MABUCHI MOTOR CO.,LTD. Q4 FY2024 earnings call

2024 Full Year Consolidated Performance

• Total revenue increased 9.8% year-over-year, and was 3.8% above the August 2024 forecast. Operating income increased 39.3% year-over-year, and was 14.5% above the August 2024 forecast, as gains from selling price/product mix improvements, yen depreciation, and lower commodity prices outweighed rising costs.
• Recurring profit increased 20.2% year-over-year, and was 35.8% above forecast driven by foreign exchange gains.
• Net income decreased 33.9% year-over-year (16.7% below forecast) due to a 7.3 billion yen special impairment loss booked for Poland Mabuchi, which pushed the effective tax rate up 17.2 percentage points year-over-year.
• Total sales volume increased 1.5% year-over-year (28 million units above August forecast), and production volume increased 3.8% year-over-year.
• Operating cash flow increased 8.3 billion yen year-over-year, driven by higher operating income and improved working capital from lower inventory.

Long-Term Strategy (Management Plan 2030)

• Targets: 300 billion yen total revenue, 15%+ operating margin, 12%+ ROIC, with progress tracked via the "Mabuchi Motor Value Point" framework (2024 progress: 61.8 points out of a 100-point target for 2030).
• The company follows a two-phase roadmap: the first half of the period focuses on strengthening the operational base and improving profitability while seeding new businesses, with new business expansion accelerating in the second half to build multiple 10 billion yen+ business pillars in both automotive and industrial segments.
• Core business concept "e-MOTO" aims to deliver diverse motion solutions beyond just rotating motors, expanding business scope and increasing added value to meet growing customer demand for complete motor units.

Operational Optimization & Base Strengthening

• Production footprint restructuring: Poland Mabuchi (impaired in 2024 due to lower-than-forecast automotive demand) will be resized to match revised demand and reconfigured to produce high value-added products including industrial applications. Taiwan Mabuchi will end mass motor production and refocus on engineering and tooling functions.
• Group-wide initiatives include optimizing production SKU allocation across sites, redeploying existing production equipment within the group, standardizing processes to improve efficiency, optimizing inventory levels, and improving turnover metrics to lift ROIC.
• Growth-focused capacity building: A new R&D center will be established in Vietnam Mabuchi, and a new sales subsidiary will launch in India in March 2025 to strengthen sales in the fast-growing Indian market.

M&A and New Business Expansion

• M&A strategy follows two core tracks: expanding motor product variety (with a standardization strategy to support cross-application deployment), and acquiring capabilities for motor adjacent controls and unit integration to increase the added value of combined solutions with Mabuchi motors.
• Recent M&A: The company has agreed to acquire shares of Obi Kogyo, a manufacturer of high-precision resin gears. The acquisition combines Obi's precision gearing and molding technology with Mabuchi motors to capture growing unit demand, following the 2023 acquisition of Mabuchi Oken (pump units) which is already delivering synergies through new order wins.
• The company is expanding sales of brushless motors in new high-growth areas: strong demand from large customers is being seen in the machinery segment driven by automation and labor shortage trends, with development and sales ongoing for material handling and collaborative robot applications. New order growth is accelerating across the three focus new segments: mobility, machinery, and medical, centered on high value-added brushless motors.
• Core automotive growth: Stable growth is expected for automotive motors, driven by expanding sales of unitized new products. Power window motors are expanding adoption across Japanese, US and European OEMs (including a 6th Japanese automaker win in 2024) benefiting from industry capacity consolidation by competitors; China focuses on high value-added profitable projects. Power seat motor sales to major Japanese interior suppliers will accelerate from 2025 onward. Valve motor development projects with major customers continue to progress, with growth accelerating from 2026 despite minor project delays from slower EV adoption.

Shareholder Return

• Starting from 2024, the dividend calculation base changed to a 3-4% target range for dividend on equity (DOE) to support long-term stable dividends.
• 2024 full year dividend is set at 76 yen per share, with 2025 full year dividend planned at 78 yen per share (a 2 yen increase), marking the 3rd consecutive year of record high dividends.
• A new share repurchase program is approved, with a maximum size of 7 billion yen / 4.6 million shares to be executed from February to December 2025.
• 2025 projected payout ratio is 64.1%, with a total shareholder payout ratio of 110.0%. Cumulative shareholder return from 2024 to 2025 is projected to reach approximately 33 billion yen, on track for the 50 billion yen total target for 2024-2026.

1. Automotive Electrical Equipment (Medium Motors): In 2024, sales volume rose 0.9% against plan, and sales value rose 1.7% against plan. Despite production cuts due to persistently high finished vehicle inventory levels centered in North America, sales for EPB (electric parking brake) and valve applications remained strong. For 2025, the segment expects overall sales value to increase 3.3% year-over-year, with a 0.2% year-over-year decrease in sales volume; sales are projected to weaken in China and grow in Japan, Europe, and North America.
2. Automotive Electrical Equipment (Small Motors): In 2024, sales for door lock applications increased, contributing to overall automotive segment growth. For 2025, small motor demand is expected to track overall automotive production levels, which are projected to stay flat year-over-year.
3. Life & Industrial Equipment: In 2024, sales volume rose 7.1% against plan, and sales value rose 11.9% against plan. Although the company narrowed low-margin beauty & personal care orders, stronger-than-expected restocking from customers across office equipment (after inventory digestion) and sustained growth in healthcare led to the upside surprise. For 2025, the segment expects sales volume to fall 12.6% year-over-year and sales value to fall 7.3% year-over-year, driven by the continued profitability-focused order pruning for home appliance, tool, housing equipment and beauty & personal care applications, and a pullback from 2024's customer restocking in office equipment. Growth is expected in the new focus areas of mobility and machinery.

• 2025 full year consolidated guidance expects overall revenue to grow 0.9% year-over-year to 198.0 billion yen.
• Operating income is projected to grow 2.6% year-over-year to 22.2 billion yen, with an 11.2% operating margin, making steady progress toward the 15%+ target in the 2030 management plan. Key drivers: 3.4 billion yen gain from selling price/product mix improvements, 0.9 billion yen gain from yen depreciation, offset by 1.5 billion yen headwind from lower sales volume and 1.7 billion yen headwind from higher costs driven by increased R&D investment.
• Recurring profit is projected to decrease 27.9% year-over-year to 23.4 billion yen, and net income is projected to increase 17.7% year-over-year to 15.1 billion yen; no foreign exchange gains/losses are included in the forecast.
• Selling, general and administrative expenses are projected to increase 17.8% year-over-year to 36.8 billion yen, to support continued investment in R&D, talent expansion, and IT infrastructure for long-term growth.
• 2025 capital expenditure is planned at 15.3 billion yen, primarily 10.8 billion yen for production equipment and 1.2 billion yen for R&D related facilities to support medium-term new order demand and labor-saving production.
• Depreciation is projected at 13.3 billion yen (0.8 billion yen lower year-over-year due to the Poland Mabuchi impairment), and R&D expenditure is projected at 8.1 billion yen (1.1 billion yen higher year-over-year).
• Long-term 2030 guidance is maintained: 300.0 billion yen total revenue, with 250.0 billion yen from organic growth and 50.0 billion yen from new areas expanded via M&A and other strategic investments.

• The global economic growth slowdown is expected to weigh on demand in 2025: global automotive production is projected to stagnate at prior year levels, with persistently high finished vehicle inventory in North America and Europe limiting production growth.
• Overall consumer demand weakness is expected to persist across most life & industrial product categories in 2025.
• The Poland Mabuchi subsidiary recorded a 7.3 billion yen impairment loss in 2024, as automotive demand failed to grow to the levels projected at the time of its 2017 establishment, requiring a resizing and restructuring of the operation.
• Automotive valve motor projects have seen minor delays due to slower-than-expected EV adoption, although development continues with growth expected to start from 2026.
• Chinese automotive demand for medium motors is projected to remain weak in 2025.

The provided transcript does not include a transcribed question and answer section, so no content can be summarized for this segment.