Performance trend of Seiko Epson (6834)

3. Financial position

Looking at the financial situation as of the end of March 2024, the total assets increased by 883 million yen from the previous year-end to 3,222.6 million yen. This increase was mainly due to the growth of current assets, particularly significant increases in cash and deposits and trade receivables. Overall, current assets increased by 979 million yen from the previous year-end to 2,273.8 million yen. This indicates that the company's immediately available resources have expanded and short-term financial soundness has improved as a result of planned asset management, reflected by the decrease in fixed assets, which decreased by 96 million yen from the previous year-end to 948.7 million yen, mainly due to depreciation of buildings and machinery and equipment. As for liabilities, current liabilities increased by 114 million yen from the previous year-end to 342.5 million yen, mainly due to an increase in short-term debt, such as unpaid consumption tax, which needs to be paid within a certain period. In addition, fixed liabilities increased by 58 million yen to 1,614 million yen, mainly due to increases in retirement benefit obligations and directors' stock compensation provisions. Net assets increased by 710 million yen from the previous year-end to 2,718.6 million yen. This increase is mainly due to increases in retained earnings and foreign currency translation adjustments, indicating that the company's self-capital has been strengthened and a stable financial foundation has been established. Overall, it can be seen that short-term financial soundness has improved due to the increase in current assets, planned asset management led to a decrease in fixed assets, the management of short- and long-term debt has been properly established, and self-capital has been strengthened due to an increase in net assets. These suggest that the company is pursuing sustainable growth and stability while responding to future uncertainties.

The cash flow from operating activities was 2,299 million yen in the March 2023 term, indicating that the company's major business activities were generating healthy earnings during that period. However, this figure decreased to 1,797 million yen in the March 2024 term. This decrease may be due to a decline in sales or profitability, but it is still positive for the company to maintain positive cash flow. The cash flow from investing activities showed negative values in both periods, but the amount of expenditures increased from 950 million yen in the March 2023 term to 1,533 million yen in the March 2024 term. This increase indicates that new equipment investments and investments in other long-term assets are being actively pursued, suggesting that the company is aiming for growth or technological innovation. Although such investments may temporarily impact cash flow, we believe that they are an important step to improve long-term profitability and corporate value. The cash flow from financing activities had stable expenditure amounts in both the March 2023 and March 2024 terms, at 513 million yen and 507 million yen, respectively. This indicates that external fund-raising, such as borrowing and dividend payments, is limited, and the company is increasing internal reserves while maintaining a low external dependence. The balance of cash and cash equivalents at the end of the term decreased slightly from 519.3 million yen in the March 2023 term to 506.5 million yen in the March 2024 term. This decrease is likely due to active investment activities, suggesting that the company is using the available funds to anticipate future growth.

The EPS for the fiscal year ending March 2024 was 83.42 yen per share, with a ROE of 2.8% and a ROA of 4.0%. The profitability indicators EPS, ROE, and ROA are generally decreasing. In particular, after showing high performance in the fiscal year ending March 2020, these indicators have significantly declined up to the March 2024 term. EPS has continued to decline from its peak in the March 2020 term and had a substantial drop in the March 2024 term. This trend indicates a decrease in profit-generating ability. Similarly, the decline in ROE and ROA suggests a decrease in operating efficiency and a decline in the effectiveness of asset utilization. As these results may be due to factors such as fierce market fluctuations, it is important for the company to grasp the market trends as early as possible and review its management strategy accordingly.

(Reported by FISCO guest analyst Hiroshi Nakayama)