Okabe : Financial Results Briefing for Fiscal Year 2023 is now available.

Hello, I'm Kawase, President of OKABE. Thank you. Thank you very much for taking time out of your busy schedule to participate in our financial results briefing today. I would also like to take this opportunity to thank you for your support of OKABE.

Without further ado, I would like to start the briefing on the financial results of OKABE for the fiscal year ending December 2023.

First, I would like to discuss the business of our group for the consolidated fiscal year ending December 2023.

The core business we are engaged in is the construction-related products business. The sales composition ratio is as shown on the screen.

Please note that, regarding the automotive products by Water Gremlin Company that are mainly associated with the battery terminal business, the Group's profit and loss will be included in the consolidated financial results for the fiscal year ending December 2023. However, this group was unconsolidated in the timing of filing for Chapter 11. Therefore, their balance sheet is not reflected in the consolidated financial report.

Accordingly, the remaining business pertaining to the automotive products business will be categorized as the diversified business from the fiscal year ending December 2024.

As of December 2023, domestic sales account for approximately 65% of total sales, and overseas sales account for approximately 35% of total sales.

Today, I will discuss two major points.

First, I would like to provide an overview of the consolidated financial results for the fiscal year that ended in December 2023, then, I will provide a summary of FY2023.

Summary for 2023

⚫ Effect of the filing of a petition for reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code

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First, as a positive factor, in the domestic market, sales from the construction-related products business remained strong due to the uptake of construction demand measured by the floor size of reinforced concrete properties. We also captured the demand for construction and construction-related products that are designed to address landslide damage, as well as the demand for community redevelopment projects in urban areas.

In the US construction-related products business, although sales decreased in terms of local currency, booked sales figures increased amid the Japanese yen's depreciation due to the impact of fluctuating exchange rates.

On the other hand, negative factors included sluggish sales of construction materials in the US construction-related products business due to the housing market slump caused by rising interest rates and other factors, as well as higher labor and packing and transportation costs. In addition, in the automotive products business, the impact of the filing for restructuring proceedings under Chapter 11 was a negative factor on an operating profit basis.

In the construction-related products business, sales increased by 1.7% from the previous year to JPY64.128 billion. In the automotive products business, net sales increased by 0.8% from the previous year to JPY9.996 billion. In the diversified business segment, net sales increased 4.4% from the previous year to JPY4.028 billion.

Looking at operating profit by segment, operating profit in the construction-related products business decreased by 20.2% from the previous fiscal year to JPY4.066 billion. In the automotive products business, the segment reported an operating loss of JPY300 million, down JPY155 million from the previous fiscal year. The diversified business decreased 0.4% from the previous year to JPY316 million.

As a result, net sales for the current fiscal year were JPY78.152 billion, up 1.7% from the previous year. Operating profit was JPY4.082 billion, down 22.5% from the previous year. Ordinary profit was JPY4.303 billion, down 21.3% from the previous year.

Net loss attributable to owners of the parent amounted to JPY5.472 billion. It was the result of extraordinary losses of JPY10.307 billion, impacted by a decrease in profitability in the manufacturing and sales of battery terminal products in the

automotive products business. Other factors that contributed to the losses are, expenses for filing Chapter 11, legal fees to prepare for a lawsuit, and an impairment loss on goodwill related to OCM Manufacturing LLC, which manufactures building materials products in the United States.

Next, I would like to report on the consolidated financial position. Total assets for the current fiscal year decreased by JPY14.009 billion from the end of the previous fiscal year to JPY89.885 billion. Net assets decreased by JPY5.05 billion from the end of the previous period to JPY62.06 billion.

The equity ratio increased 4.4 percentage points from the end of the previous period to 69%. The above is a summary of consolidated financial results for the full year ending December 2023.

We regret to report a net loss for the year due to the extraordinary loss recorded for the current fiscal period. We sincerely apologize to our shareholders and all of our stakeholders for any inconvenience and concern this may have caused.

I take this result as a major difficulty that I and the rest of the management team must face. The entire management team has taken the extraordinary loss as an opportunity to look back on past decisions and subsequent business operations, and to reevaluate how they should have been made, and has formulated the Medium-Term Management Plan starting in FY2024 to enable the Group to change for the better.

Beginning FY2024 and beyond, we commit ourselves to turn the business around to secure profitability and strive to achieve JPY75.5 billion in net sales and JPY5 billion in operating profit by 2026.

The details of the New Medium-Term Management Plan will be discussed in the subsequent slides.

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OKABE Co. Ltd. published this content on 26 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 07:11:03 UTC.