Flexible production structure and local sourcing across 2 bases in South Korea and Japan

「Although business is currently performing well, we will also optimize the production systems and workforce allocation at the two Japan-South Korea sites in preparation for sudden changes in market conditions.」

「In the two core businesses, sanitary inspection equipment and semiconductor materials, operating days were reduced through inventory adjustments and production efficiencies, while rotating attendance became necessary in indirect departments.」

「Shipments for the six-month consolidated period reached a record 49.83 million m since the company's founding, while sales volume increased 15.4% year on year. Revenue rose sharply by 26.8% year on year as the mix shifted toward higher-value-added products and the yen weakened against the South Korean won and Taiwan dollar. Shipments had remained at record levels for 8 consecutive months, but signs of a pause emerged during the second quarter. The production capacity expansion planned for the current fiscal year will proceed as scheduled in preparation for increased sales from the next fiscal year onward.」

「Sales volume for the first-quarter consolidated period reached a record high of 26.62 million m since the company's founding, increasing sharply by 23.1% year on year. In June 2021 alone, combined production at the Japan and South Korea sites reached 10 million m for the first time.」

「Production adjustments at the two Japan-South Korea sites were lifted in September 2020, and we will expand production capacity going forward to meet strong demand.」

「On the production side, we temporarily suspended 2-shift production in South Korea and actively implemented temporary furloughs in Japan, working to reduce costs and improve cash flow.」

「Amid the spread of the novel coronavirus, we temporarily suspended 2-shift production in South Korea and implemented temporary furloughs through production adjustments in Japan. We have also substantially reduced inventories to increase retained earnings.」

「To achieve the new five-year plan (NP5Y-Challenge50), we have positioned this business as a stable-growth business, and production under the full 2-shift system, the first at the South Korea production site since its founding and launched in July 2019 to accommodate further production increases, is progressing smoothly. Monthly production in September 2019 reached 9 million m, matching the special-demand level recorded in 2007 during the transition from analog to digital terrestrial broadcasting.」

「To achieve the new five-year plan (NP5Y-Challenge50), we have positioned this business as a stable-growth business and, while concentrating management resources on it, changed the South Korea production site to a full 2-shift system for the first time since its founding in July 2019 in order to establish a further production expansion framework.」

「To enable increased production in response to strong demand, we invested in expanding the manufacturing lines, resulting in a ¥58 million increase in property, plant and equipment and intangible assets.」

「With growth of 20% or more also expected for the current fiscal year, we have completed production expansion to raise the combined monthly capacity of our Japan and South Korea plants from the previous year's 5.7 million m to 8 million m. Orders have exceeded 7 million m for 6 consecutive months since July 2018, while shipments for the nine-month consolidated period increased sharply by 23.2%, resulting in a substantial increase in profit.」

「Cumulative shipments for the six-month consolidated period increased a further 21.9%, and orders exceeding 7 million m per month, well above the combined Japan-South Korea monthly production capacity of 6.5 million m (previous-period average: 5.7 million m), have continued for 5 consecutive months. As the world's No. 1 spacer tape manufacturer, we will urgently proceed with another capacity expansion, including preparations for 4K televisions, which consume 2.6 times as much of our Group's spacer tape, as well as smartphones, IC cards and medical devices, for which partial adoption has begun.」

「Against this backdrop, as the world's No. 1 spacer tape manufacturer, we will undertake a further expansion of production capacity at our existing facilities in both Japan and South Korea without additional investment, establishing a robust production system capable of meeting the expanding television market.」

「We improved the manufacturing environment, including installing clean rooms in connection with the plant relocation, and invested in expanding production lines to enable full production of spacer tape. As a result, property, plant and equipment and intangible assets increased by ¥157 million.」

「While advancing IoT for centralized management of the South Korean and Japanese bases, we will build a stronger production structure to meet strong demand.」

「Substantial further growth is expected during and after the current consolidated fiscal year. We will increase the takt time of all production lines at both the South Korean and Japanese bases by 1.5 times and execute the second step of IoT by replacing existing equipment with the latest wireless-capable PLCs (programmable logic controllers), thereby strengthening production capacity and improving efficiency through equipment modifications.」

「Substantial further growth is expected throughout the current consolidated fiscal year and beyond, and we will work to improve margins by strengthening production structures at both the South Korean and Japanese bases and rationalizing operations through equipment improvements.」

「Substantial further growth is expected from the next consolidated fiscal year onward. To restore the gross profit margin from 45.1% in the current consolidated fiscal year to the 50% range, we will establish stable production at the Shiga plant as soon as possible and accelerate cost-reduction activities at both bases.」

「To meet strong demand, we changed Japanese production from a planned reduction to a full-operating structure amid the yen's appreciation trend, postponing the move to Shiga, and manufacturing labor costs increased.」

「In addition to agreeing with customers in South Korea and Taiwan to set selling prices linked to foreign-exchange rates to absorb the continuing appreciation of the yen, we increased the proportion of production in South Korea. As a result, sales growth and a substantial improvement in margins are expected in the semiconductor materials business from the third quarter of the consolidated accounting period onward.」

「As measures, we asked our customers in South Korea and Taiwan, for the first time, to set sales unit prices linked to foreign-exchange rates, while shifting production toward greater weighting at the South Korean plant,」

「2 production bases in South Korea and Japan, establishment of a flexible production structure, and measures against foreign-exchange fluctuations through local sourcing of materials」