Performance trend of Johshin Electric <8173>

1. Performance Overview of the 2nd Quarter of the Fiscal Year Ending March 2025

The consolidated performance for the 2nd quarter of the fiscal year ending March 2025 showed a year-on-year decrease in revenue of 2.8% to 191,986 million yen, a decrease in operating profit of 59.9% to 1,838 million yen, a decrease in ordinary profit of 60.9% to 1,777 million yen, and a decrease in interim net profit attributable to parent company shareholders of 29.4% to 2,196 million yen. This result fell below the performance forecast announced at the beginning of the quarter, which was revenue of 198,000 million yen, operating profit of 4,600 million yen, ordinary profit of 4,600 million yen, and interim net profit attributable to parent company shareholders of 3,200 million yen. All items performed below expectations. The main reason for the shortfall in revenue was the decrease in sales of white goods like televisions, refrigerators, washing machines, as well as entertainment products like games. Looking at the sales performance by category, TVs decreased by 4.7% compared to the same period last year, refrigerators by 7.1%, washing machines and cleaners by 5.6%, microwave ovens and cooking appliances by 6.6%, and games, models, toys, and musical instruments by a significant 17.8%. The overall decline in demand for key products such as TVs, computers, and game consoles in the electronics industry as a whole has been attributed to increased in-home usage during the pandemic. The company's sales per store in the 2nd quarter also decreased by 2.9% compared to the same period last year, amidst a deliberate restraint on opening new stores.

Has sufficient financial security. In the 2nd quarter, some of the policy-held shares were sold, including Asics shares, recording a gain on the sale of investment securities of 1,831 million yen. The trend toward disposing of holdings is positive.

2. Financial condition and performance indicators.

The financial position at the end of the 2nd quarter of the fiscal year ending March 2025 showed a total asset decrease of 7,004 million yen to 225,771 million yen compared to the previous period. The main decrease was in current assets, with a decrease of 6,421 million yen, primarily from a decrease in cash and deposits by 239 million yen, accounts receivable by 4,095 million yen, and inventory by 2,193 million yen. Fixed assets decreased by 584 million yen to 108,185 million yen, with no significant movements in tangible or intangible fixed assets. On the other hand, total liabilities decreased by 6,002 million yen to 122,160 million yen. The main decrease was in current liabilities, where promissory notes and accounts payable increased by 3,779 million yen, while short-term interest-bearing liabilities decreased significantly by 11,391 million yen. In long-term liabilities, long-term loans increased by 4,600 million yen. Total net assets increased by 1,003 million yen to 103,610 million yen.

Looking at the business indicators, the equity ratio for the 2nd quarter of the fiscal year ending March 2025 was 45.9%, indicating a sound financial position on the balance sheet. As of the end of the previous period, the balance of investment securities was 8,017 million yen. As publicly disclosed on July 12, 2024, some of the company's policy-held shares were sold in the 2nd quarter, such as Asics <7936> shares, with a gain on sale of investment securities of 1,831 million yen recorded. Most of the remaining policy-held shares are in Daikin Industries <6367> (equivalent to about 158,900 shares worth approximately 3,190 million yen at the end of September).

(Author: Hiroki Nagao, FISCO guest analyst)