Fuji Electric Co Ltd

Hello, everyone. I am Miyoshi, and I will be taking charge of the Corporate Management Planning. In April of this year, we abolished the existing President's Office and incorporated the Public Relations and Investor Relations Department, which had been handled by the President's Office, into Corporate Management Planning Headquarters. We will continue to be in charge of communication with investors. Thank you very much for your cooperation. and I would like to begin with a report on our full-year financial results. We achieved record highs in net sales, operating profit, ordinary profit, and profit attributable to owners or parent, and we also achieved our key target of an operating profit ratio of over 10%. Next, a year-on-year comparison of the consolidated financial results for FY 2024. Net sales increased by 20.2 billion yen to 1,123.4 billion yen in real demand basis, without the gain on translation of earnings of overseas subsidiaries. Operating profit increased 11.6 billion yen to 117.6 billion yen. Details of the increase and decreases are shown on the next page. Ordinary profit amounted to 118.8 billion yen. The total amount of non-operating profits was minus 0.6 billion yen. This was due to an increase in net interest expenses, an increase in borrowings by overseas subsidiaries, and a foreign exchange loss of minus 3.5 billion yen. while a one-time expense incurred by a Malaysian subsidiary in the previous fiscal year and income from subsidies added a positive effect of 4 billion yen. Extraordinary profit increased by 8.7 billion yen to 14.9 billion yen, partly due to a gain on sales of investment securities. As a result, profit attributable to owners of parent increased 16.9 billion yen to 92.2 billion yen, and the ratio of profit attributable to owners of parent to net sales rose to 8.2%. I will explain the increase and decrease in operating profit and loss. As for the decrease in sales and production volumes, the impact of production adjustments in FA components and semiconductors based on market conditions showed up, and although there was an increase in production in food and beverage distribution segment and plant systems in the energy segment, the overall decrease came to 1.8 billion yen. In fixed costs, labor, R&D, and capital expenses increased as part of investments for growth. But other expenses, such as the impact of provisions recorded in the previous year, for example, provision for losses in the food and beverage distribution segment, resulted in a turnaround of 4.9 billion yen, for a total increase of fixed costs of 8.5 billion yen. In added value and others, there was a 3.8 billion yen effect from higher product selling prices, mainly in vending machines business for food and beverage distribution segment and ED&C components business. On the other hand, the impact of soaring prices of silver, copper, and other raw materials resulted in a total negative impact of 5.8 billion yen, mainly in semiconductor segment, ED&C components business, and others. The difference in the model mix and profitability between projects was driven by planned system projects, such as power supply and facility systems business in the energy segment and equipment construction business in the industry segment. Cost reduction efforts in semiconductors segment, vending machine business in food and beverage distribution segment, and ED&C components business in energy segment had a total positive effect of 22.3 billion yen. In total, added value and others increased by 20.3 billion yen, and foreign exchange factors also contributed 1.6 billion yen to the positive turnaround, resulting in operating profit of 117.6 billion yen. Next is the net sales and operating profit by segment. In energy, semiconductors, and food and beverage distribution segments, each posted increases in both net sales and operating profit. Industry segments saw net sales decrease due to the difficult conditions in FA component business, but operating profit was up. Food and beverage distribution segments saw operating profit increase by 5.1 billion yen due to special demand following the issuance of new paper currency, and its operating profit ratio rose to 12.5%, contributing to the increase in profit in particular. In the energy segment, net sales increased 8.1 billion yen, operating profit up 2 billion yen, and the operating profit ratio improved by 0.4% to 9.2%. Energy management and power supply in a facility systems business contributed particularly to the results. On the other hand, power generation business saw higher net sales due to large-scale renewable energy projects, but a decrease in operating profit due to increased expenses associated with thermal power and geothermal power generation projects. In ED&C components business, net sales was lower due to a delayed recovery in demand, mainly from finished machinery manufacturers and the impact of material price hikes of 2 billion yen, resulting in a decrease in profit. In the industry segment, net sales declined 7.5 billion yen year-on-year to 412.4 billion yen, while operating profit increased 3.9 billion yen to 38.2 billion yen, and the operating profit ratio improved 1.1% to 9.3%. Unfortunately, the mainstay automation systems business saw a decline in both net sales and operating profits, but other businesses increased their profits, resulting in an overall increase in operating profit as a segment. Within automation system business, planned operations projects and process automation applications saw increases in both net sales and operating profits, but FA applications saw a decline in both sales and profits, resulting in declines in both net sales and operating profits for the sub-segment as a whole. Social solutions business posted higher net sales and operating profit, mainly due to increased demand in the transportation systems. Digital transformation solutions business posted higher net sales and operating profit, mainly due to an increase in large-scale projects, especially IT solution projects. In equipment construction business, net sales decreased due to an absence of large-scale project for air conditioning equipment construction with low gross profit margin, recorded in the previous fiscal year. but differences in profitability between projects and promotion of cost reductions activities had positive impacts, resulting in improved operating profit. In semiconductor segment, net sales increased 8.8 billion yen to 236.8 billion yen. Operating profit was up 0.9 billion yen to 37.1 billion yen. operating profit ratio was down 0.2% to 15.7%. Foreign exchange had a significant impact, and excluding that impact, operating results unfortunately declined by 0.3 billion yen. Net sales, on the other hand, increased by 9.9 billion yen, excluding the impact of foreign exchange. The market trends of net sales for industrial and automotive are different, with weak demand for power semiconductors for XEVs overseas, while demand for automotive semiconductors in Japan is increasing. For industrial, demand was down in Japan, while overseas demand was strong, especially for semiconductors for renewable energy. Operating results exceeded the previous year's level due to increased net sales and selling price revisions, despite the ¥3.7 billion rising expenses related to bolstering production capacity and the impact of material price hikes. The revision of selling prices offset the profit-loss side of the business, as the price revision supplemented the volume impact of the product that fell short of the promised volume. In food and beverage distribution segment, net sales increased 4.2 billion yen to 111.5 billion yen. Operating profit increased 5.1 billion yen to 13.9 billion yen. The operating profit ratio improved significantly, rising 4.3% to 12.5%. Although vending machines business net sales increased slightly, the operating profit improved significantly due to a provision recorded in the previous fiscal year. Store distribution business posted higher net sales and operating profit, mainly due to special demand for automatic change expenses to accommodate issuance of newly designed paper currency in Japan. Next is our net sales by Japan and overseas area. Sales in India have been added as overseas area. Previously, it was included in Asia and others, but the scale of the Indian business has been expanding, and we have made it a separate disclosure item starting this time. While sales in Asia and others decreased due to the absence of large-scale projects recorded in the previous fiscal year, net sales in India increased by about 20% to 28.5 billion yen. mainly in small-capacity power supplies for automation systems business.

Next, orders. Orders received in FY 2024 were 107.5 billion yen higher than the previous year's 1 trillion 109.8 billion yen. They totaled 1 trillion 217.3 billion yen. Plant systems in energy segment jumped by 82.6 billion yen over the previous year. The main drivers were power generation plants, power receiving and transforming systems for energy management, and power supply and facility systems. These figures are real-time changes from Q3 of major components without the impact of exchange rates. Automotive semiconductors showed a significant growth because the figure includes the settlement of the impact of all the differences between the volume we promised to our customers and the actual volume in Q4. The full year results are compared against our forecast released on January 30th. Net sales increased by 9.4 billion yen, but if you include the impact of foreign exchange rates, net sales actually decreased. Meanwhile, operating profit increased by 6.1 billion yen, even when 2.3 billion yen of foreign exchange impact is included. By segment, energy segment reported lower profit due to higher power generation plant costs. semiconductor segment's operating profit improved by ¥4.6 billion. Factors contributing to improvement include ¥1.9 billion from favorable foreign exchange rates, cost reduction, and recording of one-time expenses that had been expected in automotive semiconductors as an extraordinary loss. Capital investment totaled 85.2 billion yen, up 16.9 billion yen from the previous year. With the exception of semiconductors, capital investment progressed largely in line with the plan at the beginning of the fiscal year. In energy segment, we installed a large-capacity short-circuit test equipment. In industry, we introduced smart meter assembly lines. Capital investment in semiconductor segment increased by 16.3 billion yen, but the scale was reduced by more than 10 billion yen from the initial plan because of weak market conditions. Investments were made to augment product-on-capacity of the front-end process such as for silicon carbide semiconductors and 8H silicon wafers and back-end process. R&D increased by 1.7 billion yen from the previous year to 37.8 billion yen, and although there were slight ups and downs by segment, R&D budget was implemented largely in line with the plan at the beginning of the fiscal year. It was based on the mid-term plan with an eye beyond the period of the plan. Next, balance sheet. Total assets increased due to investment for growth, mainly in semiconductors segment, and a 35.6 billion yen increase in fixed assets. In current assets, inventories increased by 12.5 billion yen. Trade receivables decreased by 12.3 billion yen due to a progress in collection, mainly those for planned projects. Interest bearing debt decreased by 58 billion yen as retained earnings increased. Net interest bearing debt came down to 42.2 billion yen. The net debt-to-equity ratio was 0.06 times. ROE was 14.3%, ROIC 12.9%, and the equity ratio was 52.7%. They all indicate improved financial position of the company. Next, cash flow. Cash flow from operating activities increased significantly due to an increase in net profit as well as an increase in collection of trade receivables. Cash flow from investing activities remained flat because proceeds from the sale of shares offset increased capital investment. Free cash flow stood at 81.5 billion yen, a sharp rise from the previous year. The year-end dividend was determined to be 85 yen per share, resulting in an annual dividend of 160 yen per share. This concludes my briefing on the financial results.