Organo Corp.TSE: 6368

Consolidated Financial Results for the Nine Months Ended December 31, 2024 387KB

Feb 5, 2025 at 8:19 AM UTC · Issued by Organo Corp.

DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice.

	Consolidated Financial Results
	for the Nine Months Ended December 31, 2024

	February 5, 2025
Company name:	ORGANO CORPORATION
Listing:	Tokyo Stock Exchange
Securities code:	6368
URL:	https://www.organo.co.jp/english/
Representative:	Masayuki Yamada, Representative Director and President
Inquiries:	Shigeru Sonobe, General Manager of Accounting Dept., Corporate Management and
	Planning
TEL:	+81-3-5635-5111

Scheduled date to commence dividend payments:	–
Preparation of supplementary material on financial results:	Yes
Holding of financial results briefing:	None

(Millions of yen with fractional amounts discarded, unless otherwise noted)

1. Consolidated financial results for the nine months ended December 31, 2024 (from April 1, 2024 to December 31, 2024)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)

			Net sales	Operating profit	Ordinary profit		Profit attributable to
				owners of parent


	Nine months ended	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen		%
	December 31, 2024	115,698	8.9	19,746		39.1	19,939		33.7	13,965		36.2
	December 31, 2023	106,236	11.7	14,194		42.8	14,910		35.7	10,250		35.7

Note:	Comprehensive income: Nine months ended December 31, 2024	¥13,813 million [20.5%]
			Nine months ended December 31, 2023	¥11,463 million [29.3%]

			Basic earnings	Diluted earnings
			per share	per share

	Nine months ended		Yen				Yen
	December 31, 2024		303.81				–
	December 31, 2023		223.22				–

(2) Consolidated financial position

			Total assets				Net assets	Equity-to-asset ratio


	As of			Millions of yen			Millions of yen				%
	December 31, 2024		185,242				109,658					59.1
	March 31, 2024		182,703				102,147					55.8
(Reference) Equity: As of December 31, 2024	¥109,415 million	As of March 31, 2024	¥101,928 million

2. Cash dividends

			Annual dividends per share

		First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total

		Yen	Yen	Yen	Yen	Yen
Fiscal year ended	–	41.00	–	61.00	102.00
March 31, 2024

Fiscal year ending	–	71.00	–

March 31, 2025

Fiscal year ending
March 31, 2025				71.00	142.00
(Forecast)
Note:	Revisions to the forecast of cash dividends most recently announced: None

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2025 (from April 1, 2024 to March 31, 2025)

(Percentages indicate year-on-year changes.)

									Profit attributable to	Basic
		Net sales		Operating profit	Ordinary profit	earnings
			owners of parent
									per share


		Millions		%	Millions	%	Millions	%	Millions	%	Yen
		of yen		of yen	of yen	of yen

Fiscal year ending	167,500		11.4	31,000	37.5	31,000	32.3	23,000	32.9	500.34
March 31, 2025


Note:	Revisions to the earnings forecasts most recently announced: Yes

* Notes

Significant changes in the scope of consolidation during the period: Yes Newly included: –

Excluded: 1 company (ORGANO ECO TECH CORPORATION)

Note For more details, please refer to “Significant changes in the scope of consolidation during the period” on page 9 of the attached material.

(2) Application of specific accounting for preparing the quarterly consolidated financial statements: Yes

Note:	For more details, please refer to “Application of specific accounting for preparing the quarterly consolidated
	financial statements” on page 9 of the attached material.

Changes in accounting policies, changes in accounting estimates, and restatement

Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
Changes in accounting policies due to other reasons: None
Changes in accounting estimates: None
Restatement: None

Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

As of December 31, 2024

As of March 31, 2024

46,359,700 shares

b. Number of treasury shares at the end of the period

As of December 31, 2024

As of March 31, 2024

393,470 shares

415,524 shares

Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

For the nine months ended December 31, 2024

For the nine months ended December 31, 2023

45,968,768 shares

45,919,310 shares

Note: The Company has introduced an Officer Share Delivery Trust, and shares of the Company held by the Trust have been included in treasury shares excluded from the calculation of the number of treasury shares at the end of the period and the average number of shares outstanding during the period (cumulative from the beginning of the fiscal year).

Review of the Japanese-language originals of the attached quarterly consolidated financial statements by certified public accountants or an audit firm: None
Proper use of earnings forecasts, and other special matters (Caution regarding forward-looking statements and others)
The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual business and other results may differ substantially due to various factors. Please refer to “(3) Explanation regarding consolidated earnings forecasts and other forward-looking statements” in “1. Qualitative information regarding financial results for the first nine months” on pages 3 and 4 of the attached material for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof.

Attached Material
	Index
1. Qualitative information regarding financial results for the first nine months	2
(1)	Explanation regarding operating results	2
(2)	Explanation regarding financial position	3
(3)	Explanation regarding consolidated earnings forecasts and other forward-looking statements 3
2. Quarterly consolidated financial statements and significant notes thereto	5
(1)	Consolidated balance sheet	5
(2)	Consolidated statement of income and consolidated statement of comprehensive income	7
	Consolidated statement of income (cumulative)	7
	Consolidated statement of comprehensive income (cumulative)	8
(3)	Notes to quarterly consolidated financial statements	9
	Notes on premise of going concern	9
	Notes on substantial changes in the amount of shareholders’ equity	9
	Significant changes in the scope of consolidation during the period	9
	Application of specific accounting for preparing the quarterly consolidated financial
	statements	9
	Changes in accounting policies	9
	Notes to quarterly consolidated statement of cash flows	9
	Segment information, etc	10
	Significant subsequent events	10
3. Supplementary information	12

- 1 -

1. Qualitative information regarding financial results for the first nine months

Explanation regarding operating results
During the nine months ended December 31, 2024 (April 1, 2024 to December 31, 2024), the global economy remained firm particularly in the U.S. amid the impact of the slowdown of the Chinese economy and geopolitical risks such as the situation in the Middle East, and the Japanese economy also showed signs of moderate recovery. On the other hand, regarding the outlook, it is necessary to be mindful of the impact of the Trump 2.0 administration’s protectionist policies on the global economy.
In the electronics industry, the Organo Group’s main market, the overall situation continued to be brisk, as capital investment for cutting-edge semiconductors increased, reflecting increased demand for semiconductors related to generative artificial intelligence (AI). On the other hand, uncertainties are seen about future market conditions, with stagnant demand for semiconductors other than those related to AI, such as those for electric vehicles (EV) and smartphones. In the general industry, such as pharmaceuticals and food, as well as electronics peripherals, and in the social infrastructure field, such as electric power/water supply and sewage, capital investment and demand for maintenance, etc. remained strong.
Under these conditions, while promoting order-taking and delivery activities for large-scale projects in Japan and overseas, the Organo Group executed investment related to digital transformation (DX) with the aim of enhancing the efficiency of plant engineering processes and took steps to expand production and delivery capacities, such as promotion of measures for development and deployment of human resources worldwide. We have also promoted various measures to enhance R&D aimed at the creation of next-generation technology and new businesses and to enhance sustainability and governance.
As a result, for the nine months ended December 31, 2024, orders received increased by 8.3% year on year to ¥117,957 million, net sales increased by 8.9% to ¥115,698 million, operating profit increased by 39.1% to ¥19,746 million, ordinary profit increased by 33.7% to ¥19,939 million, profit attributable to owners of parent increased by 36.2% to ¥13,965 million, and the carry-over balance for order backlog as of December 31, 2024 was down 7.0% to ¥116,472 million.
Results by segment are as follows.
Effective from the first quarter ended June 30, 2024, the method of classification of the reportable segments has been changed and comparison and analysis for the nine months ended December 31, 2024 are based on the classification after the change.
[Water Treatment Engineering Business Unit]
■Orders received
Orders received increased 9.1% year on year to ¥98,978 million. In the electronics industry, orders received increased, reflecting large-scale projects ordered for semiconductors in Taiwan and China and strong sales of projects for solutions, such as facility-owned services. Orders received increased in the general industry, mainly due to orders received for ultrapure water facility for Hyper-Kamiokande and for large projects for electronics peripherals, and in the social infrastructure field, mainly due to orders for replacement of power plans in Japan.
■Net sales
Net sales increased 9.4% year on year to ¥96,915 million. In the electronics industry, net sales increased, reflecting steady progress of construction in Taiwan, China, and Southeast Asia, particularly for large- scale projects ordered in the previous fiscal year or earlier and strong sales of solutions projects, such as facility-owned services and various maintenance services. Moreover, in the general industry, sales also increased, reflecting steady progress in large-scale projects ordered in the previous fiscal year or earlier and strong sales of solutions projects. In the social infrastructure field, sales remained robust mainly in Japan and net sales on a par with the same period of the previous fiscal year were secured.

■Operating profit

Operating profit increased 41.8% year on year to ¥16,967 million. This was attribute to an increase in sales from large-scale plant projects in the electronics and general industries and growth in sales in the Service Solutions Division, whose profitability is relatively high. In addition, a higher gross profit margin owing to the recording of sales from some plant projects with favorable profitability, in addition to the order-receiving environment remaining favorable against the backdrop of strong capital investment, as well as the effects of various initiatives for cost reduction and profit improvement, resulted in a higher operating profit.

[Performance Products Business Unit]

■Orders received/Net sales

Orders received increased 4.5% year on year to ¥18,978 million and net sales increased 6.2% year on year to ¥18,782 million. Against the backdrop of strong semiconductor demand, sales of products for the electronics industry, including water treatment chemicals such as RO membrane protection chemicals and wastewater treatment chemicals, were brisk and sales of functional materials, such as ion exchange resin used for separation and refinement of electronic materials, increased, resulting in higher net sales. On the other hand, sales of various food processing agents for processed foods decreased due to progress of liquidation of unprofitable transactions.

■Operating profit

Operating profit increased 24.7% year on year to ¥2,778 million. In addition to an increase in net sales of the products in general, an increase in sales of water treatment chemicals and functional materials for the electronics industry whose gross profit margin is relatively high, and the implementation of profit improvement measures, including price increases in line with increases in raw material prices, resulted in higher operating profit.

Explanation regarding financial position
Assets, liabilities and net assets
Assets
Assets as of December 31, 2024 amounted to ¥185,242 million, an increase of ¥2,538 million from the previous fiscal year end. This was mainly due to an increase of ¥6,261 million in investments in leases, despite a decrease of ¥2,797 million in inventories.
Liabilities
Liabilities as of December 31, 2024 amounted to ¥75,583 million, a decrease of ¥4,972 million from the previous fiscal year end. This was mainly due to a decrease of ¥2,125 million in short-term borrowings.
Net Assets
Net assets as of December 31, 2024 amounted to ¥109,658 million, an increase of ¥7,511 million from the previous fiscal year end. This was mainly due to an increase of ¥7,890 million in retained earnings, resulting from the recording of profit attributable to owners of parent.
Explanation regarding consolidated earnings forecasts and other forward-looking statements
In light of recent performance trends and other factors, the Company has revised the consolidated earnings forecasts, which were announced on November 1, 2024.
Orders received are expected to be below the previous forecast and amount to ¥155,000 million (down 8.8% from the previous forecast), mainly due to the impact of the postponement of the expected timing of orders received for large-scale projects in the electronics industry. Net sales are expected to exceed the previous forecast, as an increase in sales in the Service Solutions Division in the electronics and general industries was higher than expected. Profit is expected to exceed the previous forecast because of growth in sales in the Service Solutions Division, whose profitability is relatively high, and improvement in the profitability rate in the Plant Division.

Revisions to the consolidated earnings forecasts for the fiscal year ending March 31, 2025 (April 1, 2024 to March 31, 2025)

				Profit		Basic
		Operating	Ordinary	attributable
	Net sales		earnings per
	profit	profit	to owners of
			share
				parent

	Millions of yen	Millions of yen	Millions of yen	Millions of yen		Yen
Previous forecast (A)	165,000	28,000	28,500	21,500	467.75

Revised forecast (B)	167,500	31,000	31,000	23,000	500.34

Change (B-A)	2,500	3,000	2,500	1,500

Change (%)	1.5	10.7	8.8	7.0

Reference: Consolidated
results for fiscal year ended	150,356	22,544	23,425	17,310	376.92
March 31, 2024

- 4 -

2. Quarterly consolidated financial statements and significant notes thereto

(1) Consolidated balance sheet

				(Millions of yen)
			As of March 31, 2024	As of December 31, 2024

Assets
Current assets
Cash and deposits			17,642	14,835
Notes and accounts receivable - trade, and	77,773	75,458
contract assets

Electronically recorded monetary claims -			4,452	6,714
operating

Investments in leases	27,814	34,076
Merchandise and finished goods			7,707	8,320
Work in process	9,221	6,958
Raw materials and supplies			4,902	3,754
Other	3,978	5,409
Allowance for doubtful accounts			(23)	(24)
Total current assets	153,469	155,503
Non-current assets
Property, plant and equipment
Buildings and structures			19,526	19,828
Accumulated depreciation	(13,550)	(13,852)
Buildings and structures, net			5,976	5,975
Machinery, equipment and vehicles	6,706	7,077
Accumulated depreciation			(5,828)	(5,992)
Machinery, equipment and vehicles, net	877	1,085
Land			12,304	12,434
Construction in progress	148	487
Other			6,557	6,978
Accumulated depreciation	(5,229)	(5,619)
Other, net			1,327	1,359
Total property, plant and equipment	20,634	21,342
Intangible assets			986	1,029
Investments and other assets
Investment securities			2,835	2,302
Retirement benefit asset	1,955	2,088
Deferred tax assets			2,404	2,615
Other	600	530
Allowance for doubtful accounts			(183)	(171)
Total investments and other assets	7,613	7,366
Total non-current assets			29,233	29,738
Total assets	182,703	185,242

- 5 -

				(Millions of yen)
			As of March 31, 2024	As of December 31, 2024

Liabilities
Current liabilities
Notes and accounts payable - trade			19,842	18,694
Electronically recorded obligations - operating	2,839	3,729
Short-term borrowings			34,065	31,940
Income taxes payable	3,605	3,662
Contract liabilities			3,920	2,205
Provision for bonuses	1,890	1,147
Provision for product warranties			1,686	1,406
Provision for loss on construction contracts	83	66
Provision for share awards for directors (and			107	77
other officers)

Other	4,561	5,939
Total current liabilities			72,602	68,869
Non-current liabilities
Long-term borrowings			2,400	1,200
Deferred tax liabilities	59	21
Retirement benefit liability			5,344	5,372
Other	149	120
Total non-current liabilities			7,953	6,713
Total liabilities	80,555	75,583
Net assets
Shareholders’ equity
Share capital			8,225	8,225
Capital surplus	7,508	7,508
Retained earnings			82,907	90,797
Treasury shares	(518)	(745)
Total shareholders’ equity			98,122	105,786
Accumulated other comprehensive income
Valuation difference on available-for-sale			774	243
securities

Foreign currency translation adjustment	1,923	2,350
Remeasurements of defined benefit plans			1,108	1,035
Total accumulated other comprehensive income	3,805	3,629
Non-controlling interests			219	243
Total net assets	102,147	109,658
Total liabilities and net assets			182,703	185,242

- 6 -

Consolidated statement of income and consolidated statement of comprehensive income Consolidated statement of income (cumulative)

			(Millions of yen)
		Nine months ended	Nine months ended
		December 31, 2023	December 31, 2024
		(From April 1, 2023 to	(From April 1, 2024 to
		December 31, 2023)	December 31, 2024)
Net sales		106,236	115,698
Cost of sales	76,446	78,438
Gross profit		29,790	37,259
Selling, general and administrative expenses	15,596	17,513
Operating profit		14,194	19,746
Non-operating income
Interest income		97	97
Dividend income	44	29
Foreign exchange gains		480	80
Share of profit of entities accounted for using	131	76
equity method

Other		147	105
Total non-operating income	901	389
Non-operating expenses
Interest expenses	172	185
Other		12	11
Total non-operating expenses	184	196
Ordinary profit		14,910	19,939
Extraordinary income
Gain on sale of non-current assets		13	4
Gain on sale of investment securities	31	724
Gain on liquidation of subsidiaries		57	－
Total extraordinary income	102	728
Extraordinary losses
Loss on abandonment of non-current assets	25	9
Total extraordinary losses		25	9
Profit before income taxes	14,987	20,659
Income taxes		4,722	6,674
Profit	10,265	13,985
Profit attributable to non-controlling interests		15	19
Profit attributable to owners of parent	10,250	13,965

- 7 -