASP side, I can see there is a significant improvement in ASP, yes.

ASP side, in hard disk drive, right?

Yes.

So for this quarter, ASP of our spindle motor for hard disk drive was [ 39.8 ], isn't it? 79.13 -- sorry, $7.40, which is a little bit down from $7.46 in the December.

Okay?

Yes. If I may, can I ask like on the Slide #17, which is E-Axle-related investment, so is that including the potential M&As required for vertical integration as well?

Or it is excluding any kind of M&As in that particular area?

Yes, this is just the R&D cost and also capital expenditure for a traction motor business. So we exclude the M&A in this graph.

Therefore, to see investment when we grow just the organic side. Potentially, we may purchase any other company, but this is not included in this chart yet.

Yes. And probably on the last question for me, is that -- I mean general industry, we've been hearing about the chip shortage kind of halting the production for many of these OEMs.

So do you have experiencing that kind of volume decline from your side? And what's your expectation around this area in coming quarters?

So this is Jun Seki speaking, so let me reply. Actually, segment by segment, situation is very different, and the heaviest impact looks like coming into our automotive area.

It's nothing strange because it's a huge size, and they are using a lot of semiconductors and plastics and coppers and aluminum and steel. So once they have some shortage in some [ material ], suddenly they have to stop the line.

And then automotive, I think their new car demand expectation was around 86 million, 87 million in this year. But I think first -- at least first quarter looks growing at like only 8 million or a less pace, so quite slow.

But if we look at the -- I think most of those reduction is coming from semiconductor impact. I know semiconductor is #1 element.

But even semiconductor element disappear, we have plastic element and steel element as next. So they need recovery from all areas.

Then if we look at the dealer inventory in North America, its sales standard is 75 days, but I've never seen 75 days. Usually, we'll have like 85 to 90 days as average.

But current dealer inventory in North America is less 40 days. I think it's 39.2 or something.

It's extremely low. I heard that it's a record low.

So demand is there. Just the automotive company cannot build.

So we call this is a positive kind of bump. Once everything is set, suddenly they increased production volume.

So now it's a good chance to reconstruct our costs again because service is low. But we believe it's coming at June to July timing at latest, that's what you're seeing.

And meanwhile, we have some impact for home appliance and commercial appliance. But so far, customer demand doesn't show any deterioration.

Actually, it's increasing. And then we are following the increased volumes.

The problem is all those suppliers is requesting us to increase price. So many are still arguing.

Generally, impact is 4% to 5%. Of course, we don't approve all of these.

So it's still arguing but finally we negotiate with our supplier and our customers. And then we need to absorb this increase -- the main increase by other cost reductions.

That's the situation.

Okay. Thank you, Mr.

Neelam. [Operator Instructions] Okay, our next question is from Mr.

Bradley Snyder.

Yes, just a quick question on the Mitsubishi Machine Tool acquisition. It looks like the sales figures in your slide there fell pretty dramatically.

I assume that's due to the pandemic. I think it was from JPY 40 billion to JPY 23 billion.

So I was just wondering if there's any other reason for that. And also, what should we put in for the coming year for 2021 as a sales expectation?

And what margins would you see on that business as well?

The business is heavy. The -- because of COVID-19 and also some kind of a stagnant market in industrial areas, or postponing the CapEx in any factory.

That's why the sales will be down to around JPY 25 billion per year, maybe this fiscal year. And maybe backlog or order intake has been increasing at this point.

So that maybe fiscal year 2021 annual basis, the sales will be around JPY 30 billion in fiscal year 2021.

But we are not sure when we can -- we will be able to close this deal because of antitrust -- the investigation is going on. That's why the -- I'm not sure when at this time.

But anyway, annual sales will be around JPY 30 billion of top line.

And on maybe profit-wise, maybe it's still losing money. And together with increasing the top line, it's going to be a great reason in fiscal year -- late fiscal year 2021.

That's the current situation.

That's very helpful.

Bradley, this is Jun Seki, and let me add a few more comments. We are expecting this Mitsubishi Heavy Industries machining division to supply many of clear machining equipment to Nidec automotive divisions.

Because our goal is 10 million productions in 2030. And then to do that, we need over 30 line of -- 300,000 capacity per year.

One line capacity, 300,000 components per year. And then we need 30 of those.

And then we are going to set up around 10 to 12 by '25. And then Mitsubishi Heavy Industries has a significant high technology, but very expensive, that's why they stay pretty low volumes and they're not so profitable.

And then we assure, once we officially absorb them, we can compress their fixed costs. And then we can make intensive order to this.

And then while we are grouped, we can show everything pretty transparently. Then we can resonate what they have to change and what they don't have to change.

Usually, fixed costs, they don't need to change for long life is over 80%. So that makes their R&D cost very low.

So I'm assuming just maybe 20%, 30% of our activity. But I'm sure we can make them more revenue because the our demand, demand from Nidec ourselves.

And then we can make their cost very strong, just to answer your point.

So I understand it sounds like you're mainly buying that to producing the machines if you need internally to hit your E-Axle target. So I guess, should we think of that acquisition as more like CapEx.

And is that maybe why your CapEx budget was lower?

Yes, [ 3 60 ].

Thank you, Mr. Snyder.

Let's move on. We take additional questions from Ramsai Neelam of State Street.

So just to understand, Nidec has a new business area and then mobility area, like e-bicycle and e-scooter and maybe the mini-EV. Is that -- can you give us some -- what is the total market scope there, or total market size, if you have some numbers around it?

And what's the scope of Nidec going into that market? I know it's a significant area, very big market, but give us your strategy to acquire into that market or capturing the business in that market.

Okay, Ramsai. Let me reply.

And then after my reply, Sato-san, if you have any additions, please.

First, about compact EV, we called mini EV, we don't know. To be honest, we don't know yet.

So it used to be very small. But Shanghai GM holding on one mini completely breaks in that area.

They have a $4,000 EV, and it's thriving actually. They sold 200,000 EV by 200 days from their start of sales, sold as much.

And then amazing data for those sales [ years ], 72% of zone buyer are person who was born after 1990. That means most of people purchasing this 20 to 30 years ago, mostly 20-somethings, yes?

And then 60% of this buyer are female.

You may not be so familiar with the number. Whenever you go, female buyer of vehicle is around 30%, most of those case, even the drive.

But all of the cars is [indiscernible]. Therefore naturally, major owner is majority.

But this car is loved by younger girls.

So if we look at their behavior, they're obviously mobile phones in fashion through an Amazon or a Baidu. And so they need to spend lots of money.

So they don't want to spend so much money for automotives. But meanwhile, if they use a public transportation like bus or train to go to office, danger because of COVID-19.

So I think -- I don't know if they're buying by themselves or their parents is giving money to purchase a new car. So that's why.

And then we already got 4 more orders from their competitor. So their competitor is going to change what they're building.

Because buyer of this car is very different from current automotive customers. So one [indiscernible].

So those parts buyer doesn't move from current vehicle segment. So this is pure additions.

So if this happens not only China but also India, Latin America, Africa, potential demand is probably about 200 million addition on top of current vehicle number. This is huge.

It may not grow so fast. But once it breaks through, probably grows very, very fast.

That's Mr. Nagamori's predicting and me also.

So mini EVs, we don't know. Let's say at least 100 million by 2030, [indiscernible].

Meanwhile, e-bike -- including e-bike, I think this is the segment of just replacement from gasoline-driven motorbike to motor-driven motorbikes. Because current share of the EV this year is almost 0.

I think new bike sales volume annually is around 20 million to 30 million. So it's a big potential too.

Particularly in like Indonesia or India, emission level from motorbike is much worse than automotive vehicles or other vehicles. So government is very serious to shift from gasoline-driven motorbike to motor-driven motorbikes.

So I think that -- but the feel is around 2 million -- 20 million to 30 million annually.

And then motor shifted by scope. This is also booming, both very high-cost country, yes, high-cost country and low-cost countries.

So it's a big potential, but we need more study for this area.

Okay. And then to follow up on that, do these technologies that Nidec already have?

Or you have to invest little amount in this area to further reach the market requirement?

Yes.

And also can you comment on this margin because it may require new investments around this area?

We clearly have technology. Actually probably, we are [indiscernible] on current players.

For example, in China, motor-driven motorbike is very standard. Actually, in China, probably it's much more than engine-driven motorbike.

But their quality levels, durability levels and then some reliability, I think it's not so high. For us, it's very easy to overtake with sale price.

So definitely, we have.

And then for mini EV side, at this moment, we are seeing a clear preference from Chinese customers -- I mean Chinese OEMs. They want to use locally made motors.

Of course, we can localize. But at least they are saying we are Japan brand, not Chinese brand.

So -- but we are convincing them sooner or later, they want to export those. I think there is a marketing even in Japan.

But customers don't trust Chinese-made motors. If you have our motors, probably it's much easier to convince the export customers.

That communications, we are going -- we are very positive to go into these areas.

Thank you, Mr. Neelam.

Next question is from, again, James Pulsford, Alma Capital.

I wonder, could you comment, Seki-san, on the -- well, obviously, the major view today is that you're taking over as Chief Executive Officer from Nagamori-san. And if you could -- I'd be just interested to hear any other -- in practical terms, how decision-making may change at the top, what Nagamori-san's role will be within the company and how that will impact his work?

Can you just talk a little bit about that and how big a change that will be going forward to what's been in place over the last year?

Okay. Thank you, James.

We are waiting for this question. We wonder why we don't receive these questions.

It's very natural.

[indiscernible]

Yes. Thank you.

Before we run out time. No, as we repeatedly explained to the press, we have -- Nagamori-san and myself have very close communication day by day, week by week.

And then, of course, from the beginning, Nagamori-san wanted me to take over CEO positions in some days. Of course like 1 year, it was impossible for me.

I need a runway to understand more deeply for Nidec and then employees and then strength and weakness of products and our customers. And then he said maybe a few years later if I'm completely settled in our company, and if I show strong leadership and also relationship with our executives and our employees, he transfer the CEO position to me.

That was the discussion from the beginning, so more than 1 year.

But in March, he started to say he's pretty much satisfied. I'm little shy to say it by myself.

This is just telling you what he said. But he is satisfied with way of my management.

It's very similar to his own. It's, of course, because I'm copying intentionally, and there also outcomes like 2020 financial results and also some litigation from people, management side, employee side.

So I didn't expect actually. He said he would transfer it to me.

That was middle of March. And since then, we prepared.

I didn't feel comfortable to transfer everything once because employee warnings, shareholder warnings, investor warnings. And we discussed we should have a very gradual shift.

So as a straight answer to you, we had some change of DOA, but it's nothing significant. Nagamori-san take a huge decision for all important things.

So let's say, over USD 10 million investment are important, but those decided by Nagamori-san still. But a number of the decisions for those are quite few.

Meanwhile before, even like $10,000 investment went to him. So day by day, he must make a huge decision.

So those come to me, not to him. So I take over those delegations.

But for the company basis, important decisions, still I ask him to decide. So from that point, I would say not a major change, although I take over as CEO.

So he stays this company as like our largest shareholder, Founder and then Representative Director and Chairman and Chairman of BOD. So for all important decisions such as high investment or new area to expand or mid-term plans, Nagamori-san and myself make together.

And then -- but meanwhile for day-by-day operations, I used to have only automotive and appliance industry commercial. But from April 1, I'm taking responsibility for precision motor and group company as well.

So for like a solid work, day-by-day work, for organic growth side, I take care of. But he stays for major decisions.

And even those day-by-day communications, some are very important to discuss with him. I keep one-on-one with him, at least one per week to allow what's necessary.

And we don't have any misalignment between Nagamori and myself.

And last decision to go ahead for this shift is also helped by executive lineups. I got many executives which I can rely on.

And then I will also hire from outside. So executive lineup is much more mature than 1 year ago.

So that also made Nagamori-san's decision earlier.

So this is the status. So from now to 2030, we're going to grow from current 1.6 million to 2 million, 5 million and 10 million.

And then time by time, if we clear milestones, Nagamori-san will probably shift even more delegation to me. But it's not happen all of a sudden, we do this gradually.

That's I must explain it.

Okay, that's clear. Is there anything -- so I can see the change is more, as you say, sort of day-to-day operation at the moment.

Are there any other changes that are sort of that you've decided that are happening in 6 months or 3 months or a year, was already decided, other than what you've just outlined about the day-to-day operational stuff across the company and investment?

Yes, yes. Day by day, I don't.

Small decision to go to Nagamori-san, I take care of all of those.

No, I understand. So that...

No other major change.

No, that's very good. And is there anything else that's decided?

Because you mentioned this a staged thing. Is there anything that -- this is what's happening from now.

Is there anything that is planned that's going to change, that you're going to take on more responsibilities, or he's going to do less in 6 months' time or a year's time? Anything else that you...

That's right, that's right. We intentionally make this point further because we trust each other.

So he believes if any significant thing happens, I definitely would pause and discuss with him, consult it with him. So he understood.

So we don't have to define it. So clear from this point because of the deep relationship.

Thank you, Mr. Pulsford.

It seems that we are running out of time and probably we can accomodate just one short more question. And if -- the senior management of the company welcome any relevant questions.

Otherwise, we would like to conclude this call.

Okay. Now there seems to be no further questions, and we would like to conclude the conference call.

I'd like to appreciate for your active participation. Should you have any further questions, please do not hesitate to contact Nidec Corporation or your service representatives at Mitsubishi UFJ Morgan Securities.

Thank you very much.

Thank you, everyone. See you next time.

Bye-bye.