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Business Performance for the Third Quarter of Fiscal Year Ending March 2023

To all KIMOTO supporters,

Takashi Hikiba,Director, General Manager, Sales Division

This is a report from the general managers and division heads of the Technology Division, Sales Division, Digital Twin Division, and Administration Division on the consolidated business results for the second quarter of the fiscal year ending March 31, 2022.

This time, Hikiba of the Sales Division will give the report.

Profile of Takashi Hikiba

Unfortunately, we have had to revise our full-year forecast downward due to the following financial results for the third quarter of the fiscal year ending March 31, 2023 (April 2022-March 2023).
We sincerely apologize for any concern this may have caused.

The main reasons for this poor performance were a sharp decline in demand for electronic devices, including smartphones, which are the main target application for our products. This was due to excess inventory for Chinese smartphone makers, and a sharp reduction in production capacity at our manufacturing sites in China due to the Zero-COVID Policy, which also impacted our Company.This represented about 60% of the factors behind this poor performance. In addition, rising prices due to the conflict in Ukraine in Europe have put the brakes on consumption, and automobile production has been adjusted due to a shortage of semiconductors, which represented 15% of the factors contributing to the underperformance. We are still very much in the middle of this downturn and expect demand to recover by March 2023 at the earliest, and by summer at the latest.
In response to the other increases in the cost of purchased materials, the balance was net even due to sales price increases. However, an increase in factory operations that do not lead to sales, including prototypes involving material consolidation and changes that began in the second half of 2020, and the burden of work expenses due to these increases have also been a factor in the underperformance.

Looking ahead, we expect demand for electronic devices, including smartphones, to return to normal in the second half of the fiscal year ending March 31, 2024, although we do not anticipate significant growth, and we expect our performance to level off.

Positive factors are expected to include an increase in sales through an appropriate response to the growing demand for automotive displays, which is the focus of our efforts, as well as an increase in sales through the on-time launch of products under development for different base materials and other fields.
In addition, we expect sales growth in the non-film Digital Twin business by leveraging our technology, expertise, and experience to respond to the rapid development of the market through digital transformations in the construction and manufacturing industries. Moreover, we believe that this situation will continue for 5 to 7 years.

Regarding the medium-term management plan announced in May 2022, we apologize for not being able to achieve the targets for the first year. We will disclose the relevant information to you again at a time when we return to normal operations (by October 2023).

The entire KIMOTO Group is committed to working together to regain our business performance, and we will continue to make even greater efforts to develop attractive, high-quality products and services that are globally recognized. We appreciate your continued kind support.

January　30,2023
KIMOTO Co.,Ltd.
Director, General Manager, Sales Division
Takashi Hikiba

For more details, please click here.

Summary of Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2023(Japanese) Notice of Liquidation of Deferred Tax Assets, Revision of Full-Year Earnings Forecast (Consolidated), and Reduction of Executive Compensation(Japanese)

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