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.

Performance trend for the year ending March 2024.

For the fiscal year ending March 2024, Takiron Seer Inc.'s revenue was 13,758.1 billion yen (a 5.6% decrease from the previous fiscal year), operating profit was 622.8 million yen (a 7.5% increase), ordinary profit was 650.1 million yen (a 9.8% increase), and net income attributable to the parent company shareholders was 510.2 million yen (a 107.4% increase). Compared to the initial plan, sales were 1,641.9 million yen lower, operating income was 157.2 million yen lower, and ordinary income was 149.9 million yen lower, but net income attributable to the parent company shareholders was 102 million yen higher. The significant increase and overachievement in net income attributable to the parent company shareholders were due to negative goodwill related to the succession of the agricultural polyolefin film business and gains on sales of securities resulting from the dissolution of joint ventures.

The Japanese economy experienced a slight slowdown in certain areas, but normalisation of social and economic activities continued, and there were signs of gradual recovery, particularly in domestic demand. On the other hand, risks of downturn in the global economy, such as rising energy and material prices, worldwide financial tightening, prolonged Ukraine situation, and future concerns over the Chinese economy and Middle Eastern region, remain present, and the situation is still unclear. In terms of business environment, while the demand for renovation of condominiums continued to be robust and partial recovery of demand for civil engineering materials was seen, the unpredictable situation of the European market due to financial tightening and deceleration of the semiconductor market, which had been very active in the previous fiscal year, continued. Under these circumstances, the company proceeded with business activities in accordance with the basic policy of the annual business plan.

As a result, on the revenue side, the domestic infrastructure business, such as Howell tubes and rotational molding products, recovered, and flooring materials saw good progress with strong demand for renovation of condominiums. However, due to sluggish sales of North American shrink films caused by inventory adjustments and slow recovery of the semiconductor market, high-performance materials suffered a decrease in revenue. On the profit side, there was significant improvement in earnings for the infrastructure business, which had been in a deficit in the previous fiscal year, and increased profit was achieved by absorbing the decrease in sales volume in North America and Europe and slow growth of high-performance materials through product price revisions tailored to each country. The shortfall compared to the initial plan was mainly due to the sluggish performance in North America and Europe and slow growth of high-performance materials.

(Author: FISCO guest analyst Nobumitsu Miyata)