May 15, 2024

FY23 Financial Results

(Fiscal Year Ended March 31, 2024)

Securities Code: 6287.T

●I am Konuma.

●Thank you for taking time out of your busy schedule to join us today. ●Let's get started.

0

FY23 Results &

FY24-28Medium-term

Management Plan

FY24 Consolidated Forecasts

Japan & Overseas Initiatives

1

●Our presentation consists of two parts.

1

FY23 Results &

FY24-28Medium-term

Management Plan

FY24 Consolidated Forecasts

Japan & Overseas Initiatives

2

2

Consolidated

Summary

  • FY23 Results
  • Consolidated sales and OI reached record highs.
  • Both overseas and Japan businesses contributed to sales.
    OI was driven by overseas while Japan achieved its revised plan.
  • Q4 (Jan-Mar) Results
  • Consolidated sales increased YoY while OI remained flat.
    The OI decline in Primary Label businesses was offset by higher profits in Asia, Oceania, and Japan.
    • Overseas Base business : Sales and OI increased
      Overseas Primary business: Sales increased but OI decreased
      Japan business: Sales were flat and OI increased
  • OI overseas exceeded its plan. Japan was in line with plan.
    • Asia and Oceania performed well versus plan.
  • Outlook for FY24
  • Consolidated sales and OI are forecasted to mark record highs.

3

●These are the highlights of our financial results.

●In FY23, we achieved record-high sales and OI on a consolidated basis. ●The decline in sales in the primary labels business outside of Japan was

compensated for by growth in the base business and strong performance in logistics and health care markets in Japan.

●Investments, driven by labor shortages, continue both in Japan and

overseas, leading to an increase in sales of RFID solutions.

●The primary labels business in the overseas markets contributed to OI.

Japan achieved the targets revised in November, driven primarily by the successful results of price revisions.

●In Q4, on a consolidated basis, sales increased year on year, while OI

remained flat.

OI remained flat, with growth in Asia, Oceania, and Japan offsetting the decline in OI of the primary labels business.

●OI exceeded the targets, driven by the overseas business performing better

than expected.

The Japan business stayed in line with the plan.

●The recovery in manufacturing in Asia and Oceania resulted in

outperforming the targets.

●Next, let's move on to the forecasts.

●On a consolidated basis, a large decline in OI in the primary labels business

in the overseas markets was offset by an increase in OI in Japan. We have set targets exceeding FY23's record-high results.

●We will give you more details later.

3

Consolidated

FY23

Sales and OI by Business Segment

Auto-ID

Total Sales

Solutions

Operating

business

Income

Total Sales

Overseas

Operating

Income

Total Sales

Japan

Operating

Income

Consolidated

Total Sales

（incl. eliminations）

Operating

Income

FY23

143,446

(127,447)

9,968

(6,200)

67,931

(51,933)

8,243

(4,475)

75,514

1,724

143,446

(127,447)

10,383

(6,615)

(Millions of JPY)

FY22

YoY

excl. FX impact

142,824

+0.4%

+3.2%

(125,157)

(+1.8%)

(+1.1%)

9,748

+2.3%

+21.4%

(6,205)

(-0.1%)

(+11.2%)

68,657

-1.1%

+4.8%

(50,990)

(+1.8%)

(-0.0%)

7,111

+15.9%

+42.8%

(3,568)

(+25.4%)

(+46.1%)

74,166

+1.8%

+1.8%

2,637

-34.6%

-36.2%

142,824

+0.4%

+3.2%

(125,157)

(+1.8%)

(+1.1%)

8,841

+17.4%

+38.6%

(5,297)

(+24.9%)

(+38.0%)

* Figures in parentheses exclude the Russian subsidiaries.

4

●From this slide onward, I'll present year-on-year analyses.

●The table shows figures related to the performance highlights from the

previous slide.

●Figures in parentheses do not include numbers coming from the Russian

subsidiaries.

This applies to all the contents in the slides that follow.

●Refer to the figures for the primary labels business in Europe on slide 11 for

the performance of our Russian subsidiaries.

●The elimination of profits resulting from intragroup transactions was

positive, with approximately JPY 400 million year-on-year.

This is attributed to a decrease in the amount of unrealized profit eliminated as a result of optimizing printer inventories.

4

Consolidated

FY23

Consolidated Results

FY23

Net Sales

143,446

(127,447)

Operating

10,383

Income

(6,615)

Operating Income %

7.2%

(5.2%)

Ordinary Income

8,961

(5,716)

Profit attributable to

3,565

owners of parent

(1,578)

Effective Tax Rate

25.8%

EBITDA*

15,456

(11,165)

(Millions of JPY)

FY22

Change

YoY

142,824

+621

+0.4%

(125,157)

(+2,290)

(+1.8%)

8,841

+1,541

+17.4%

(5,297)

(+1,317)

(+24.9%)

6.2%

+1.0pt

-

(4.2%)

(+1.0pt)

-

9,068

-106

-1.2%

(5,391)

(+324)

(+6.0%)

4,184

-619

-14.8%

(1,987)

(-409)

(-20.6%)

30.6%

-4.8pt

-

13,961

+1,494

+10.7%

(9,710)

(+1,454)

(+15.0%)

Average exchange rates for FY23: JPY 144.58 /USD, JPY 156.74 /EUR, FY22: JPY 135.49 /USD, JPY 140.98 /EUR

FX sensitivity for FY23: JPY +503million in sales and JPY +19million in OI for +1 JPY against USD and assuming all others move by the same ratio

  • EBITDA = Operating Income + Depreciation + Amortization ･Depreciation for FY23: JPY 4,926 million (4,404 million)

･Amortization for FY23: JPY 146 million (146 million)

* Figures in parentheses exclude the Russian subsidiaries.

FY22: JPY 4,855 million (4,148 million)

FY22: JPY 264 million (264 million)

5

●This slide shows the consolidated results.

●In Argentina, the application of hyperinflation accounting has led to a

negative impact of approximately JPY 600 million on sales and approximately JPY 350 million on OI.

  • The profit attributable to the owners of the parent company has been
    adjusted to reflect the extraordinary loss of approximately JPY 2.1 billion associated with the new IT system, originally planned for launch under the previous medium-term management plan.
    ●We aimed to develop a new IT system to enhance our business processes
    and update some outdated systems. However, due to rising costs and challenges in recruiting the necessary talent both internally and externally, we've opted to replace it with a smaller-scale system.
    ●As announced in April, we take this extraordinary loss and the resulting
    revisions to our performance seriously. Therefore, we have decided to reduce monthly remuneration for directors by 20% to underscore their accountability.

5

Consolidated

Jan-Mar

Sales and OI by Business Segment

Auto-ID

Total Sales

Solutions

Operating

business

Income

Total Sales

Overseas

Operating

Income

Total Sales

Japan

Operating

Income

Consolidated

Total Sales

（incl. eliminations）

Operating

Income

FY23

Jan-Mar

36,031

(32,257)

2,139

(1,421)

16,725

(12,951)

1,238

(520)

19,305

901

36,031

(32,257)

2,295

(1,577)

(Millions of JPY)

FY22

YoY

Jan-Mar

excl. FX impact

34,489

+4.5%

+3.6%

(30,748)

(+4.9%)

(+2.7%)

2,039

+4.9%

+9.0%

(1,034)

(+37.4%)

(+42.9%)

15,153

+10.4%

+8.5%

(11,411)

(+13.5%)

(+7.6%)

1,445

-14.3%

-7.4%

(440)

(+18.2%)

(+35.1%)

19,336

-0.2%

-0.2%

594

+51.5%

+48.7%

34,489

+4.5%

+3.6%

(30,748)

(+4.9%)

(+2.7%)

1,760

+30.4%

+35.2%

(755)

(2.1x)

(2.2x)

* Figures in parentheses exclude the Russian subsidiaries.

6

●The table shows the Q4 performance for each business segment.

●Sales increased in all overseas regions. OI declined overall, despite strong

performance in Asia and Oceania, primarily due to a decrease in OI in the primary labels business in Europe.

●In Japan, while sales remained flat, there was a substantial increase in OI, primarily attributed to the contribution of price revisions.

6

ConsolidatedJan-Mar

Consolidated Results

(Millions of JPY)

FY23

FY22

Change

Jan-Mar

Jan-Mar

YoY

Net Sales

36,031

34,489

+1,541

+4.5%

(32,257)

(30,748)

(+1,508)

(+4.9%)

Operating

2,295

1,760

+535

+30.4%

Income

(1,577)

(755)

(+822)

(2.1x)

Operating Income %

6.4%

5.1%

+1.3pt

-

(4.9%)

(2.5%)

(+2.4pt)

-

Ordinary Income

1,194

1,391

-197

-14.2%

(709)

(863)

(-154)

(-17.9%)

Profit attributable to

(1,241)

(932)

-308

-

owners of parent

(-1,538)

(-1,223)

(-314)

-

EBITDA*

3,633

2,970

+662

+22.3%

(2,763)

(1,817)

(+945)

(+52.0%)

* EBITDA = Operating Income + Depreciation + Amortization

･Depreciation for Jan-Mar FY23: JPY 1,300 million (1,148 million)

Jan-Mar FY22: JPY

1,182million (1,034 million)

･Amortization for Jan-Mar FY23: JPY 37 million (37 million)

Jan-Mar FY22: JPY

27 million (27 million)

  • Figures in parentheses exclude the Russian subsidiaries.

7

●This slide shows our consolidated performance for Q4.

7

(Millions of JPY)

Auto-ID Solutions Business (Overseas)

Jan- Mar

Overview

Labor shortage-related demand was captured by SATO's solutions.

Sales increased, partly due to the completion of inventory adjustments for printers at distributors in the U.S. and Europe. OI decreased due to intensified competition in Russia and the impact of applying hyperinflationary accounting standards in Argentina.

FY23

FY22

Change

Jan-Mar

Jan-Mar

YoY

excl. FX impact

Total Sales

16,725

15,153

+1,572

+10.4%

+8.5%

(12,951)

(11,411)

(+1,539)

(+13.5%)

(+7.6%)

Gross Profit

6,306

5,761

+544

+9.5%

-

(4,949)

(4,181)

(+768)

(+18.4%)

-

Gross Profit %

37.7%

38.0%

-0.3pt

-

-

(38.2%)

(36.6%)

(+1.6pt)

-

-

Operating Income

1,238

1,445

-207

-14.3%

-7.4%

(520)

(440)

(+80)

(+18.2%)

(+35.1%)

Operating Income %

7.4%

9.5%

-2.1pt

-

-

(4.0%)

(3.9%)

(+0.2pt)

-

-

FY23

FY22

Change

YoY

excl. FX impact

Total Sales

67,931

68,657

-725

-1.1%

+4.8%

(51,933)

(50,990)

(+942)

(+1.8%)

(-0.0%)

Gross Profit

27,719

25,255

+2,464

+9.8%

-

(21,185)

(19,307)

(+1,878)

(+9.7%)

-

Gross Profit %

40.8%

36.8%

+4.0pt

-

-

(40.8%)

(37.9%)

(+2.9pt)

-

-

Operating Income

8,243

7,111

+1,131

+15.9%

+42.8%

(4,475)

(3,568)

(+907)

(+25.4%)

(+46.1%)

Operating Income %

12.1%

10.4%

+1.8pt

-

-

(8.6%)

(7.0%)

(+1.6pt)

-

-

* Figures in parentheses exclude the Russian subsidiaries.

8

●Next, I will take you through the results of our overseas business. The

upper table shows the Q4 performance.

●Sales increased, but OI decreased in the overseas business in Q4.

●Demand remained strong due to labor shortages, and our koto-uri strategy

captured it despite economic slowdowns in Europe and China.

The recovery in the manufacturing market within the sales companies of Asia and Oceania, coupled with a large contract for RFID solutions, made a particularly substantial contribution.

The completion of adjusting printer inventory levels among distributors' customers in Europe and the US also made a contribution.

●OI decreased due to intensified competition in Russia, driven by the

recovery of supply networks of competitors and the application of hyperinflation accounting in Argentina.

●Further details for each region will be provided in the following slides.

8

Auto-ID Solutions Business (Overseas)

Major Gains/Losses in OI

(Millions of JPY)

Jan-Mar

+772

-436

•

Positive factors

(+545)

(-73)

•

Negative factors

•

Asia/Oceania

• Europe and The Americas

1,445

primary labels

  1. • Europe and The Americas primary labels
    • Factories

-443

(-318)

-100

(-74)

•

Asia/Oceania

•

The Americas primary labels

1,238

•

Europe primary labels

•

Factories

(520)

+2,662

-1,569

FY23

•

Europe and The

(+1,253)

(-348)

Americas primary labels

•

Europe

Europe and The Americas

•

Europe

+1,947

•

•

Europe primary labels

7,111

primary labels

•

The Americas

(+740)

•

The Americas

(3,568)

Excludes exchange rate effects

-1,908

(-738)

  • Europe and The Americas primary labels

8,243

(4,475)

* Figures in parentheses exclude the Russian subsidiaries. Comments shown in the bubble include the Russian subsidiaries.

9

●This slide shows a year-on-year comparison of OI.

●Positive/negative factors listed in the balloons include those of the Russian

subsidiaries.

●Overall, OI decreased, but the base business still made a contribution

9

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SATO Holdings Corporation published this content on 23 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 May 2024 07:42:04 UTC.