In FY2024, the third year of the Mid-Term Business Plan, from the beginning of the FY, the Company had assumed that costs would increase due to the upfront burden of expenses associated with the launch of new products for semiconductor manufacturing equipment, higher labor costs associated with improved compensation, and higher energy and material prices. The Company planned to operating profit and ordinary profit of ¥1,500 million each, despite lower profits, by absorbing as much as possible of these increases through price pass-on and increased sales, mainly in the Toner Segment which accounts for more than 30% of consolidated net sales, and in the functional non-woven fabrics business which launched new products in the previous FY.

However, due to the sluggish Chinese economy, the performance of the Toner Segment and the functional non-woven fabrics businesses remained weak until the third quarter. On the other hand, the Semiconductor and display-related businesses and the Security Media Segment performed better than initially expected. As a result of the above, net sales amounted to ¥33,692 million, down ¥477 million from that of the previous FY, when the Toner Segment was particularly strong.

In terms of profit, the effect of various cost increases was more modest than initially expected, as it was offset partially by an increase in income from prototype production and improvements in on-site productivity. Price pass-on was also better than expected. In addition, the depreciation of the yen in the second half of the current FY had a positive effect on profits. However, in addition to the decrease in net sales compared to the previous FY, production adjustments aimed at reducing inventories, particularly in the Toner Segment, had a negative effect on profits. As a result, Operating profit was ¥1,331 million, down ¥720 million from that of the previous FY. Ordinary profit was ¥1,643 million, only down ¥507 million from that of the previous FY, exceeding the original plan of ¥1,500 million announced on May 12, 2023, thanks to the continued contribution of equity earnings from an affiliated company that handles processing of optical film used for displays. Profit attributable to owners of parent was down to ¥594 million. This was mainly due to the absence of extraordinary income from sales of closed fix asset recorded in the previous FY.

With regard to a financial strength, although the Company redeemed all of its preferred stock ahead of schedule during the term, it continued to maintain net asset ratio of 40%, which it has set as a guideline for the foreseeable future.

In FY2025, the fourth year of the 8th Mid-Term Business Plan, the Company expects an increase in both sales and profit compared to the previous FY. In the Toner Segment, signs of a recovery in demand have been seen since FY2024 4Q, and in the Functional Sheet Segment, the Company is making progress in developing markets other than the Chinese market, and expects to acquire new projects. With regard to the Semiconductor and display-related business, although the effect of temporary order wins in the display-related business during the current FY is expected to level off, a recovery in the semiconductor market is anticipated from the second half of FY2025. For FY2025, the Company has set its full-year net sales forecasts at ¥35,000 million.

The Company expects operating profit to be ¥2,200 million and it will continue to aim to the level of the revised 8th Mid-Term Business Plan, thanks to the effects of increased sales, penetration of price increases, the market recovery in the Toner Segment and the continued yen depreciation in the first half of the current FY, despite an upfront expenses associated with the launch of new products in the Semiconductor-related business and an increase in labor costs associated with improved compensation and aggressive investments in DX-related businesses are expected to increase costs.

For the final FY (FY2026) of the revised 8th Mid-Term Business Plan, the Company will continue to aim operating profit of ¥3,500 million, taking into account the recovery and market share expansion in the Toner Segment, further growth in the semiconductor-related product market, improvement of profit margins through continued price pass-on, improvement of the quality of business management and business productivity through the use of DX, and the full-scale contribution of new products.

We look forward to your continued support in the future.