Meidensha : Financial Result for FY2024 Q2

Published October 27, 2024 at 11:00 p.m. UTC

Source: MarketScreener

FOR IMMEDIATE RELEASE

Meidensha Corporation Reports Earnings for

the Six months ended September 30, 2024 (Interim Period)

Tokyo, Japan, October 28, 2024 - Meidensha Corporation (TSE: 6508) reported consolidated net sales of ¥120,099 million and a net income attributable to owners of the parent of ¥2,094 million, or ¥46.17 per share, for the six months ended September 30, 2024.

1. Operating Results

(1) Analysis of Operating Results

[Consolidated Results]

The management environment surrounding the Meiden Group in the six months ended September 30, 2024 continued to show strong demand for the heavy electrical products and systems we handle 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 a wide range of domestic sectors continues to require close attention.

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

Among the Meiden Group's businesses, sales of electrical equipment to electric power companies and government agencies and of water purification and sewerage treatment equipment to local government authorities tend to be concentrated at the end of fiscal year. For this reason, net sales in the first six months every fiscal year tend to be low in comparison with the full-year figure.

			(Unit: millions of yen)
	Six months ended	Six months ended	Change	Change (%)
	September 30, 2023	September 30, 2024


Net sales	119,047	120,099	1,052	0.9
Operating income (loss)	(2,366)	1,909	4,275	-

Ordinary income (loss)	(1,622)	1,743	3,366	-

Net income (loss)
attributable to owners of	(1,616)	2,094	3,710	-
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 six months ended September 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 the Power T&D business in particular, income increased against the backdrop of strong demand in the Singapore market and business expansion at local subsidiaries in India and Germany. As a result, net sales in the segment increased 12.0% year on year to ¥35,173 million, and operating income improved by ¥1,638 million to ¥2,584 million.

2) Public, Industrial & Commercial Sector Business

In the Railways business, although sales of overseas projects decreased, income increased due to factors such as improvement of project costs. In addition, the Social Infrastructure business and Water Infrastructure business saw an increase in both sales and income, due to an increase in the number of projects being undertaken against a backdrop of strong orders. As a result, net sales in the segment increased by 8.7% year on year to ¥37,288 million, and operating loss improved by ¥1,543 million to ¥1,297 million.

3) Mobility & Electrical Components Business

In the EV business, both sales and income declined, mainly due to lower sales volume for some models for which our products were delivered. On the other hand, sales and income increased in the Electronics Products business and the Mobility T&S business, which had been in a slump for a while and showed signs of improvement. In addition, although sales in the Motor Drive Solutions business decreased, income increased due to factors such as improved income resulting from price revisions. As a result, net sales in the segment decreased by 15.6% year on year to ¥32,643 million, and operating loss improved by ¥219 million to ¥375 million.

4) Field Service Engineering Business

In addition to the continuation of steady demand for maintenance services for facilities, generally steady progress in existing orders resulted in sales increasing by 18.3% to ¥16,680 million and operating income improving by ¥1,031 million to ¥1,325 million.

5) Real Estate Business

Net sales in the segment increased 0.1% year on year to ¥1,616 million, and operating income deteriorated by ¥3 million to ¥735 million.

6) Other

In businesses not included in reportable segments, while net sales decreased by 20.8% year on year to ¥3,869 million, operating income improved by ¥54 million to ¥38 million.

(2) Analysis of Financial Condition

Total assets at September 30, 2024 amounted to ¥314,157 million, a decrease of ¥20,630 million from the end of the previous fiscal year (March 31, 2024).

Current assets declined by ¥16,650 million to ¥191,852 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 ¥3,979 million to ¥122,304 million due to a decrease in investment securities caused by sale and a fall in market prices of listed shares held by the Company.

Total liabilities at September 30, 2024 were ¥187,780 million, a decrease of ¥17,518 million from the end of the previous fiscal year, attributable to a decrease in notes and accounts payable-trade and redemption of bonds.

Total net assets fell ¥3,112 million to ¥126,376 million due to a decrease in unrealized gains on available- for-sale securities.

As a result, the equity ratio came to 39.2% as of September 30, 2024, compared with 37.8% at the end of the previous fiscal year.

(3) Forecast of Consolidated Results

With regard to the forecast of results for the year ending March 31, 2025, net sales are expected to decrease from the previously announcement forecast, mainly due to a decline in demand in the EV business and delays in the progress of domestic infrastructure projects. Meanwhile, operating income, ordinary income and net income attributable to owners of the parent are expected to be higher than the previously announced forecast due to improvements in performance being expected to continue against the backdrop of robust demand in the Field Service Engineering business and Power Infrastructure business.

The current management forecast for consolidated financial results for the year ending March 31, 2025 is as follows.

Revision of consolidated results forecast figures for the year ending March 31, 2025 (April 1, 2024 to March 31, 2025)

	Net sales	Operating	Ordinary	Net income	Net income per
	attributable to
	income	income
	(millions of	owners of the	share (yen)
	(millions of	(millions of
	yen)	parent
	yen)	yen)
		(millions of yen)

Previous	310,000	15,000	14,500	10,500	231.44
forecast (A)


Revised	300,000	16,000	15,500	11,500	253.49
forecast (B)


Change (B-A)	(10,000)	1,000	1,000	1,000	－

Change (%)	(3.2)	6.7	6.9	9.5	－

(Reference)
Results for the
previous fiscal
year	287,880	12,731	13,385	11,205	247.00
(Fiscal year
ended March
31, 2024)

2. Consolidated Financial Statements and Notes

(1) Consolidated Balance Sheets

	As of March 31,	As of September
	2024	30, 2024
	millions of yen	millions of yen

Assets
Current assets
Cash and time deposits	18,984	23,008

Notes and accounts receivable-trade, and	106,385	74,544
contract assets

Electronically recorded monetary claims-	9,317	7,132
operating

Merchandise and finished goods	10,806	11,318
Work in process	41,717	55,966
Raw materials and supplies	14,700	13,497
Other current assets	6,893	6,669
Allowance for doubtful accounts	(302)	(284)

Total current assets	208,503	191,852

Fixed assets
Property, plant and equipment
Buildings and structures, net	39,133	38,630
Machinery, equipment and vehicles, net	15,292	14,130
Land	12,542	12,544
Construction in progress	2,876	3,822
Other property, plant and equipment, net	5,518	5,456

Total property, plant and equipment	75,363	74,584

Intangible assets
Software	4,774	4,579

Goodwill	2,175	1,742
Other	699	655

Total intangible assets	7,650	6,976

Investments and other assets
Investment securities	26,558	22,572

Long-term loans receivable	30	33
Deferred tax assets	14,377	15,817
Other assets	2,331	2,346
Allowance for doubtful accounts	(27)	(27)

Total investments and other assets	43,270	40,743

Total fixed assets	126,284	122,304

Total assets	334,787	314,157

	As of March 31,	As of September
	2024	30, 2024
	millions of yen	millions of yen
Liabilities
Current liabilities
Notes and accounts payable-trade	35,918	31,660
Electronically recorded obligations-operating	4,238	2,381
Short-term borrowings	9,912	11,451
Commercial paper	10,000	6,000
Current portion of bonds payable	6,000	-
Accounts payable-other	6,413	4,397
Accrued income taxes	3,216	1,631
Contract liabilities	19,461	25,697
Accrued bonuses for employees	8,348	8,063
Provision for product warranties	1,281	1,168
Provision for loss on orders	833	863
Other current liabilities	18,618	15,790

Total current liabilities	124,242	109,106

Long-term liabilities
Long-term debt	28,767	25,613
Net defined benefit liability	47,445	48,255
Provision for environmental measures	63	63
Other long-term liabilities	4,780	4,741

Total long-term liabilities	81,056	78,674

Total liabilities	205,298	187,780

Net assets
Shareholders' equity
Common stock	17,070	17,070
Capital surplus	10,226	10,226
Retained earnings	78,642	78,468
Treasury stock	(197)	(200)

Total shareholders' equity	105,741	105,565

Accumulated other comprehensive income
Unrealized gains on available-for-sale securities	13,297	10,627
Foreign currency translation adjustment	7,610	7,271
Remeasurements of defined benefit plans	(241)	(163)

Total accumulated other comprehensive income	20,665	17,736

Non-controlling interests	3,081	3,074

Total net assets	129,488	126,376

Total liabilities and net assets	334,787	314,157

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

	Six months ended	Six months ended
	September 30,	September 30,
	2023	2024
	millions of yen	millions of yen
Net sales	119,047	120,099
Cost of sales	94,067	89,434

Gross profit	24,980	30,665
Selling, general and administrative expenses	27,346	28,756

Operating income (loss)	(2,366)	1,909
Non-operating income
Interest income	48	135
Dividend income	413	488
Rent income	49	42
Foreign exchange gains	707	-
Other	359	419
Total non-operating income	1,579	1,086
Non-operating expenses
Interest expenses	452	484
Loss on foreign exchange	-	407
Seconded employee expenses	65	39
Other	317	320
Total non-operating expenses	835	1,252
Ordinary income (loss)	(1,622)	1,743

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	170	18
Impairment loss	97	-
Loss on disaster	-	148
Other	35	-
Total extraordinary loss	303	166
Income (loss) before income taxes	(1,925)	2,850
Income taxes
Current	647	1,071
Deferred	(936)	(335)
Total income taxes	(288)	735

Net income (loss)	(1,637)	2,115
Net income (loss) attributable to the non-controlling	(20)	20
interests
Net income (loss) attributable to owners of the parent	(1,616)	2,094

Consolidated Statements of Comprehensive Income
		Six months ended	Six months ended
		September 30,	September 30,
		2023	2024
		millions of yen	millions of yen

	Net income (loss)	(1,637)	2,115
	Other comprehensive income
	Unrealized gains (losses) on available-for-sale	3,502	(2,669)
	securities

	Foreign currency translation adjustment	2,032	(314)
	Remeasurements of defined benefit plans	107	78

	Total other comprehensive income	5,642	(2,905)

	Comprehensive income	4,005	(790)

	Comprehensive income attributable to:
	Owners of the parent	4,002	(834)
	Non-controlling interests	2	44

(3) Consolidated Statements of Cash Flows

	Six months ended	Six months ended
	September 30,	September 30,
	2023	2024
	millions of yen	millions of yen

Cash flows from operating activities
Income (loss) before income taxes	(1,925)	2,850
Depreciation and amortization	4,854	4,983
Amortization of goodwill	355	348
Increase (decrease) in provisions	(434)	(380)
Increase (decrease) in net defined benefit liability	971	917
Interest and dividend income	(461)	(623)
Interest expenses	452	484
Loss (gain) on sales of investment securities	-	(1,274)
Decrease (increase) in trade receivables and	36,024	40,111
contract assets

Decrease (increase) in inventories	(11,157)	(13,972)
Increase (decrease) in trade payables	(6,737)	(7,230)
Other	(3,584)	(3,807)
Sub total
18,356	22,406
Interest and dividends received
461	634
Interest expenses paid	(434)	(468)
Proceeds from insurance income	-	439
Payments for fire losses	-	(25)
Income taxes paid	(3,751)	(2,465)

Net cash provided by (used in) operating activities	14,632	20,520

Cash flows from investing activities
Purchase of property, plant and equipment, and	(4,423)	(4,729)
intangible assets

Proceeds from sales of investment securities	-	1,422
Other	(526)	519

Net cash provided by (used in) investing activities	(4,950)	(2,787)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings	(1,621)	(1,274)
Increase (decrease) in commercial paper	1,000	(4,000)
Proceeds from long-term debt	159	-
Repayment of long-term debt	(2,075)	(39)
Redemption of bonds	-	(6,000)
Cash dividends paid	(998)	(2,264)
Cash dividends paid to non-controlling interests	(53)	(50)
Other	(244)	(276)

Net cash provided by (used in) financing activities	(3,834)	(13,905)

Effect of exchange rate on cash and cash equivalents	783	(44)

Net increase (decrease) in cash and cash equivalents	6,631	3,782

Cash and cash equivalents at beginning of term	14,116	17,224

Cash and cash equivalents at end of term	20,748	21,006

Notes on Consolidated Financial Statements
(Notes on the Going-concern Assumption) 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 six months ended September 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 interim 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 six months ended September 30, 2024. The change in accounting policy has been applied retrospectively, and the interim consolidated financial statements for 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 consolidated financial statements for the interim period of the previous fiscal year or the consolidated financial statements of the previous fiscal year.

(Notes on Segment and Other Information)

I. Six months ended September 30, 2023 (April 1, 2023 to September 30, 2023) Net sales and income/loss by reportable segment

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

Sales to
outside	31,121	32,762	37,942	13,312	1,595	116,733	2,313	119,047	－	119,047
customers
Inter-
segment	290	1,550	755	788	19	3,405	2,570	5,975	(5,975)	－
sales and

transfers

Total	31,411	34,313	38,697	14,101	1,614	120,138	4,884	125,022	(5,975)	119,047

Segment	946	(2,841)	(594)	293	738	(1,457)	(15)	(1,473)	(893)	(2,366)
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 ¥893 million, consists mainly of ¥420 million for elimination of inter-segment transactions among reportable segments, ¥19 million for adjustments of inventories, and minus ¥1,333 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 interim consolidated statements of income for the corresponding period.
Six months ended September 30, 2024 (April 1, 2024 to September 30, 2024)

1. Net sales and income/loss by reportable segment

(Millions of yen)

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

	Components						(Note3)
		Sector
Net sales

Sales to
outside	34,830	34,357	32,008	15,664	1,597	118,458	1,640	120,099	－	120,099
customers
Inter-
segment	343	2,931	634	1,015	18	4,943	2,228	7,172	(7,172)	－
sales and

transfers

Total	35,173	37,288	32,643	16,680	1,616	123,402	3,869	127,272	(7,172)	120,099

Segment	2,584	(1,297)	(375)	1,325	735	2,972	38	3,011	(1,102)	1,909
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 ¥1,102 million, consists mainly of ¥365 million for elimination of inter-segment transactions among reportable segments, minus ¥69 million for adjustments of inventories, and minus ¥1,398 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 reported in the interim 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 six months ended September 30, 2024.

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