■Performance trends of Hagiwara Electric Holdings <7467>

2. Segment status for the second quarter of the fiscal year ending March 2025.

(1) Device Business

Revenue was 116,732 million yen (up 24.1% year-on-year), segment profit was 3,249 million yen (down 7.5% year-on-year), and operating margin was 2.8% (3.7% in the same period last year). Despite a decrease in automobile production, revenue increased due to acquiring new distribution channels, expanding model variations, and the effects of yen depreciation. On the profit side, changes in the Commodity ETF composition, a decline from last period's spot profits, and increased investment costs for the future resulted in a decrease in segment profit.

a) Revenue by Customer

Revenue by customer was 51,308 million yen for Denso (an increase of 577 million yen year-on-year, up 1.1%), 2,754 million yen for Tokai Rika <6995> (a decrease of 277 million yen year-on-year, down 9.2%), 29,406 million yen for QITABANKUAI (an increase of 12,960 million yen year-on-year, up 78.8%), and 33,264 million yen from overseas customers (an increase of 9,394 million yen year-on-year, up 39.4%). The increase in QITABANKUAI is due to acquiring new distribution channels.

b) Revenue by Region

Revenue by region was 83,468 million yen in Japan (an increase of 13,529 million yen year-on-year, up 18.9%), 13,434 million yen in Asia (an increase of 2,428 million yen year-on-year, up 22.1%), 16,766 million yen in the American region (an increase of 6,124 million yen year-on-year, up 57.5%), and 3,062 million yen in the European Index (an increase of 842 million yen year-on-year, up 37.9%). As a result, overseas revenue was 33,264 million yen (an increase of 9,394 million yen year-on-year, up 39.4%).

The region names refer to the locations of the company's group bases (excluding intra-group trades). Additionally, since the financial period for the company's group bases in Singapore, China, and the American is December, the results incorporated in the 2Q period ending March 2025 are those from January 2024 to June 2024.

All areas exceeded the same period last year. Overseas, due to the yen's depreciation, there was an additional effect of approximately 3,300 million yen.

(2) Solution Business

Revenue was 15,048 million yen (an increase of 8.0% compared to the same period last year), segment profit was 478 million yen (a decrease of 55.6% compared to the same period last year), and segment profit margin was 3.2% (compared to 7.7% in the same period last year).

Although there were signs of inventory adjustments among some customers due to the market conditions in China, revenue remained steady due to capturing the investment demand from major automobile-related companies. However, the total gross profit struggled to grow due to changes in revenue composition within the segment (the decrease of relatively high-profit margin in 'embedded'), and with aggressive investments in next-generation development and marketing, operating profit decreased.

a) Revenue by Business Segment

Revenue by business segment* was 4,905 million yen for IT solutions and data platform (an increase of 329 million yen, 7.2% increase compared to the same period last year), 6,948 million yen for embedded solutions (a decrease of 95 million yen, 1.4% decrease), and 3,194 million yen for FA engineering (an increase of 878 million yen, 37.9% increase).

From the fiscal year ending March 2025, the names of the revenue by business segment will be changed to IT solutions (formerly system solutions), embedded solutions (formerly embedded), and FA engineering (formerly FA solutions), and a new data platform will be added, making it four areas. The content of each business is as follows.

• IT Solutions: Sales of IT equipment, app development, IoT system development, Security measures, etc.

• Data Platform: Sales of IoT platform infrastructure and services, etc.

• Embedded Solutions: Development and manufacturing of industrial Computers, sales of embedded industrial Computers for machinery, etc.

• FA Engineering: Sales of measuring instruments, inspection equipment, FA equipment, development, manufacturing, and sales of various automation and labor-saving manufacturing devices, etc.

By business segment, although sales in the embedded solutions area struggled due to the stagnation of the China market, overall business increased due to capturing the capital investment demand of automobile-related companies.

b) Revenue Composition by Global Sectors

In terms of Revenue Composition by Global Sectors, Automobiles accounted for 5,316 million yen (an increase of 621 million yen year-on-year, up 13.2%), FA and industrial machinery accounted for 6,862 million yen (a decrease of 256 million yen year-on-year, down 3.6%), and QITABANKUAI accounted for 2,868 million yen (an increase of 747 million yen year-on-year, up 35.2%).

Although sales in the embedded solutions area struggled due to the stagnation of the China market, overall business increased due to capturing the capital investment demand of automobile-related companies.

(Written by FISCO guest analyst Noboru Terashima)