Meidensha : Financial Result for FY2024 Q1

Published July 30, 2024 at 10:00 p.m. UTC

Source: MarketScreener

FOR IMMEDIATE RELEASE

Meidensha Corporation Reports Earnings for the Three Months Ended June 30, 2024

Tokyo, Japan, July 31, 2024 - Meidensha Corporation (TSE: 6508) reported consolidated net sales of ¥54,975 million and a net income attributable to owners of the parent of ¥1,017 million, or ¥22.44 per share, for the three months ended June 30, 2024.

1. Operating Results

(1) Analysis of Operating Results

[Consolidated Results]

The management environment surrounding the Meiden Group in the three months ended June 30, 2024 continued to show strong demand for the heavy electrical products and systems we handle, as in the previous consolidated fiscal year, against a backdrop of aggressive investment in power infrastructure in Japan and overseas. Meanwhile, the risk that the timing of recording sales in the Meiden Group may be pushed back due to delays in progress of some private and public sector construction projects against the backdrop of labor shortages in the domestic construction sector continues to require close attention.

The consolidated results for the three months under review are provided below.

			(Unit: millions of yen)
	Three months ended	Three months ended	Change	Change (%)
	June 30, 2023	June 30, 2024


Net sales	53,532	54,975	1,443	2.7
Operating income (loss)	(3,374)	(896)	2,477	-

Ordinary income (loss)	(2,648)	213	2,862	-

Net income (loss)
attributable to owners of	(2,102)	1,017	3,119	-
the parent

The results for each business segment are presented below, with sales figures including inter-segment sales.

With the absorption-type merger of MEIDEN SHOJI Co., Ltd. in the year ended March 31, 2024, the segment classification of the business conducted by MEIDEN SHOJI was changed from the three months ended June 30, 2024. The following comparisons with the same period of the previous year are based on the figures for the same period of the previous year reflecting the change.

1) Power Infrastructure Business

Sales and income increased in both the Power & Energy business mainly operating in Japan and the Power T&D business mainly operating overseas. In particular, in the Power T&D business, the profit increase was driven by a significant improvement in the profitability of local subsidiaries such as in Singapore, India and Germany. As a result, net sales in the segment increased 39.4% year on year to ¥18,458 million, and operating income improved by ¥1,331 million to ¥1,154 million.

2) Public, Industrial & Commercial Sector Business

While the Railways business posted a decrease in sales and income due to a decline in overseas projects, the Social Infrastructure business, which saw an increase in projects for private-sector plants, and the Water Infrastructure business, which saw an easing of the downward pressure on profitability caused by rising material prices, posted higher sales and income. As a result, net sales in the segment increased by 4.7% year on year to ¥15,237 million, and operating loss improved by ¥552 million to ¥1,578 million.

3) Mobility & Electrical Components Business

In the EV business, both sales and income declined, mainly due to lower sales volume of some models delivered. Meanwhile, in the Electronics Products business, demand for vacuum capacitors showed improvement from the same period of the previous year, when shipments were significantly sluggish, and both sales and income increased. Furthermore, the Motor Drive Solutions and Mobility T&S businesses both reported lower sales, but higher profits due to the effect of price revisions and improved profits from project differences. As a result, net sales in the segment decreased by 23.0% year on year to ¥14,503 million, and operating loss improved by ¥152 million to ¥544 million.

4) Field Service Engineering Business

In addition to the expansion of demand continuing for maintenance services for facilities, generally steady progress in existing orders resulted in net sales increasing by 4.1% to ¥6,616 million and operating income improving by ¥469 million to ¥176 million.

5) Real Estate Business

Net sales in the segment increased 0.2% year on year to ¥808 million, and operating income deteriorated by ¥5 million to ¥360 million.

6) Other

In businesses not included in reportable segments, while net sales decreased by 16.1% year on year to ¥1,882 million, operating income improved by ¥88 million to ¥29 million due to reorganization and reviewing functions of some domestic subsidiaries and associates in the previous fiscal year.

(2) Analysis of Financial Condition

Total assets at June 30, 2024 amounted to ¥315,768 million, a decrease of ¥19,018 million from the end of the previous fiscal year (March 31, 2024).

Current assets declined by ¥17,779 million to ¥190,723 million, as collection of notes and accounts receivable-trade, and contract assets recorded at the end of the previous fiscal year progressed.

Fixed assets declined by ¥1,238 million to ¥125,045 million due to a decrease in investment securities caused by sale of listed shares held by the Company.

Total liabilities were ¥186,629 million, a decrease of ¥18,669 million from the end of the previous fiscal year, attributable to a decrease in commercial paper and a decrease in notes and accounts payable-trade.

Total net assets fell ¥348 million to ¥129,139 million due to payment of cash dividends.

As a result, the equity ratio came to 39.9% as of June 30, 2024, compared with 37.8% at the end of the previous fiscal year.

(3) Forecast of Consolidated Results

Among the Meiden Group's businesses, sales from electrical equipment for electric power companies and government agencies and water purification and sewerage treatment equipment for local governments tend to be concentrated at the end of fiscal year. For this reason, net sales and income/loss in the first three months of the fiscal year are low in comparison with the full-year figure. However, business performance has developed broadly as forecast, and there is no revision to the results forecast announced on May 10, 2024.

2. Consolidated Financial Statements and Notes
(1) Consolidated Balance Sheets
		As of March 31,	As of June 30,
		2024	2024
		millions of yen	millions of yen

	Assets
	Current assets
	Cash and time deposits	18,984	27,988
	Notes and accounts receivable-trade, and contract	106,385	68,771
	assets

	Electronically recorded monetary claims-	9,317	8,988
	operating

	Merchandise and finished goods	10,806	11,755
	Work in process	41,717	51,772
	Raw materials and supplies	14,700	14,794
	Other current assets	6,893	6,962
	Allowance for doubtful accounts	(302)	(310)

	Total current assets	208,503	190,723

	Fixed assets
	Property, plant and equipment
	Buildings and structures	39,133	39,117
	Machinery, equipment and vehicles	15,292	15,225
	Land	12,542	12,554
	Construction in progress	2,876	2,911
	Other property, plant and equipment, net	5,518	5,686

	Total property, plant and equipment	75,363	75,494

	Intangible assets
	Software	4,774	4,581
	Goodwill	2,175	2,085
	Other	699	708

	Total intangible assets	7,650	7,375

	Investments and other assets
	Investment securities	26,558	25,137
	Long-term loans receivable	30	33
	Deferred tax assets	14,377	14,686
	Other assets	2,331	2,344
	Allowance for doubtful accounts	(27)	(27)

	Total investments and other assets	43,270	42,175

	Total fixed assets	126,284	125,045

	Total assets	334,787	315,768

	As of March 31,	As of June 30,
	2024	2024
	millions of yen	millions of yen
Liabilities
Current liabilities
Notes and accounts payable-trade	35,918	30,291
Electronically recorded obligations-operating	4,238	3,370
Short-term borrowings	9,912	8,023
Commercial paper	10,000	-
Current portion of bonds payable	6,000	6,000
Accounts payable-other	6,413	4,412
Accrued income taxes	3,216	1,105
Contract liabilities	19,461	28,113
Accrued bonuses for employees	8,348	4,266
Provision for product warranties	1,281	1,248
Provision for loss on orders	833	830
Other current liabilities	18,618	17,131

Total current liabilities	124,242	104,793

Long-term liabilities
Long-term debt	28,767	28,945
Net defined benefit liability	47,445	47,938
Provision for environmental measures	63	63
Other long-term liabilities	4,780	4,888

Total long-term liabilities	81,056	81,835

Total liabilities	205,298	186,629
Net assets
Shareholders' equity
Common stock	17,070	17,070
Capital surplus	10,226	10,226
Retained earnings	78,642	77,391
Treasury stock	(197)	(198)

Total shareholders' equity	105,741	104,490

Accumulated other comprehensive income
Unrealized gains on available-for-sale securities	13,297	12,409
Foreign currency translation adjustment	7,610	9,342
Remeasurements of defined benefit plans	(241)	(202)

Total accumulated other comprehensive income	20,665	21,549

Non-controlling interests	3,081	3,099

Total net assets	129,488	129,139

Total liabilities and net assets	334,787	315,768

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income

	Three months	Three months
	ended June 30,	ended June 30,
	2023	2024
	millions of yen	millions of yen

Net sales	53,532	54,975
Cost of sales	43,585	41,575
Gross profit	9,946	13,400
Selling, general and administrative expenses	13,320	14,296
Operating income (loss)	(3,374)	(896)
Non-operating income
Interest income	23	64
Dividend income	411	485
Rent income	25	21
Foreign exchange gains	468	711
Other	176	219
Total non-operating income	1,104	1,502
Non-operating expenses
Interest expenses	222	258
Seconded employee expenses	34	18
Other	121	114
Total non-operating expenses	378	391
Ordinary income (loss)	(2,648)	213
Extraordinary income
Gain on sales of investment securities	-	1,274
Other	1	-
Total extraordinary income	1	1,274
Extraordinary loss
Loss on liquidation of subsidiaries and associates	22	9
Loss on disaster	-	58
Total extraordinary loss	22	67
Income (loss) before income taxes	(2,669)	1,420
Income taxes
Current	325	283
Deferred	(870)	91
Total income taxes	(545)	374
Net income (loss)	(2,123)	1,045
Net income (loss) attributable to the non-controlling interests	(21)	27

Net income (loss) attributable to owners of the parent	(2,102)	1,017

Consolidated Statements of Comprehensive Income
		Three months	Three months
		ended June 30,	ended June 30,
		2023	2024
		millions of yen	millions of yen
	Net income (loss)	(2,123)	1,045
	Other comprehensive income
	Unrealized gains (losses) on available-for-sale	2,015	(887)
	securities

	Foreign currency translation adjustment	1,368	1,752
	Remeasurements of defined benefit plans	53	39
	Total other comprehensive income	3,437	903
	Comprehensive income	1,313	1,949
	Comprehensive income attributable to:
	Owners of the parent	1,317	1,902
	Non-controlling interests	(3)	47

(3) Consolidated Statements of Cash Flows
		Three months	Three months
		ended June 30,	ended June 30,
		2023	2024
		millions of yen	millions of yen
	Cash flows from operating activities
	Income (loss) before income taxes	(2,669)	1,420
	Depreciation and amortization	2,401	2,530
	Amortization of goodwill	174	201
	Increase (decrease) in provisions	(3,971)	(4,198)
	Increase (decrease) in net defined benefit liability	485	532
	Interest and dividend income	(435)	(550)
	Interest expenses	222	258
	Loss (gain) on sales of investment securities	-	(1,274)
	Decrease (increase) in trade receivables and	40,344	46,977
	contract assets

	Decrease (increase) in inventories	(8,405)	(9,717)
	Increase (decrease) in trade payables	(4,124)	(7,369)
	Other	(2,801)	(4,075)
	Sub total	21,222	24,735
	Interest and dividends received	435	559
	Interest expenses paid	(188)	(254)
	Proceeds from insurance income	-	439
	Payments for fire losses	-	(12)
	Income taxes paid	(2,673)	(2,351)
	Net cash provided by (used in) operating activities	18,795	23,116
	Cash flows from investing activities
	Purchase of property, plant and equipment, and	(2,020)	(1,981)
	intangible assets

	Proceeds from sales of investment securities	-	1,422
	Other	(369)	445
	Net cash provided by (used in) investing activities	(2,389)	(113)
	Cash flows from financing activities
	Net increase (decrease) in short-term borrowings	(1,949)	(2,250)
	Increase (decrease) in commercial paper	(8,000)	(10,000)
	Proceeds from long-term debt	33	-
	Repayment of long-term debt	(18)	(25)
	Cash dividends paid	(882)	(2,030)
	Cash dividends paid to non-controlling interests	(23)	(28)
	Other	(12)	(61)
	Net cash provided by (used in) financing activities	(10,853)	(14,396)
	Effect of exchange rate on cash and cash equivalents	521	730
	Net increase (decrease) in cash and cash equivalents	6,074	9,335
	Cash and cash equivalents at beginning of term	14,116	17,224
	Cash and cash equivalents at end of term	20,191	26,559

Notes on Consolidated Financial Statements (Notes on the Going-concernAssumption)
Not applicable

(Notes on Significant Changes in the Amount of Shareholders' Equity)

Not applicable

(Changes in Accounting Methods)

(Application of Accounting Standard for Current Income Taxes, etc.)

The "Accounting Standard for Current Income Taxes" (ASBJ Statement No. 27, October 28, 2022; "2022 Revised Accounting Standard") has been applied from the beginning of the three months ended June 30, 2024.

With regard to the revisions concerning the accounting classification of income taxes (taxation on other comprehensive income), these are subject to the provisional treatment set forth in the proviso of paragraph 20- 3 of the 2022 Revised Accounting Standard and the provisional treatment set forth in the proviso of paragraph 65-2 (2) of the "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022; "2022 Revised Guidance"). This change has no impact on the quarterly consolidated financial statements.

In addition, the Company has adopted the 2022 Revised Guidance for the revisions related to the review of the treatment in consolidated financial statements deferring gains or losses on sales of investments in subsidiaries among consolidated companies for tax purposes, effective from the beginning of the three months ended June 30, 2024. The change in accounting policy has been applied retrospectively, and the quarterly consolidated financial statements for the quarters of the previous fiscal year and the consolidated financial statements of the previous fiscal year have been prepared on a retrospective basis. This change has no impact on the quarterly consolidated financial statements for the quarters of the previous fiscal year or the consolidated financial statements of the previous fiscal year.

(Notes on Segment and Other Information)

Three months ended June 30, 2023 (April 1 - June 30, 2023) Net sales and income/loss by reportable segment

									(Millions of yen)
			Reportable segment						Amounts on
		Public,	Mobility &				Other		Adjustments	consolidated
					Total	statements of
	Power	Industrial &	Field Service	Real Estate	Sub-total	(Note1)	(Note2)
	Electrical		income
	Infrastructure	Commercial	Engineering
	Components						(Note3)
		Sector
Net sales

Sales to
outside	13,143	13,939	18,563	6,034	797	52,478	1,054	53,532	-	53,532
customers
Inter-
segment	94	620	283	319	9	1,326	1,188	2,515	(2,515)	-
sales and

transfers

Total	13,238	14,559	18,846	6,353	806	53,804	2,242	56,047	(2,515)	53,532

Segment	(176)	(2,130)	(697)	(292)	365	(2,931)	(58)	(2,990)	(383)	(3,374)
income (loss)

Notes: 1. "Other" comprises businesses such as sales of other products, employees' welfare services, and provision of chemical products, that are not included in the reportable segments.

1. Adjustment to segment income (loss), which amounted to minus ¥383 million, consists mainly of ¥149 million for elimination of inter-segment transactions among reportable segments, ¥68 million for adjustments of inventories, and minus ¥602 million for company-wide costs that do not belong to any reportable segments. Company-wide costs are comprised mainly of expenses for research and development conducted by the research and development division and other units that are not included in the reportable segments.
2. Adjustment to segment income (loss) is based on operating income/loss reported in the quarterly consolidated statements of income for the corresponding period.
Three months ended June 30, 2024 (April 1 - June 30, 2024)

1． Net sales and income/loss by reportable segment

									(Millions of yen)
			Reportable segment						Amounts on
		Public,	Mobility &				Other		Adjustments	consolidated
		Field Service			Total	statements of
	Power	Industrial &	Real Estate	Sub-total	(Note1)	(Note2)
	Electrical		income
	Infrastructure	Commercial	Engineering
	Components						(Note3)
		Sector
Net sales

Sales to
outside	18,257	14,636	14,289	6,140	798	54,123	851	54,975	-	54,975
customers
Inter-
segment	200	600	214	475	9	1,500	1,030	2,530	(2,530)	-
sales and

transfers

Total	18,458	15,237	14,503	6,616	808	55,623	1,882	57,505	(2,530)	54,975

Segment	1,154	(1,578)	(544)	176	360	(431)	29	(401)	(494)	(896)
income (loss)

Notes: 1. "Other" comprises businesses such as sales of other products, employees' welfare services, and provision of chemical products, that are not included in the reportable segments.

Adjustment to segment income (loss), which amounted to minus ¥494 million, consists mainly of ¥123 million for elimination of inter-segment transactions among reportable segments, minus ¥0 million for adjustments of inventories, and minus ¥618 million for company-wide costs that do not belong to any reportable segments. Company-wide costs are comprised mainly of expenses for research and development conducted by the research and development division and other units that are not included in the reportable segments.
Adjustment to segment income (loss) is based on operating income/loss reported in the quarterly consolidated statements of income for the corresponding period.

2． Information on changes in reportable segments

In the previous fiscal year, the Company conducted an absorption-type merger with MEIDEN SHOJI Co., Ltd. Accordingly, MEIDEN SHOJI's business, which was included in "Other" until the previous fiscal year, has been split according to the content of the business and included in "Power Infrastructure," "Public, Industrial & Commercial Sector," and "Mobility & Electrical Components" businesses from the three months ended June 30, 2024.

"Net sales and income/loss by reportable segment" for the three months ended June 30, 2023 has been reclassified to reflect the new amounts.

July 31, 2024

Meidensha Corporation

＜TSE：6508＞

FY 2024 1Q

Supplementary information

Contents

〈Financial conditions〉

１．Financial Results and Forecast

２．The results for each business segment （Orders）

（Net sales）

（Power Infrastructure）

（Public, Industrial & Commercial Sector）（Mobility & Electrical Components）

（Field Service Engineering）（Real Estate）

（Other）

３．Overseas ratio of sales

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