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Overview of Fiscal Year Ended March 2024
Looking at the global economy during the Fiscal Year Ended March 2024, in the USA, the economy benefitted from the firm consumer spending. On the other hand, in Europe, the overall sense of stagnation intensified due to the prolonged situation in Ukraine and the effects of monetary tightening, and in China, the pace of economic recovery slowed because of adjustments in the real estate market. In Japan, the economy trended towards a moderate recovery supported by solid demand for capital investment and a recovery in inbound demand, although corporate production activities were stagnant because of the global economic slowdown.
Looking at the market environment influencing the Nippon Chemi-Con Group, automotive electronics market remained firm. Automobile production activities normalized due to the easing of the semiconductor supply shortage, and demand for parts used in vehicle electrification also increased. On the other hand, the industrial equipment-related market remained stagnant overall due to sluggish capital investment due to the deterioration of business confidence in China. In the ICT-related market, the downturn after the special demand caused by the COVID-19 pandemic was larger than expected, and inventory adjustments for PCs, servers for data centers, and other products were prolonged.
Amid this operating environment, our Group steadily advanced the policies outlined in our 10th Medium-term Management Plan. We focused on expanding sales of high-value-added products targeting our strategic markets such as automotive electronics and ICT. We worked to expand sales of hybrid capacitors and coil products that are expected to be used in on-board chargers for electric vehicles. At the same time, to improve profitability, we stopped production of some of our products, which had been a factor in increasing costs, and promoted the transition to products with higher production efficiency.
Our product development efforts included the development of the HXK series of conductive polymer hybrid aluminum electrolytic capacitors for automotive applications. This product offers both the highest capacity in the industry and higher ripple current than conventional products. We also enhanced our competitiveness in strategic markets by expanding the selection of sizes of radial lead type aluminum electrolytic capacitors that are used in applications such as power supplies for digital home appliances.
In addition, as part of our capital policy, we concluded an investment agreement with Japan Industrial Solutions III Investment Limited Partnership and raised a total of 15 billion yen through third-party allotment of class shares. We also concluded an investment agreement with Samyoung Electronics Co., Ltd., and raised 2.4 billion yen through third-party allotment of common shares. The proceeds will be used to finance capital investment in growth areas under the medium-term management plan, such as the construction of a manufacturing building to increase production capacity for hybrid capacitors, where demand is expected to increase in the future.
As a result of these efforts, consolidated earnings for the fiscal year ended March 2024 resulted in net sales of 150,740 million yen (down 6.9% YoY), operating income of 9,422 million yen (down 27.2% YoY), and ordinary income of 7,913 million yen (down 28.0% YoY). Furthermore, net losses attributable to owners of parent was 21,291 million yen (previous fiscal year resulted in profit attributable to owners of parent of 2,273 million yen), having recorded extraordinary losses related antitrust law.
It is with sincere regret that we have decided to forego issuing a year-end dividend on our common share for the consolidated fiscal year ended March 2024. We offer our deepest apologies to our shareholders.
Status by Product Group
The consolidated fiscal year status by product group is as follows.
- Capacitors (141,082 million yen, 93.6% of total sales)
Net sales of the product group decreased by 5.5% YoY due to decreased demand in the ICT market and industrial equipment market. - Mechanical Parts and Other Parts (3,500 million yen, 2.3% of total sales)
Net sales of the product group decreased by 22.2% YoY due to decreased demand for CMOS camera modules and inductors (coils). - Capacitor Materials (4,615 million yen, 3.1% of total sales)
Net sales of the product group decreased by 19.5% YoY due to decreased demand for electrode foils used in aluminum electrolytic capacitors. - Other Products (1,541 million yen, 1.0% of total sales)
Net sales of the product group decreased by 34.3% YoY due to decreased demand for resale products.
Outlook for Fiscal 2024
Looking ahead, the domestic economy is projected to trend towards a mild recovery. An improved economy is expected to benefit from consumer spending thanks to an improved employment and income conditions. Looking at the global economy overall, however, there remains the risk of economic downturn due to the impact of monetary tightening policies in Europe and the United States and geopolitical risks such as the situation in the Middle East and Ukraine. As a result, we project the operating environment influencing the Nippon Chemi-Con Group will continue to lack certainty. In addition, as sustainability initiatives become a central issue in corporate management, companies are expected to contribute to solving social issues through their business activities. Increasing importance is being placed on carbon neutrality and other initiatives to reduce environmental load amid increasing global concerns of climate risks.
For the market environment influencing the Group, demand is expected to increase in automotive electronics market due to an increase in automobile production and in number of parts per vehicle due to continued vehicle electrification and computerization. Demand is expected to recover in ICT market, including demand for personal computers. A rapid growth in generated AI servers and an end to inventory adjustment of conventional servers are expected. In the industrial equipment market, labor saving investment and recovery in semiconductor manufacturing equipment are also expected in the second half of the fiscal year.
Our Group will continue to steadily implement each of the key measures in our 10th Medium-term Management Plan to transform itself into a highly profitable business structure. Among the five strategic markets, the automotive electronics market, the ICT market and the industrial equipment market will be positioned as the most important strategic markets, and we will conduct sales expansion activities of high-value-added products, mainly hybrid capacitors, for growth fields such as electric vehicles and AI servers. In addition, we will further improve profitability by thoroughly implementing TPM (Total Productive Management) at production plants and introducing production execution systems.
Our consolidated earnings forecast for FYE 3/2025 (FY2024) are net sales of 153,000 million yen (up 1.5% YoY), operating income of 11,500 million yen (up 22.0% YoY), ordinary income of 10,000 million yen (up 26.4% YoY), and 7,400 million yen in profit attributable to owners of parent (previous fiscal year resulted in losses attributable to owners of parent of 21,291 million yen). The assumed exchange rate is US $1 = JPY145.
June 27, 2024
Norio Kamiyama
Representative Director and President