Financial Results for the First Quarter of Fiscal Year Ending March 2025
August 8, 2024
Key points of financial results
1Q Result
- YoY comparison: While the business was affected by the continuing decline in demand for construction machinery since the second half of the previous fiscal year, operating income increased due to a significant improvement in the Springs business.
- vs. initial forecast: Operating income exceeded the initial forecast, mainly because of better- than-expected progress in improving selling prices and costs.
- An extraordinary loss was recorded in connection with the withdrawal from MSSC Ahle GmbH.
First half/full-year forecast | |
◆ First half forecast: | In response to a recent uptick in business performance, operating and |
ordinary income have been revised upward. |
- Second half forecast: There is no change from the initial forecast.
- Despite the improvement in operating income, the net income forecast remains unchanged due to the recording of the extraordinary loss related to MSSC Ahle GmbH.
- There is no change in the dividend forecast of 60 yen per share per year in accordance with the policy (*).
- We announced a dividend policy in February 2024 as follows: Target payout ratio of 30% and minimum dividend of 60 yen per share during the period of the Mid-term Business Plan.
1
1Q performance summary
- Net sales decreased slightly due to sluggish demand for construction machinery, despite the effect of the exchange conversion with depreciated yen.
- Operating income increased mainly due to improved profitability of North American subsidiaries in the Springs business.
- Net income increased only slightly due to the recording of the extraordinary loss resulting from the withdrawal from MSSC Ahle GmbH(*).
- We have revised our performance forecasts in response to recent performance trends and the recording of the extraordinary loss (see details on page 7 and beyond).
* On June 19, we announced our withdrawal from MSSC Ahle GmbH, our German
Foreign exchange ratesprings subsidiary.
(as of the end of the period)
FY2023 1Q | Projected | FY2024 1Q | (JPY100M) | |||||
initial rate | ||||||||
145 yen | 150 yen | 161 yen | FY2023 1Q results | FY2024 1Q results | YoY change | |||
Net sales | 413 | 406 | △7 |
Operating income | 8 | 13 | 5 |
Ordinary income | 7 | 12 | 5 |
Net income attributable to owners of | 0 | 1 | 1 |
parent company | |||
2 |
Results by segment
(JPY100M) | ||||
FY2023 1Q results | FY2024 1Q results | YoY change | ||
Special Steel | Net sales | 231 | 205 | △26 |
Bars | Operating income | 9 | 6 | △3 |
Springs | Net sales | 162 | 181 | 19 |
Operating income | △3 | 6 | 9 | |
Formed & | Net sales | 22 | 24 | 2 |
Fabricated | ||||
Operating income | 0 | 2 | 2 | |
Products | ||||
Machinery | Net sales | 20 | 16 | △4 |
Operating income | 1 | △0 | △1 | |
Other | Net sales | 8 | 10 | 2 |
Operating income | 0 | 1 | 1 | |
Consolidation | Net sales | △31 | △30 | 1 |
adjustments | Operating income | 0 | 0 | 0 |
Total | Net sales | 413 | 406 | △7 |
Operating income | 8 | 13 | 5 | |
3 |
Results by segment (Special Steel Bars, Springs)
Special Steel Bars | ||||
business | (JPY100M) | |||
FY2023 1Q | FY2024 1Q | |||
Net sales | 231 | 205 | ||
Operating | 9 | 6 | ||
income | ||||
Domestic steel bar sales volume | ||||
(accumulated) | ||||
FY2023 1Q | FY2024 1Q | |||
95 Kt | 84 Kt | |||
Springs business
(JPY100M) | ||
FY2023 1Q | FY2024 1Q | |
Net sales | 162 | 181 |
Operating | △3 | 6 |
income | ||
- Net sales (decreased)
- Domestic: Ongoing downturn in demand for construction machinery that began in the 2nd half of the previous fiscal year
- Overseas (Indonesia): Decreased demand following delay in public budget execution by the country's presidential election, rising interest rates, etc.
- Operating income (decreased)
- Lower sales volumes in domestic and overseas markets and soaring cost of imported raw materials due to ongoing yen depreciation
- On the other hand, progress was made in improving selling prices and costs.
- Net sales (increased)
- Domestic: Lower volumes of heavy-duty coil springs due to decreased demand for construction machinery, etc.
- North America: Increased net sales due to volume growth and the effects of exchange conversion
- Operating income (return to profitability)
- Domestic: Decreased operating income due to lower sales volume
- North America: Improved profitability due to higher sales volume and progress in improving selling prices, etc.
4
Results by segment (Formed & Fabricated Products, Machinery)
Formed & Fabricated
Products business
(JPY100M) | ||
FY2023 1Q | FY2024 1Q | |
Net sales | 22 | 24 |
Operating | 0 | 2 |
income | ||
Machinery business
(JPY100M) | ||
FY2023 1Q | FY2024 1Q | |
Net sales | 20 | 16 |
Operating | 1 | △0 |
income | ||
- Net sales (increased)
- Increased sales of precision components by the subsidiary in Thailand
- Operating income (increased)
- Increased sales and progress in improving selling prices and costs
- Net sales (decreased)
- Decreased sales of electric power equipment, etc. for the domestic market
- Operating income (decreased)
- Decreased sales
- The first quarter results showed a slight loss, but this business tends to record the sales of large-scale projects based on construction progress, and profits tend to be concentrated at the end of the fiscal year.
5
Impact of non-operating income/loss and extraordinary income/loss
- Despite a decrease in foreign exchange hedge costs as a result of the increased investment in the North American subsidiary in the previous year, non-operating income/ loss is expected to be consistent with the YoY due to reduction in foreign exchange valuation gains.
- Despite the improvement in ordinary income due to higher operating income, net income grew only slightly due to the recording of an extraordinary loss (loss on business liquidation) of 1.0 billion yen associated with the withdrawal from MSSC Ahle GmbH.
(JPY100M) | |||||
FY2023 1Q | FY2024 1Q | YoY change | |||
results | results | ||||
Operating income | 8 | 13 | 5 | ||
Non-operating income/loss | △1 | △1 | 0 | ||
Translation (exchange profit and loss) | 2 | 2 | 0 | ||
Interest paid | △4 | △4 | 0 | ||
Ordinary income | 7 | 12 | 5 | ||
Extraordinary income/loss | △1 | △8 | △7 | ||
Insurance income | 0 | 2 | 2 | ||
Loss on business liquidation (including | 0 | △10 | △10 | ||
provision) | |||||
Net income before income taxes and other adjustments | 6 | 5 | △1 | ||
Tax expenses | △5 | △3 | 2 | ||
Net income attributable to non-controlling interests | △1 | 0 | 1 | ||
Net income attributable to owners of parent company | 0 | 1 | 1 | ||
6 |
First half/full-year performance forecasts
- The performance forecasts announced at the beginning of the fiscal year were revised based on the following two points (details on the next page and beyond):
- Upwardly revised first-half operating income based on the recent uptick in business performance (second- half operating income unchanged)
- No change in net income due to the recording of the extraordinary loss associated with the withdrawal from MSSC Ahle GmbH, despite the increase in operating and ordinary income
- Dividend will be paid in accordance with the policy (target payout ratio of 30% and minimum dividend of 60 yen/share annually during the period of the Mid-term Business Plan), with no change.
Projected exchange rate: 1$ = JPY150 (No change in initial forecast)
(JPY100M)
FY2024 initial forecast | ||
1H | Full-year | |
Net sales | 830 | 1,750 |
Operating | 15 | 55 |
income | ||
Ordinary income | 7 | 40 |
Net income | ||
attributable to | 7 | 30 |
owners of parent | ||
company | ||
FY2024 revised forecast
1H | vs. initial | Full-year | vs. initial |
forecast | forecast | ||
830 | - | 1,750 | - |
28 | +13 | 68 | +13 |
22 | +15 | 55 | +15 |
7 | ±0 | 30 | ±0 |
(Reference)
FY2023
results
1,699
48
19
△10
Dividends | 30.0 | 60.0 |
30.0 | - | 60.0 | - | 60.0 | |
7
Reasons for the revision of performance forecasts ①
- Operating income for the first half was revised upward (no change in the second half) to reflect a recent uptick in business performance.
-
⇒1Q operating income results progressed at levels exceeding initial forecasts.
Operating income for the first half revised upward (+1.3 billion yen)
FY2024 1H | |
initial forecast | |
Special Steel Bars | 6 |
Springs | 5 |
Formed & Fabricated Products, | 4 |
Machinery | |
Total | 15 |
FY2024 revised forecast
1Q results | 2Q forecast | 1H forecast | vs. initial |
forecast | |||
6 | 9 | 15 | +9 |
6 | 2 | 8 | +3 |
1 | 3 | 4 | ±0 |
13 | 15 | 28 | +13 |
Main factors contributing to the improvement in operating income
- More progress was made in improving selling prices and costs in the Special Steel Bars business than initially forecast.
- Positive sales trends are expected in the Springs business due to a large-scale project involving precision components for which mass production began during the period.
- No change was made for the second half of the fiscal year due to uncertainties in the demand conditions, although profit is expected to improve due to the above factors.
8
[Reference] Revised performance forecasts by segment
(JPY100M) | ||||||
FY2023 | FY2024 | |||||
Results | 1H | 2H | Full-year | YoY change | ||
Special Steel | Net sales | 889 | 429 | 480 | 909 | 20 |
Bars | Operating income | 23 | 15 | 15 | 30 | 7 |
Springs | Net sales | 706 | 354 | 382 | 736 | 30 |
Operating income | 10 | 8 | 15 | 23 | 13 | |
Formed & | Net sales | 94 | 46 | 50 | 96 | 2 |
Fabricated | ||||||
Operating income | 8 | 2 | 6 | 8 | 0 | |
Products | ||||||
Machinery | Net sales | 100 | 46 | 56 | 102 | 2 |
Operating income | 7 | 2 | 4 | 6 | △1 | |
Other | Net sales | 34 | 17 | 17 | 33 | △1 |
Operating income | 1 | 0 | 0 | 1 | 0 | |
Consolidation | Net sales | △123 | △62 | △65 | △127 | △4 |
adjustments | Operating income | 0 | 0 | 0 | 0 | 0 |
Total | Net sales | 1,699 | 830 | 920 | 1,750 | 51 |
Operating income | 48 | 28 | 40 | 68 | 20 | |
9 |