Rebuilding a management foundation that consistently generates profit

「2027年３月期中間期 31,194 16.9 2,404 68.0」

「In terms of profit, operating income was ¥2,404 million, up 68.0% year on year; interim income before income taxes was ¥2,065 million, up 98.5%; and interim net income attributable to owners of the parent was ¥1,570 million, up 95.7%. All exceeded the levels of the same period of the previous year. The Company is pursuing the portfolio transformation set out in its medium-term management plan, the “Five Pillars + One” concept, to achieve Vision2030, and continues to make upfront investments in research and development and other areas toward its realization. During the six months ended 30 September, the substantial increase in revenue absorbed the burden of these upfront investments, resulting in higher revenue and higher profit.」

「In terms of profit, operating profit was ¥3,355 million, down 27.4% year on year, profit before income taxes was ¥2,552 million, down 13.6%, and profit for the year was ¥2,065 million, up 15.2%.」

「Operating profit for the current consolidated fiscal year was ¥4,344 million. Compared with the previous year, when temporary insurance proceeds of ¥1,501 million were recorded, this represented a decrease of 47.8%. Profit before income taxes was ¥3,129 million, down 58.0% from the previous consolidated fiscal year, and profit for the year was ¥2,334 million, down 62.2%.」

「With respect to profit, operating income for the nine months ended 31 December was ¥1,864 million, down 53.9% year on year; income before income taxes was ¥1,419 million, down 63.9%; and net income was ¥1,190 million, down 64.5%, due to lower revenue, higher personnel and DX costs, and the impact of reducing inventories.」

「With respect to profit, operating income for the three months ended 30 June was ¥636 million, down 58.9% year on year; income before income taxes was ¥239 million, down 86.1%; and net income was ¥154 million, down 89.0%, due to the impact of lower revenue on profit.」

「Operating profit for the current consolidated fiscal year was ¥8,327 million, up 60.7% from the previous consolidated fiscal year, profit before income taxes was ¥7,450 million, up 51.4%, and profit for the year was ¥6,123 million, up 12.2%.」

「Including the impact of foreign exchange, which increased profit by approximately ¥1,000 million year on year, operating income for the nine months ended 31 December was ¥6,680 million, up 90.0% from operating income of ¥3,517 million in the same period of the previous year.」

「With respect to profit, operating income for the six months ended 30 September was ¥4,041 million, up 42.3% year on year from ¥2,839 million; income before income taxes was ¥3,927 million, up 50.9% from ¥2,601 million; and net income was ¥3,352 million, up 37.9% from ¥2,430 million.」

「With respect to profit, operating income for the three months ended 30 June was ¥1,549 million, up 150.2% year on year, compared with operating income of ¥619 million in the same period of the previous year; income before income taxes was ¥1,718 million, up 222.2%, compared with ¥533 million; and net income was ¥1,397 million, up 198.8%, compared with ¥467 million.」

「As a result, in addition to reaching a point where completion of the series of structural reforms undertaken since fiscal 2018, the fiscal year ending March 2019, was in sight, the business environment surrounding the company had changed substantially from when the previous medium-term management plan was formulated, and performance recovered at a faster-than-expected pace, mainly in automotive and mobile communications applications.」

「As a result, operating income for the nine months ended 31 December was ¥3,517 million, compared with operating income of ¥2,789 million in the same period of the previous year; income before income taxes was ¥3,251 million, compared with ¥2,418 million; and net income was ¥2,927 million, compared with ¥1,870 million.」

「As a result, operating profit for the second quarter of the current consolidated cumulative period was ¥2,839 million, compared with an operating loss of ¥1,453 million in the same quarter of the previous year, profit before income taxes was ¥2,601 million, compared with a loss before income taxes of ¥1,663 million, and quarterly profit was ¥2,430 million, compared with a quarterly loss of ¥2,157 million.」

「As a result, operating profit for the first quarter of the current consolidated cumulative period was ¥619 million, compared with an operating loss of ¥715 million in the same quarter of the previous year, profit before income taxes was ¥533 million, compared with a loss before income taxes of ¥820 million, and quarterly profit was ¥467 million, compared with a quarterly loss of ¥849 million.」

「In addition, even excluding ¥4.4 billion in income arising from the transfer of shares in a subsidiary and ¥300 million in structural reform costs, we posted operating profit in the third quarter of the current consolidated fiscal year.」

「We expect to post operating profit for the current consolidated fiscal year. Accordingly, we have determined that the material events and conditions related to the going concern assumption have been resolved.」

「However, the impact of the approximately 20% year-on-year decrease in sales was substantial. As a result, operating loss for the first quarter of the current consolidated cumulative period was ¥715 million, compared with an operating loss of ¥515 million in the same quarter of the previous year, loss before income taxes was ¥820 million, compared with a loss before income taxes of ¥550 million, and quarterly loss was ¥849 million, compared with a quarterly loss of ¥548 million.」

「Although we sought to reduce fixed costs by reconstructing our production structure, sales fell below expectations and the loss increased from the same quarter of the previous year.」

「Regarding the reconstruction of our production structure, we have generally proceeded as planned with fixed-cost reductions since the start of the current fiscal year, including by transferring the manufacturing line for small-volume mass-produced products for mobile communications applications from the Sayama Plant to the Hakodate Plant. However, sales, mainly for automotive and industrial equipment applications, fell below expectations. In addition, as sales for mobile communications applications, which have marginal profitability, are expected to contract going forward, we recorded an impairment loss of ¥1,884 million.」

「Meanwhile, we transferred the manufacturing line for small-volume mass-produced products for mobile communications applications from the Sayama Plant to the Hakodate Plant, proceeding with the reconstruction of our production structure and reducing fixed costs as planned. As a result, sales for the first quarter of the current consolidated cumulative period were ¥9,279 million, down 11.1% year on year, operating loss was ¥515 million, compared with an operating loss of ¥317 million in the same quarter of the previous year, loss before income taxes was ¥550 million, compared with a loss before income taxes of ¥272 million, and quarterly loss was ¥548 million, compared with a quarterly loss of ¥312 million.」

「As part of our structural reforms, the group is reviewing its production structure while working to improve productivity and streamline indirect functions in order to reduce fixed costs. However, as described above, sales of products for automotive and mobile communications applications fell below plan in the third quarter, and we were unable to return to profitability.」

「In addition, we consolidated the group's materials procurement operations within the Procurement Headquarters established in April. This will enable us to reduce material costs, improve productivity and streamline indirect functions, thereby reducing fixed costs and aiming to return to profitability from the third quarter onward.」

「We take seriously the fact that we posted a substantial net loss in the consolidated fiscal year under review and will earnestly work to rebuild a management foundation that consistently generates profit. To this end, we will implement the following structural reforms.」