2023
2021 - 2023

Financial Results Briefing Material
for the Fiscal Year ended March 2024

KAGA ELECTRONICS CO., LTD.
TSE Prime Market 8154

May 23, 2024

Management Topics
Representative Director,
President & COO

Ryoichi Kado

Summary of FY2024/3 Results
In the Electronic Component segment, the impact of ‘inventory adjustment by
Initialcustomers’ and ‘disappearance of spot demand’ was factored into our forecast forforecast
lower net sales and operating income.


FY2024/3
Summary
Results

Outlook for
FY2025/3



‘Spot demand’ made no contribution to earnings as expected.
The impact of inventory adjustment by customers on 1H results appeared lessthan initially expected, and both net sales and operating income returned
above the internal plan.
The impact of inventory adjustment by customers began on a full scale in 2H
and the upward swing gradually narrowed, but the full-year plan exceeded thetarget.
1Q

2Q

3Q

4Q

Operation margin

6.9 bn13.8 bn

20.4 bn

25.8 bn

Progress rate

28.0％

55.5％

82.0％

103.4％vs InternalPlan＋2.0 bn＋3.8 bn＋2.0 bn＋0.8 bn(billion yen)

Upside: Medium- to long-term market growth scenario, especially in the automotive
sector, remains unchanged.
Downside: Inventory adjustment by customers continue for some time, and a fullfledged recovery is expected in 2H of FY2025/3.
Salary increase: Decided to increase salaries to invest in human capital contributing tofuture growth
Even after factoring in the impact of 1.5 billion yen, we aim to return to an upward
trend of higher net sales and operating income.
2Factors behind Changes in Operating Income
for FY2025/3
Operating Income（billion yen）

25.8bn+1.6△1.5

Sales Volume
Personnel
Sales mix
expenses+0.1

26.0bnCost increase factors incorporated
into FY2025/3 forecasts⑴ Salary increases 1.0 bn
・ Kaga Electronics: Up 25,000 yen /month across the board(average rise of 7.8%)・ Group companies: rise of 2.0% to 7.5%

Other
expenses⑵ New graduate salary, regularsalary increases, etc.
0.5 bnIncome Increase:around 0.2 bn
2024/3Results

2025/3Results*Operating income forecast:+1.6 billion yen (+6.4%) in real terms,
excluding the effects of the above factors

3Inventory Reduction
Inventory amount / Inventory turnover days
■Inventory amount (manufacturing business)■Inventory amount (trading company business)
140

900

JPY 78.8 bn

JPY 62.6 bn

84.0

27.1

JPY 70.5 bn

30.3

600

500

89.0

30.1

30.4
80.1

200

100

0

－Inventory turnover (trading company business)

JPY

JPY 63.5 bn
JPY 56.2 bn

27.0

76.7
78.1

27.0

46.1

34.3

43.3

31.4

43.7

32.6

35.4

40.8

40.8

2022/32022/62022/9

47.9

26.8

100

25.6

79.0

33.7

38.9

48.5

2022/12

46.6
37.3

43.5

23.4

29.3

2023/3120

66.4 bn
JPY

74.8

65.5

400

300

－Inventory turnover (manufacturing business)

JPY 71.2 bn
JPY 71.0 bn

800

700

－Inventory turnover (consolidated)

54.7 bn
70.9days

24.2

80

60

45.0
42.3
31.5

36.4

36.8days
36.0

40.8

26.6days

40

20

30.4
2023/62023/92023/122024/30

4

『Medium-Term Management Plan 2024』
Progress of Management targets


The Company formulated the three-year Medium-Term Management Plan 2024 in November 2021. Excluding the
new M&A element, management targets for all the three KPIs of net sales, operating income, and ROE set
for the final year of the Plan were achieved in the fiscal year ended March 31, 2023, the first year of thePlan. Based on the results of the first year, the Company updated its earnings forecast for the final year, andpresented them as the “latest outlook.”The earnings forecast for the fiscal year ending March 31, 2025, announced at this time deviates from the “latest
outlook” partly due to unexpectedly prolonged inventory adjustment and impact of salary increases.
Accordingly, the Company has positioned earnings forecast as “commitment” and the latest outlook as“challenging targets,” and will work toward accomplishment of the Plan in the final year.
First-year
results

Initial plan
(Announcedon November 25, 2021)

JPY

Net Sales

FY2023/3

Latest outlook(Announced on May 11, 2023)

Second-year
results

Final-year
earnings forecast

FY2024/3

FY2025/3

750.0 bn

Organic growth :JPY 600.0 bn
Including new M&As:

JPY

608.0 bn

542.6 bn

JPY

25.8 bn

JPY[No change]

JPY

30.0 bn or higher

JPY

555.0 bn

JPY 150.0 bn

Operating
IncomeROE

JPY

20.0 bn
Stable8.5% or higher

JPY

32.2 bn

19.6％

JPY

stable10.0% or higher

14.5％

26.0 bn

11.5％
5

Medium-Term Management Plan 2024 - Progress ofManagement Measures Overall, we expect to achieve initial targets through efforts on key issues as per our basic policy.
key issues
Further
Reinforcement ofProfitability

Reinforcement ofManagement Base

• Selection and concentration in
growth fields• Reinforcement and expansionof EMS business and overseas
business• Reinforcement of corporate
governance• Efficient Group management• Investments in human capital

Major outcome• Started operation of a new plant in
Mexico (April 2024)

Evaluation○• Established a special leave system formale employees to take parental leave
Utilization rate of 73.7% (FY2024/3)• Group-wide salary increase decided○(March 2024)

Creation of New
Businesses• Initiatives in new fields• Promotion of open innovation
through venture investments• M&A efforts aimed at
discontinuous growth

Promotion of SDGs
Management*See the Progress of the Sustainability Medium- to Long-term Management Plan in thefollowing page.

• Investment in start-up companies
through CVC (5 cases in FY2023/3, 1
case in FY2024/3)△

6

Started a New Factory in Mexico to expand EMS Business In April 2024, the new Mexico plant began operation as initially planned.
 Aiming for ‘sales of 50 billion yen’ over the next 5 years to meet the growing production
demand that is expected for North and Latin American markets
 Launched "TAXAN-SWE MEXICO," a finished product assembly plant adjacent to the new plantin Mexico
We will establish an integrated production base that encompasses component molding, andsheet metal processing, in addition to circuit board assembly.

TAXAN MEXICO S.A. DE C.V.
Outline of the New Factory
Location：Parque Industrial
Millenium, Arroyos,
San Luis Potosí

Nomber of
Employees ：700（at start）
Land area ：80,000㎡
Floor area ：20,000㎡
Expected Investment Amount：total around 5 billion yen
over the next five years.
（includes the landpurchase and buildings）
Items produced
Assembly of automotive lighting
units and circuit boards for airconditioning equipment, etc.
Start of operation
Scheduled for April 2024

7

Medium- to long-term sustainability targets and major KPIs
Key themesE

Achievement of shift to100% renewable energy

Issues to address and issues to
examine• Adoption of renewable energy atdomestic sales offices• Adoption of renewable energy atdomestic manufacturing sites• Adoption of renewable energy atoverseas manufacturing sites

Shift to electricity for• Switch to electric vehicles for domestic
sales vehicles (EV, HV, PHV, FCV)
company-owned vehicles

2030: 100%

By 2024: Information
gathering/analysis and determinationof policy
・In-house power generation/external
procurement
・Solar panel/biomass power
generation/renewable energy
businesses

2030: 50%
2050: 100%

2024: 85% (78.5%)

2030: 100%

Diversity and humanresource management

Percentage of female newgraduates in general positions
2023: 30% (5.8%)
Percentage of women in
management positions
2024: 15% (13.3%)

Work–life management
and enhancement of
productivity• Enhancement of programs such as
childcare/family-care and telework• Acquisition of certification as a Healthand Productivity Management
Organization

2022: Implementation of review
2023: Certification

Restructuring the• Independent Outside Directors: atgovernance structure in
least 1/3
response to the revision of
the Corporate Governance • Establishment of Nomination and
Code and the reorganization
Compensation Committeeof Tokyo Stock Exchange

Further strengthening
the supervisory andoversight functions of
top management overbusiness execution• Diversification of the Board of
Directors• Full compliance with Corporate
Governance Code for Prime Market• Adoption of delegation-based
executive officer structure• Transition to structure of company
with committees

Long-term targets

2024: 40% (1%)• Ensuring diversity in core humanresources (Women, foreign
nationals, mid-career hires)• Initiatives to employ elderly workers
and persons with disabilities

S

G

Medium-term targets

2030: 30%
2050: 100%

Percentage of female
new graduates ingeneral positions
2028: 40%
Percentage of women in
management positions
2029: 17%2025: Certification byoutside party
2024 onward:
Continuation ofcertification

Performed in June 2021

By June 2022: Determination ofpolicyPerformed in November 2021

Setting of targets inline with next
Corporate Governance
Code revision

April 2022: Enactment
By March 2023: Determination ofpolicy*Numbers in parentheses represent values at the time of planning: Nov. 2021

8

Progress of medium- to long-term sustainability targets：
Environmental
Key themes

Issues to address and issues to examine

Main activities and progress in FY2022 / FY2023
FY2022: (1) Introduced 1.2% of total electricity
from renewable sources (2) Study on measures to‘achieve 40% in FY2024’• Adoption of renewable energy at domestic
sales offices

Achievement of shift
to 100% renewableenergyE• Adoption of renewable energy at domestic
manufacturing sites• Adoption of renewable energy at overseas
manufacturing sites

Shift to electricity forcompany-owned
vehicles• Switch to electric vehicles for domestic sales
vehicles (EV, HV, PHV, FCV)FY2023: (1) Introduced 5.1% of total electricity
from renewable sources (2) Decided to purchasenon-fossil certificates to achieve target of ‘40%
renewable energy in 2024’, and to quantify
greenhouse gas emissions and set a reduction
target in FY2024
FY2022：Calculated power generation to installsolar panels at sites in Aomori, Fukushima, andTottori. Started the detailed design.
FY2023:Installed solar power generation system in
Towada factory (December 2023) and Fukushima
factory (February 2024)
FY2022: Started to introduce renewable energyderived electricity using solar panels at sites in
China (Hubei) and Vietnam. Expected to cover
30%-50% of annual electricity usage at each site.
FY2023: Installed solar panels in Mexico newfactory (April 2024)
FY2022: The ratio of electric vehicles increased by
1.2pt year on year to 82.0% (as of March 31,2023).
FY2023: The ratio of electric vehicles increased by
3.0pt year on year (as of March 31, 2024)

9

Introduction of Renewable Energy Solar power generation facilities will be installed step by step to achieve 100% renewable energy.
 We continue to proactively install facilities for environmentally sustainable business growth.

KAGA EMS TOWADA CO.,LTD.

写真

Fukushima Factory

Generating capacity

Generating capacity

Annual energy
production

Annual energy
production

289,444kWh

Renewable energy
ratio

10～20％

写真

158,761kWh

Renewable energy
ratio

20～30％

Instruction period

Instruction period

December, 2023

February, 2024

Hubei Factory

Vietnam factory

写真

KAGA MICRO SOLUTION CO., LTD.

Generating capacity

Generating capacity

Annual energy
production

Annual energy
production

747,934kWh

Renewable energy
ratio

70～80％

写真

1,086,118kWh

Renewable energy
ratio

30～40％

Instruction period

Instruction period

November, 2022

April, 2022

Note: Renewable energy ratio indicates the projected percentage of renewable energy
in total consumption at each site.

10

Progress of medium- to long-term sustainability targets：Social
Key themes

Diversity andhuman resource
management

Issues to address and issues to examine

 Ensuring diversity in core humanresources (Women, foreign nationals,
mid-career hires) Percentage of female new graduates in general
positions based on hiring activities as per the
Action Plan
FY2022: 4 females out of 22 new graduates ingeneral positions, up 12.3pt year on year to 18.1%
FY2023: 5 females out of 23 new graduates ingeneral positions, up 3.6pt year on year to 21.7%.
Fell below the target of 30%, despite a 3.6-pt
year-on-year increase to 21.7%
 Discussions held within the group to improve
percentage of women in management positions
and set targets for the number of women in
management positions at each group company.
FY2022: 16.5%, up 3.2pt year on year
FY2023: 17.4%, up 0.9pt year on year

 Initiatives to employ elderly workers andpersons with disabilities

FY2022: Employment of persons with disabilities is100% of the legally mandated rate (as of March 31,2023)
FY2023: Employment of persons with disabilities is100% of the legally mandated rate (as of March 31,2024) Enhancement of programs such as
childcare/family-care and telework

FY2022: Revised regulations and rules to maketelework a permanent system
FY2023: The new rules took effect in April 2023.

 Acquisition of certification as a Healthand Productivity Management
Organization

FY2022: Certified in March 2023
FY2023: Certified for two consecutive years in
March 2024

S

Work–life
management
and enhancementof productivity

Main activities and progress in FY2022 / FY2023

11

Progress of medium- to long-term sustainability targets：
GovernanceKey themes

Restructuring thegovernance structure
in response to therevision of the
Corporate
Governance Codeand thereorganization ofTokyo Stock
Exchange

G

Issues to address and issues to examine Independent Outside Directors: at least
1/3
 Establishment of Nomination andCompensation Committee Diversification of the Board of Directors

 Full compliance with Corporate
Governance Code for Prime Market

Main activities and progress in FY2022 / FY2023
FY2022: Effective June 2023, 6 directors(including three outside directors), with a majorityof directors being outside directors. Establishedthe Nomination and Compensation Committee.
FY2023: Adopted a 6-director structure (including
3 outside directors) at the June 2023 generalshareholders' meeting
FY2022: Decided to nominate a female candidate
as a new outside auditor. Continued to work to
appoint a female director.
FY2023: Appointed a female outside director at
the June 2023 meeting. Deferred a proposal toappoint a female director at the June 2024
meeting
FY2022: TCFD-compliant information to bedisclosed from June 2022.
FY2023: CG Code not revised
FY2022: Implemented from April 2022.

Furtherstrengthening thesupervisory andoversight
functions of top
management overbusiness execution

 Adoption of delegation-based executive
officer structure Transition to structure of company withcommittees

FY2023: Decided to expand the membership of
the Group management committee to adelegation-based executive officer structure
effective in April 2024
FY2022: Continue the company-with-auditors
system, but shorten the term of directors from thecurrent 2 years to 1 year (in June 2023).
FY2023: Continued the company-with-auditors
system. Discussed to move to a company-withaudit and supervisory committee structure, given
the need for speedy management andappointment of female directors

12

“Everything we do isfor our customers
20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Department
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail： webmaster@taxan.co.jp
https://www.taxan.co.jp/en/

■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.