Fuji Electric Co Ltd

I am Miyoshi of Corporate Management Planning Headquarters. I understand that today, several companies in the electric sector are holding earnings briefings at the same time, so we appreciate deeply your participation in our company's briefing. Unfortunately, there are some who are unable to join us, so we will do our best to provide a detailed explanation of the financial results as much as possible, so that even those who cannot participate in the Q&A session will be able to have a good understanding of the results. Today, the heads of each business segment are also in attendance. We would appreciate any questions or comments you may have in the limited time we have with you today. Overall, the first quarter financial results were driven by both the energy and industry segments, with net sales and operating profit exceeding the previous year's figures, setting new record highs. We have been consistently explaining to investors that we are a power electronics company. The first quarter results demonstrate that we are close to achieving this vision. Now allow me to provide an overview of the results. This is a summary of the consolidated financial results for the first quarter of fiscal year 2025. Net sales and operating profit reached new record highs despite the appreciation of the yen from the previous year. net sales increased by 11.5 billion yen to 247.9 billion yen year-on-year, which includes a negative foreign exchange translation difference of 4.5 billion yen from earnings of overseas subsidiaries. So in real demand basis, it was up 16.1 billion yen. Operating profit increased by 800 million yen to 18.1 billion yen year-on-year, with an operating profit ratio of 7.3% and change from the previous year. An analysis of operating profit will be discussed on the next page. Changes in non-operating profit loss were primarily influenced by foreign exchange gains and losses. Ordinary profit decreased by 900 million yen year-on-year to 17.3 billion yen, while extraordinary profit was almost flat at a loss of 200 million yen, despite recording losses from the disposal of fixed assets. Profit attributable to owners of parent decreased by 600 million yen year-on-year to 10.9 billion yen. Next is an analysis of operating profit. Despite negative factors such as rising fixed costs and raw material prices, higher sales and production volumes resulted in operating profit to be up 800 million yen year-near to 18.1 billion yen. The primary drivers of this increase were power supply and facility systems and energy management businesses of the energy segment, industrial business of the semiconductor segment, and IT solutions business of the industry segment. On the other hand, vending machines and store distribution businesses in the food and beverage distribution segment and automotive business in the semiconductor segment were negative. Fixed costs increased, labour costs by 2.7 billion yen and capital costs increased by 1 billion yen, primarily related to the semiconductor factories in Malaysia and domestic factories. As for added value and others, saw an impact of rising raw material prices amounting to 1.5 billion yen. Negative impacts of approximately 500 to 900 million yen were seen in both the semiconductor segment and ED&C components business in the industry segment. Next is the net sales and operating profit by segment. Net sales growth was driven by the energy and industry segments. In operating profit, declines in the semiconductors and food and beverage distribution segments were offset with gains in the energy and industry segments. In particular, the energy segment saw significant year-on-year increases in both net sales and operating profit, with an operating profit ratio rising to 11.5%. Next, I will explain the key points of business results by segment, starting with the energy segment. Net sales increased by 8.4 billion yen to 73.8 billion yen, and operating profit increased by 5.1 billion yen to 8.5 billion yen. The operating profit ratio reached 11.5%. The three businesses, namely energy management, power supply and facility systems, and equipment construction also increases in both net sales and operating profit, driving the performance. Power generation business saw net sales decrease by 1%. Energy management and power supply and facility systems businesses, which are of high interest to investors and which we also hold high expectations for, saw particularly strong growth. energy management business contributed to the significant year-on-year increase in net sales and operating profit through an increase in projects related to storage battery system and grid stabilization projects, as well as an increase in substation equipment. In addition, power supply and facility systems business also saw an increase in both net sales and operating profit year-on-year due to increased demand from data centers. Next, the industry segment. Net sales increased by 7.3 billion yen to 87.8 billion yen, and operating profit increased by 1 billion yen to 2.9 billion yen year-on-year. The operating profit ratio was 3.3%, which tends to be heavily weighted towards the fourth quarter business characteristic-wise, but it improved by 1% compared to the previous year. In terms of sub-segments, all four sub-segments except SA components saw an increase in net sales. Automation systems saw an increase in net sales due to increased demand, but unfortunately, operating profit decreased due to the rising expenses associated with large-scale projects. IT solutions saw an increase in both net sales and operating profit. Net sales increased significantly by 30% due to growth in large-scale projects from the academic sector, with operating profit also increasing accordingly. Next is the semiconductor segment. Net sales increased by 1 billion yen to 54.8 billion yen year-on-year, with operating profit down 2.8 billion yen to 4.9 billion yen, with an operating profit ratio of 8.9%. Semiconductor segment is relatively more susceptible to exchange rate fluctuations than other segments. The exchange rate impact is shown on page 7 of the presentation material. The exchange rate impact included in net sales was 2.2 billion yen, and in operating profit, it was 600 million yen. Net sales of the industrial business were up year-on-year, mainly due to increased demand for semiconductors for renewable energy and other applications overseas, particularly China. In the automotive business, domestic demand increased, but overseas demand decreased, and combined with the impact of exchange rates, net sales decreased year-on-year. Operating profit decreased compared to the same period of the previous year due to increased costs related to production capacity expansion, rising raw material prices, and exchange rate impacts, despite increased sales in the industrial business. Next, food and beverage distribution segment. Net sales decreased by ¥4.4 billion to ¥26.3 billion year-on-year. And operating profit decreased by ¥2 billion to ¥3.1 billion, resulting in an operating profit ratio of 11.9%. Vending machines business saw a decrease in both net sales and operating profit due to a decline in domestic demand for vending machines. with net sales decreasing by 14%. Store distribution business saw a 15% decrease in net sales. While renovation demand for convenience stores remained steady, both sales and profit increased significantly due to special demand related to automatic change dispensers in the same period of the previous year, and the absence of this special demand resulted in this decline. If the impact of the previous year's special demand for automatic change dispensers was to be excluded, store distribution business achieved an increase in both sales and profit, and we recognize that the food and beverage distribution business is steadily gaining strength. Next, I will discuss net sales by Japan and overseas area with a focus on overseas. Overseas sales decreased by 1.9 billion yen to 17.8 billion yen year-near, accounting for 29% of total sales. This includes a foreign exchange impact of 4.5 billion yen, resulting in an actual increase of 2.6 billion yen. Looking at the situation by region, the largest sales region is Asia and China. In Asia, sales decreased year-on-year due to the impact of projects related to power generation and power supply and facility systems businesses. On the other hand, in China, sales increased due to steady demand in the semiconductor industrial for renewable energy applications. Next is orders. First quarter orders totaled 336.2 billion yen, an increase of 40.2 billion yen year-on-year. Higher plant and system orders in the energy and industry segments led to increase up 36.7 billion yen year-on-year. Order of energy segment increased by 8.1 billion yen year-on-year. driven by energy management and power supply and facility systems businesses. Within energy, power generation orders decreased by approximately 5 billion yen, but this was offset by an increase of approximately 13 billion yen in other businesses such as energy management and power supply and facility systems. In the industry segment, large-scale projects from academic sector in the IT solutions business had a significant impact, and in addition, orders for transportation systems in social solutions business increased for the Americas, resulting in an increase of 28.5 billion yen. Next is orders for major components. In the same period last year, orders were 99.9 billion yen, and for the current fiscal year they came to 102.7 billion yen, despite FX effect of 2.9 billion yen. We expect the market to show a gradual recovery trend. Semiconductors automotive was affected by decline in overseas demand, resulting in decreases both quarter-on-quarter and year-on-year. The semiconductor industrial saw positive growth with contribution from China's renewable energy application demand. FA and ED&C components markets are showing signs of recovery, but as mentioned earlier, we have not yet seen a strong recovery trend in the first quarter. FA saw increased demand for plant equipment in Europe. Regarding ED&C components business, we are seeing signs of recovery in some areas of domestic finished machinery manufacturers, but we believe that further monitoring is necessary. Next, consolidated balance sheet and cash flow situation. Total assets decreased by ¥40.2 billion to ¥1,272,000,000 year-on-year, primarily due to a decrease in notes receivable. Under assets, inventories increased by 13.7 billion yen mainly due to an increase in plant equipment. Under liabilities, other liabilities down 31.3 billion yen primarily due to corporate taxes or bonus payments, and we have raised 27 billion yen in commercial paper as interest-bearing debt. Net interest-bearing debt increased by 25.7 billion yen to 67.9 billion yen, and the net DE ratio is 0.1 times, progressing almost according to plan. This is a cash flow statement. Cash flows from operating activities deteriorated year-on-year, mainly due to a decrease in advance payments collected and an increase in payments for accounts payable. Cash flows from investing activities improved as capital investments mainly in semiconductors continued but were timed appropriately. Cash flows from financing activities improved due to commercial paper financing. Based on the results of the first quarter, we have revised upward a consolidated earnings forecast for the six-month period ending September 30, 2025. Net sales are increased by 15 billion yen to 534 billion yen. Operating profit is increased by 6.5 billion yen to 40.5 billion yen and profit attributable to owners or parent is increased by 4.5 billion yen to 23.5 billion yen. The breakdown by segment is as shown in the table below. This is a full year forecast. The full-year forecast reflects the upward revision of the six-month period ending September 30, 2025, but we have left the second-half forecast unchanged, as further analysis is required. Reciprocal tariff rate of 15% is set with the United States, finally giving us direction going forward. We will closely monitor market conditions, customer investment timings, and other factors, and revise our full-year forecast as necessary. Please find a table comparing the consolidated forecast with the previously announced outlook and against the year-on-year results for your reference. That concludes my presentation. Thank you very much for your attention.