Nidec Corporation
Q1 2021 Earnings Call Transcript

Published: 21 Jul 2021

[Taku Miyagawa:]

Dear all thank you very much for joining Nidec Conference Call. I am Taku Miyagawa , General Manager, Corporate Division 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 already in front of you. If not, please download the files on Nidec’s homepage right now. Please note that this call is being recorded and the conference materials will be posted on Nidec’s homepage for the coming weeks for investors and analysts who are not be able to join today’s call.

[Hidetoshi Yokota:]

Thank you. Greetings from Kyoto, Japan to everyone and welcome to today’s conference call hosted by Nidec. I am Hidetoshi Yokota, CFO of Nidec. Today, Mr. Jun Seki, Representative Director, President and CEO and myself will be your main speakers and answer your questions. Joining us also is Mr. Masahiro Nagayasu, General Manager of Nidec’s IR team. For the forward-looking statements, please see Slide 2 of our presentation material for details. Today, we have two chapters in the presentation. Now as first chapter, I am going to review the key figures for fiscal year ‘21 first quarter. Please see Slide 3 for our Q1 results. Let’s move to Page 4. The net sales, was record high of ¥447.5 billion or 32.8% higher year-on-year. The operating profit made a significant increase of 60.3% year-on-year to ¥44.6 billion. The first quarter’s operating profit ratio was 10% due to enhanced profitability through WPR4 program implemented since FY ‘20 and also due to sales recovery from FY ‘22. On Slide 5 and 6, here are steps charts showing the net sales and operating profit year-on-year and quarter-on-quarter respectively by product groups. As you see on Slide 6, appliance, commercial and industrial, or ACI, and machinery are continuously performing, thanks to the growing demand such as compressor or motors for home appliance, HD and testing machine, etcetera, while net sales and operating profit of small precision motors and automotive products declined due to continuous improvement from new business areas, reduced HDD shipments and impact of semiconductor shortage. Please turn to Slide 7. In response to the structural change in the HDD market, our small precision motor division is implementing business portfolio transformation as we explained before. As you see, the graph on the left, the quarterly sales of other small motors in green color has increased quarter-on-quarter and we are starting to focus on the launch of mass production in new business areas such as mobility, including mini EV, electric motorcycle, electric scooters, electric-assisted bicycle, etcetera, for our mid-term growth.

[A - Taku Miyagawa:]

Thank you very much, Mr. Yokota. Now, we would like to turn to the Q&A session. Mr. Seki and Mr. Yokota will be pleased to answer your questions. Today’s Q&A session will be conducted electronically. Okay. Our first question today is from James Pulsford from Alma Capital.

[James Pulsford:]

Alma Capital, quite right. Thank you very much for presentation and congratulations on a very good set of results. I’d like to ask a little bit more if I can about the makeup of profits and what happened within small precision motors. You commented on your presentation on profits down on prior investments, the cost of the new products. Can I check that in – can you be a bit more specific for that and that’s I assume in other precision motors? And to help me understand what’s going on within it, is it also possible to breakdown profits between the HDD side and the other precision motor side? And I am interested to look there as what’s happening to the trend in profitability for other precision motors and why? Thank you.

[Jun Seki:]

So James, maybe your voice is little bit difficult to hear. Would you just add – very sorry, just on the point?

[James Pulsford:]

So, Jun would you like me to repeat the whole question?

[Jun Seki:]

No, no, just a key question that you made.

[James Pulsford:]

Key point. Okay, I am after for precision small motors. So if you can help me understand.

[Jun Seki:]

Yes, which motor?

[James Pulsford:]

Precision motor.

[Jun Seki:]

Small precision motor, okay.

[Hidetoshi Yokota:]

The investment that we are making for the future, what kind of specific area, that’s what the first question, correct?

[James Pulsford:]

It’s the – why profits went down, so it’s the prior investment for customer new products. That’s point one. If you could explain that? And then point two is really looking at the – if you could give me a breakdown of profitability between the HDD side and the other precision motor side and comment on that, please?

[Jun Seki:]

Okay. So you have the slide and Slide #7, then we are showing you there, the past nine quarters of results. Then those are divided into the small precision motor in the blue and the green and the non-HDD motors. There also we are showing you what the OP margin of the segment. So clearly, as you see in the past nine quarters, the top line is coming down even say at most flat or coming down in the OP margin front. So as you hear that we are looking at the growth of the top line in our Vision 2025 even from there to 2030. So thereby, we need some top line growth in this segment. So thereby, we decided to focus on the new market, which is the mobility market and mini EV market and 5G smartphone market and the other e-commerce robotics market. So, with a new focus in the new market, we are planning to increase our top line, then after that, basically with the profit. So, this is basically the strategy in this small precision motor. Then the number of the small precision motor is in Slide #16, okay. So, the fiscal year 2020, we reported the top line on this small precision motor segment ¥443.6 billion, 443.6. Then with the focus of the new market, we are going to grow organically up to ¥600 billion at minimum, then in order to adding some new scheme or new M&A, we are looking at ¥800 billion top line in 2025. So you might be asking what kind of M&A, then clearly, if we are getting – coming into the new market, then there are several maybe function that we need to calculate that market. Then we were looking at an opportunity in these areas as well as the expanding its top line is a key strategy at this moment for 2025. So, for this, in order to achieve this, maybe we are going to utilize our key technology, but also we may get the support from the other company in the form of the margin at least. James, is that fine?

[James Pulsford:]

Yes, that’s interesting. And I know so your – the products, some of the products you are targeting are very similar to the – well, I mean, one of them is actually in the automotive area and mini EV that the – that must I mean if you look at your products in the automotive side, they must be just a one step down. It’s interesting you choose to put the mini EV side and also in mobility, you choose to put it here rather than in automotive. Wouldn’t it make more sense to have it in there?

[Jun Seki:]

Okay. The key point is the wattage is completely different. So when we are talking about the mini EV, then we are looking at up to 30 kilowatts, where E-Axle or traction motor is so far, we have been looking at 50 kilowatt. So, from 30 to 50, there is some borderline between the motor developed by our auto people and the motor developed by the small precision motor, okay. Then for the other motor in this chart, if you are looking at the Slide #7, the mobility, for example, e-bicycle, e-bicycle is something like 400, 600 watt and the e-scooter, 400, 600, 1 kilowatt, 1.2 kilowatt, 1.8 kilowatt, in that type of range. And the electric motorcycle up to a 1 kilowatt, 2 kilowatt, 3 kilowatt, 3.5 kilowatt and 4 kilowatt in that range in the motorcycle. So clearly, in the small precision motor area, the wattage is small. The difference is – also the other difference is the mini EV market and mobility market, the timeline is much shorter than the normal so-called the EV production lines. In the EV product lines, well, maybe from the contract to the sales of mass production, 1.5 years minimum.

[James Pulsford:]

Okay.

[Jun Seki:]

But in the case of mini EV or mobility, the term line is much shorter, then that’s going to be more similar to the small precision motor. So thereby, we – at this moment, we are planning to do these markets by the small precision people. James, is that fine?

[James Pulsford:]

It is fine. Can I just ask, you have spoken before on previous calls about the exciting developments in China with the micro EV or very small EV market in China and the success one company, in particular, has the potential for that market. Is that in this 30 kilowatt range or is that – will that stay within auto? Could you just explain to me where those – that potential market fit? Is it here or on the other side?

[Jun Seki:]

James, this is Seki speaking. Thank you for your questions and thank you for your very, very good memories. Exact name of that small EV is Hongguang mini produced by Shanghai GM Wuling and then that motor size is 20 kilowatts. And then on top of Nagaya’s explanation – from Nagayasu, actually, as the CEO of these companies, I don’t care so much, if precision motor take care of this range or automotive section take care of this range. But as a matter of fact, automotive group already run out their resources, because too many order takings from current automotive companies. Actually, total is exceeding 40. And then of course, at Nidec, we don’t want to do this opportunity for smaller EV side. And then concurrently precision motor division lost the sales. They have very good resources, engineers and then some facilities. So, discussion between Nagamori-sen and myself, we decided – let’s put this into precision motor area. That’s on the simple decisions. So we won’t be very flexible. Once precision motor has many other business, while automotive has settled down, we may shift this business into automotive area again. But at this moment, our decision is put this 30 kilowatt, 20 kilowatt motor into precision motors.

[James Pulsford:]

Okay, that’s very clear. Thank you very much. And just – I know it’s less interesting, but is it possible that just before I sort of stop, please let me know on for the HDD side, I have got couple of things. One, what was the operating margin of just the HDD business, which is obviously sort of separate to precision. And also, you gave some industry figures for shipments, HDD shipments, I think. But do you have your own company shipment figures? And any comment on the ASP or change in mix that you can give us? Thank you.

[Masahiro Nagayasu:]

So, we say roughly 30% at this point on the spindle motor business.

[James Pulsford:]

30%.

[Masahiro Nagayasu:]

Yes. So, we have been reporting roughly 30% in maybe two quarters or three quarters already in a row.

[James Pulsford:]

Yes. They have not changed in Q1, yes.

[Masahiro Nagayasu:]

So, the key is the mix is shifting to a more high capacity wind up in year end, and those are really a high margin. Then numbers that so-called the product mix is going to be shifting to a more higher capacity, maybe we can keep a good margin in there, okay.

[James Pulsford:]

Yes. That’s great. And what were your volumes in Q1, please?

[Masahiro Nagayasu:]

Yes. The total volume of the market is maybe at this point in front, now within that .

[James Pulsford:]

[Masahiro Nagayasu:]

The market, at this point, we say in terms of the product mix. As I said, ERI is increasing by 3.5, 2.5 is coming down, right. But overall, we say the market for this 2021 is roughly flat or slightly down from the previous year. That’s what we are looking at.

[James Pulsford:]

I understand, so I haven’t been very clear with my question, obviously. I can understand market shipments of 64 million units in the first quarter for Nidec shipment. I know they are very high value added, what were Nidec shipments, please?

[Masahiro Nagayasu:]

Okay. So, maybe you were talking about the market number is 64 million, but our number is roughly, say, 31 million this quarter. So, for this quarter, clearly, we had to limit that we are not a majority of market, but that will be affected by a lot of the investor questions and so-called transaction or trading relationship. Thereby, we do have some so-called inventory issues, which happened in September quarter last year for us. If you are looking at , we have shown you a huge increase of our sales in Q2 last year. But Q1 this year, clearly, Nidec has a similar situation. So thereby, they increased there, we decrease, very simple mathematics.

[James Pulsford:]

Okay. I understand your strategy here, it’s basically about making money not about share. Good. Okay. Well, look, I would probably better to let someone else ask your question, but thank you very much.

[Taku Miyagawa:]

Thank you. Our next question is from Ramsai Neelam from State Street Global Advisors. Please go ahead.

[Ramsai Neelam:]

Congratulations on the great quarter and all the best Vision 2025. My first question is on chip shortage. So, it seems to have an impact on automotive and also Small Precision Motor segment. Can you give some color on maybe if possible try to quantify the impact of semiconductor shortage in Q1? And what is your outlook going forward in this quarter?

[Jun Seki:]

Ramsai, this is Seki speaking. Shortage is occurring in not only semiconductors, but also plastics and the magnetic steel and copper and other standard steel. Therefore, it’s very difficult to say, damaged by semiconductor alone. But overall, I think price increase requirement was about 5% of our total revenues. So let’s say, our total revenue in Q1 was ¥4,400 million. So 5%, therefore, it’s along with ¥200 million, there was impact. And then, of course, we cannot absorb all. So first, we made our cost reduction, our direct labor costs or other expense. And then second, we request our supplier to wait for this increase. And then such, we negotiated our customers to share this increase with our products on this damage. And then finally, we managed within the 1% tonnage integrated damage from all, not only semiconductor, steel, copper, plastics. So, it was therefore damage that we have seen. And then that is like a financial review. And then we have a volume shortage from customers. So, for automotive variants, lastly, 120 of 300 sales is lost because of customer – end user won’t purchase vehicle, but our customers cannot build the vehicle. And then we can build our components, but because our customers cannot build their vehicles, we cannot deliver. There was some of represented 25 impact, if it’s okay for you.

[Ramsai Neelam:]

Yes, that’s great.

[Jun Seki:]

The forecast in Q2 and Q3, we don’t know. We have our assumptions, but we don’t want – that really happens and we are checking day-by-day. It’s a bit unpredictable. Overall, tendency is May was really bottomed. It’s a very, very heavy rains. And in June, still very heavy rains, but better than May. And July, it’s raining very severely, but better than June and May. And then probably, it’s a little better in August again. And then I am predicting from September onwards, probably much better than now, but not our factory meets market demand. Probably, the other recovery happened in the end of Q3 to Q4. That’s we are taking.

[Ramsai Neelam:]

Yes. That’s helpful. And my next question is on E-Axle 2025 target. It’s good to see that your target improved from 2 million units to 2.8 million units. Can you give some color on the recent inquiries for your E-Axle and how the trend has been? And also, if I can ask a question on the pricing of E-Axle, I believe it is around $1,200 previously. So, do you see any – I mean, can you give some color on the price trends or any competitive pricing there?

[Jun Seki:]

Okay. You have very, very good memories. I don’t want to disclose this information to outside, but investor side is okay. But don’t put this information onto your website, okay. I trust you. The other order we already got is about ¥1.9 million, okay. And then I ask you with high probability we are seeing is around 180 – sorry, ¥1.8 million, another ¥1.8 million – sorry, maybe I said wrong. The other order we got is $1.9 million. And then very high probability RFQ is ¥1.8 million. But we compressed that high probability half. So, I add up ¥0.9 million into ¥1.9 million that makes ¥2.8 million. Okay. And on price wise, you are right, $1,200 for 150 kilowatts. And then overall market tendency is supposed to be less priced than that. Actually, market is moving high torque side, so definitely, price is going down because market is returning more power and more torque, actually price stays same, that is the situation. That happened for high power motor, such as 150 kilowatts and 200 kilowatts. I think 70 kilowatt or 50 kilowatt motor, which we have a lot product yet. But I think that is probably going down further. And then we talked about the 20 kilowatt and 30 kilowatt. That is also has a very soft decline for volume. We are sure. We can make profit. And then our profitability become clear in ‘23. And on price, we sought out all accumulated negative profit in ‘25.

[Ramsai Neelam:]

That’s great. Just to follow-up on that. On the cost side, I remember earlier. For example, I think it’s a 150 kilowatt motor costs around $1,000 to produce. For example, inverter costs $700 and gas cost $200 and motors cost $100 and you aim to reduce the cost of production there by achieving the operating margins. So, may I know any update on that front? I mean what’s the progress on cost reduction, of course, you are doing M&As and doing some arrangements. But is there any change in your targets to reduce, especially inverters engaged by 50%, I think. Can you give us some color on the cost side as well?

[Jun Seki:]

Thank you. I think that this figure is too sensitive even to investors. So, I cannot predict this growth, but we are meeting our original plan. We have another balance, which is semiconductors, magnetic steel, plastic increase, which is very impacting very heavily, so again, same stories. We are requesting further cost reduction to in-house teams. And then we are requesting packing team to control this price increase. And we are requesting customers to share this price and cost increase. So that’s remain on top of our drive to cost reduction.

[Ramsai Neelam:]

That’s; great. Maybe my final question on your JV plant that seems really exciting, can you give your JV plan with Foxconn. What is the real value add you are expecting in the long run on the JV, you are planning to have from 2020, if I am not wrong. Can you give some more color on the JV, please?

[Jun Seki:]

Yes. Ramsai, if you promise me, you don’t put this into your minutes or something. I can go very straight. You don’t put this in your Internet or website.

[Ramsai Neelam:]

Yes. I think this teleconference will be published somewhere. I am not sure.

[Jun Seki:]

If this will be published, have to be very public comment. Our main customer automotive makers, okay, particularly currently, most of the Chinese players were approaching us, and they are a very good customer. This is a straight answer to your question. But they are very good customers because they don’t hesitate to outsource motor. But also, their lead time from order place to SOP is very short, okay. For example, if we get the order from a standard automotive player from Europe or Japan, and usually it takes minimum 2.5 years, maximum 3.5 years. It’s a July ‘21. If we take all that now, it’s sometimes January ‘25, that is SOP. So during that period, we are just spending our money. We cannot get the money back. Chinese customer is very attractive because their returning show is, let’s take the order this July, this year now and their SOP is generally like Q3, quarter three of next year. So, it’s a very quick return. That’s one of the reasons we love Chinese customer. But then we have therefore, like a standard customer type. They stick in in-house at this moment. And then like a type of a Chinese customer, they don’t care to outsource. They come to us. In between is like joint JVs, JV with Grandis and JV with Guangzhou Motors. They don’t want to be this heart of vehicle to completely outside, but they don’t want to spend too much money for this one. So, they request us to come and then share investment and development costs instead they are exclusively releasing their demand to us. It’s win and win, okay. And then for – while we have been increase expanding those businesses, we are seeing newcomer such as Foxconn. And then ASF, Yakota mentioned, those are new type. And then for us, any type is okay as long as they use motors. It’s nothing special. They need 150 kilowatt motor or 100 kilowatt motors or 70 kilowatt motors, we can offer. And then meaning of JV with Foxconn is a bit different because the reason from Grandis or reason from Guangzhou Motors is digitalization while sharing the investment and development costs. For Foxconn, I think they need strong know-how, not only from motor side, but also many other key components of vehicles. So, I just – I don’t have any improvement. I guess, we have similar JVs with other key component players, okay. And then, therefore, attractiveness from us to them is clear, and we are very desirable, experienced motor company. And then attractiveness from them to us is, I would say, high potential. We don’t know if they can do or not, but they have many third-party customers who want to build the EV by themselves, okay. Because of the confidentiality agreement, I cannot tell you clearly, but many famous companies wants to build their own EVs. So we don’t know if this really happen or not, but I don’t want to lose these opportunities. So that’s why we agree to go deep dive for another 6 months. And then our agreement is if we agree for our point, we make a final contract in December this year. That’s a content of JV, I mean, study – agreement of the study at this moment.

[Ramsai Neelam:]

Okay, thank you. Thanks. Thanks, Jun. I will join back the queue.

[Taku Miyagawa:]

James, thank you. Our next question is from Ms. Yunli Liu from Ninety One. Please go ahead.

[Yunli Liu:]

Thanks for allowing me to ask the question. Actually, my question just got asked, it’s about the JV with Hon Hai and Foxconn but I have another question on e-scooters. Right now, I’m aware that there is a regulatory-driven replacement demand in China right now. I am wondering what’s your customers in terms of e-scooters and e-bikes, etcetera and if you could give us the rough ballpark of your market share, if that’s possible? Thanks.

[Jun Seki:]

Okay. I don’t know if you know or not, but in China, most of the motor bike is already driven by motor. It’s very different from like Indonesia or India. Most of the Southeast Asia country has a huge volume of motorcycles, but it’s still driven by engines. But China, it’s, let’s say, 90%, 95% of motor bike is driven by motors, okay? And then I think current motor – most of the current motor is not so efficient. And then the placement – incentive for replacement is to accelerate efficient motors. And then for these areas, we have newcomers because current market is dominated by Chinese players. But we already found that we can – we have enough capability to build our motor with the same price as them with much better reliability, durabilities. So that’s why current top player of this electric motor bike is agreed to source us. Actually, our SOP, start of production for first product is in September this year, 2 months from now, okay? And then – So answer to your question, probably this is a very good opportunity for us to increase our sales. But we have to confident; I mean, take market share from our competitors because we don’t have enough market share right now, okay? So replacement and the increased demand is good. But before that, we have to take much share from our competitor that is current situation. Of course, it’s same logic for a power assistance bicycles and others.

[Yunli Liu:]

Thank you. So is it possible to name any specific e-scooter customer?

[Jun Seki:]

Sorry.

[Yunli Liu:]

Or high probability.

[Jun Seki:]

This announced by our customer. We can talk, but we cannot announce by our side first, one of the top players.

[Yunli Liu:]

Okay. Okay, alright. Thank you very much.

[Taku Miyagawa:]

Our next question is from Mr. . Please go ahead.

[Unidentified Analyst:]

Hi, thank you very much for taking the call. My first question is around the ¥1 trillion of CapEx and M&A spend guidance that you’ve given over the next 5 years. I wondered if you could either let us in on how that was calculated or break it down by CapEx and M&A. I’m just trying to square it with the target for ¥1 trillion in organic sales increase and also with the quite considerable CapEx requirements for your E-Axle business. Thank you.

[Jun Seki:]

Thank you. Most of the case for M&A side, we can save our investment because they already have the capacity and facilities. And then if we know M&A, we have to do it by ourselves, and then we have to invest. So those are pretty much in line and almost same figures. So let’s say, we purchased ¥50 billion companies. And then we have almost ¥50 billion asset. So we don’t have to invest. So depending on what size M&A we do, currently, we can tell you roughly 50-50. So ¥0.5 trillion for our own investment, ¥0.5 trillion for M&A. if we have a very good items, or company to purchase, ¥3.5 trillion, we do, okay. And then to maintain that flexibility, what we have to do is we have to procure our equipment as low as possible, okay? And then one of the solution for that is in-house machine tool builders. So as I already explained at the previous session or previous sessions, we’re developing our winding builders by internally. We are building testing equipment for E-Axles by ourselves. And it’s very famous, our stamping machine is our own. And then on top, we merged, acquired Mitsubishi Heavy Industry Machine to the divisions. It’s not clearly closed yet. I don’t think, but I don’t think it’s too far from today. It’s probably a very short period. And then since they are already inside, we can purchase a very, very reasonable price. Of course, on top of that, we have a very strong know-how to make a cost slimmer. So let’s say, we can purchase their equipment, 50% from their previous price and that is the strength. So ¥0.5 trillion for investment, ¥0.5 trillion for M&A is just very last but flexible bond to increase that flexibility. We are continuing to put the effort for capital investment reductions. And that’s effectively happening. Okay?

[Unidentified Analyst:]

Thank you. So can we assume that your M&A targets are – I mean, this is very rough, but based on ¥0.5 trillion spend for $1 trillion in sales, there are unlikely to be either high growth or high-margin businesses that you are targeting to purchase. Is that a fair assumption based on what you’ve just said?

[Jun Seki:]

It is, yes and no. If you go to Page 16, segment by segment, target is actually different. We are already large. So we used to purchase like ¥10 million companies, but now we can go very high if we want. And automotive sector is the one probably we should go very large one. For me like small precisions and then other product, probably we still have to stay a very small one. And then it’s small, but still very profitable, I mean delicious for us. So segment by segment, actually, we cannot make a general comment. It’s different. But we have a target.

[Unidentified Analyst:]

Okay. Thank you. That’s very clear, thanks. And just if I may, on a slightly different topic, I am interested in the emphasis of the per employee KPIs or sales per employee and OP per employee that you’ve put up there alongside return on invested capital. Could you explain a bit what made you settle on these as the most appropriate KPIs? And also, if I may, as a follow-up, whether or not you’ve said anything really planned on headcount? Thank you.

[Jun Seki:]

Thank you. I’m very happy to have this question. Actually, I wanted to have a discussion. Let me introduce where we have passed, okay? At landing FY ‘20, our sales is ¥1.6 trillion. And then we have 120,000 employees globally, okay? We had many employees but we have reasons. Nidec is very cost competitive companies. There are many reasons, but one of the technical reason for that is we have very high vertical integrations. Many part supplier is just assembling, okay, maximum via machining but they don’t cast, they don’t press. Of course, many of them don’t produce die or winding machines or some machinery equipment assembly treatment by themselves. But we do. That’s why we are very cost competitive. But at same time, that brings more employees than standard company, okay? One of the point is if we’re going to go ¥10 trillion, which is 6x from 20s, do we really have over nearly 1 million employees, of course, not. We cannot maintain those. So what I conduct is while we are keeping cost competitiveness, within this very high vertical integration, but we have to make more efficiency for not only direct labor, but also indirect labor. So, of course, digital solutions for indirect labor, is digitalization. We still have a very much manual work. And also because of complicated organization, probably we are doing some unnecessary work, whilst more simplification in the organization. Those are solutions for more productivity from the Nidec side. And for that upside, standard introduced more automation, okay. Nidec – many of Nidec plants are located in cost competitive countries such as Thailand, Vietnam and then China, and then Mexico, and in East Europe. And then when we introduced our facility in there, originally, labor cost was very low. So we – and at the same time, we didn’t know if very good sales happened. So for the introduction, we were very careful not to invest too much. So we skipped and removed automation – investment for automation. So naturally, we have many people. Then 10 years and 20 years from now, and almost no exceptions, cost-competitive country increased their standard labor cost. So still competitive compared with the U.S. or Europe and Japan, but not competitive as like 10 years, 20 years ago. So now I decided whenever we go as a new plant, we introduced higher automation from the beginning with no hesitation. So lately, we announced that we are installing a new facility in Serbia Serbia in our company to introduce very high capability, high automation machine. That will help this productivity improvement, okay? So when we’re reaching the ¥10 trillion hopefully, we have around only 400,000 employees, not 1 million. Does that answer your question?

[Unidentified Analyst:]

Thank you. Yes, that’s perfect. Thank you.

[Taku Miyagawa:]

Thank you very much, . We have only a few more minutes and the next will be the final question. Mr. Ramsai Neelam from State Street Global Advisors again. Please go ahead.

[Ramsai Neelam:]

Yes. Thanks for taking my question. So just referring to page in the presentation, so when we compare Vision 2020 and Vision 2025, Vision 2020 somewhat lacks some – I mean, unable to reach the target precisely. So what is different when we compare vision – I mean, what, is the difference in strategy when we compare Vision 2025 and Vision 2020? What is – can you give us some color around that to achieve Vision 2025?

[Jun Seki:]

Thank you, Ramsai. This is a key question I anticipated. Vision 2020 took so long time because we didn’t have Seki. Now he has Seki. He was only the leader leading this company, but we can share leadership. That means our DNAs, micro management, micro management, complete micro management by just Nagamori was impossible. That was the main reason why it stuck, okay? So now we share micro management from Nagamori side and Seki side. And then it’s proving 2020, very successful. It’s much more better growth than ‘18 and ‘19. So now while we are doing micro management, also, I bring the many people. And then those people are very professional to how should I say, prepare for future growth not too much excitement for current performance but for futures. So those are main difference. And then, of course, as today’s presentation showing, I think we can’t disclose everything, because we have a competitor and then we have stakeholders. And then we can – if we’re showing too much, too precise what we are going to do, that makes our activity difficult but we have a very detailed plan to achieve. So for example, like the vehicle side, as I said, it’s a long lead time anyway. Then we have a very good visibility up to ’24. This show many big automotive-related company working for ‘25, but I think it’s pretty much close to what I won’t, okay? So we have more management capability ability and actually, results and visibility is telling us this is very much a practical growth.

[Ramsai Neelam:]

Yes. That’s helpful. Thank you. Thank you very much.

[Jun Seki:]

So, again, I cannot tell you too much precise.

[Ramsai Neelam:]

Yes, yes, I got your point. Yes.

[Jun Seki:]

Okay.

[Taku Miyagawa:]

Okay. Thank you very much, Ramsai. Now we’d like to conclude the conference call. I’d like to appreciate for your participation. Should you have any further questions, please don’t hesitate to contact Nidec Corporation or U.S. sales representative at Mitsubishi UFJ Morgan Stanley Securities. Again, thank you for joining the conference call. And you may now disconnect.

[Masahiro Nagayasu:]

Thank you.

[Jun Seki:]

Thank you. Bye-bye.