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Message from the President

Report on the Consolidated Business Performance and Business Activities in the Third Quarter of the Fiscal Year Ending March 2024.

I would like to express my sincere appreciation for our shareholders’ continued patronage.
Asahi Yukizai Corporation released today our business results as well as the summary of business performance by business segment on a consolidated basis in the third quarter of the fiscal year ending March 2024. We would like to report its summary as follows:

Kazuya Nakano

1. Consolidated Business Performance for the Third Quarter of the Fiscal Year Ending March 2024

  1) Business Environment in the Third Quarter Cumulative Period
Regarding, in the first place, the Valve and Piping Systems Business Segment, domestic capital investment related to primary products are calming as a whole compared with the preceding period. Overseas, while demand for construction of factories related to the electronics industry continued growing, demand in the markets for semiconductor-manufacturing equipment, which are related to Dymatrix products, remained stagnant since the second half of the preceding fiscal year.
Secondly, in the Resin Business Segment, the market for semiconductor devices which are in relation to electronic material products continued stagnant since the second half of the preceding fiscal year. Concerning the markets which are related to foundry products, although the number of cars manufactured in Japan remained in good shape, uncertainty began increasing due to the slowdown in the Chinese market. Meanwhile, domestic condominium construction starts, which have connection with the foaming material products, increased over the preceding year.
  2) Consolidated Business Performance
Sales as well as profits of all types posted increases, due to such factors as the increase in sales to the electronics-related industry centering at semiconductors.
Sales 66.1 billion yen An increase of 9.72 billion yen year-on-year (up 17.2%)
Operating profit 12.45 billion yen An increase of 3.98 billion yen year-on-year (up 47.0%)
Ordinary profit 12.75 billion yen An increase of 4 billion yen year-on-year (up 45.8%)
Net profit for the quarter attributable to owners of parent 8.18 billion yen An increase of 2.39 billion yen year-on-year (up 41.2%)

2. Summary of Business Activities by Business Segment

  1) Valve and Piping Systems Business Segment
<Thermoplastic valves, piping, pipe fittings and engineering businesses, etc.>
● Promotion of sales activities in which we endeavored to be helpful to our customers by developing the products about which we pursued solution of the corrosion problems and the functionality of plastic piping materials.
  • In the sales of primary products including thermoplastic valves, the supply-demand balance was improving, as capital investment, which had been brisk, turned apparently to be calming.
  • Overseas, demand related to semiconductor factory construction remained firm in tone, although it was gradually calming in the U.S.
  • The engineering business that makes use of the thermoplastic piping materials and others also remained strong.
As a result, the segment saw an increase in sales over the preceding fiscal year.

<Dymatrix products to be used in semiconductor-manufacturing equipment>
● Contribution to the increase in sophistication of semiconductors through development of miniature precision valves that correspond to the increasing sophistication of the semiconductor manufacturing process.
  • Sales of Dymatrix products to be used in semiconductor-manufacturing equipment were adversely affected by the continuously stagnant demand in Korea along with the slowed investment in China resulting from the friction between the U.S. and China.

As a result, segmental sales posted a decrease from the preceding year.

<Concerning the profits>
  • In the face of the adverse effects of increased personnel expenses and higher raw material prices, profits turned out to be greater than in the preceding year, due to the favorable effects of the yen’s depreciation in addition to the increase in sales mainly in overseas.
Sales 43.71 billion yen Up 22.4% year-on-year
Operating profit 10.98 billion yen Up 40.0% year-on-year
Operating profit margin 25.1%  

  2) Resin Business Segment
<Products for foundry materials>
● Endeavors to be helpful to our customers through making proposals concerning products most suitable for diversified casting processes, in relation to the manufacturing of castings which are necessary for automobiles, construction machines and others.
  • We aggressively made proposals to our existing customers which should lead to the improvement of product quality and the increase in productivity, along with the improvement of work environment by reducing the smell. We also carried out aggressive sales activity for new customers.
  • The number of automobiles produced was on a firm note.
As a result, sales posted an increase over the preceding year.

<Foaming material products>
● Provision of safety and security to our customers by, in addition to the easiness of application of the foaming material products, endeavoring to further raise the quality of products after being sprayed.
  • We endeavored to receive orders related to large-scale projects in connection with the redevelopment programs in Kanto and Kansai areas with much success.
  • With regard to the materials used in civil engineering work, we actively made proposals to our customers concerning the products as well as methods of construction that are most suitable for respective construction sites.
As a result, sales posted an increase over the preceding year.

<Electronics material products>
● Contribution to the increase of sophistication of semiconductors by pursuing development of the low-metal refinement technology for electronics materials, which is essential in manufacturing semiconductor devices.
  • Although the business was adversely affected by the stagnant demand for semiconductor devices and the inventory adjustment carried out by purchasing parties, it is now expected to touch bottom soon.
As a result, sales posted a moderate increase over the preceding year.

<Concerning the profits>
  • The electronics material products proved to be less profitable, though it has turned toward recovery, due to unfavorable factors in the first half; however, the profits derived from the entire resin business segment were greater than in the preceding year, thanks to the contribution by the products for foundry materials and the foaming material products.
Sales 16.75 billion yen Up 10.8% year-on-year
Operating profit 1.24 billion yen Up 185.1% year-on-year
Operating profit margin 7.4%  

  3) Water Treatment & Natural Resources Development Business Segment
<Water treatment business>
● Implementation of designing and construction of water treatment facilities to meet our customers’ needs as well as water regeneration systems which are intended to efficiently use water resources.
  • In both the government-office and private construction projects, the number of construction completes increased steadily and construction made steady progress.

As a result, sales posted an increase over the preceding year.

<Natural resources development business>
● Contribution to the efficient use of resources by excavating steam wells for geothermal power generation as well as engaging in construction for development of thermal springs.
  • Although thermal spring development projects made steady progress, projects of geothermal power excavation were delayed.
As a result, sales posted a decrease from the preceding year.

<Maintenance and management service business as chemical business>
● Provision of services for stable operation of facilities and equipment, as well as the chemicals for water treatment.
  • In the maintenance service section, maintenance/management as well as repairing projects made progress as scheduled.
  • In the environmental chemical business, an increase was posted in the volume of products shipped.
As a result, sales posted an increase over the preceding year.

<Concerning the profits>
  • Due to the increases in sales derived from government-office and private construction and thermal spring construction projects in the water treatment business as well as those derived from the environmental chemical business, profits were greater than in the preceding year.
Sales 5.63 billion yen Up 1.7% year-on-year
Operating profit 0.28 billion yen Up 95.4% year-on-year
Operating profit margin 4.9%  

It is our intention that we will continue endeavoring to create added value by concentrating our energy in promoting digital transformation in our operation and in fostering human resources, aiming at sustainable growth of the Asahi Yukizai group.
We would highly appreciate it if our shareholders continue to believe in the growth of Asahi Yukizai group in the future and extend a continuous support and guidance to us.

January 31, 2024
Kazuya Nakano