Dear all, thank you very much for joining Nidec conference call. I'm 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 ready in front of you. If not, please download the files on Nidec homepage right now. Please note this call is being recorded, and the conference materials will be posted on Nidec homepage for the coming week for investors and analysts who will not be able to join today's call. Now, I'd like to introduce today's attendees from Nidec Corporation. Mr. Jun Seki, Representative Director, President, and Chief Executive Officer, and Mr. Hidetoshi Yokota, Senior Vice President and Chief Financial Officer. First, Mr. Yokota will make a presentation. After his presentation, we'll move on to a Q&A session, and Mr. Seki and Mr. Yokota will answer your question. Mr. Yokota now presents Nidec's Q1 2021 results, future outlook, and management strategies. Mr. Yokota, please go ahead. Thank you. Greetings from Kyoto, Japan, to everyone, and welcome to today's conference call hosted by Nidec. I'm 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 forward-looking statement, please see slide two of our presentation material for details. Today, we have two chapters in the presentation. Now, as first chapter, I'm going to review the key figures for fiscal year 2021 first quarter. Please see slide three for our Q1 results. Let's move to page four. The net sales was record high of JPY 447.5 billion, or 32.8% higher year-on-year. The operating profit made a significant increase of 60.3% year-on-year to JPY 44.6 billion. The first quarter's operating profit ratio was 10% due to enhanced profitability through WPR4 program implemented since FY 2020, and also due to sales recovery from FY 2022. On slide five and six, here are the pictures showing the net sales and operating profit walk year-on-year and quarter-on-quarter, respectively, by product groups. As you see on slide six, Appliance, Commercial, and Industrial, or ACI, and Machinery are continuously performing good thanks to the growing demand, such as compressor or motors for home appliance, AGV, and testing machine, etc., while net sales and operating profit of small precision motors and automotive products decline due to continuous investment for new business area. It is HDD shipment and impact of semiconductor shortage. Please turn to slide seven. 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. 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, et cetera, for our midterm goal. Please see slide eight. The automotive existing business, which means automotive business excluding impact of traction motors related business and Nidec Mobility business, is keeping double-digit operating profit ratio for four consecutive quarters after bottoming out in the first quarter of FY 2020. Please see slide nine. The cumulative number of EVs using our E-Axle has reached 161,000 units. In both mentioned, the monthly sales volume has exceeded the past peak in December 2019, boosted by recently launched models such as Aion Y by GAC and Geometry A by Geely. Please see slide 10. The operating profit ratio of ACI is steadily improving after bottoming out in the fourth quarter of FY 2019 and reached 10.5%. Please see slide 11. The operating profit ratio of other product groups, which consist of machinery, electric, and optical components, and others, keeps achieving around 15% level after bottoming out in fourth quarter of FY 2019. We want to move to second chapter of the presentation. Please see slide 13. From here, I'm going to explain our new midterm plan called Vision 2025. Based on the solid foundation period led by the founder, Shigenobu Nagamori, Nidec is going to enter a new era with a new management structure driven by the new CEO, Jun Seki. We are aiming for JPY 2 trillion in sales in FY 2022, which was originally the target for FY 2020. Celebrating our 50th anniversary in FY 2023, aiming for JPY 4 trillion in sales in FY 2025, which is the final year of Vision 2025, and eventually JPY 10 trillion in sales in FY 2030. We keep changing and growing sustainably for 100 years and beyond to be truly a global company. Please see slide 14. As you can see in the middle box, we are going to focus on JPY 2 trillion sales target again in FY 2022, which was the target for the previous midterm plan, Vision 2020. In fiscal year 2022, we are also aiming to increase the sales and profit per employee by 30% by improving the productivity and achieve over 10% return on invested capital or ROIC. In the right box for FY 2025, likewise, JPY 4 trillion in sales, double the sales and profit by employee, and to become a top-rated ESG company. Please see slide 15. In Vision 2025, we are going to talk about growth strategy, including organic plus M&A and efficiency improvement in capital investment. In FY 2025, we are aiming to achieve JPY 3 trillion organic sales and JPY 1 trillion through M&A. For the JPY 3 trillion organic sales, we are aiming for 15% operating profit ratio and 15% ROIC for the total company. Please see slide 16. In Vision 2025, we are aiming to achieve high growth with aggressive investment in the key growth areas. You see the graph on the right, small precision module organic growth target is set at JPY 600 billion, while sales from new M&A are expected to be JPY 200 billion. Automotive and ACIM organic sales are JPY 1 trillion, new M&A of JPY 300 billion respectively, and other product group organic sales of JPY 400 billion, plus new M&A of JPY 200 billion. Please see slide 17. In Vision 2025, we will evolve our business model and business areas to accomplish JPY 10 trillion in sales. This slide is illustrating the example of EVs and robotics, where the horizontal line showing business areas goes from device alone, module, system to solution. The vertical line showing expected market size expand accordingly. From left bottom to right top, we design the business expansion with seamless integration. Please see slide 18. Nidec is leading the EV era as a company who triggers a creative disruption and goes beyond the industry tradition. As you see the graph on the right, all new vehicles sold in China will be eco-friendly in 2035, and the European Union has proposed effective ban for new ICE vehicles such as gasoline vehicles, including hybrid ones, from 2035. Based on these strong tailwinds in our favor in the EV market, we have revised up the sales target volume for our E-Axle in FY 2025 from the previously announced 2.5 million to 2.8 million units. Please see slide 19. Japanese EV startup, ASF, has decided to adopt Nidec's traction motors and inverters for G050, an EV for delivery that ASF designed. This is the first time that our traction motors will be adopted for EVs running in Japan. ASF is in charge of R&D in collaboration with a major Japanese logistics company, Sagawa Express, and its production will be conducted by Chinese automaker, Guangzhou Wuling Automobile Industry, under the umbrella of Guangxi Automobile Group based in Guangxi Province, China. This is a brand-new project where the model is designed in Japan in accordance with the Japanese vehicle and load standards, but produced overseas. Please see slide 20. We are going to set ROIC targets in line with each business unit strategy and conduct improvement activities. We will invest over a total of JPY 1 trillion, including CapEx and M&A, and accelerate growth while aiming to optimize CapEx to sales ratio. Please see slide 21. This is one of the important initiatives for Vision 2025. We are going to declare carbon neutrality in Scope 1 and Scope 2 by FY 2040 and lay out Scope 3 supply chain action plan by FY 2025. We will reduce our CO2 emissions through extensive introduction of renewable electricity, efficiency boost, shift to low carbon fuel, and funding third-party projects to offset unavoidable emissions. This is the end of the presentation material. Last but not least, on behalf of the entire management team, I would like to thank our customers, business partners, suppliers for their support and commitment, as well as our shareholders. At this time, we would like to open up the call for any questions. Thank you. Thank you very much, Mr. Yokota. Now, we'd 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. We'll now pose four questions from the participants. Okay, our first question today is from [James Passport] from State Street. Sorry, [Arma Capital]. Q uite right. Thank you very much for your 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 comment on your presentation on profits down on prior investments for customer new products. Can I check, can you be a bit more specific for that? That's, I assume, in other precision motors. To help me understand what's going on within it, is it also possible to break down profits between the HDD side and the other precision motor side? I'm interested too, to look there as to what's happening to the trends in profitability for other precision motors, and why. Thank you. James, maybe your voice is a little bit difficult to hear. Would you just ask very shortly, just on the point? Would you like me to repeat the whole question? No, just the key question that you made. Key point. Okay. I'm after for precision small motors, if you can help me understand. Yeah, which motor? Precision motor. Small precision. Small Small precision motor. Okay. The investment that we are making for the future, what kind of specific area? That's what the first question, correct? Mm-hmm. It's why profits went down. There's the prior investment for customer new products. That's point one, if you could explain that. Then point two is really looking at if you could give me a breakdown of profitability between the HDD side and the other precision motor side, and comment on that, please. Okay. You have the slide, and slide number seven. We are showing you there the past nine quarter of results. Those are divided into the small precision motor in the blue and the green in the non-ACI motors. Also, we are showing you what the OP margin of the segment. Clearly, as you see, in the past nine quarters, the top line is coming down, even say at most a flat or coming down, and then the OP margin is flat. Okay. As you hear that we are looking at the growth of the top line in our Vision 2025, even from there to 2030. Thereby, we need some top line growth in this segment. Okay? 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. With a new focus in the new market, we are applying to increase our top lines. After that, basically with the profit. This is basically the strategy in this small precision motor. The number of the small precision motors is in slide number 16. The FY 2020, we reported the top line on this small precision motor segment, JPY 443.6 billion, 443.6. With the focus of the new market, we are going to grow organically up to JPY 600 billion at minimum. In order to adding some, a new scheme or new M&A, we are looking at JPY 800 billion top line in 2025. You might be asking what kind of M&A. Clearly, if we are coming into the new market, then there are several functions that we need to cultivate that market. We were looking at the opportunity in these areas, as well as the expanding and supplying is a key strategy at this moment for 2025. 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 merger and acquisition. James, is that fine? Yes, that's interesting. I note some of the products you're targeting are very similar to one of them is actually in the automotive area, a mini EV. If you look at your products in the automotive side, they must be just one step down. It's interesting you choose to put the mini EV side and also mobility, you choose to put it here rather than in automotive. Wouldn't it make more sense to have it in there? The key point is the wattage is completely different. When we're talking about the mini EV, we are looking at up to 30 kW, where E-Axle or traction motor is, so far, we have been looking at 50 kW. 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. For the other motor in this chart, if you're looking at the slide number seven, the mobility. For example, e-bicycle. E-bicycle is something like a 400 W, 600 W, and the e-scooter, 400 kW, 600 kW, 1 kW, 1.2 kW, 1.8 kW, and that type of range. Yeah. The electric motorcycle, up to a 1 kW, 2 kW, 3.5 kW, and 4 kW, in that range is the motorcycle. Okay. Clearly, in the small precision motor area, the wattage is small. Also, the other difference is the mini EV market and the mobility market, the timeline is much shorter than the normal, so-called EV production lines. In the EV production lines, maybe from the contract to the start of the mass production, year and a half minimum. Okay? In the case of mini EV or mobility, the timeline is much shorter. That will be more similar to the small precision motor. Thereby, at this moment, we are planning to do these markets by the small precision people. James, is that fine? I think it's fine. Can I just ask, you've 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 had and the potential for that market. Is that in this 30-kW range, or will that stay within auto? Could you just explain to me where that potential market fits? Is it here or on the other side? James, this is Seki speaking. Thank you for your questions, thank you for your very good memories. Exact name of that small EV is Hongguang Mini, produced by SAIC-GM-Wuling. That motor size is 20 kW. Thank you. On top of Nagayasu's explanation from Nagayasu-san, actually, as 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. As a matter of fact, automotive group already run out their resources because too many order takings from current automotive companies. Actually, total runs is exceeding 40. Of course, at Nidec, we don't want to lose this opportunity for small EV side. Concurrently, precision motor division lost the sales. They have very good resources, engineers, and then some facilities. Discussion between Nagamori-san and myself, we decided, let's put this into precision motor area. That's on the simple decisions. We want to be very flexible. Once precision motor has many other business, while automotive has settled down, we may shift this business into automotive area again. At this moment, our decision is put this 30 kW, 20 kW motor into precision motors. Okay, brilliant. That's very clear. Thank you very much. I know it's less interesting, is it possible, just before I stop, for you to let me know for the HDD side, a couple of things. One, what was the operating margin of just the HDD business, which is obviously separate to Precision. Also, you give some industry figures for shipments, HDD shipments, I think. Do you have your own company shipment figures and any comment on the ASP or change of mix that you can give us? Thank you. Margin. We say roughly a 30% at this point on the spindle motor business. 30%? Yeah. We have been reporting roughly 30% in maybe two or three quarters already in a row. Yeah. Not changed in Q1, yeah? The key is the mix is shifting to a more high capacity one like the nearline, and those are really a high margin. Yeah But as long as that so-called product mix is going to be shipped into a more higher capacity, maybe we can keep a good margin in there. Okay? Yeah. That's great. What were your volumes in Q1, please? Yeah. The total volume of the market is maybe at this point, flat. Within that flat you can see number seven, then share is right. Our margin is right. Okay. The market, at this point, we say in terms of the product mix, as I say, nearline is increasing, but 3.5, 2.5 is coming down. Okay. Overall, we say the market for this 2021 is roughly flat or slightly down from the previous year. That's what we are looking. Okay. No, I understand. 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 shipments, I know they're very high value added. What were Nidec shipments, please? Okay. Maybe you were talking about the market number is JPY 64, but our number is roughly, say, JPY 31 million this quarter. 31. For this quarter, sorry, we have to admit that we are not a majority of the market. That will be affected by other inventory questions. As you understand that there is a streamline of the HDD makers and stream of movement. Before and the three customer, now Seagate only, which are only Nidec. It's a huge change on the 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're looking at the 7%, we have shown you a huge increase of our sales in Q2 last year. Q1 this year, currently MinebeaMitsumi has a similar situation. Thereby they increase, there we decrease. Very simple mathematics. Okay. I completely understand your strategy here. It's about making money, not about share. Good. Okay. Well, I probably better let someone else ask a question, but thank you very much. James, thank you. Our next question is from Ramsai Neelam from State Street Global Advisors. Please go ahead. Congratulations on the great quarter, and all the best Vision 2025. My first question is on chip shortage. 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? Ramsai Neelam, this is Jun Seki speaking. Hi. Shortage is occurring not only semiconductors, but also plastics, and then magnetic steels, and coppers, and other standard steels. It's very difficult to say damage by semiconductor alone. Overall, I think price increase requirement was about 5% of our total revenues. Let's say our total revenue in Q1 was JPY 4,400 okay. 5%, therefore, it's around JPY 200 okay. That was the impact. Of course, we cannot absorb all. First, we made our cost reduction side, our direct labor cost to our other expense, and then second, we request our supplier to wait for this increase. Third, we negotiated our customer to share this increase with our price and damage. Finally, we managed within the 1% damage, integrated damage from all, not only semiconductors, steels, caps, plastics. It was therefore around JPY 40 billion damage. That's we are seeing. That is like a financial review. We have a volume shortage from customers. For automotive areas, roughly JPY 120 billion sales is lost because end users want to purchase vehicle, but our customer cannot build vehicle. We can build our components, but because our customer cannot build their vehicles, we cannot deliver. That was a sum of represented quantified impact. If it's okay for you. Yeah, that's great. And probably the forecasting Q2 and Q3. Any outlook? Right. We don't know. We have our assumptions, but we don't want that really happens. We are checking day by day. It's a bit unpredictable. Overall, tendency is, May was really bottom. It's a very, very heavy rain. June, still very heavy rain, but better than May. July, it's raining very severely, but better than June and May. Probably it's little better in August again. I'm predicting from September onwards, probably much better than now, but not perfectly meet market demand. Probably real recovery happen only end Q3 to Q4. That we are checking. Yeah. That's perfect. My next question is on E-Axle 2025 targets. It's good to see that your target improved from two point 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? Also, if I can ask a question on the pricing of E-Axle, I believe it is around $1,200 previously. Can you give some color on the price trends or any competitive pricing there? Okay. You have a very, very good memory, sir. I don't want to disclose this information to outside, but, you or investor side is okay. But don't put this information onto your website. Okay? I trust you. Real order we already got is about 1.9 million. Okay? RFQ with high probability we are seeing is around 180. Sorry, 1.8 million. Another 1.8. Sorry, maybe I said wrong. Real order we got is 1.9 million. Very high probability RFQ is 1.8 million. We compressed that high probability half. I add that 0.9 million onto 1.9 million real order. That makes 2.8 million. Okay? Price-wise, you had $1,200 for 150 kW. Overall market tendency is supposed to be less price than that. Actually, market is moving high torque side. If your performance is same, definitely price is going down. Because market is requiring more power and more torque, actually price stays same. That's the situation. That happen for high power motor, such as 150 kW and 200 kW. I think 70 kW or 50 kW motor, which we have not got a real product yet, but I think that is probably go down further. We talked about the 20 kW and 30 kW. That is also has a very soft decline for this year. We are sure we can make a profit. Our profitability become clearer in 2023. Our plan is we sort out all accumulating negative profit in 2025. That's great. Just to follow up on that, on the cost side, I remember earlier, for example, I think it's a 150 kW motor costs around $1,000 to produce. For example, inverter costs $700 and gears cost JPY 200 and motors cost $ 100. You aim to reduce the cost of production, thereby achieving the operating margins. May know any update on that front? What's the progress on cost reduction? Of course, you're doing M&As and doing some arrangements. Is there any change in your targets to reduce, especially inverters and gears by 50%, I think. Can you give some color on the cost side as well? Ramsai, thank you. I think that this figure is too sensitive even to investors. I cannot clearly disclose. We are meeting our original plan. We have another balance, which is semiconductors, magnetic steels, plastic increase, which really impacting very heavily. Again, same stories. We are requesting further cost reduction to in-house teams. We are requesting purchasing team to control this price increase. We are requesting customer to share this price and the cost increase. That remain on top of our planned cost reduction. That's great. Maybe my final question on your JV plan. That seems really exciting. Can you give your JV plan with Foxconn? What is the real value add, you're expecting in the long run on the JV you're planning to have from 2022, if I'm not wrong? Can you give some more color on the JV, please? Ramsai, if you promise me you don't put this into your minutes or something, I can go very straight. You won't put this in your Internet or website, yeah? Yeah. I think this teleconference will be published somewhere. I'm not sure. If this will be published, I have to be very public for comments then. Our main customer, automotive makers. Okay. Particularly currently, most of Chinese player were approaching us. They are very good customer. This is straight answer to your not question. They are very good customer because they don't hesitate to outsource motor. Also, their lead time from order place to SOP is very short. Okay. For example, if we get the order from standard automotive player from Europe or Japan, usually it takes minimum 2.5 years, maximum 3.5 years. It's a July 2021. If we take order place now, it's sometimes January 2025. That is SOP. During that period, we just spending our money. We can't get the money back. The Chinese customer is very attractive because their lead time is short. Let's take an order this July, this year now, and then their SOP is generally like a Q3, quarter three of next year. It's a very quick return. That's one of the reason we love Chinese customer. We have therefore a standard customer type. They stick in in-house at this moment. A type of Chinese customer, they don't care to outsource. They come to us very quick. In between is like JVs. JV with Stellantis and JV with GAC Motor. They don't want to release this half of vehicle to completely outside, but they don't want to spend too much money for this one. They request us to come and then share investment and development costs. Instead, they are exclusively releasing their demand to us. It's a win and win. Okay? While we are having increases expanding those business, we are seeing a newcomer such as Foxconn, and ASF, Yokota-san mentioned. Those are new type. For us, any type is okay as long as they use motors. It's nothing special. They need 150 kW motors or 100 kW motors or 70 kW motors. We can offer. Okay. Meaning of JV with Foxconn is a bit different because reason from Stellantis or reason from GAC Motor is deep validation. While sharing the investment and development cost. For Foxconn, I think they need a strong knowhow, not only from motor side, but also many other key component of vehicles. I don't have any clue, but I guess they have a similar JV with other key component players. Okay. Therefore, attractiveness from us to them is clear. We are very reliable, experienced motor company. 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 confidentiality agreement, I cannot tell you that clearly, but many famous companies want to build their own EVs. We don't know if this really happened or not, but I don't want to lose these opportunities. That's why we agree to go deep dive for another six months. Our agreement is, if we agreed for all points, we make a final contract in December this year. That's the content of the JV. I mean, agreement of study at this moment. Okay. Thank you. Thanks for your answers. I'll join back with you. Thank you. James, thank you. Our next question is from Ms. [Yung Lee Du from 91]. Please go ahead. Thanks for allowing me to ask the question. Actually, my question just got asked. It's about the JV with Hon Hai and Foxconn. I have another question on e-scooters. Right now, I'm aware that there's a regulatory-driven replacement demand in China right now. I'm wondering what's your customers in terms of e-scooters and e-bikes, et cetera, and if you could give us the rough ballpark of your market share, if that's possible. Thanks. Okay. I don't know if you know or not, in China, most of the motorbike is already driven by motor. It's very different from Indonesia or India. Most of the Southeast Asia country has a huge volume of motorcycles, it's still driven by engines. China, let's say 90%, 95% of motorbike is driven by motors, okay. I think most of the current motor is not so efficient. Incentive for replacement is to accelerate efficient motors. For these two areas, we are newcomers, because the current market is dominated by Chinese players. We already found that we have enough capability to build our motor with the same price as them, with much better reliability, durabilities. That's why current top player of this electric motorbike has agreed to source us. Actually, our SOP, start of production, for first product is in September this year, two months from now, okay? To answer your questions, probably this is very good opportunity for us to increase our sales. We have to take market share from our competitors, because we don't have enough market share right now, okay? Replacement and then increased demand is good. Before that, we have to take market share from our competitor. That is current situation. Of course, it's same logic for power assisted by bicycles and others. Thank you. Is it possible to name any specific e-scooter customer? Sorry. For high probabilities. Once this is announced by our customer, we can follow, but we cannot announce by our side first. Okay the top players. Okay. Right. Okay. Thank you very much. Okay, thank you very much. Our next question is from Mr. Theo Wyld from Ruffer. Please go ahead. Hi. Thank you very much for taking the call, and again for holding the conference call. My first question is around the ¥1 trillion of CapEx and M&A spend guidance that you've given over the next five 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. Thank you. M&A side, we can save our investment because they already have a capacity and facilities. If you know M&A, we have to do it by ourselves, and then we have to invest. Those are pretty much in line and almost same figures. Let's say we purchase JPY 50 billion companies, and then they have almost JPY 50 billion assets, so we don't have to invest. Depending on what size M&A we do, currently, we can tell you roughly it's 50/50. JPY 0.5 trillion for our own investment, JPY 0.5 trillion for our M&A. If we have a very good items or company to purchase, even JPY 6.5 trillion, we do. Okay? To maintain that flexibility, what we have to do is we have to procure our equipment as low as possible. Okay? One of the solution for that is in-house machine tool builders. As I already explained at a 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. On top, we merged, acquired Mitsubishi Heavy Industries machine tool divisions. It's not clearly closed yet. I don't think it's too far from today. It's probably a very short period. Since they are already inside, we can purchase very reasonable price. Of course, on top of that, we have a very strong know-how to make a cost slimmer. Let's say, we can purchase their equipment, 50% from their previous price. That is a strength. JPY 0.5 trillion for investment, JPY 0.5 for M&A is just very large, but flexible balance, to increase that flexibility. We are continuing to put the effort for capital investment reductions. That effectively happens. Okay? Thank you. Can we assume that your M&A targets are, I mean, this is very rough, but based on JPY 0.5 trillion spend, so JPY 1 trillion in sales, they're 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? Theo, it is yes and no. If you go to page 16 Yep. Segment by segment, target is actually different. We are already large, so we used to purchase like JPY 10 billion companies, but now we can go very high if we want. Automotive sector is the one, probably we should go very large one. Meanwhile, like small precisions and then other product, probably we still have to stay a very small one. Then, it's small, but still very profitable one and delicious for us. Segment by segment, actually, we cannot make a general comment. It's different. We have a target. Okay. Thank you. That's very clear. Thanks. Just, if I may, on a slightly different topic, I'm interested in the emphasis of the per employee KPIs, so 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? Also, if I may, as a follow-up, whether or not you've said anything re plans on headcounts. Thank you. Thank you, Phil. Thank you. I'm very happy to have this question. Actually, I wanted to have this question. Let me introduce where we have passed. Okay? At landing of FY 2020, our sales is JPY 1.6 trillion, and then we have 120,000 employee globally. Okay? We have many employee, We have reasons. Nidec is a very cost-competitive companies. There are many reasons, One of the technical reason for that is we have a very high vertical integrations. Many part supplier is just assembling. Okay? Maximum, they are machining. They don't cast, they don't place. Of course, many of them don't produce a die or winding machines or some machining equipment, or assembly equipment by themselves. We do. That's why we are very cost competitive. Same time, that brings more employees than standard companies. Okay? One of the point is, if we going to go JPY 10 trillion, which is six times from twenties, do we really have over nearly 1 million employees? Of course not. We cannot maintain those. What I conduct is, while we are keeping cost competitiveness, we don't abandon this very high vertical integrations, but we have to make more efficiency for not only direct labor, but also indirect labors. Yeah. Of course, a typical solution for indirect labor is digitalizations. We still have a very much manual works. Also, because of a complicated organization, probably we are doing some unnecessary work. Therefore, we are disciplining more simplification of organizations. Those are solution for more productivity from the indirect side. For direct side, standard line introduce more automations. Okay? Many of Nidec plants located in cost-competitive countries such as Thailand, Vietnam, China, Mexico, and many of them East Europe. When we introduced our facility in there, originally, labor cost was very low. At the same time, we didn't know if really good sales happens. For the introductions, we were very careful not to invest too much, so we skipped and removed investment for automation. Naturally, we have many people. 10 years and 20 years from now, almost no exceptions, all cost-competitive countries increased their standard labor cost. Still competitive compared with the U.S. or Europe and Japan, but not competitive as like 10 years, 20 years ago. Now I decided whenever we go as new plants, we introduce high automation from the beginning with no hesitation. Lately, we announced that we are installing a new facility in Serbia. I am requesting leader of Serbia in our company to introduce very high technology, high automation ratio. That will help this productivity improvement. Yeah. When we reaching the JPY 10 trillion, hopefully we have around only 400,000 employees, not 1 million. Thank you. That answering to your question, Theo? Thanks. Mm-hmm. Yes, that's perfect. Thank you. Thank you very much, Theo. We have only a few more minutes. The next will be the final question. Mr. Ramsai Neelam from State Street Global Advisors again. Please go ahead. Yeah. Thanks for taking my question. Just referring to page in the presentation. When we compare Vision 2020 and Vision 2025, Vision 2020 unable to reach the target precisely. What is different in strategy when we compare Vision 2025 and Vision 2020? Can you give some color around that to achieve Vision 2025? Thank you, Ramsai. This is key questions I anticipated. Vision 2020 took so long time because Nagamori didn't have Seki. Now he has Seki. He was only the leader leading this company, but we can share leadership. That means, our DNA is micromanagement. Complete micromanagement by just Nagamori was impossible. That was the main reason why it stuck. Okay? Now we share micromanagement from Nagamori side and Seki side, and then it's proving to 2020, very successful. It's much more better growth than 2018 and 2019. Now, while we are doing micromanagement, also, I bring many peoples, and then those people are very professional to, how should I say, prepare for future growth. Excitement for current performance, but for futures. Those are main difference. Of course, as today's presentation is showing, I think we can't disclose everything because we have competitors, and then we have stakeholders, and then if we are showing too precise what we are going to do, that makes our activity difficult. We have a very detailed plan to achieve. Okay. For example, like a vehicle side, as I said, it's a long lead time anyway. We have a very good visibility up to 2024. We show many vehicle automotive-related company working for 2025, but I think it's pretty much close to what I want. Okay. We have more management power, management capability, ability, and actually result and visibility is telling us this is very much a practical goal. Yeah. That's helpful. Thank you. Thank you very much. Sorry. Again, I cannot tell you too much precise. Yeah. I got your point. Yeah. Okay. 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 your sales representative at Mitsubishi UFJ Morgan Stanley Securities. Again, thank you for joining the conference call, and you may now disconnect. Thank you. Thank you. Bye-bye. Thank you very much.