■ Performance Trends
1. Summary of Consolidated Financial Results for the Fiscal Year Ending March 2024
(1) Profit and Loss Situation
Hagiwara Electric Holdings <7467> reported consolidated financial results for the fiscal year ending March 2024, with net sales of 225,150 million yen (a 21.0% increase from the previous term), operating income of 7,711 million yen (a 14.7% increase), ordinary income of 7,221 million yen (a 12.5% increase), and net income attributable to parent company shareholders of 4,421 million yen (a 10.0% decrease), all of which set new record highs except for the net income attributable to parent company shareholders, which decreased due to a reaction from the previous term's recording of a negative goodwill gain of 670 million yen as a special profit.
The significant increase in revenue was due to a smooth recovery in production by major automotive-related client companies, an expansion in the models adopted, new adoptions, and the launch of new projects that had been undertaken previously, as well as contributions from a weaker yen. The gross profit margin on sales was 8.9%, a decrease of 0.9 percentage points from the previous term, mainly due to a change in product mix (an increase in the sales ratio of the relatively low-profit-margin device business) and an increase in the cost of sales (about 486 million yen) resulting from a change in inventory valuation in consultation with the auditing firm. Although the gross profit margin on sales decreased, the gross profit on sales increased to 20,003 million yen (a 9.8% increase) due to the increase in revenue. On the other hand, selling, general and administrative expenses were contained to a 7.0% increase, resulting in a 14.7% increase in operating income.
Analyzing the factors affecting the change in operating income, the increase in gross profit on sales due to higher revenue was 3.1 billion yen, the decrease in gross profit on sales due to other factors (inventory asset valuation loss, decrease due to the reaction of spot projects, etc.) was 1.3 billion yen, and the decrease due to an increase in selling, general and administrative expenses (increase in personnel expenses, system investment, etc.) was 0.8 billion yen.
(Written by: FISCO guest analyst Noboru Terashima)