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Status of the Consolidated of Fiscal Year Ending March 2025
The global economy for the current fiscal year under review was generally on the track of recovery including firm consumer spending in the United States. On the other hand, however, the economy in Europe exhibited a slow pace of recovery primarily stemming from the lasting manufacturing slumps in Germany and other parts of the region although there were some visible signs of recovery. The Chinese economy also endured moderate deceleration under background of the continuing slump in real estate and sluggish consumer spending. Corporate manufacturing activities in Japan remained soft although the economy was taking on the track of slow recovery in general. Under the circumstances, triggered by the US Government's revised trade policy since the beginning of this year, the global economy was heading toward downward swing risks, which will lead to increasing uncertainty in the future.
Among the markets surrounding the NCC Group, the ICT related markets kept expanding firm in demand for servers, including generated AI servers, due to growing investments mainly by major IT corporations in the United States to build up their data centers. Meanwhile, demand from the automotive-related market remained weak in general due to decelerated growth in the global EV markets, followed by automakers' backward revisions, one after another, of their EV strategies, and impact from their adjustment of components inventory. Industrial equipment markets still remained in the adverse environments due to the lasting inventory adjustment stemming from shrinking mindset of corporations for capital investment amid business uncertainties including the sluggish Chinese economy.
Under the business environments, the NCC Group deployed its strategy into the automotive electronics market, industrial equipment markets, and ICT market that are expected to be promising and accordingly engaged in the proactive promotion and sales of hybrid capacitors and other high value-added products. We also set up a new sales base in India, which started substantial operation in December 2024. In manufacturing, we built up a new wing to produce hybrid capacitors at the existing Chemi-Con East Japan Corp. Miyagi Plant. The new lines started production in October 2024. In addition, we continued to expand smart factory systems by, for example, introducing partial automation to product and material quality control processes to reduce human errors resulting in quality degradation.
Our product development during the current fiscal year includes the development of a new type of aluminum electrolytic capacitors for the first time in the industry. The new capacitors can be applied in immersion-cooled AI servers, which will be increasingly common in data centers in the near future because AI servers radiate large quantities of heat. Moreover, we succeeded in developing conductive polymer aluminum solid-state electrolytic capacitor "PXY Series" products that will deter the post-reflow leakage current within a reliable range of values for the first time in the industry. Our efforts also led to adding large-sized items to conductive polymer hybrid aluminum electrolytic capacitor "HXK Series" products.
As a result of our efforts mentioned above, consolidated operating results for the current fiscal year were net sales of 122,684 million yen (down 18.6% YoY), operating income of 3,740 million yen (down 60.3% YoY), ordinary income of 1,568 million yen (down 80.2% YoY), and net income of 37 million yen attributable to owners of parent was (net losses of 21,291 million yen attributable to owners of parent for the previous fiscal year).
Under the harsh business environments, when future market trends are taken into consideration, it is with sincere regret that we have decided to forego issuing a year-end dividend for the current fiscal year. We offer our deepest apologies to our shareholders.
Status by Product Group
Our consolidated performances by product group for the fiscal year ending March 2025 are as follows:
- Capacitors (112,319 million yen, 91.6% of total sales)
Net sales of this division decreased by 20.4% YoY due mainly to decreased demand for industrial equipment. - Mechanical Parts and Other Parts (3,441 million yen, 2.8% of total sales)
Net sales of this division decreased by 1.7% YoY due mainly to decreased demand for inductors (coils) - Capacitor Materials (5,703 million yen, 4.6% of total sales)
Net sales of this division increased by 23.6% YoY due mainly to increased demand for electrode foils used in aluminum electrolytic capacitors. - Other Products (1,220 million yen, 1.0% of total sales)
Net sales of this division decreased by 20.8% YoY due mainly to decreased demand for resale products.
Full-year Outlook
Regarding outlooks for the future, the business environments surrounding the NCC Group will continue to be unpredictable under downward pressure on the global economy, which is chiefly stemming from the US Government's tariff imposition measures including reciprocal tariffs, and mounting geopolitical risks in the Middle-East and Ukraine.
Under the circumstances, NCC is determined to steadily implement priority measures detailed in the 10th Medium-term Management Plan. In marketing, we will continue to promote and sell products in our three strategic markets, namely the automotive electronics market, industrial equipment markets and ICT market. Meanwhile, we foresee substantial recovery in the automotive electronics market and industrial equipment markets from the second half or later of 2025. Thus, we are more focusing on the ICT market because it is expected to have stable expansion. In manufacturing, centering on our high value-added products, we are going to establish optimum-location production and prepare for growing country risks by, for example, reinforcing our production capacities and transferring some manufacturing facilities.
Aside from the above-mentioned, the defendants including NCC were facing civil class actions that claimed damages concerning electrolytic capacitors, tantalum capacitors, and film capacitors on the alleged violations of the Economic Competition Law of Israel. NCC admits no such legal liability. However, after taking various factors and circumstances into consideration, NCC agreed to pay a sum of 3.5 million US dollars to settle the cases to the class action plaintiffs and accordingly concluded a settlement agreement in December 2024. The agreement will take official effect when the court approval proceedings are completed. When such effect is taken, all the civil actions that claimed damages against the NCC Group concerning the transactions of aluminum electrolytic capacitors, etc. are settled except one lawsuit case in Taiwan. However, NCC regards that no material loss will incur from the lawsuit.
Singapore Chemi-Con (Pte) Ltd. (hereafter "SCC"), as NCC subsidiary, has been facing a lawsuit concerning its sales of components to Dyson Manufacturing Sdn. Bhd. (hereafter "Dyson") who went to law for damages in December 2024 to the Singapore International Commercial Court (SICC). Dyson is claiming damages of 145,544,762 British pounds against SCC. However, SCC regards Dyson's allegation is unreasonable and SCC is determined to assert its legitimate position in court by proving that it assumes no legal liability against the allegation.
Aside from above, our forecasts of consolidated operating results for the term ending March 2026 (fiscal 2025) will be net sales of 146 billion yen (up 19.0% YoY), operating income of 7.5 billion yen (up 100.5% YoY), ordinary income of 5.8 billion yen (up 269.8% YoY), and net income of 4.4 billion yen attributable to owners of parent (net income of 37 million yen attributable to owners of parent for the previous fiscal year). The exchange rate is assumed at 145 yen to one US dollar.
June 5, 2025
Kenichi Konno
Representative Director and President