Performance Trend 1. Overview of performance for FY3/2024 Consolidated performance for FY3/2024 of G-7 Holdings <7508> was 192,992 million yen in increased operating income of 9.1% over the previous year, and increased ordinary income of 7.4% to 7,318 million yen, and attributed to the parent company's net income of 5,175 million yen, an increase of 35.3% over the previous year. Sales were driven by the Business Supermarket Business and the Meat Business, and continued to set a new record high, exceeding the company's plan by 4.3%. However, in terms of profits, the automobile-related business was affected by a decrease in profits due to poor sales of winter tires due to a warm winter, and could not reach the company's plan, it turned to a profit increase for the second time due to the growth of other businesses centered on the Business Supermarket business. The sales cost ratio has increased by 0.8 points over the previous year due to changes in the sales composition ratio; however, the selling, general and administrative expense ratio decreased by 0.7 points due to the effect of increased earnings, and the operating margin decreased by 0.1 points to 3.6%. The main reasons for the increase/decrease of selling, general and administrative expenses were a decrease of 600 million yen in energy costs due to subsidies from rising electricity prices, and an increase of 1 billion yen in labor costs due to improvements in employee treatment and increased education costs. In addition to this, depreciation expenses increased by nearly 600 million yen due to rising construction material costs and rising costs of opening stores etc. The EBITDA margin has increased by 0.1 points from the previous year. Also, the reason for the large increase in the net income of the parent company's shareholders attributable to the current period is due to the elimination of 500 million yen in retirement benefits paid to executives that were recorded as special losses in the previous year, a decrease of 455 million yen in impairment losses, and a gain of 127 million yen on the sale of investment securities in FY3/2024.

1. Consolidated Business Performance Overview for the period ended March 2024.

P/L

For the consolidated performance of Hagiwara Electric Holdings (7467) for the year ending March 2024, sales were ¥225,150 million (+21.0% YoY), operating profit was ¥7,711 million (+14.7% YoY), recurring profit was ¥7,221 million (+12.5% YoY), and net income attributable to the parent company shareholders was ¥4,421 million (-10.0% YoY). Sales, operating profit, and recurring profit all reached record highs. The decrease in net income attributable to the parent company shareholders was due to a rebound from the extraordinary gain of ¥670 million from negative goodwill recognized in the previous fiscal year.

The significant increase in revenue was due to the steady recovery of production by major automotive companies, the expansion of deployed vehicle models and new deployments, and the emergence of newly launched projects that have been addressed in the past, as well as the contribution of the weaker yen. While the gross profit margin decreased 0.9 points YoY to 8.9%, this was mainly due to changes in product mix (an increase in the proportion of sales of the relatively low-profit device business) and an increase in cost of sales due to a change in inventory valuation as a result of discussions with auditors (approximately ¥486 million). Despite the decrease in gross profit margin, gross profit increased by 9.8% YoY to ¥20,003 million due to the increase in sales. Meanwhile, selling, general and administrative expenses increased by only 7.0% YoY, leading to an operating profit of ¥14.7% YoY.

Factors contributing to the increase and decrease of operating profit were an increase in gross profit due to the increase in sales (¥3.1 billion), a decrease in gross profit due to other factors (e.g. inventory valuation losses, recoil decrease in spot projects) (¥1.3 billion), and a decrease due to the increase in selling, general and administrative expenses (e.g. increase in personnel costs, system investment) (¥800 million).

(Written by FISCO guest analyst Noboru Terashima)