Improving Business Fundamentals and Establishing the Foundation for Growth Strategies through Group Structural Reform

「Against this market backdrop, in the fiscal year ending March 2024, the final year of the 2021 medium-term management plan, our Group is making upfront investments that form the foundation for realizing its medium- to long-term growth strategy.」

「We also decided to conduct a private placement for our U.S. subsidiary Polar Semiconductor, LLC, with a private equity fund as the subscriber. This will advance our fab-light strategy, enabling us to expand stable wafer procurement capacity and reduce the burden of capital investment from a long-term perspective.」

「Against this backdrop, our Group identified the following priority areas for the current fiscal year: delivering the results of structural reform, realizing the growth strategy, ESG management, promoting DX and strengthening the financial strategy. We focused on specific measures to realize the growth strategy. By launching new power module products based on the SPP concept, the cornerstone of our growth strategy, we increased the proportion of new products in net sales, while launching production lines incorporating new smart-factory technologies and improving profitability.」

「In the first year of the plan, we sought to concentrate management resources on Sanken Core. We also completed by the end of December last year the production of inventory built up in preparation for the closure of 2 domestic semiconductor device plants, an initiative pursued as part of structural reform under the 18 Medium-Term Management Plan, and largely completed the optimisation of the production system.」

「In the first quarter of the first year of the 2021 medium-term management plan, we completed the transfer of the social systems business, which had been pursued as part of structural reform under the 2018 medium-term management plan, and continued to concentrate management resources on Sanken Core. We also accelerated development reform centered on the Monozukuri Development Center, which began operations in May, and focused on development activities aimed at increasing the proportion of new products at Sanken Core.」

「We implemented structural reform aimed at fundamentally rebuilding the earnings structure, including optimizing the production structure of the semiconductor device business and realizing strategic options for the power systems business, while」

「We implemented structural reform aimed at fundamentally rebuilding the earnings structure, including optimizing the production structure of the semiconductor device business and realizing strategic options for the power systems business. We also pursued development reform to improve the competitiveness of semiconductor devices and worked to establish production sites for next-generation products.」

「By executing this absorption-type company split and this share transfer, we will be able to concentrate management resources on semiconductor devices and power modules, further strengthen competitiveness and improve management efficiency, thereby achieving further growth going forward.」

「Under these circumstances, the Group established “structural reform,” “achieving the growth strategy,” “strengthening the financial position” and “promoting work-style reform” as its basic policies for the current fiscal year. In addition to pursuing structural reforms aimed at fundamentally rebuilding its earnings structure, including optimising the production system for the semiconductor devices business and giving concrete form to strategic options for the power systems business, we have undertaken development reforms aimed at improving the commercial strength of semiconductor devices and prepared production sites for next-generation products resulting from those reforms.」

「Subsequently, in February 2020, we announced specific measures to optimize the production structure of the semiconductor device business and worked to ensure the reliable execution of the plan.」

「In November 2019, as a new structural reform plan, we announced a policy of pursuing selection and concentration in businesses centered on the semiconductor device business. Specifically, we decided to optimize the production structure through the consolidation and integration of factories related to the semiconductor device business, consider strategic options including the sale of the Power Systems Business, withdraw from the LED lighting business, and advance the sale of certain sites.」

「The company also continued to work to expand sales in these growth fields, launch new product production lines and improve productivity, while continuing to address unprofitable products.」

「However, in terms of profit and loss, structural reforms improved the product mix, resulting in consolidated operating profit of ¥549 million, an increase of ¥74 million, or 15.8%, from the previous consolidated fiscal year.」

「In terms of income and expenses, operating income increased by ¥222 million, or 2.6%, year on year to ¥8.813 billion, due mainly to the effects of structural reform.」

「In terms of income and expenses, operating income increased by ¥862 million, or 15.8%, year on year to ¥6.319 billion, owing to sales growth and the effects of structural reform implemented in the previous fiscal year.」

「In terms of earnings, as the effects of structural reforms implemented in the previous fiscal year emerged, operating income increased ¥492 million, or 24.2%, year on year to ¥2,529 million, ordinary income increased ¥289 million, or 19.1%, to ¥1,803 million, and quarterly net income attributable to owners of the parent increased ¥15 million, or 2.9%, to ¥563 million.」

「In particular, the company has sought to capture growth opportunities through new product launches, including the growing adoption of energy-efficient white goods overseas, the increasing use of electronic systems in the automotive market and advances in autonomous driving, while expanding sales. It has also implemented structural reforms, including the withdrawal from the PM business, which had been an ongoing management issue, the discontinuation of unprofitable products in the semiconductor device business and reductions in fixed costs at headquarters.」

「As announced on 18 July 2017, our Group secured funds through a private placement by our U.S. subsidiary Sanken North America, Inc. We then implemented structural reforms, including withdrawing from the PM business, shifting the business structure of the semiconductor device business and introducing a special early-retirement program, while launching various initiatives aimed at accelerating growth in the U.S. business and improving individual performance and strengthening shareholders’ equity, which had been important management priorities. We have also begun various measures to support growth across the Group.」

「Within our Group, improving individual performance, strengthening shareholders’ equity and implementing the growth strategy of SKN, which occupies an important position in consolidated performance, are important management priorities. We have therefore been pursuing business-structure reform within the Group, and are promoting further structural reform to improve our corporate foundation while building the foundation for our growth strategy in preparation for the next medium-term management plan.」