Partial exit from low-profitability businesses

「By selling shares in certain affiliates and separating non-core and unprofitable businesses, the Company is improving capital efficiency while preparing to reinvest in growth areas.」

「As the recovery from the slowdown in the Chinese market has been delayed and price competition has intensified, we determined that it would be difficult to return net income to profitability under the current structure, even assuming medium- to long-term market expansion going forward.」

「These mainly comprised special retirement payments and other expenses associated with workforce rationalization at overseas consolidated subsidiaries as part of business structural reforms in the Information and Communications Solutions business.」

「These mainly comprised special retirement payments and other expenses associated with workforce rationalization at overseas consolidated subsidiaries as part of business structural reforms in the Information and Communications Solutions business.」

「These comprised special retirement payments and other expenses associated with workforce rationalization at overseas consolidated subsidiaries as part of business structural reforms, as well as inventory valuation losses associated with the withdrawal from certain businesses.」

「These comprised special retirement payments and other expenses associated with workforce rationalization at overseas consolidated subsidiaries as part of structural reforms in the Information and Communications Solutions business, as well as inventory valuation losses associated with the withdrawal from certain businesses.」

「Effective 1 October 2020, the Company transferred, through an absorption-type company split, the business conducted by the Company and its wholly owned subsidiary 古河マグネットワイヤ㈱ relating to the development, manufacture and sale of heavy-gauge winding wire and polyimide tubing (PIT) to EFMJ㈱, a wholly owned subsidiary established by the Company on 24 September 2019 and renamed エセックス古河マグネットワイヤジャパン㈱ on 16 November of the same year. The Company contributed in kind to Essex Furukawa Magnet Wire LLC, a joint venture with Superior Essex Holding Corp. (ownership ratio: FEMA 39% / SPSX 61%), all shares issued by EFMJ㈱, all shares issued by FE Magnet Wire (Malaysia) Sdn. Bhd., another wholly owned subsidiary, and all shares held by the Company in Essex Furukawa Magnet Wire Europe GmbH.」

「The Company made an in-kind contribution of all shares issued by EFMJ㈱, all shares issued by its wholly owned subsidiary FE Magnet Wire (Malaysia) Sdn. Bhd. (FEMM), and all shares held by the Company among the issued shares of Essex Furukawa Magnet Wire Europe GmbH (EFMWE; the Company's ownership interest: 49%) to Essex Furukawa Magnet Wire LLC, a joint venture with Superior Essex Holding Corp. (SPSX), through the Company's wholly owned subsidiary Furukawa Electric Magnet Wire America, Inc. (FEMA). FEMA and SPSX hold 39% and 61%, respectively, of the joint venture. The in-kind contribution, together with the transfer by SPSX, is collectively referred to as the “Transaction,” and the businesses concerned, including the Japanese business, are collectively referred to as the “Business.”」

「We will also promote improvements in low-profitability businesses and product groups and review the business portfolio using the operating profit margin on business assets (*2) as an indicator. After comprehensively considering business synergies with the infrastructure and automotive fields, which are priority areas under the medium-term management plan, we decided during the current fiscal year to transfer the copper tube business and restructure the winding wire business」

「After comprehensively considering synergies between the Company's priority businesses and products and this business, the further enhancement of this business's competitiveness, and other factors, we determined that transferring the business to a joint venture with SPSX, a subsidiary of Superior Essex Inc. (Atlanta, Georgia, United States), with which we had maintained a long-standing partnership in this business, would contribute to its continued growth. We therefore decided to conduct this transaction with SPSX.」

「We will review the business portfolio and strengthen earnings power by promoting business management focused on the operating profit margin on business assets, strengthening priority businesses and products, and transforming low-profitability businesses and products.」

「Based on the evaluation of effectiveness in the previous fiscal year, the Company actively discussed verifying progress toward the medium-term management plan and improving low-profitability businesses during the current fiscal year」

「In addition to strong demand for optical cables and integrated signal light sources in Europe, the United States and China, the partial withdrawal from low-profit businesses contributed to segment sales of ¥187.4 billion, up 0.7% year on year, and operating income of ¥8.5 billion, up 109.8%.」