Nippon Chemi Con : Financial Results Explanatory Material (FY2023)

Financial Results Explanatory Material

for FY2023

(FY ended March 31, 2024)

TSE Prime Market, Securities code:6997

NIPPON CHEMI‐CON CORPORATION

May 2024		1

Quarterly Performance Trend

Net Sales
(Million yen)	Trend in Net Sales and Operating Margin	Operating margin
(%)
50,000	9th Medium-term Management Plan	10th Medium-term

45,000																42,858 41,982				11%
															41,137
	Impact from COVID-19 pandemic								39,203
			37,82538,439 38,602	9.7%	9.4%
40,000												9%
											35,680
										35,989										34,718
35,000
					33,383	33,118										6.9%	7%
				30,931	7.2%
30,000		28,405 27,670							7.2%	6.4%	6.2%		5.9%		6.4%
										5.8%
									5.1%
25,000	23,781		4.3%	5.1%	5.4%											5%
20,000																					3%
15,000			1.8%
																				1%
10,000
5,000	-1.3%																			-1%
0																					-3%
	FY2020					FY2021					FY2022					FY2023
	Q1	Q2	Q3	Q4	Q1		Q2		Q3	Q4	Q1	Q2		Q3	Q4	Q1	Q2	Q3	Q4

NIPPON CHEMI‐CON CORPORATION

May 2024		2

FY2023: Overview of Consolidated Results

The automotive electronics market rebounded and remained firm while the slump in the industrial

equipment and ICT markets persisted, leading to a decline in both net sales and profit.

(Million yen)	FY2022	FY2023	Change	%
Net Sales	161,881	150,740	-11,141	-6.9%
Operating income	12,939	9,422	-3,517	-27.2%
Ratio to net sales	8.0%	6.3%	-1.7pt	-
Profit/loss attributable to owners of parent	2,273	-21,291	-23,564	-
* Excluding extraordinary loss	8,682	8,313	-369	-4.3％
related to antitrust law
ROE	4.8%	-41.2%	-46.0pt	-
Exchange rate
Average exchange rate:	135.47	144.62	6.8% weaker yen
USD (yen)
Average exchange rate:	140.97	156.80	11.2% weaker yen
EUR (yen)

NIPPON CHEMI‐CON CORPORATION

May 2024		3

FY2023: Net Sales by Market and by Region

□ Percentage of Net Sales by Market					Strong Market
								Automotive electronics
		Automotive	Industrial	New	Home	ICT	Other
FY2022	electronics	equipment	energy	appliances	Normalization of semiconductor
24%	7%
		28%	25%	6%	10%	supply and growth in the number of
								parts per vehicle due to progress on
								electrification resulted in firm growth.

FY2023			34%	22%	6%		8%		23%		7%	Weak Markets
				Industrial equipment and ICT
												Inventory adjustments continued
0%	10% 20% 30%	40% 50%	60%	70%	80%	90% 100%along with the decrease in demand.

• Percentage of Net Sales by Region

FY2022		Greater China	Japan	Europe	Americas	Other
38%	19%	14%	12%	16%

FY2023		35%	20%	15%	14%	16%

Strong Region

Americas

Firm sales continued, owing to strong household budgets and corporate capital investment.

Weak Region

Greater China

Inventory adjustments persisted in the industrial equipment and ICT markets.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NIPPON CHEMI‐CON CORPORATION

May 2024		4

FY2023: Analysis of Factors Behind YoY Change in Operating Income

	Lower sales from the slump in the industrial equipment and ICT markets
(Billion yen)	and deterioration in operating rates led to a decline in operating income.

NIPPON CHEMI‐CON CORPORATION

May 2024		5

FY2023: Measures to Boost Capital

Capital financing

• Issued new common shares and classified shares viathird-party allocation and procured a total of 17.4 billion yen in financing (2.4 billion yen from common shares and 15.0 billion yen from classified shares).

Purpose of Capital Financing

• The purpose of the current financing is to (1) strengthen the Company's financial base and (2) secure the funds to pursue the growth strategy outlined in the 10thMedium-term Management Plan.

Achieve both financial soundness

and investment in growth

Financial soundness

Investment in growth*

• • Growth of net assets
• ➢Restore equity capital, which was diminished by losses related to competition law.
• • • Maintain rating and strive for future improvement.
  • Stable cash flow
  • • Achieve stable cash flow after payment of large
• lawsuit expenses.
• • Secure the liquidity to respond to changes in the business environment.

• • Capital investment during the 10th Medium- term Management Plan period
• ➢Build a new hybrid capacitor plant.
• • • Increase production of foil, R&D, etc.
  • Use of DX
  • • Reduce personnel by pursuing a smart factory and
• automation.
• • Improve the sophistication and efficiency of SCM.
  • Improve the productivity of Headquarters staff, etc.

Positive effects of capital financing

• The increase in capital strengthened financial resilience and supported credit ratings (R&I/JCR: Announced

decision to maintain the current rating of BBB- in April 2024)

*See the Notice on Issuance of Classified Shares Through Third-party Allocation, Decrease in Stated Capital and Capital Reserves, and Partial Revision of the Articles of Incorporation; Decrease in Stated Capital and Capital Reserves Associated with the Issuance of Classified Shares; and Issuance of Common Shares Through Third-party Allocation published on October 10, 2023 for the detailed purposes of use for the current capital financing.

NIPPON CHEMI‐CON CORPORATION

May 2024		6

FY2024: Consolidated Full-Year Forecast

In FY2024, we expect inventory adjustments in the industrial equipment and ICT markets to come to

an end in the 1H and forecast a rebound in demand in the 2H.

	FY2023			FY2024
(Million yen)	Full-year	1H	2H	Full-year	Change	% Change
	results	plan	plan	plan	YoY	YoY
Net Sales	150,740	66,500	86,500	153,000	+2,259	+1.5%
Operating income	9,422	3,200	8,300	11,500	+2,077	＋22.0%
Ratio to net sales	6.3%	4.8%	9.6%	7.5%	+1.2 pt	‐
Profit/loss attributable	-21,291	1,600	5,800	7,400	+28,691	‐
to owners of parent
ROE	‐41.2%	3.0%	-	13.0%	+54.2 pt	-
Exchange rate
Average exchange rate:	144.62	145.00	145.00	145.00	0.3% weaker yen
USD (yen)
Average exchange rate:	156.80	158.00	158.00	158.00	0.8% weaker yen
EUR (yen)

NIPPON CHEMI‐CON CORPORATION

May 2024		7

Current Business Environment and FY2024 Forecast (Envisioned market rebound)

Forecasts

[Net Sales Forecast by Market]

160

110

60
Q3		Q4
	FY2023		FY2023

Automotive electronics

ICT

Industrial equipment

Q1		Q2		Q3
FY2024		FY2024		FY2024

Q4

FY2024

Market

Automotive	Semiconductor supply and BCP inventories	Number of parts used will increase as electrification advances and
electronics	will normalize	more electronics are used

Industrial	Inventory adjustments will persist,	Investment in semiconductors and
equipment	mainly due to the slump in the Chinese economy	labor-savings will increase

ICT	PC inventory adjustments	Demand for conventional servers will rebound and the rapid
will come to an end	increase in demand for AI-based servers will continue

NIPPON CHEMI‐CON CORPORATION

May 2024		8

FY2024 Market Overview for the Three Main Markets: Forecasting Continuing Strength in Automotive Electronics and a Rebound in Industrial Equipment and ICT

	[INDEX: FY2022 = 100]
Automotive	150			・The number of vehicles is forecast to
electronics					increase by 3% in 2024 to 89 million.
	100			・Progress on electrification, increasing use of
					electronics.
					The number of components installed in
	50				vehicles is forecast to increase by 7%.
			1H	2H
	FY2022	FY2023	FY2024	FY2024
Industrial	[INDEX: FY2022 = 100]
150
equipment				・We anticipate a rebound in the 2H of FY2024
	100				despite the prolonged recovery cycle.
			・Investment in semiconductors and labor-
					savings will pick up in pace.
	50
			1H	2H
	FY2022	FY2023	FY2024	FY2024
	[INDEX: FY2022 = 100]			・	PCs
ICT	110
			Inventory adjustments will come to an end and
100
	90				we forecast a rebound in demand in the 2Q.
	80			・	Servers
	70				Rapid growth in generative AI servers will
	60				continue.
	50				Demand for conventional servers will rebound
			1H	2H	from the 2Q onward.
	FY2022	FY2023	FY2024	FY2024

NIPPON CHEMI‐CON CORPORATION

May 2024		9

FY2024: Analysis of Factors Behind Forecast YoY Change in Operating Income

We forecast an increase in operating income from an increase in sales due to the rebound in the industrial equipment and ICT markets, cost reductions, and reduction in SG&A expenses.

(Billion yen)

NIPPON CHEMI‐CON CORPORATION

May 2024		10