■Performance trends of Oval ＜7727＞

1. Summary of financial results for the interim period ending March 31, 2025

The future of the global economy for the fiscal year ending 2025/3 continued to be uncertain, such as the impact on each country's economy due to continued monetary tightening policies and economic changes in the Chinese economy. In Japan, as the employment/income environment and corporate profits improved, private consumption and capital investment continued to remain strong, and the economy recovered moderately, but there was also a risk that a downturn in the overseas economy would push down Japan's economy, and the outlook continued to be uncertain, partly due to rising prices.

Under such an economic environment, the Group steadily promoted the “Medium-Term Management Plan “Imagination 2025.” As a result, consolidated financial results for the interim period ending 2025/3 were orders of 7939 million yen (down 9.5% from the same period last year), sales of 7128 million yen (up 2.2% from the same period), gross profit of 2959 million yen (down 1.6% from the same period), operating income of 689 million yen (down 13.6% from the same period), ordinary income of 624 million yen (down 26.8% from the same period), and interim net profit attributable to parent company shareholders of 422 million yen (same 23.2% increase) Decrease), and it was a settlement of an increase in sales and a decrease in profit.

The lump-sum receipt of license agreements with Austria Anton Paar, which occurred in the same period last year, had a significant impact on sales and profits in comparison with the same period last year. The decline in order volume resonated with the decline in the sensor sector. Sales increased as sales records for large projects in the strong systems division exceeded the decrease due to Anton Paar's lump-sum payments. The decline in gross profit was also greatly affected by a decrease in sales due to Anton Paar's lump-sum payments, in addition to rising raw material costs. Also, the increase in SG&A expenses is due to an increase in labor costs associated with wage increases. As a result, operating profit declined, and although the operating profit margin fell to 9.7%, it has secured a level above 7.7% in the interim period ending 2023/3. Also, the reason why the rate of decline in ordinary income and interim net profit attributable to parent company shareholders was large also resonated with the fact that the recording of exchange gains for the same period last year turned into recording exchange losses. The progress rate for the interim period compared to the full-year forecast for the fiscal year ending March 31, 2025 is 50.9%, and operating profit is 53.1%, which is higher than previous years, so we determine that it is progressing smoothly towards achieving the earnings forecast.

Looking at the performance by business division, the volume of orders received in the sensor division, which is the main force, was 4578 million yen (down 27.1% from the same period last year). This is due to the domestic market falling due to a reaction where orders were received ahead of schedule for the semiconductor-related industry, and the bubble overheating came to an end overseas for battery-related industries such as electric vehicles in China and South Korea. There is a wave of semiconductor orders due to inventory, and it seems that inventory is excessive because advance orders were received in the previous fiscal year. Sales were also 4794 million yen (down 4.9% from the same period). This is because, similar to high orders, the chemical-related industry was strong domestically, but although orders received in the first fiscal year were shipped to semiconductor-related industries, they did not reach the results for the same period last year. Note, for the same period of the previous year, high orders and sales were recorded overseas due to contract lump-sum payment collection, which is compensation for intellectual property licenses, based on license agreements with Austrian Anton Paar.

In the systems division, order volume increased drastically to 1858 million yen (up 64.7% from the same period last year). This is due to the fact that while overseas was sluggish, orders for large projects were received domestically for the (National Research Institute) National Institute of Advanced Industrial Science and Technology and the petroleum related industry. It seems that orders for large-scale projects for the system will continue for some time to come. Meanwhile, sales were 922 million yen (up 51.6% from the same period). Overseas, although the decline in the Southeast Asian region bottomed out, the recovery remained limited, but domestically, sales of large projects for the National Institute of Advanced Industrial Science and Technology and the food-related industry were recorded, which greatly exceeded the same period last year, leading the company's overall sales increase.

In the service sector, the volume of orders received was 1501 million yen (up 10.3% from the same period last year), and sales were 1411 million yen (up 6.5% from the same period). This is due to the fact that in the petroleum-related industry, which is our main customer, we continue steady and detailed maintenance activities such as maintenance plan support services and maintenance activities for other companies' products as severe market environments such as industry restructuring and energy replacement for a decarbonized society continue. Note, sales in the service sector fell slightly in the fiscal year ending March 31, 2021 due to the spread of the novel coronavirus infection (hereinafter, COVID-19), but the impact was small, and since then it has continued to increase, and it is a sector that is not greatly affected by the economy compared to other divisions.

Ensure a high level of safety

2. Financial Status and Management Indicators

Total assets at the end of the interim period ending 2025/3 were 23586 million yen (up 135 million yen from the end of the previous fiscal year). Of these, current assets were 12666 million yen (31 million yen increase from the same period). This is mainly due to a decrease in cash and deposits by 86 million yen, electronic record receivables by 236 million yen, and inventory assets by 128 million yen, respectively, while notes receivable, accounts receivable, and contract assets increased by 422 million yen, and other current assets by 54 million yen, respectively. Inventory assets (total of products and products, work in progress, raw materials, and stored goods) continued to increase until the end of the previous fiscal year due to increased inventory to maintain delivery dates for the company's products amid material shortages, such as making it difficult to obtain electronic components due to a shortage of semiconductors, but delivery delays did not occur due to such efforts. It is expected that they will continue to respond flexibly according to semiconductor market conditions in the future. Also, fixed assets were 10,920 million yen (same increase of 103 million yen). This is mainly due to a decrease of 39 million yen in intangible fixed assets, while mechanical equipment and transportation equipment increased by 143 million yen.

Meanwhile, total debt was 7688 million yen (397 million yen decrease compared to the end of the previous fiscal year). Of these, current liabilities were 3910 million yen (405 million yen decrease from the same period). This is mainly due to an increase of 79 million yen in short-term loans, while notes payable and accounts payable decreased by 98 million yen, unpaid amounts by 312 million yen, and unpaid expenses by 47 million yen, respectively. Also, fixed liabilities were 3778 million yen (7 million yen increase from the same period). This is mainly due to an increase of 7 million yen in long-term loans. The sum of long-term and short-term loans was 1904 million yen (up 86 million yen from the same period). Also, total net assets were 15897 million yen (increase of 533 million yen from the same period). This is mainly due to an increase in retained earnings of 265 million yen and exchange conversion adjustment accounts of 257 million yen, respectively.

As a result of the above, the capital adequacy ratio has risen to 65.4%, and it can be evaluated that it has ensured high safety, which is higher than the precision equipment industry average of 58.5% listed on the prime standard growth market for the fiscal year ending 2024/3, which is the latest data. Meanwhile, the ROA for the fiscal year ended 2024/3 was 6.9% and ROE was 7.7%, which is below the industry average in terms of profitability indicators, and we believe that strengthening profitability will be an issue in the future.

(Written by FISCO Visiting Analyst Shigeki Kuni)