JCU : Financial Results Briefing Material for the Fiscal Year Ending March 2024 (Webcast)

JCU Corporation

Financial Results Briefing for the Fiscal Year Ended March 2024

May 17, 2024

Event Summary

[Company Name]	JCU Corporation
[Company ID]	4975-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Financial Results Briefing for the Fiscal Year Ended March 2024
[Fiscal Period]	FY2024 Annual
[Date]	May 17, 2024
[Number of Pages]	50
[Time]	16:00 - 16:53
	(Total: 53 minutes, Presentation: 50 minutes, Q&A: 3 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	2
	Masashi Kimura	Representative Director, President and CEO
	Yoji Inoue	Director, Manager, Corporate Strategy Office

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

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Presentation

Moderator: Thank you very much for participating in the financial results briefing of JCU Corporation for the fiscal year ended March 31, 2024. We will now start a financial results briefing of JCU for the fiscal year ended March 31, 2024.

This briefing will be webcast live via Zoom. If the live stream is interrupted or the screen freezes during the presentation, please wait a moment and refresh your browser. If you have trouble viewing or listening to the presentation due to technical or other reasons, please access our website to download recorded footage later, or feel free to contact our IR staff for an individual inquiry regarding the financial results.

In addition to the financial results presentation, we also disclosed our new medium-term management plan on May 10, and I would like to explain it as well. The briefing is scheduled to end around 4:45 PM.

First, I would like to introduce the attendees. Today's attendees from the company are Masashi Kimura, Representative Director, President and CEO, and Yoji Inoue, Director and General Manager of the Corporate Strategy Office.

There will be time for questions and answers after the presentation. We have received questions in advance of this event, we will answer those questions first. Please include your company name and your name when asking questions. Please note that we may not be able to respond due to time constraints, in which case, we will respond individually by e-mail later.

Masashi Kimura, Representative Director, President and CEO of JCU, would like to welcome you and explain the financial results for the fiscal year ended March 31, 2024. President Kimura, please go ahead.

Kimura: Hello, everyone. I am Kimura, Representative Director, President and CEO. Thank you very much for taking time out of your busy schedule to participate in our financial results briefing today. We would like to express our sincere gratitude to our investors for their continued understanding and support of our company's management.

I would now like to report our full-year results for the fiscal year ended March 31, 2024, and our forecast for the fiscal year ending March 31, 2025.

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Now, page two is a summary of our financial results for the fiscal year ended March 31, 2024.

Due to the three-month difference in the fiscal year end of our overseas subsidiaries, the domestic non- consolidated financial results are for the period from April 2023 to March 2024, while the overseas subsidiaries' financial results are for the period from January to December 2023.

In the electronics field, although some printed circuit board, PCB, manufacturers in China showed signs of recovery, demand for PCBs for smartphones and other high-performance electronic devices was sluggish, and chemical sales remained flat YoY. In Taiwan, demand for semiconductor package substrates for servers and high-performance electronic devices was sluggish, resulting in a YoY decline in chemical sales. In South Korea, demand for semiconductor package substrates was sluggish due to the continued poor performance of the semiconductor market, resulting in a YoY decline in chemical sales.

In the automotive sector, although domestic automobile production increased due to the easing of semiconductor and component shortages, demand for chemicals declined due to changes in the automobile component mix and the impact of shipment stoppages in the auto industry in Q4.

In China, although automobile production increased as the shortage of semiconductors and components eased, demand for auto parts, our target market, declined, resulting in a YoY decline in chemical sales.

In the equipment business, sales and order backlogs increased due to an increase in new investment demand accompanying the normalization of economic activity.

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As a result of this business environment, our consolidated results for the fiscal year ended March 31, 2024, are as shown on page three of the document.

Net sales, operating profit, ordinary profit, and net profit all decreased from the same period of the previous year. These results were due to the end of corona disaster's nesting demand and low global demand for smartphones and other high-function electronic devices, particularly in the electronics industry.

However, in H2 of the fiscal year, demand for chemicals recovered, especially for some printed circuit boards, and the yen weakened during the period, resulting in net sales of JPY24,859 million, close to the forecast made at the beginning of the fiscal year, and operating profit of JPY8,041 million, about JPY1 billion above the forecast.

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Page four shows a summary of the balance sheet.

The equity ratio was 85.1% and the return on equity ROE was 13.8%.

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Page five is the exchange rate.

Since we sell our products in local currencies and convert them into Japanese yen at the time of consolidated settlement of accounts, foreign exchange rates affect our business results. The major currencies used are the Chinese yuan, Taiwan dollar, and South Korean won, all using the average rates for the period from January to December 2023.

A 1% change in major currencies in terms of foreign exchange sensitivity has an impact of about JPY105 million on consolidated operating income. Compared to the same period last year, the yen weakened against all three currencies, which contributed to the increase in operating income.

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Next, on page six are the factors that caused operating profit to increase or decrease from the same period of the previous year.

Pharmaceutical sales decreased by JPY2,357 million. The profit margin on pharmaceuticals increased by JPY620 million. This increase was due to an improved mix, reflecting higher sales of chemicals for printed circuit boards, which have high chemical profit margins.

The impact of the pharmaceutical exchange rate increased by JPY403 million due to the depreciation of the yen against three major currencies. Gross profit from the equipment business increased by JPY82 million in line with the increase in net sales. As a result, operating profit decreased by JPY1,244 million from the same period last year.

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This is the forecast for the fiscal year ending March 2025.

The forecast for net sales is JPY27 billion, operating income and ordinary income are JPY8.5 billion, and net income is JPY5.9 billion, an increase in both sales and income. The assumed exchange rate at the time of the earnings forecast is shown on page five earlier.

Although we have factored in a certain degree of impact from the global situation in our forecast figures, we will promptly announce any major changes in the future.

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Page eight then shows the projected changes in operating income.

We project a JPY1,414 million increase in gross profit on chemicals due to higher sales of chemicals and a JPY57 million decrease in gross profit on equipment due to lower equipment sales.

SG&A expenses are expected to increase by JPY1,111 million, mainly due to increases in R&D, depreciation, and travel and transportation expenses. As a result, operating income for the fiscal year ending March 31, 2025, is expected to increase by JPY459 million YoY.

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