In the third quarter of the fiscal year ending March 31, 2024, the rate of increase in income exceeded the rate of increase in sales, and we achieved “higher income and sales”. We are on track to achieve our full-year financial results forecast, with progress rates of 71.9% for sales, 72.0% for ordinary income, and 72.4% for net income attributable to owners of parent.

This is a summary of financial results.
Compared to the same period of the previous fiscal year, sales increased by 3,851 million yen to 179,748 million yen, while ordinary income increased by 1,223 million yen to 9,717 million yen, with the ordinary income ratio improving by 0.6 points to 5.4%. Net income attributable to owners of parent increased by 1,169 million yen to 7,070 million yen.

This graph shows changes in net sales.
Sales increased in all Businesses, resulting in net sales of 179.7 billion yen for the third quarter.

The next slide is for sales and income by segment.

In the CN Business, although sales of IT equipment declined, recurring businesses such as security-related products and maintenance & monitoring services performed well. The income ratio also improved through reinforced measures to avoid foreign exchange rate fluctuation risks.
Net sales for the Business increased by 5.4% year on year to 20,940 million yen, and segment income increased by 90.9% year on year to 1,976 million yen.

As for the EC Business, sales for industrial equipment were weak due to the shift by semiconductor manufacturers to direct manufacturer-to-consumer sales, but sales for automotive equipment increased significantly, boosted by the expansion of commercial rights. An improvement in semiconductor supply helped reduce order backlogs, and there was also an impact from a weaker yen.
As a result, net sales increased by 1.8% year on year to 158,807 million yen, and segment income increased by 3.8% year on year to 7,741 million yen.

Now, we will move on to the performance of each segment.

Looking at the CN Business by product category, sales of network-related products and storage-related products decreased due in part to a decrease in large orders compared to the previous fiscal year. Meanwhile, as for security-related products, sales grew for cloud security and endpoint security products. Maintenance & monitoring services also performed well.

By field, sales of security-related products and maintenance & monitoring services to system integrators were strong. Sales to telecommunications carriers also grew.

In the EC Business, there was a large increase in sales of processors and memory ICs for automotive equipment due to the expansion of commercial rights.
On the other hand, sales for industrial equipment decreased, affected by lower demand for industrial equipment, such as for semiconductor manufacturing equipment, and the shift by semiconductor manufacturers to direct manufacturer-to-consumer sales.
Sales for computers and peripherals as well as for communications equipment remained weak.

In the PB business, sales of design & manufacturing services for medical equipment remained steady. At TED Nagasaki, sales for semiconductor manufacturing equipment were steady due to progress in procurement of parts and materials.
At FAST, sales for industrial equipment were weak.
As a result, sales in the PB Business increased by 4.9% year on year to 9,886 million yen, and the net sales ratio was 6.2%.

A slide for balance sheet.
Total assets stood at 155,739 million yen at the end of December, up 12,287 million yen from the end of the previous fiscal year.
Among assets, notes and accounts receivable decreased due to the progress of collection for sales recorded in the previous fiscal year.
On the other hand, inventories increased along with the expansion of commercial rights.
Regarding liabilities and net assets, interest-bearing liabilities increased due to factors such as increased inventories. In the third quarter, a new commercial paper was issued.

Statement of cash flows.
Operating CF amounted to -257 million yen as factors that decrease cash flows, such as increase in inventories and decrease in trade payables, exceeded factors that increase cash flows, such as increase in net income before income taxes and a smaller decrease (increase) in notes and accounts receivable-trade and contract assets.
Investment CF amounted to -2,422 million yen due mainly to payments for acquisition of businesses.
Financial CF amounted to 6,390 million yen due to increase in borrowings, issuance of a new commercial paper, and others.

The amount of orders received was 54,806 million yen.
In the CN Business, the IT investment situation was steady, and there were large orders in the third quarter of FY2024.
As for the EC Business, orders remained at a level sufficient to meet the sales forecast for the current fiscal year despite the continuing decline of long-term orders.