KAGA ELECTRONICS CO.,LTD.

	2024/3	YoY
Net sales	542,697	10.8%Down
Operating income	25,845	19.9%Down
Ordinary income	25,976	20.7%Down
Profit attributable to owners of parent	20,345	11.8%Down

	Electronic components	Information equipment	Software	Others
Net Sales	472,583	44,305	2,567	23,241
Operating Income	20,887	2,924	370	1,555

	2023/3	YoY
Net sales	608,064	22.6%Up
Operating income	32,249	54.2%Up
Ordinary income	32,739	52.6%Up
Profit attributable to owners of parent	23,070	49.8%Up

In the electronic components business, which is the Group’s core business, primarily in automotive and medical equipment applications, sales in both the component sales business and the EMS business grew significantly.
In the information equipment business, the Company saw growth in sales of high-end PC products and security software, as well as in the LED installation business.
In the software business, orders for smartphone game development and computer graphics production recovered.
In other businesses, the recycling business for PC products and other products remained solid.
As a result, sales increased in all business segments, and the Group’s net sales in the fiscal year under review totaled 608,064 million yen, up 22.6% year on year.
Operating income increased by 54.2% year on year to 32,249 million yen due to a significant increase in gross profit resulting from higher net sales and improved gross profit margin. Ordinary income increased by 52.6% year on year to 32,739 million yen and profit attributable to owners of parent increased by 49.8% to 23,070 million yen. The Company achieved record highs in net sales for the second consecutive year, operating income and ordinary income for the fourth consecutive year, and profit attributable to owners of parent for the third consecutive year.

	Electronic components	Information equipment	Software	Others
Net Sales	539,342	43,680	2,998	22,044
Operating Income	28,314	2,449	286	1,101

(a) Electronic components
(Development, manufacture and sale of semiconductors, general electronic components and other products, the electronics manufacturing service (EMS*), and other activities)
In this business, the component sales business attracted a high level of sales in a broad range of industries, in part due to the improved supply/demand conditions for semiconductors and electronic components from the second half of the fiscal year, which remained tight. Some products for automotive-related applications are facing supply shortages, but the Company mobilized its abilities and secured sales volume by using its strength in procurement capabilities as an independent trading company as well as proposing alternative products.
In the EMS business, sales in the automotive sector grew significantly and sales to key customers in applications related to medical and office equipment remained strong. The yen has been weak since the start of the fiscal year, and this pushed up revenue on a yen basis.
As a result, net sales increased 24.3% year on year to 539,342 million yen and segment income increased 56.4% year on year to 28,314 million yen.

(b) Information equipment
(Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products, original brand products, and other products)
In this business, sales of PCs for corporations and educational institutions were sluggish on a unit basis due to the prolonged replacement cycle but performed well on a value basis thanks to sales of high-end products. Sales of PC peripheral products such as security software also remained solid. In the LED installation business, the installation of large-scale nationwide projects, which had been delayed due to material shortages, made steady progress and contributed significantly to operating revenue.
As a result, net sales increased 10.3% year on year to 43,680 million yen and segment income increased 17.4% year on year to 2,449 million yen.

(c) Software
(Production of computer graphics, planning and development of amusement products, and other activities)
In this business, orders for large-scale and new projects in smartphone games development and computer graphics production recovered, and the profitability of the business improved as a result of progress in cost reductions.
As a result, net sales increased 8.3% year on year to 2,998 million yen and segment income was 286 million yen (segment loss was 26 million yen in the same period of the previous year).

(d) Others
(Repair and supports for electronics equipment, manufacture and sales of amusement equipment, and sales of sports goods, and other activities)
In this business, the PC and PC peripheral recycling business was strong. In addition, sales of game equipment for the amusement industry in Japan and overseas as well as golf products were robust, in part due to the relaxation of restrictions on movement during the pandemic.
As a result, net sales increased 12.5% year on year to 22,044 million yen and segment income increased 76.0% year on year to 111 million yen.

	2022/3	YoY
Net sales	495,827	17.4%Up
Operating income	20,915	82.4%Up
Ordinary income	21,456	90.9%Up
Profit attributable to owners of parent	15,401	35.1%Up

The electronic components business, which is the Group’s core business, addressed customer requests from various industries in advance, pursued sales activities that leveraged its strengths as an independent trading company, and gave the highest priority to securing sales volume. As a result, the Group’s net sales in the fiscal year under review totaled 495,827 million yen, up 17.4% year on year.
In terms of income, the Company’s continued efforts to facilitate telework and take other workstyle reform measures in the midst of the COVID-19 pandemic while also controlling operating costs, combined with an increase in gross profit due to higher net sales and an improved gross profit margin, led to an 82.4% year-on-year increase in operating income, to 20,915 million yen, and a 90.9% increase in ordinary income, to 21,456 million yen. Despite the absence of the 7,963 million yen “gain on bargain purchase” posted as extraordinary income following a corporate acquisition in the previous fiscal year, profit attributable to owners of parent increased 35.1% year on year, to 15,401 million yen, due to a significant increase in ordinary income.
Net sales reached the highest level in two fiscal years, since the fiscal year ended in March 2020, operating income and ordinary income reached record levels for the third straight year, and profit attributable to owners of parent did so for the second straight year

2022/3	Electronic components	Information equipment	Software	Others
Net Sales	433,852	39,616	2,767	19,590
Operating Income	18,107	2,085	-26	626

(a) Electronic components
(Development, manufacture and sale of semiconductors, general electronic components and other products, the electronics manufacturing service (EMS*), and other activities)
In this business, despite prolonged constraints on the supply of semiconductors and electronic parts, strong sales continued in the component sales business throughout the period as a result of previously capturing demand from customers in a wide range of industries. Furthermore, the Company leveraged the strength of its procurement capabilities and knowledge as an independent trading company to enable it to maintain widespread sales quantities, which also boosted revenue in this business. In addition, steady progress in PMI at acquired companies such as KAGA FEI Co., Ltd., and EXCEL Co., Ltd., contributed to profit growth in this business.
In the EMS business, the automotive, industrial equipment, and medical sectors in particular continued to see strong performance. Although lockdowns to combat the spread of COVID-19 and production line stoppages due to a shortage of electronic parts occurred at some plants, the Company endeavored to mitigate their impact by implementing thorough process control through close cooperation with customers’ plants and other measures.
As a result, net sales rose 22.7% year on year to 433,852 million yen and segment income increased 122.1% year on year to 18,107 million yen.

(b) Information equipment
(Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products, original brand products, and other products)
In this business, sales of PCs for educational institutions and PC peripherals such as security software remained strong, but sales of PCs to corporations were sluggish due to the winding down of demand associated with the shift to remote work and the impact of product supply difficulties attributable to a shortage of electronic parts. In addition, the impact of difficulties in procuring equipment, products, and materials and delays to construction work resulting from late deliveries were also felt in the equipment installation business for LED lighting, network devices, and other, which led to disappointing results.
As a result, net sales decreased 18.1% year on year to 39,616 million yen and segment income decreased 16.0% year on year to 2,085 million yen.

(c) Software
(Production of computer graphics, planning and development of amusement products, and other activities)
In this business, demand for computer graphics production for smartphone games was solid on the back of stay-at-home demand during the pandemic, but profitability worsened due to an increase in development costs and other resulting from efforts to meet delivery deadlines.
As a result, net sales decreased 5.6% year on year to 2,767 million yen and segment loss was 26 million yen (segment income was 263 million yen in the same period of the previous year).

(d) Others
(Repair and supports for electronics equipment, manufacture and sales of amusement equipment, and sales of sports goods, and other activities)
In this business, the PC and PC peripheral recycling business was strong, as demand for reused and recycled products increased amid continuing supply difficulties for PC products due to the shortage in electronic parts.
As a result, net sales increased 11.4% year on year to 19,590 million yen and segment income increased 32.0% year on year to 626 million yen.

(Million Yen)

	2021/3	YoY
Net sales	422,365	-4.8%
Operating income	11,467	14.5％
Ordinary income	11,241	10.9％
Profit attributable to owners of parent	11,399	94.8%

Net sales in the consolidated fiscal year ended March 31, 2021 decreased by 4.8% year on year to 422,365 million yen. Although the Group attracted demand for computers and others spurred by telework and responded to the recovery in demand in the manufacturing industry, and new Group subsidiary EXCEL boosted sales, the termination of Kaga FEI’s sales agency agreements with large firms continued to affect sales.
11,467 million yen and ordinary income rose 10.9% year on year to 11,241 million yen. This was due to an increase in gross profit supported by solid sales in key businesses, in addition to efforts to curtail and reduce selling, general, and administrative expenses, such as travel and transportation costs and business dining costs, as well as to promote teleworking, online meetings, and other initiatives to improve operational efficiency.
Profit attributable to owners of parent rose 94.8% over the previous year, to 11,399 million yen, well over the previous year’s level. This was because the Group posted a 7,963 million yen “gain on bargain purchase” as extraordinary income following a corporation acquisition, despite pricing in one-off losses resulting from the prolonged COVID-19 pandemic, such as the posting of 1,893 million yen in impairment losses including those for the newly built EMS manufacturing bases overseas as an extraordinary loss and 1,750 million yen in provision for allowance for doubtful accounts for a major supplier.
Both operating income and ordinary income reached record highs for the second straight fiscal year, and profit attributable to owners of parent reached a historical high for the first time in two fiscal years, since the fiscal year ended in March 2019.

(Million Yen)

2021/3	Electronic components	Information equipment	Software	Others
Net Sales	353,454	48,389	2,932	17,589
Operating Income	8,151	2,482	263	474

(a) Electronic components
(Development, manufacture and sale of semiconductors, general electronic components and other products, the electronics manufacturing service (EMS), and other activities)
In this business, the components sales business saw the effect of higher sales generated by EXCEL’s consolidation from April 2020, and the business also responded adroitly to demand as it recovered sharply in a wide range of industries from the second half of the fiscal year. However, the termination of Kaga FEI’s sales agency agreements with large firms continued to affect sales, and as a result, net sales undercut the previous year’s levels in this fiscal year.
The EMS business was affected by the suspension of manufacturing at overseas manufacturing plants of both the Company and its customers due to countries imposing lockdowns as COVID-19 infections increased early in the fiscal year, among other factors. However, demand picked up markedly from the second half of the fiscal year, particularly in the automotive and industrial equipment sectors. This in turn can be attributed to a recovery in spending, particularly on automobiles, which had fallen sharply at one point. As a result, net sales in the fiscal year under review exceeded levels in the previous year.
As a result, net sales decreased by 6.4% year on year to 353,454 million yen, and segment income increased by 8.6% year on year to 8,151 million yen.

(b) Information equipment
(Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products, original brand products, and other products)
In this business, sales of PCs, PC peripherals, and security software grew as companies and schools respectively expanded teleworking and online classes. In addition, sales of thermography equipment for temperature checks and sterilizing deodorizers with antiviral functions for companies were also solid as products aimed at countering COVID-19.
As a result, net sales increased by 11.3% year on year to 48,389 million yen, and segment income increased by 45.3% year on year to 2,482 million yen.

(c) Software
(Production of computer graphics, planning and development of amusement products, and other activities)
In this business, areas such as computer graphics animation and the development of game software performed well due to an increase in orders and front-loaded orders from customers sparked by a rise in at-home activities, among other factors.
As a result, net sales increased by 5.5% year on year to 2,932 million yen, and segment income increased by 11.4% year on year to 263 million yen.

(d) Others
(Repair and supports for electronics equipment, manufacture and sales of amusement equipment, and sales of sports goods, and other activities)
In this business, the PC and PC peripheral recycling business was solid, but sales of game equipment for the amusement industry and golf products were low due to the impact of requests from administrative authorities around the country that large commercial facilities curtail their operating hours to prevent the spread of COVID-19.
As a result, net sales decreased by 11.1% year on year to 17,589 million yen, and segment income increased by 4.9% year on year to 474 million yen.