Presentation Q&A

Q: What were the actual Q2 capacity utilization ratios for MLCCs and SAW filters? What are the projected utilization ratios for October and thereafter, and what are the plans for capital investment for the next fiscal year?

A: In Q2, MLCCs used 95% of their 27-day operation month equipment capacity. MLCCs are expected to achieve 90% and 88% in Q3 and Q4, respectively. In the quarter under review, SAW filters used 100% of their 27-day operation month equipment capacity. Order intake stabilized after the huge order placed by a Chinese smartphone manufacturer in April, but in October, it was at high levels again if not comparable with the levels for April, making us expect the capacity utilization ratio to remain at 100% in Q3.
We will increase overall production capacity for MLCCs by 0 to 5% by implementing measures including the improvement of product mix. The production capacity for SAW filters, which was increased by 30% in the previous fiscal year, will be increased by 15% in this full fiscal year. 
We have yet to determine capital investment plans for the next fiscal year. We will determine these plans by carefully studying developments in our global share.

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A: We will expect to have nearly the same inventory levels at the end of March 2015 as we had at the end of last September. In Q3, we aim to secure net sales by drawing down the existing inventories. In Q4, we plan to increase inventories to accommodate an expected increase in order intake in early spring. 

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A: We anticipate that the component mix will continue to improve for us the next fiscal year and thereafter. This is particularly true for RF components.

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A: Despite the slower growth in production, we will get ahead of the competition by establishing mass-production techniques in order to accommodate demand for all of the new technologies and products that are emerging with the progress in LTE. We will also ensure growth in the next fiscal year and thereafter by making good preparations to supply new products. In the process, we expect the growing number of components per smartphone will be the greater driver of growth.

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A: We aim to increase the overall share of our MLCCs by meeting customer requirements with new products, such as compact thin-layer types, highly reliable types for automobiles, and embedded capacitors.

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A: In Q3, we anticipate lower earnings compared with Q2, partly because of increases in costs including depreciation expenses.

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A: We expect that an increasing use of carrier aggregation devices will accelerate modularization. It also leads to a new increase in demand for components.

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This Q&A contains forward-looking statements concerning Murata Manufacturing Co., Ltd. and its group companies' projections, plans, policies, strategies, schedules, and decisions. These forward-looking statements are not historical facts; rather, they represent the assumptions of the Murata Group (the "Group") based on information currently available and certain assumptions we deem as reasonable. Actual results may differ materially from expectations due to various risks and uncertainties. Readers are therefore requested not to rely on these forward-looking statements as the sole basis for evaluating the Group. The Company has no obligation to revise any of the forward-looking statements as a result of new information, future events or otherwise.

Risks and uncertainties that may affect actual results include, but are not limited to, the following:

1.economic conditions of the Company's business environment, and trends, supply-demand balance, and price fluctuations in the markets for electronic devices and components
2.price fluctuations and insufficient supply of raw materials
3.exchange rate fluctuations
4.the Group's ability to provide a stable supply of new products that are compatible with the rapid technical innovation of the electronic components market and to continue to design and develop products and services that satisfy customers
5.changes in the market value of the Group's financial assets
6.drastic legal, political, and social changes in the Group's business environment; and
7.other uncertainties and contingencies.

The Company undertakes no obligation to publicly update any forward-looking statements included in this Q&A.