■Financial Results for the Second Quarter

During the second quarter of this fiscal year under review, the environment surrounding our Company Group has remained uncertain despite the global semiconductor supply shortage gradually easing and automobile production recovering, as the rapid electric vehicles (EVs) shift in China causing significant changes in market needs, and concerns for unstable global situations such as the Russia-Ukraine situation still in place.

Under such circumstances, net sales for the second quarter increased by 22.9% year-on-year to 58.2 billion yen due to the recovery in customer production resulting from the easing of semiconductor supply shortages, the effect of new vehicle launches, progress in passing on soaring raw material prices etc., to sales prices, and the impact of an increase in sales due to currency translation, despite a decrease in sales due to the impact of sales difficulties of Japanese automotive manufacturers in China. In terms of profit and loss, despite the negative impact of a decrease in sales in China and an increase in labor costs due to wage increases, operating income was 1.7 billion yen (a loss of 1.2 billion yen in the same period of the previous fiscal year) due to the impact of increased sales in other regions, improvement in profitability due to rationalization, the stabilization of soaring raw material prices, and the improvement of production losses due to the recovery in production by customers etc. Ordinary income was 2.1 billion yen (an ordinary loss of 0.7 billion yen in the same period of the previous fiscal year) due to the recording of foreign exchange gains based on the valuation of foreign currency-denominated receivables and loans to overseas consolidated subsidiaries at the end of the fiscal year. Quarterly net income attributable to owners of parent was 1.8 billion yen (a quarterly net loss attributable to owners of parent of 1.4 billion yen in the same period of the previous fiscal year).

■Full Year Outlook

As for the consolidated earnings forecast for the fiscal year ending March 2024, we have revised the figures from the consolidated earnings forecast announced on May 22, 2023.

We have been negotiating with our customers to pass on the impact of soaring raw material prices to sales prices, which has been one of the factors of the deterioration in our business performance. In the previous fiscal year there has been delay in such negotiation, but for the current fiscal year it is progressing steadily, and with other factors such as weakening of the yen exceeding the expectations, net sales are expected to be 125.0 billion yen, exceeding the previously announced forecast. In terms of profit and loss, operating income is expected to be 2.9 billion yen, exceeding the previously announced forecast, due to progress in abovementioned passing on to sales prices. Ordinary income is expected to be 3.0 billion yen and net income attributable to owners of parent is expected to be 2.0 billion yen, exceeding the previously announced forecast due to an increase in operating income and the recording of foreign exchange gains.

The exchange rate is assumed to be 142 JPY to the USD.

■Dividends

Our company recognizes return of profits to shareholders as one of our important management issues, while securing necessary internal reserves for future business outlook and to strengthen our business structure and has made it our basic policy to continuously pay stable dividends taking into account the corporate performance and dividend payout ratios.

As for the dividend (interim dividend) for the second quarter of the current fiscal year, with our corporate performance expected to recover, we have decided to pay a dividend of ¥7.50 per share of the Company’s common stock, an increase of ¥2.50 from the dividend forecast announced on May 22, 2023.

We will continue to focus on improving profitability through company-wide management rationalization and strive to continuously strengthen our management structure for future growth and development.

We would like to ask our shareholders for your continued support and encouragement.

December 2023