In the world economy during the nine months ended September 30, 2011 (January 1- September 30, 2011), whereas growth, albeit unstable, continued in emerging countries, signs of deceleration of growth appeared in developed countries as the impact of financial instability in the euro zone spread. Although the Japanese economy has recovered at a pace that exceeded initial expectations after slumping due to the earthquake disaster, in the short term, risks that threaten to slow the recovery, namely fears of economic deceleration in Europe and North America and yen appreciation, increased.
In this environment, Japan痴 parts industry increased and restored at a rapid pace the supply of products, mainly parts for the automotive industry, and appeared to make up for the supply decrease caused by the earthquake. Nevertheless, due to the impact of poor business conditions in developed countries, demand from non-automotive industries fell short of the prior-year level even after the negative effects of the earthquake were overcome.
Under these business conditions, looking at the sales performance of Mabuchi motors, sales volume decreased 0.2% and sales revenue decreased 6.0% compared to the same period last year. Furthermore, sales volume and sales revenue were 2.6% and 2.9% lower, respectively, than the third-quarter cumulative forecasts revised in August. As a result, net sales for the nine months ended September 30, 2011 were 59,478 million yen (a 6.0% decrease on a year-on-year basis). Motor sales, which account for the majority of consolidated net sales, were 59,385 million yen (a 6.0% decrease on a year-on-year basis).
The next section describes market trends and sales conditions categorized into separate applications for motors, which is Mabuchi Motor's principle business.
Descriptions of market trends and motor sales conditions by application
Automotive Products Market
Net sales in this market were 30,089 million yen (a 0.2% decrease on a year-on-year basis). Although demand in Japan for products including motors for mirrors and door locks, our major existing applications in this market, declined due to the impact of the earthquake disaster, it recovered sharply in the third quarter. Demand for nearly all applications was robust, including demand in other regions and demand for other products such as power window lifters, our prioritized business.
Audio & Visual Equipment Market
Net sales in this market decreased to 7,371 million yen (a 16.7% decrease on a year-on-year basis). Although demand for motors for CD players (CD players in cars), which had declined due to the earthquake disaster, recovered, sales of motors for DVD players fell sharply due to inventory adjustments by customers and a drop-off in demand in preparation for the peak year-end sales period.
Optical & Precision Instruments Market
Net sales in this market decreased to 9,534 million yen (an 11.5% decrease on a year-on-year basis). Despite recovery in demand for motors for inkjet printers and digital cameras, which had declined due to the earthquake disaster, demand in preparation for the peak year-end sales period was lower than in the previous fiscal year. Sales of motors for PC drives were robust, roughly at the prior-year level.
Home Appliances, Power Tools, Toys & Hobbies Market
Net sales in this market decreased to 12,390 million yen (a 7.5% decrease on a year-on-year basis). Whereas sales of motors for hair dryers, toothbrushes, and power tools remained strong, sales for other applications decreased due to a decline in demand for the peak year-end sales period.
Operating income for the nine months ended September 30, 2011 was 2,824 million yen (a 48.9% decrease on a year-on-year basis) as a result of higher materials costs triggered by soaring prices of copper, steel materials, and rare earths, key product components, despite a decrease in selling, general and administrative expenses. Although non-operating income versus expenses improved due to factors including an increase in income from the sale of scrap materials, ordinary income decreased to 4,021 million yen (a 34.8% decrease on a year-on-year basis) as a result of the decrease in operating income. Income before income taxes was 4,032 million yen (a 32.5% decrease on a year-on-year basis) as a result of the improvement in other gains versus losses due to factors such as the recording of a gain on sales of fixed assets at overseas subsidiaries. Net income for the nine months was 2,370 million yen (a 45.9% decrease on a year-on-year basis). The decrease is attributable to a higher consolidated effective tax rate resulting from a change in the estimate of deferred tax assets in the consolidated financial results and other factors.