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.

For the consolidated performance of Fuji Dice <6167> for the term ending March 2024, revenue decreased by 2.9% year-on-year to 1,667.8 million yen, operating profit decreased by 29.7% to 80.9 million yen, ordinary profit decreased by 28.0% to 88.2 million yen, and net income attributable to shareholders of the parent company decreased by 45.1% to 70.9 million yen. While there was an expansion in demand for motor core molds and semiconductor manufacturing equipment, there was a decrease in revenue due to a decline in demand in China, delays in the recovery of related molds due to inventory adjustments by automobile parts manufacturers, a significant drop in demand for secondary battery molds and extruded steel pipes. Despite productivity improvements, business improvements, and the effects of price revision on the profit side, there was a double-digit decrease in profit due to the impact of revenue reduction, temporary increase in costs due to equipment enhancement at the Kumamoto plant, and also due to the backlash of recording 632 million yen for fixed asset sales gains in the year ended March 2023.

Sales trends by product category showed that in super-hard cutting tools, sales of groove roll tools for overseas markets and some extrusion tools for steel pipes were brisk, and sales increased by 4.8% year-on-year to 478.8 million yen. In super-hard metal molds, sales of motor core molds were strong, but sales of secondary battery molds decreased significantly due to a customer's production site change, sales of related molds stalled due to inventory adjustments by automobile parts manufacturers, resulting in a 7.1% year-on-year decrease in revenue to 392 million yen. In other super-hard products, demand for semiconductor manufacturing equipment was firm but sales of materials for the Chinese market declined resulting in sales remaining at 400.4 million yen, down 6.0% year-on-year. In non-super-hard products, sales of some steel automobile parts tools and molds were strong, but sales of extruded steel pipes were low, resulting in sales of 396.4 million yen, down 3.9% year-on-year.

The factors affecting the change in operating profit include a decrease in revenue causing a decrease in profit of 501 million yen, a decrease in profit of 68 million yen due to the high cost of super-hard materials, and an impact of 179 million yen as a temporary cost to the construction of the new metallurgical building in Kumamoto. The effect of productivity improvement, such as reduction of outsourcing processing costs, was 184 million yen but was not enough to offset the significant decrease in profit. In addition, although the initial plan was 1,170 million yen, it was 361 million yen short. This is mainly due to the significant decrease of 1,168 million yen in sales, which could not be covered by other means.

From a long-term trend perspective, there is a one-time expense of 132 million yen in the decrease in sales, and the sales gross profit margin has not declined significantly, falling by only 0.6 points from the previous year to 25.4%, in response to the shortfall in sales caused by unexpected decrease in sales of molds for battery. If there were no temporary costs or unexpected decrease in sales, it is believed that profit at the same level as the previous year could have been secured.

(Written by FISCO Guest Analyst Hiroshi Okamoto)