■Performance Trends
2. Segment Overview
(1) Enterprise Solution
Net sales were 16,701 million yen (up 13.0% from the previous fiscal year), operating profit was 2438 million yen (up 16.2% from the same period), and operating profit margin was 14.6% (up 0.4 points from the same period), leading the strong performance of NSW ＜9739＞. As for sales, in addition to the increase in development for the retail industry and sales of system equipment, sales also increased due to a strong trend in system development for the financial industry. As for operating income, in addition to the increase in gross profit associated with the increase in sales, sales and administration expenses were reduced, and profit increased due to the contribution of highly profitable projects. Compared to the plan, sales were 5.0% higher than planned, and operating profit was significantly higher than 21.3%. Also, order volume was steady at 16,745 million yen (up 3.4% from the same period).
Looking at the breakdown of sales, business solutions sales were 5,959 million yen (up 11.8% from the previous fiscal year). It remained steady due to the provision of in-house packages for the manufacturing and logistics industries, and the retail industry also grew drastically due to new store support for existing major distribution customers, such as POS systems, etc., and the commencement of infrastructure projects. Also, sales of financial and public solutions were 7,857 million yen (up 6.6% from the same period). For the finance/insurance industry, business in the card settlement field grew significantly, and for government offices and organizations, it was strong, incorporating systems related to the public/social security domain. Furthermore, sales of system equipment sales increased significantly by 2,884 million yen (up 39.0% from the same period). In particular, equipment sales increased drastically due to retail customer support for new stores, etc.
(2) Service solutions
Net sales were 13,985 million yen (up 7.6% from the previous fiscal year), operating profit was 425 million yen (down 16.5% from the same period), and operating profit margin was 3.0% (down 0.9 points from the same period). As for sales, sales increased due to the acquisition of large-scale projects in the web development field. As for operating profit, profit declined due to unprofitability of some large-scale projects. Compared to the plan, sales were 4.4% higher with a steady accumulation of projects. However, operating profit fell 45.5% due to the impact of unprofitable projects. The same segment has been an independent segment since the fiscal year ended March 31, 2020, and operating profit margins are relatively low compared to other segments due to system strengthening for business expansion, upfront investment for new service development, etc. It seems that it will take a little longer for the business to get back on track and contribute to the company's overall performance. Meanwhile, the volume of orders received was 14,103 million yen (up 2.1% from the same period).
Looking at the breakdown of sales, cloud infrastructure service sales were 9,947 million yen (up 0.9% from the previous fiscal year). As for clouds, construction-related matters centered on public clouds have increased in line with steady demand for cloud use. As for infrastructure and other services, the data management field has been doing well, and the expansion trend continues. Sales of digital solutions were 4038 million yen (up 28.8% from the same period). Since IoT/AI remained steady due to deep customer cultivation in the IoT field, efforts were focused on stabilizing the business. Furthermore, segment profits in Web/EC declined due to partial unprofitability of existing customer projects.
(3) Embedded Solutions
Net sales were 10,650 million yen (up 8.7% from the previous fiscal year), operating profit was 1,598 million yen (up 13.8% from the same period), and operating profit margin was 15.0% (up 0.7 points from the same period). Sales were in the 10 billion yen range, and profit margins remained at a high level. Sales were also strong in the automotive, mobile, and equipment fields. Also, in terms of profit, profit increased due to an increase in gross profit associated with the increase in sales. Compared to the plan, sales exceeded the plan by 5.5% and operating profit by 11.8%, respectively. Productivity has improved due to deepening the cultivation of existing customers, and high profit margins continue to be maintained, but as described above, technical barriers to entry are high, and it is thought that there are few companies that handle the same business on the scale of an independent company. Furthermore, the volume of orders received was steady at 10,894 million yen (up 11.6% from the same period).
Looking at the breakdown of sales, automotive, which is the company's specialty, worked to increase projects and expand response areas due to increased demand for SDV*, contributing to the increase in sales. Mobile development for carriers and finance-related application development, etc. have increased. As for equipment, broadcasting equipment-related and energy fields, etc., maintained strong sales. While network equipment development-related developments were strong in communication, it remained flat as 5G development converged.
*An abbreviation for Software-Defined Vehicle, it is an automobile that can increase value, function, and performance by changing software.
(4) Device Solutions
Net sales were 8,961 million yen (up 3.9% from the previous fiscal year), operating profit was 140 million yen (up 1.9% from the same period), and operating profit margin was 15.6% (down 0.3 points from the same period). Sales increased due to a steady trend in the design, development, and evaluation fields in semiconductors. As for profit, profit increased by absorbing cost increases associated with overseas utilization of resources due to an increase in gross profit associated with an increase in sales. Sales were 1.5% lower than planned, but operating profit was 1.5% higher, and profit margin was 15.6% (up 0.5 point from plan). Similar to embedded solutions, productivity has improved due to the deepening cultivation of existing customers and operating profit margins have risen, technical barriers to entry are high, and there are also few companies that handle the same business on the scale of an independent company, so they continue to maintain high profit margins. The company is strong in individual fields rather than general-purpose fields, but since it is a field where business partners have been consolidated, it is growing business performance by digging deep into relationships with major customers. The order volume remained flat at 9,040 million yen (up 0.2% from the same period), and the idea is to keep a close eye on future semiconductor-related trends.
Looking at the breakdown of sales, although project valleys etc. of some existing customers were affected, the main business centered on semiconductor design and development evaluations increased steadily. However, the semiconductor field is particularly highly specialized, and there is also a chronic shortage of human resources in the industry as a whole, and the company is in full swing overseas utilization and partner cooperation mainly in Southeast Asia, starting with Vietnam. We have also formed an alliance in Taiwan, China, and are proceeding with new development with the aim of acquiring projects from overseas companies.
(Written by FISCO Visiting Analyst Shigeki Kuni)