Performance trend of Riken NPR <6209>

1. Consolidated Business Performance Overview for the period ended March 2024.

In the consolidated financial statements based on the fiscal year ending March 2024, revenue was 1385.86 billion yen, operating profit was 876.4 billion yen, ordinary profit was 1,163.5 billion yen, and net income for the year attributable to parent shareholders was 2,632.4 billion yen. Special profits such as settlement interest and dividends received of 87.3 billion yen, investment profit by equity method of 146.5 billion yen, and exchange gain of 34.8 billion yen, as well as negative goodwill gain related to the acquisition of Japan Joint Co. Ltd. and the business integration of Riken NPR were recorded as special profits, and impairments losses of 9.33 billion yen were recorded as special losses. Compared with the forecast (revised value dated February 14, 2024, revenue of 1,370 billion yen, operating profit of 800 million yen, ordinary profit of 1,050 million yen, and net income for the year attributable to parent shareholders of 3,000 million yen), net income for the year attributable to parent shareholders fell below the forecast due to a decrease in negative goodwill gain expected (about 2.1 billion yen), but revenue, operating profit, and ordinary profit all exceeded the forecast.

Due to the consolidation accounting of the business combination, the results for the six-month period from April to September 2023 of NPR are not reflected in the numerical values of the settlement briefings for the fiscal year ending March 2024. Therefore, comparing both of Riken and NPR's 12-month performance reflected values, revenue for the fiscal year ending March 2024 was 168.6 billion yen, a 16% increase from the previous year, operating profit was 10.6 billion yen, a 51% increase from the previous year, ordinary profit was 13.7 billion yen, 35% increase from the previous year, net income for the year attributable to parent shareholders was 27.9 billion yen, a 355% increase from the previous year, and net income for the year attributable to parent shareholders excluding negative goodwill gain was 8.7 billion yen, 42% increase from the previous year. This is due to the recovery of automobile production, the effect of the depreciation of the yen, the new consolidation of Japan Joint Co. Ltd. by Riken, and the increase in demand due to the price transfer of raw materials and energy, as well as progress in rationalization. The regional breakdown of revenue*: Japan increased by 23% year-on-year due to the new connection effect of Japan Joint Co. Ltd. to 84.2 billion yen (50% of revenue composition), China decreased by 1% year-on-year to 10.4 billion yen (6% of revenue composition) due to the downturn in Japanese OEM sales. Other Asia increased by 3% year-on-year to 27.4 billion yen (16% of revenue composition), North America increased by 16% year-on-year to 23.6 billion yen (14% of revenue composition) due to the recovery of orders due to the resolution of semiconductor shortages, and Europe increased by 11% year-on-year to 13.6 billion yen (8% of revenue composition) due to the steady increase in demand. Others increased by 38% year-on-year to 9.4 billion yen (6% of revenue composition).

* Sales breakdown by region: Japan increased by 23% year-on-year to 84.2 billion yen (50% of revenue composition) due to the new connecting effect of Japan Joint Co. Ltd.; China decreased by 1% year-on-year to 10.4 billion yen (6% of revenue composition) due to the decline in Japanese OEM sales; Other Asia increased by 3% year-on-year to 27.4 billion yen (16% of revenue composition) due to the steady increase in demand; North America increased by 16% year-on-year to 23.6 billion yen (14% of revenue composition) due to the recovery of orders due to the resolution of semiconductor shortages, and Europe increased by 11% year-on-year to 13.6 billion yen (8% of revenue composition) due to the steady increase in demand. Others increased by 38% year-on-year to 9.4 billion yen (6% of revenue composition).

* Values are reflected based on the 12-month performance of both Riken and NPR.

* Analysis of change in operating profit: increase of 2.3 billion yen due sales growth, increase of 0.8 billion yen due to exchange rate changes, increase of 1.4 billion yen due to price transfer, decrease of 1.1 billion yen due to rising material and energy prices, decrease of 0.4 billion yen due to increased labor costs, decrease of 0.4 billion yen due to increased depreciation and research and development expenses, increase of 1.5 billion yen due to rationalization progress, and decrease of 0.5 billion yen due to increased expenses.

* Values are reflected based on the 12-month performance of both Riken and NPR.

* Sales by segment: The Automotive and Industrial Machinery Parts Business had sales of 135.4 billion yen, an 8% increase from the previous year, and operating profit (before adjustment for all company expenses, etc.) of 8.6 billion yen, a 48% increase from the previous year. Effects such as increased revenue due to the recovery of automobile production and the depreciation of the yen, as well as the effects of price transfer and rationalization contributed to this. The piping and construction equipment business had sales of 17.4 billion yen, a 275% increase from the previous year due to the new effect of the consolidation of Japan Joint Co. Ltd., and operating profit of 0.6 billion yen, a 131% increase from the previous year. Others had sales of 18.5 billion yen, a 4% increase from the previous year and operating profit of 1.2 billion yen, a 17% decrease from the previous year.

* Values are reflected based on the 12-month performance of both Riken and NPR.

(Authored by FISCO guest analyst Masanobu Mizuta)