■Performance Trends

3. Financial Status and Management Indicators

The total assets of Wavelock Holdings' ＜7940＞ at the end of the 2025/3 interim period were 29367 million yen, an increase of 907 million yen from the end of the previous fiscal year. Looking at the main factors of increase or decrease, operating receivables decreased by 806 million yen in current assets, while cash and deposits increased by 1166 million yen. As for fixed assets, construction provisional accounts increased by 375 million yen, and investment securities increased by 92 million yen.

Total liabilities increased 551 million yen from the end of the previous fiscal year to 12899 million yen. While interest-bearing debt decreased by 83 million yen due to repayment of short-term loans and implementation of long-term loans, operating debt increased by 407 million yen. Total net assets increased by 356 million yen to 16468 million yen. Retained earnings increased by 276 million yen due to the recording of interim net income attributable to parent company shareholders of 403 million yen and dividend expenditure of 126 million yen, and exchange conversion adjustment accounts increased by 50 million yen and uncontrolled equity interests increased by 17 million yen, respectively.

Looking at management indicators, the interest-bearing debt ratio declined from 33.0% at the end of the previous fiscal year to 31.8% as interest-bearing debt declined, and the equity ratio also remained at a high level of 55.8%, so it is judged that financial details are in a healthy state.

■Future outlook

Financial results for the fiscal year ending 2025/3 remain unchanged due to continued strong sales of metal-tone decorative films, and there is room for improvement

1. Earnings forecast for the fiscal year ending March 31, 2025

Consolidated financial results for the fiscal year ended 2025/3 left the initial plan unchanged, with sales up 8.2% from the previous fiscal year, 420 million yen, up 8.4% from the same period, operating income, 660 million yen, down 2.4% from the same period, and net income attributable to parent company shareholders falling 3.6% to 440 million yen. The steady trend in sales is expected to continue until the mid-term period, but in addition to unstable exchange trends and price upward pressure on raw materials not linked to naphtha prices, the plan was left unchanged taking into account the uncertain market environment, such as reviewing production plans of automobile manufacturers due to the deceleration of the EV market in Europe and the United States.

The performance progress rate up to the mid-term period was 50.5% in terms of sales and 68.8% in operating income, and it seems that progress in operating profit is low when compared to the most recent 3-year average (sales 50.7%, operating profit 105.7%), but the previous fiscal year and the previous two fiscal years were affected by overlapping factors such as rising raw material costs and recording inventory valuation losses in the second half, and if it is a normal seasonal fluctuation pattern, operating profit also progressed smoothly. The non-operating balance is expected to deteriorate by 48 million yen compared to the previous fiscal year, but this is mainly because it is assumed that the exchange gain of 89 million yen recorded in the previous fiscal year will disappear (exchange gain of 186 million yen was recorded in the interim period). Considering that an increase in investment profit due to the equity method can be expected, it is expected that the non-operating balance will also improve compared to the plan unless the exchange rate rapidly progresses to an appreciation of the yen. Note that the assumed exchange rate is 150 yen/US dollar (144 yen/US dollar in the previous fiscal year), and the assumption for naphtha prices, which is a leading indicator of raw material prices, is 72 thousand yen/kl (same 67.6 thousand yen/kl).

(1) Material solutions business

Sales in the material solutions business are planned to increase 7.1% from the previous fiscal year to 19,000 million yen, and operating profit to decrease 6.7% from the same period to 950 million yen. Sales are expected to continue to be steady in all solution fields, and plan achievement is within range, but in terms of profit, there is a high possibility that they will fall slightly below the plan due to increases in raw material costs and utility costs, etc.

Also, sales in the geothermal heat business, which is the focus area, were planned to be 330 million yen, an increase of 3.6 times from the previous fiscal year, but based on the current order acceptance situation, it is expected that it will settle to around 200 to 300 million yen. Amid concerns that electricity charges will remain high, interest in energy saving solutions using geothermal heat is gradually growing, and there will be no change in the policy of aiming for business expansion by strengthening the business system in the future.

(2) Advanced technology business

Sales in the advanced technology business are planned to increase 11.3% from the previous fiscal year to 6500 million yen, and operating profit is planned to increase 258.9% from the same period to 150 million yen. The operating profit progress rate for the interim period is at a slightly low level of 32.9%, but since new projects for metal-tone decorative films overseas are expected to begin contributing to sales in the second half, and productivity improvements in molded products are also expected, there is a large probability that the plan will be exceeded.

As an example of new adoption, in North America, new adoption has progressed for multiple car models as an emblem for EV manufacturers, and adoption as molded products has also progressed for other parts. It seems that the fact that it leads to a reduction in CO2 emissions compared to plated products has been evaluated. Also, it was evaluated for major automobile manufacturers in terms of functionality such as light transmission, and in addition to being adopted as an emblem in multiple car models, it has also been adopted for multiple parts, and sales are progressing as molded products.

In the Chinese market, it is for major EV manufacturers, and adoption is spreading for light-transmitting emblems and multiple parts, and in India, the fact that it leads to a reduction in CO2 emissions was evaluated as a plating substitute for emblems for major automobile manufacturers, and new adoption progressed. Furthermore, light transmission and radio wave permeability have also been evaluated for the European market, and it is planned to be adopted for front panels of EV models by major automobile manufacturers. Since molded products such as emblems have been adopted one after another, it is planned to expand molding machines at the Nagoya Plant (molding processing plant) and proceed with an increase in production capacity.

(Author: FISCO Visiting Analyst Joe Sato)