■Fujibo Holdings' Performance Trends (3104)
In the fiscal year ended 2024/3, operating profit decreased by 42.2% compared to the previous fiscal year due to a decrease in orders for abrasives, which is the core business, but on the other hand, what is attracting attention as a bright material is that polishing materials for SiC wafer applications, which are expected as next-generation power devices, have finally been introduced to the market in earnest. The main end use market is highly anticipated as a “trump card” for a decarbonized society, such as for electric vehicle (EV) inverters and power conditioners for renewable energy power generation equipment (solar power generation, wind power generation, grid storage sites, etc.). The company has been working on research, development, and prototyping of abrasives for SiC wafers until now, and now, it has developed high-performance, high-quality abrasives (soft pads) for leading manufacturers of SiC power semiconductors in Europe, America, China, etc., and has secured a high market share as a pioneer.
2. Performance Overview by Segment
(1) Abrasive materials business
As for the main abrasives for ultra-precision processing, orders for “CMP applications” for semiconductor devices decreased by 6% compared to the previous fiscal year, and orders for “silicon wafer applications” decreased by 21%. Demand bottomed out in the 2023/6/7 fiscal year for some applications in the semiconductor market, and there is a gradual recovery trend. In particular, orders were the first to recover from CMP applications in the main market. Orders for “hard disk applications” also declined by 6%, but demand for hard disk updates for data centers has finally begun to move. Also, orders for “liquid crystal glass applications” decreased by 18% from the same period. It was affected by rapid production cut adjustments by LCD panel manufacturers due to sluggish demand for digital devices such as televisions, computers, and smartphones. Even if demand for digital devices recovers in the future, a noticeable recovery in orders for abrasives cannot be expected. Meanwhile, orders for “SiC wafer applications” increased 9% from the same period. This is because the 2023/10-12 fiscal year did not work, but it recovered in the 2024/1-3 fiscal year. Going forward, it seems that strong demand will continue in the SiC power semiconductor field used for automobiles, starting with electric vehicles (EVs), and for data centers.
As a result, sales decreased 11.0% from the previous fiscal year to 13,416 million yen, and operating profit decreased 61.5% from the same period to 1,087 million yen (operating profit margin 8.1%).
CMP applications are abrasives (soft pads) for cutting-edge semiconductors, such as miniaturization, high definition, and generative AI, and are the basis for building high-profit structures as high value-added products.
(2) Chemical industrial products business
For some functional materials, in addition to declining global demand, the chemical industry as a whole continues to have a tough business environment due to deteriorating market conditions for electronic materials used in semiconductors, smartphones, and 5G communication base stations. The operating rate of some production lines at the Yanai Plant and the Takefu Plant declined, putting pressure on profits. Also, price transfer has been promoted since 2023/4 for the portion of product cost increases due to soaring raw material and energy prices, and full-scale profit improvement effects were obtained throughout the year. As a result, sales increased 1.2% from the previous fiscal year to 12,519 million yen, and operating profit decreased 13.8% from the same period to 888 million yen (operating profit margin 7.1%).
(3) Lifestyle clothing business
B.V.D.'s main force struggled with autumn/winter products due to the influence of last year's warm winter. In particular, for the fiscal year ending January to March 2024, both sales and profits fell, and the initial plan was not reached. In B.V.D. internet sales, digital marketing, such as SNS utilization, is being strengthened in response to diversifying customer needs and market trends. Meanwhile, as major supermarket stores withdraw, mass retailer sales will continue to decline more and more in the future. The company wants to cover that part by increasing EC conversion.
As a result, sales decreased 4.5% from the previous fiscal year to 6,952 million yen, and operating profit decreased 12.1% to 782 million yen (operating profit margin 11.2%).
(4) Other (chemical products) business
In the chemical products division, orders for medical device parts are strong, and demand from customers is expected to increase, so injection molding machines were added. In the mold division, molds for automobiles struggled due to the end stage of development projects, including the EV conversion shift, but stable profits for the fiscal year ended 2024/3 were secured due to IPM, a small mold business, joining the group. In the trade sector, orders declined due to the reaction of COVID-19 special demand and the effects of production discontinuation due to model changes in main models.
As a result, sales increased 9.5% from the previous fiscal year to 3,219 million yen, and operating profit decreased by 52.0% to 59 million yen (operating margin 1.8%).
A sound financial position is rock-solid in promoting growth strategies
3. Financial Status and Management Indicators
(1) Financial Status
As for the financial situation at the end of the 2024/3 fiscal year, total assets increased 1,143 million yen from the end of the previous fiscal year to 62,512 million yen. This is because inventories and other current assets declined, but bills receivable, cash, and deposits increased. Also, fixed assets increased by 457 million yen to 38,822 million yen. This is due to an increase in investment and other assets due to an increase in the market value of the shares held. Total liabilities increased 91 million yen from the end of the previous fiscal year to 18,539 million yen. Current liabilities decreased by 112 million yen to 11,756 million yen, and fixed liabilities increased 203 million yen to 6,782 million yen. This is due to an increase in other current liabilities, such as equipment-related bills payable, etc. Total net assets increased 1,052 million yen from the end of the previous fiscal year to 43,973 million yen. This is due to the fact that dividends from surplus were implemented at 1,261 million yen, which decreased by 487 million yen due to treasury stock acquisitions, etc., but there was an increase of 2,117 million yen due to recording net income attributable to parent company shareholders.
(2) Management indicators
In terms of management indicators, interest-bearing debt is stable at a low level of 1,433 million yen, and the financial position is strong, with a current ratio of 201.5%, an equity ratio of 70.3%, and an interest-bearing debt ratio of 3.3%, which are financial soundness indicators, and it can be said that the management foundation for promoting medium- to long-term growth strategies is rock-solid.
(Written by FISCO Visiting Analyst Keiji Shimizu)