■Performance Trends of Soft99 Corporation ＜4464＞

2. Trends by business segment

(1) Fine chemicals business

As for the performance of the fine chemicals business, sales decreased 1.5% from the previous fiscal year to 14,511 million yen, and operating profit increased 11.7% from the same period to 1,926 million yen. Although sales declined slightly, operating profit turned to an increase for the first time in three fiscal years. The gross profit margin rose 1.4 points from 42.7% in the previous fiscal year to 44.0% due to price increases for general consumer car supplies and commercial products, and narrowing down advertising expenses actively invested in the previous fiscal year was also a factor in the increase in profit.

Looking at the breakdown of sales, among domestic general consumer sales (automobile sector), body care products began to increase by 5.9% compared to the previous fiscal year. Shipments of the “Digloss” series of undercarriage products and the “Raindrop Tornado Vortex,” which went on sale in 2023/9, were strong. Meanwhile, glass care products decreased by 2.9%, and repair products decreased by 3.9%, both of which declined. Glass care products are due to the reaction of the consolidated introduction of new wiper products for customers in the previous fiscal year. Although profit margins for repair products improved due to price revisions, there were commercial flow changes (wholesale companies) to some sales destinations in the first half, and sales declined due to the effect that shipments were temporarily suspended. However, shipments also resumed in the second half, and things are progressing smoothly.

There was also an effect of price increases for commercial products (automobiles/industrial fields), and sales increased for the fourth consecutive term, with a 7.7% increase from the previous fiscal year. For new cars, OEM products declined due to a decrease in production by some automobile manufacturers due to the earthquake, but they were covered by strong sales of in-house brand products, and overall sales increased. For used cars, sales of high value-added products grew due to strong sales of used cars and aggressive approaches to customer construction shops, contributing to increased sales and improved profit margins. Sales of household products (lifestyle sector) declined 29.2% from the same period, for the third consecutive term. The reason is that eyeglass care products, which are the main products, declined due to a round of nesting demand. Compared to the 2021/3 fiscal year, which was the peak of demand, sales declined to a level of 60%, but compared to the sales level for the 2023/3 fiscal year before the COVID-19 pandemic, it is at a level of less than 1.2 times, and it is thought that the sales scale has risen to the bottom in the medium term.

Overseas business (automobile sector) decreased 1.7% from the previous fiscal year. Purchases and sales of other companies' products, which were a factor in the increase in sales in the previous fiscal year, remained flat, and struggles due to inventory adjustments in East Asia and Southeast Asia excluding China became a factor in the decline in sales. However, sales of body care products and glass care products remained strong due to the effect that local agents actively developed SNS promotions for Europe. Even in Brazil, sales of glass care products grew due to an increase in rainfall, and performance has begun to grow steadily in focus areas.

Sales in the TPMS business (automobile sector) increased 48.0% from the previous fiscal year, breaking record high sales for the first time in 2 fiscal years. Sales declined in the previous fiscal year due to the effects of the suspension of shipments by some truck manufacturers, but in the current fiscal year, the number of trucks produced recovered and the number of units installed recovered, and maintenance/maintenance services for existing mounted vehicles also grew, contributing to the increase in sales. The company's TPMS has sold a total of 10,000 units, and it is expected that maintenance services will also become a stable revenue source in the future.

Electronic device/software development (industrial sector) increased 3.7% from the previous fiscal year. It has been decided that 3G wireless communication services used in remote monitoring systems etc. will end at the end of 2026/3, and demand for switching from 3G to 4G compatible communication systems remained steady. Note that other sales were recorded negatively of 234 million yen, but this is due to inventory returns from dealers related to seasonal products. The impact of the current fiscal year was that winter products were sluggish due to a warm winter.

(2) Porous materials business

As for the performance of the porous materials business, sales decreased 2.9% from the previous fiscal year to 8,304 million yen, and operating profit increased 3.9% from the same period to 1,083 million yen. As for sales, consumables for semiconductor manufacturing for Taiwan, China and South Korea fell due to adjustments in the semiconductor market, and the fact that there were no large-scale equipment projects that recorded sales in the medical field in the previous fiscal year was a factor in the decline in sales. Meanwhile, in terms of profit, in addition to the fact that the gross profit margin improved from 31.3% in the previous fiscal year to 31.5%, the loss of goodwill amortization amount of 136 million yen related to Aztec was a factor in the increase in profit (collectively recorded as impairment loss in the previous fiscal year). Although depreciation and amortization expenses increased by 106 million yen as the new plant was put into operation in the fall of 2022, the gross profit margin improved due to the fact that the operating rate was normalized and excess labor costs decreased compared to the previous fiscal year, which was a super busy situation, and large equipment projects that are purchased in the medical field disappeared.

As for the breakdown of sales, the industrial materials division began to decline for the first time in 10 fiscal years to 6,515 million yen, down 4.1% from the previous fiscal year. Of these, the domestic market increased 4.3% from the same period. Although sales declined due to prolonged customer production adjustments for HDDs, sales increased as the main semiconductor market remained steady, and price increases were implemented for filter and printer applications. Meanwhile, the overseas market declined by 3.1% from the same period, and began to decline for the first time in 9 fiscal years. Although sales of brush rollers used in semiconductor cleaning processes were strong to the United States, a decline was felt in Taiwan and South Korea due to inventory adjustments. The medical field decreased 18.4% from the same period to 1,123 million yen. Although development of new applications such as in vitro test agent filters and chemical solution coating materials progressed, sales declined due to the disappearance of large-scale equipment projects as described above.

Sales of household materials increased 1.6% from the previous fiscal year to 1,790 million yen for the fourth consecutive term. As for the domestic market, in addition to growing due to strong sales of OEM products associated with the recovery in new car sales, sports towels etc. also remained strong due to the subsidence of the COVID-19 pandemic, and record high sales were continuously updated. Meanwhile, overseas markets declined 13.8% from the same period due to prolonged inventory adjustments to the United States, which is the main destination.

(Author: FISCO Visiting Analyst Joe Sato)