CEO Message

Junya Suzuki, President and CEO

Dear shareholders and investors,

Thank you for your continued support of the Nissha Group.

Overview of consolidated operating results
for the fiscal year ended December 31, 2022

During the fiscal year ended December 31, 2022, the global economic environment showed movements of recovery from the novel coronavirus disease (COVID-19) crisis. However, the surging inflation and the corresponding interest rate hikes in the United States and Europe, among other factors, slowed the pace of the recovery. While the U.S. economy continued to recover gradually, the European economy remained sluggish owing mainly to Russia’s invasion of Ukraine. Meanwhile, the recovery of China’s economy stagnated because of the Chinese government’s COVID-19 policies and other reasons. In Japan, the easing of constraints on supply drove a gradual pickup in the economy.
Under these conditions, in the Industrial Materials segment, price of sustainable materials were raised to reflect soaring costs, and product demand for decorations remained firm. On the other hand, in the Devices segment, product demand for smartphones declined from the previous fiscal year, but we saw strong product demand for contract design/development manufacturing services in the Medical Technologies segment. As these results, the net sales increased year on year. As for the profit, the decline in product demand for smartphones and higher energy and labor costs driven by the inflation put pressure on profitability. Furthermore, the Group recognized an impairment loss on goodwill for European subsidiaries, which manufactures and sells sustainable materials in the Industrial Materials segment, mainly due to rises in discount rates following the interest rate hikes, and profit declined year on year.
As a result, regarding the financial results for the fiscal year ended December 31, 2022, net sales were ¥193,963 million (an increase of 2.5% as compared to the previous year). Operating profit was ¥9,520 million (a decrease of 45.2% as compared to the previous year). Profit attributable to owners of parent was ¥10,140 million (a decrease of 36.1% as compared to the previous year).

Forecast for the fiscal year ending December 31, 2023

The Group has been implementing the three-year 7th Medium-term Business Plan since January 2021. We aim to construct a foundation for growth by fully utilizing the global business bases we have acquired and built so far and maximizing their synergies. In our priority markets of Medical Devices, Mobility, and Sustainable Materials, our goal is to achieve growth by expanding product and service lineups that will solve social issues. In the IT Devices market, we will enhance profitability and efficiency in response to the downturn trend in the product demand.
Concerning the global economic environment in the fiscal year ending December 31, 2023, the economic outlook, such as high inflation, policy interest rates, and foreign exchange market, is uncertain. We expect that the economy will continue to trend toward a gradual recovery backed by the further easing of constraints on supply and active corporate capital investment, among other factors. On the other hand, however, there is a concern about a slowdown in the pace of economic recovery, including sluggish demand.
Under these conditions, in the Industrial Materials segment, we expect that demand for mobility components in the field of decoration and for metallized paper, a sustainable material, will grow steadily. In the Devices segment, we expect a decline in product demand for smartphones and tablets by factoring in the economic slowdown, while we foresee growth in product demand for mobility components and gas sensors, among others. In the Medical Technologies segment, product demand for contract design/development manufacturing services will rise against a backdrop of the active market trend. On the other hand, as efforts to improve profits, we will raise product prices in response to rising energy costs, raw material costs, and labor costs due to the inflation. Also, we aim to improve productivity and efficiency mainly by promoting factory automation and DX (Digital Transformation). As these results, for the consolidated financial results for the fiscal year ending December 31, 2023, we expect net sales of ¥192,000 million, operating profit of ¥9,000 million, profit before tax of ¥8,500 million and profit attributable to owners of parent of ¥6,200 million. These figures are based on an exchange rate of 1US$ = ¥130 for the fiscal year ending December 31, 2023.
  2022
Results
2023
Forecast

Net sales

(Millions of JPY)

193,963 192,000

Operating profit

(Millions of JPY)

9,520 9,000

Profit before tax

(Millions of JPY)

12,373 8,500

Profit attributable to owners of parent

(Millions of JPY)

10,140 6,200

In Conclusion

Our Mission is to use the diverse capabilities of our people and our Core Technologies as an engine for growth to create highly competitive, feature-rich products and services that offer value to customers and contribute to better lives for all. Guided by this Mission, we will move forward toward our medium-to-long term growth which leads corporate value improvement.

Once again, I want to thank you, our shareholders and investors, for your support to the Nissha Group.
February 14, 2023
Junya Suzuki
Chairman of the Board
President and CEO

Junya Suzuki

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