1st Quarter Results
Maruwa Co Ld
05 August 2005
5 August 2005
MARUWA CO., LTD.
3-83, Minamihonjigahara-cho, Owariasahi-city, Aichi-pref., 488-0044 JAPAN
FOR IMMEDIATE RELEASE
Nagoya- MARUWA CO., LTD. today announced its consolidated business results for
the first quarter of fiscal 2006, the three-month period ended 30th June 2005 as follows; -
Note1) Statements of income are unaudited.
Note2) MARUWA acquired the entire shares of Kimmon Electric Co.,Ltd. as a new consolidated subsidiary on 1
April 2005, and changed its name to MARUWA SHOMEI Co., Ltd.
Consolidated operating results and financial conditions for the first quarter of fiscal 2006
<1 April 2005 - 30 June 2005>
1. Summary of operating results
JPY million
Current 1st Qt Previous 1st Qt (Reference)
from 1 April 2005 from 1 April 2004 For fiscal 2005
to 30 June 2005 to 30 June 2004 ended 31 March 2005
Change% Change%
Net sales 4,481 7.3% 4,176 46.4% 15,529
Operating income 398 29.2% 308 633.3% 1,357
Net income 51 -67.3% 156 188.9% 1,225
Net income per share : JPY
(Basic) 4.69 14.32 112.40
(Diluted) 4.67 14.32 112.18
Note) Change figures indicate increases (decreases) percentages compared to the 1st quarter results in the
previous fiscal year, respectively.
Review of operations
MARUWA group started a new business of lighting equipment from April, which we acquired through M&A. There is
a big difference between the operations of our existing electronic ceramics business and of the lighting
equipment business, of which main products are involved for public enterprises. To make MARUWA's entire
business condition understood accurately, we here report the results of each sector: the ceramic components
sector consisting of circuit ceramics division, machinery ceramics division, radio frequency products division,
and EMC components division, and the lighting equipment sector.
Net sales increased 7.3% compared to the first quarter of the previous year to 4,481 million yen. The
inventory adjustments in the electronic components market had prolonged since second quarter of the last year,
but it has shown a recovery trend, while it is moderate, since fourth quarter of the previous year. Thanks to
the situation mentioned above and the new entry of multi-layer beads and inductors into our product lineups by
M&A, the sales of the electronic ceramics products in this first quarter remained approximately the same as the
favorable sales in the first quarter of the previous year led by the brisk digital home appliances market as
well as the semi-conductor equipment market. The lighting equipment sales in the first quarter were 264
million yen due to the specificity of its business structure.
The profit in the first quarter largely outweighed the forecast figures announced in May. While still facing
strong demands from customers to lower the prices of electronic components, we see some effects of continued
efforts to reduce inventories and lead time, and to enhance the corporate structure through the improvement of
product quality and a yield rate, the restructuring of loss-making businesses acquired through M&A into
profitability, and the contribution to profits of newly developed products. As a result, operating income of
the ceramic components surged 91.2% to 589 million yen compared to the even favorable first quarter of the
previous year.
Regarding to the newly started lighting equipment sector, we posted operating loss for the first quarter of
191 million yen as its sales are to be concentrated in March while carrying expenses throughout the year.
Currently, we are promoting the integration of the sales bases with MARUWA's existing sales offices, and the
restructuring of the operations including cost reduction. Due to theses efforts, we observed that the deficit
had been reduced, and expect an annual profit to be improved.
Meanwhile, we posted net income of 51 million yen as it was forecast in May 2005, taking into account loss of
261 million yen due to the payment of retirement benefits for directors followed by termination of the
retirement benefits system.
Sales by segment
Ceramic Components:
JPY million
Previous 1st Qt Current 1st Qt
from 1 April 2004 from 1 April 2005
to 30 June 2004 to 30 June 2005
Change%
Net sales 4,176 4,217 1.0%
Operating income 308 589 91.2%
Lighting Equipment:
JPY million
Previous 1st Qt Current 1st Qt
from 1 April 2004 from 1 April 2005
to 30 June 2004 to 30 June 2005
Change%
Net sales -- 264 --
Operating income -- (191) --
Total:
JPY million
Previous 1st Qt Current 1st Qt
from 1 April 2004 from 1 April 2005
to 30 June 2004 to 30 June 2005
Change%
Net sales 4,176 4,481 7.3%
Operating income 308 398 29.2%
Quarterly sales results of Ceramic Components segment by product division
JPY million
For year ended 31st March
2005 2006
1st Qt 2nd Qt 3rd Qt 4th Qt 1st Qt
Circuit Ceramics 1,746 1,566 1,479 1,421 1,649
Machinery Ceramics 1,363 1,376 1,257 1,256 1,129
Radio Frequency Products 259 270 302 265 344
EMC Components 808 768 720 673 1,096
Total 4,176 3,980 3,758 3,615 4,218
Circuit Ceramics
Total sales of Circuit Ceramics division increased 16.0% to 1,649 million yen compared to the last quarter (the
fourth quarter of the previous fiscal year.)
Every product group in this division grew compared to the last quarterly results, enjoying solid orders in
the Taiwanese market. We expect to keep such favorable sales also in the second quarter of the current year.
Machinery Ceramics
Total sales of Machinery Ceramics division dropped 10.1% to 1,129 million yen compared to the last quarter.
Although in the prior year, the quartz glass products increased both sales and profit due to favorable orders
from semiconductor equipment sector under the brisk digital home appliances market as well as the enhancement
of a business structure through the restructuring of the organization, an inventory adjustment since the
previous fourth quarter forced sales down at the level lower than expected without a sign of recovery yet.
Although a full recovery in the second quarter is now hardly anticipated, the situation is now changing toward
a possible recovery in the latter half of this year. At the same time, we will continue to strengthen the
operating structure to secure profits by improving manufacturing processes and developing materials and items
for large sized wafers.
The other products in this division grew steadily.
Radio Frequency Products
Total sales of Radio Frequency Products division grew 29.8% to 344 million yen compared to the previous
quarter, due to the sales expansion of VCOs (voltage controlled oscillators) for new applications, and brisk
sales for dielectric ceramics for LNB (low noise box) products as well as a modest recovery of the electronic
components market. Thin film substrates settled a foundation for profitability in the previous year with hopes
for future growth, and has been growing for DVD-related areas, showing a sign of further growth including
expansion to other areas.
EMC Components
Total sales of EMC Components division surged 62.9% to 1,096 million yen compared to the last quarter amid a
recovery trend in the electronic components market, exceeding the sales in the first quarter of the prior year,
which had enjoyed an active market for digital devices.
In this division, we have steadily added product variations, developing the business in response to market
needs changing at an accelerated pace, such as downsizing, speeding up, or multi-functioning of electronics
devices.
2. Summary of consolidated financial conditions
JPY million
Current 1st Qt Previous 1st Qt (Reference)
As of 30 June 2005 As of 30 June 2004 As of 31 March 2005
Total Assets 30,475 27,973 28,465
Shareholders' equity 24,492 23,652 24,328
Shareholders' equity 80.4% 84.6% 85.5%
ratio
JPY
Shareholders' equity 2,272.53 2,165.14 2,256.48
per share
Total assets at the end of this first quarter were 30,475 million yen as a result of the 3-month operation, up
2,010 million yen compared to the end of the last year, including an increase of 2,022 million yen through
MARUWA SHOMEI Co., Ltd., a new consolidated subsidiary from April. By category, trade notes and accounts
receivable increased 1,365 million yen, including a 996 million yen increase by MARUWA SHOMEI. Although
inventories increased 194 million yen totally, 73 million yen was cut in the existing business to improve the
efficiency of inventory assets.
The new capital expenditure in this period amounted to 380 million yen, and depreciation was 361 million yen.
3. Outlook for the fiscal 2006 ending 31 March 2006
JPY million
Interim Annual
Net sales Net income Net sales Net income
Forecast (A) 9,360 300 21,230 1,120
Forecast (B) 9,360 100 21,230 930
announced on 10 May 2005
Changes (A)-(B) 0 200 0 190
Changes (%) -- 200% -- 20.4%
(Reference) Fiscal 2005 15,529 1,225
(Reference) Outlook by segment
Ceramic Components:
JPY million
Net sales Operating income
Apr. - Sept. Oct.-Mar. Total Apr. - Oct.-Mar. Total
Sept.
Forecast 8,560 9,470 18,030 1,050 1,090 2,140
Forecast announced 8,560 9,470 18,030 760 1,090 1,850
on 10 May 2005
Changes (A)-(B) 0 0 0 290 0 290
Changes (%) -- -- -- 38.2% -- 15.7%
Lighting Equipment:
JPY million
Net sales Operating income
Apr. - Sept. Oct.-Mar. Total Apr. - Oct.-Mar. Total
Sept.
Forecast 800 2,400 3,200 (280) 240 (40)
Forecast announced 800 2,400 3,200 (330) 110 (220)
on 10 May 2005
Changes (A)-(B) 0 0 0 50 130 180
Changes (%) -- -- -- -- 118.2% --
Total:
JPY million
Net sales Operating income
Apr. - Sept. Oct.-Mar. Total Apr. - Oct.-Mar. Total
Sept.
Forecast 9,360 11,870 21,230 770 1,330 2,100
Forecast announced 9,360 11,870 21,230 430 1,200 1,630
on 10 May 2005
Changes (A)-(B) 0 0 0 340 130 470
Changes (%) -- -- -- 79.1% 10.8% 28.8%
Operating income of the first quarter largely exceeded the forecast due to solid sales for newly started
products by M&A in EMC Components, and the successful control of expenses better than expected in the lighting
equipment business started also through M&A, of which the initial budget plan was tight.
For the second quarter onwards, we revised the forecast figures announced on 10 May 2005 due to the prospects
of a recovery in the quartz glass market, and tighter cost control in the lighting equipment operation even
though the future is still unclear as a recovery in the semiconductor equipment market slowed down.
Note) The forecasts stated above are based on currently available information as of the date of announcement of
this document. Actual performance results may differ from these forecasts due to various factors.
1. Consolidated Balance Sheet (summary)
JPY million JPY million
Current 1st Qt Previous 1st Qt Fiscal 2005
(Reference)
As of 30 June 2005 As of 30 June 2004 As of 31
Change Mar. 2005 Change
ASSETS
Current assets
Cash & deposits 6,910 5,922 988 6,935 (25)
Notes and accounts receivable, 6,077 4,802 1,275 4,712 1,365
trade
Inventories 2,748 3,150 (402) 2,554 194
Other current assets 539 372 167 629 (90)
Total current assets 16,274 14,246 2,028 14,830 1,444
Property, plant & equipment 11,772 11,360 412 11,308 464
Investments & other assets 2,429 2,367 62 2,327 102
Total assets 30,475 27,973 2,502 28,465 2,010
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes & accounts payable, trade 1,948 848 1,100 797 1,151
Short term debt -- -- -- -- --
Other current 2,078 1,581 497 1,614 464
liabilities
Total current 4,026 2,429 1,597 2,411 1,615
liabilities
Long-term
liabilities:
Long-term debt 298 447 (149) 335 (37)
Accrued pension & severance costs 837 754 83 858 (21)
Other 822 691 131 533 289
Total long-term liabilities 1,957 1,892 65 1,726 231
Shareholders'
equity:
Common stock, authorized: 6,683 6,683 0 6,683 0
26,000,000 shares; issued & outstanding:
11,050,000 shares in 2003
Additional paid-in capital 9,710 9,710 0 9,710 0
Retained earnings 9,537 8,589 948 9,577 (40)
Net unrealized gains (losses) on 11 26 (15) 16 (5)
other securities
Foreign currency translation (868) (1,053) 185 (1,077) 209
adjustment
Treasury stock (581) (303) (278) (581) 0
Total shareholders' equity 24,492 23,652 840 24,328 164
Total liabilities & shareholders' 30,475 27,973 2,502 28,465 2,010
equity
2. Consolidated statement of income (summary)
JPY million
Current 1st Qt Previous 1st Qt (Reference)
from 1 April 2005 from 1 April 2004 Change For fiscal 2005
to 30 June 2005 to 30 June 2004 amount % ended 31 March 2005
to net to net to net
sales sales sales
Net sales 4,481 4,176 305 7.3% 15,529
Cost of sales 3,091 69.0% 3,120 74.7% (29) -0.9% 11,187 72.0%
Gross profit 1,390 31.0% 1,056 25.3% 334 31.6% 4,342 28.0%
Selling, general &
administrative 992 22.1% 748 17.9% 244 32.6% 2,985 19.2%
expenses
Operating income 398 8.9% 308 7.4% 90 29.2% 1,357 8.7%
Other income (286) -6.4% (39) -0.9% (247) 633.3% (177) -1.1%
(expenses)
Income before income 112 2.5% 269 6.4% (157) -58.4% 1,180 7.6%
taxes
Income tax expenses 61 1.4% 113 2.7% (52) -46.0% (45) -0.3%
Net income 51 1.1% 156 3.7% (105) -67.3% 1,225 7.9%
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