Due to the recovery and expansion of customers' capital investment, our performance in FY24/6 significantly exceeded the plan, and both sales and gross profit margin reached the highest level since ULVAC was listed on Tokyo Stock Exchange

 

Regarding the business environment surrounding our group in FY24/6, in the semiconductor industry, demand for semiconductors expanded against the backdrop of expectations for AI and other technologies, and in response to geopolitical risks, new semiconductor factories were built around the world. Next, in the electronics industry, along with technological innovation and expansion of investment for production increase of power devices and various electronic devices due to continued progress in policies to promote the introduction of EVs based on green energy policies, etc.. China also continued to invest based on its policy of domestic production of electronics. In the flat panel display (FPD) industry, IT panels were in the transitional stage of switching from LCD to OLED, and investment in large-size OLED substrates has started. In the industrial battery industry, signs of full-scale investment in mass production continued to be seen as EV batteries became smaller, larger in capacity, and safer.

 

In this business environment, our group's business results for FY24/6, were significantly better than planned in terms of orders received, net sales, operating profit, and ordinary profit.

 

Regarding the orders for FY24/6, orders for advanced logic and memory recovered from the second half, which the Group positions as a growth driver, and orders for power devices and EV batteries also increased in addition to the orders for components and materials. As a result, orders rose to ¥258.2 billion (up 4.4% year-on-year), an increase of ¥11.0 billion from the previous fiscal year and the sales rose to ¥261.1 billion (up 14.8% year-on-year), the record high since listed on Tokyo Stock Exchange.

 

In terms of profits for FY24/6, the gross profit margin rose from 29.5% in the previous fiscal year to 30.9%, the highest level since listed, and the operating profit margin improved significantly from 8.8% in the previous fiscal year to 11.4%, due to higher sales and an increased sales ratio of high margin products. As a result, operating profit was ¥29.8 billion(up 49.3% year-on-year), ordinary profit was ¥29.8 billion(up 30.2% year-on-year), and profit attributable to owners of the parent was ¥20.2 billion (up 42.8% year-on-year).

We have also formulated our Materiality, a set of important issues to be addressed by the Ulvac Group as follows: “Promotion of creation and co-creation with vacuum as the core technology.” “Development of diverse human resources and promotion of their advancement; cultivation resilient organizations” “Respect for human rights and responsible conduct in the value chain” and “Contribution to a sustainable global environment” . In order to address these materialities, our three-year mid-term management plan, which begins in FY24/6, is based on the basic policies of “Creating social value through vacuum technology” and “Enhancing Profit and Capital Efficiency Oriented Management,” and sets three key strategies: “Strengthening product competitiveness in growth businesses,” “Improving global productivity,” and “Strengthening management bases. The Group's performance targets for FY26/6, the final year of the plan, are as follows: net sales of ¥300 billion, gross margin of 35%, operating profit of ¥48 billion (operating margin of 16%), operating cash flow (accumulated over three years) of ¥63 billion, and ROE of 14%.

 

As mentioned above, the results for FY24/6, the first year of the midterm management plan, significantly exceeded the plan for the single fiscal year. We will continue to aim to achieve the performance targets of the mid-term management plan, and in particular, further strengthen our product planning and strategic purchasing capabilities as a measure to “strengthen our manufacturing capabilities,” which will lead to higher productivity by further expanding our planned production system and further improving the gross profit margin.

 

Regarding the environment surrounding the growth drivers and the Group's initiatives, first, in the memory and logic devices, customers' investments are recovering, and we aim to achieve steady growth by entering into processes in which we have not yet entered. In electronic devices, we expect customers to continue to invest in packaging andμOLED (micro organic light emitting diode  displays). In power devices, customers have been restraining full-scale investments in 8-inch SiC ( Silicon Carbide) wafers due to the slow down in  the EV market growth, but we aim to increase sales by strengthening sales expansion in regions where our equipment market share is still low. In the battery-related business, customers are expected to make full-scale investments in new current collector materials for EV batteries from FY26/6, and we are working to increase our market share by improving productivity by expanding the film width of the double-sided aluminum evaporation film used as cathode current collector and by replacing the film with a copper evaporation film used as anode current collector.

 

In FY26/6, we aim to increase orders by 1.5 times compared to FY23/6 for all of these growth drivers.

For FY25/6, the second year of the mid-term management plan, we aim to achieve further increases in both sales and profits, with “orders of ¥270 billion (up 4.6% year-on-year),” “sales of ¥275 billion (up 5.3% year-on-year),” “operating profit of ¥34.5 billion (up 15.9% year-on-year),” “ordinary profit of ¥35 billion (up 17.5% year-on-year)” and “profit attributable to owners of the parent of ¥23 billion yen (up 13.7% year-on-year)”, achieving further increases in both sales and profit. We also target a gross profit margin of 32.4%, operating profit margin of 12.5%, and ROE of 10.1%.

 

Although there is a sense of uncertainty in the business environment surrounding our group, we will strive to further increase orders by seizing opportunities such as the recovery of customers' investment in memory and logic devices and the full-scale investment in OLEDs for IT panels. In addition, the Group's cryopumps are widely used in evaporation equipment for OLEDs, and will strive to increase sales of cryopumps. We will also work aggressively to expand sales of leak test systems, which can be customized for a wide range of applications, and surface analysis systems, for which the demand is growing.

 

In addition to these market trends, we expect to achieve the above single-year sales target for FY25/6, given that the Group's order backlog at the end of the previous fiscal year was ¥145.0 billion. In terms of profits, we expect an improvement in the profit margin due to an increase in the sales ratio of highly profitable semiconductor and electronic devices manufacturing equipment. Meanwhile, we plan to invest ¥10.5 billion in R&D facilities and ¥14.0 billion in R&D expenses for a total of ¥24.5 billion in FY25/6 to further strengthen our growth drivers.

 

To achieve the goals of the mid-term management plan, we aim to achieve sustainable growth while steadily implementing key strategies.

We need to secure sufficient funds for R&D investment in growth areas and also build and maintain a stable financial base. At the same time, we consider the distribution of profits to shareholders to be one of our most important policies. Therefore, starting from FY24/6, we will further raise the consolidated dividend payout ratio to 35% or more and set the year-end dividend for FY24/6 at ¥144 per share, an increase of ¥35 from the previous fiscal year. We will continue our efforts to return profits to shareholders, and plan to pay a year-end dividend of ¥164 per share for FY25/6.

 

The ULVAC group will work as one to achieve the performance targets of the final year of the mid-term management plan and continue to enhance corporate value and We look forward to your continued understanding and support.

 

September, 2024