Financial Highlights

Outline of Business Segments

Financial Highlights
Net sales (millions of yen)

Outline of Business Segments

Operating income (millions of yen)

608,064

Profit attributable to owners of theparent / Earnings per share

Electronic Components

Profit attributable to owners of the parent(millions of yen)
Earnings per share (yen)23,07032,249495,827443,615422,36588.7%

878.65
15,401

20,915
292,779

11,3997,570

10,014

11,467

8,014

576.46
5,852

292.07
2019/3 2020/3 2021/3 2022/3 2023/3

Return on equity (ROE) (%)

2019/3 2020/3 2021/3 2022/3 2023/3

213.21

45.3
38.4

35.8
18,7549,999

7.6

Development, manufacture and sale of semiconductors, general electronic
components and other products, EMS, and other activities

37.7

2019/3 2020/3 2021/3 2022/3 2023/3¥43,680 million
7.2%

North America

7.2%

3.6%

Information equipment-8,408EuropeNet sales¥608,064
million2023/3¥23,785 million
3.9%

Japan

¥335,201million
55.1%

Electronic components

Asia

88.7%

33.8%

¥539,342 million

KAGA ELECTRONICS CO.,LTD.

Electroniccomponent
business¥43,679 million¥22,044 million

0.5%

2019/3 2020/3 2021/3 2022/3 2023/3-1,554

Others¥2,998 million

Up

56.4%

(millions of yen)

28,314539,342433,8522022/3

18,1072023/32022/32023/338.8-1,554-8,327

Net sales composition by segment and region (Inner: By segment, Outer: By region)

Software24.3%

Business overview and opportunities / risks

2019/3 2020/3 2021/3 2022/3 2023/3-1,547

Segment income(millions of yen)In the electronic component business, sales to a wide range of industries
remained high as the supply-demand situation for semiconductors and electronic
components improved from the second half of the fiscal year. For some parts
whose supply has constantly fallen short of demand, we strove to secure sales
volumes while proposing alternatives. In the EMS business, sales to the automotive industry grew significantly, while sales to the medical and office equipment
industries remained strong, and the yen's depreciation since the beginning of thefiscal year boosted earnings on a yen basis.
As a result, net sales were ¥539,342 million (up 24.3% year-on-year) and segment income was ¥28,314 million (up 56.4% year-on-year).

7,545-1,547-8,408

Up

Review of FY2023/3 performance

Equity ratio (%)

30,56925,76322,406

13.5

Net sales

Business description

Cash flows from operating activities(millions of yen)Free cash flow (millions of yen)

15.7
10.9

415.07

2019/3 2020/3 2021/3 2022/3 2023/3

Cash flows from operating
activities / Free cash flow

19.6

45

Proportion of
consolidated netsales¥205,398 million

EMS businessBusiness overview

Opportunities

Risks

In the electronic component business,sales to a wide range of industries
remained high as the supply-demandsituation for semiconductors and electronic parts, which had remained tight,
improved from the second half of thefiscal year. On the other hand, for someproducts for the in-vehicle market,
supply shortages persisted, and theGroup made concerted efforts to securesales volume by taking advantage of its
procurement capabilities as an independent trading company and to propose
alternative products.

• Advancement of automobile-related
technologies represented by EV(electric vehicles) and CASE*.
• Expansion in demand due to thepopularization of high-performanceelectronics related to ICT, such as
those supporting the 5G mobile
communication system, IoT and AI• Continued tight supply-demandbalance for some semiconductors
and electronic components, including
those for automotive applications• Soaring prices of resources andother commodities due to theprolonged conflict in Ukraine• Financial system instability associated with policy rate hike measures• Loss of commercial rights due to achange in commercial distribution
at a sales destination or supplier• Rebound from the significant
increase in demand from theCOVID-19 pandemic• Impact of inventory adjustment bycustomers due to recession risk

In the EMS business, sales to suchmajor customers as manufacturers in
the medical equipment-related andoffice equipment-related industries
remained strong, while sales toautomotive-related industries grewsignificantly. Furthermore, the yen’sdepreciation since the beginning of theperiod boosted earnings in yen terms.

*Stands for Connected, Autonomous, Shared& Services, and Electric• Progress in a return to normal forsocioeconomic activities andsemiconductor shortages, andsubsiding supply chain disruptions• Increased demand from theindustrial sector due to the elimination of shortages and extendeddelivery times for semiconductors
and electronic components• Increase in the number of fablesscompanies and rising demand foroutsourcing• Growing need for further automation and efficiency• Shortage of human resources bothin Japan and overseas• Natural disasters such as earthquakes, or floods, or the spread of
infectious diseases• Suspension of factory operations
due to other external political andeconomic factors

Integrated Report 202346

Outline of Business Segments

Information Equipment

Software Business

Proportion ofconsolidated net
sales

Proportion ofconsolidated netsales

7.2%

Net sales

Business description
Sale of PCs, PC peripherals, home electric appliances, photographic and imaging
products, and finished products, such as original goods

UpSegment income

10.3%

Review of FY2023/3 performance(millions of yen)

Sales of PCs to corporate customers and educational institutions remainedsluggish in terms of volume due to the prolonged replacement cycle, but they
were strong in terms of value due to the contribution of sales of high-end
products. In the LED installation business, large-scale nationwide projects, which
had been delayed due to material shortages, progressed smoothly, contributing
significantly to business earnings.
As a result, net sales were ¥43,680 million (up 10.3% year-on-year) and segment
income was ¥2,449 million (up 17.4% year-on-year).

39,616

0.5%

Up

17.4%

(millions of yen)

43,680

Production of computer graphics, planning and development of amusement
products, and other activities

2,449

2,085Net salesUpSegment income

8.3%

Review of FY2023/3 performance(millions of yen)

Business profitability improved, with orders for large-scale projects and newprojects in smartphone game and computer graphics production recovering, andprogress in cost reductions.
As a result, net sales were ¥2,998 million (up 8.3% year-on-year) and segment
income amounted to ¥286 million (compared with a segment loss of ¥26 million in
the previous fiscal year).

2,767

2,998

(millions of yen)

286

-26
2022/32023/32023/32022/3Business overview and opportunities / risks

Informationequipment

Business description

Business overviewOpportunities

Risks

Sales of PCs to corporate customers and educational institutions remained sluggish in terms ofvolume, but they performed well in terms of value
due to the contribution of sales of high-priced
products. Moreover, sales of security software andother PC peripheral products were robust. In theLED installation business, large-scale nationwide
projects progressed smoothly, contributing significantly to business earnings.

• Robust expansion of needs for
information-related devices on
the back of advances in ICT• Growing needs for security
related solutions among highereducation institutions• Discovery of new commercialproducts• Loss of sales opportunities dueto parts supply shortages• Loss of commercial rights andproduct procurement routes
due to changes in the distribution policies of buyers andsuppliers• Intensifying competition due tolower prices and more newmarket entrants

2022/3

Other Business2023/32022/32023/3

Proportion ofconsolidated netsales

3.6%

TOPICS
NodeAI-based Power Cost Reduction System Reduces Power Usage
In January 2023, we became the first distributor in Japan to sell AIrux8, an electricity cost reduction system
based on AI technology developed by TRaas On Product.
Using AI, the AIrux8 system collects and analyzes data, for example, congestion and absence status withina facility, through a centralized controller device called a Node that operates motion sensors. The systemcommunicates with the IoT lighting equipment and air conditioning equipment installed in the facility andthen, depending on the situation, including the time of day, day of the business week, and season, automatically adjusts the lighting brightness and air conditioning temperature settings in each lighting area group.
In Japan, where electricity and other energy prices continue to soar, energy cost reduction is a pressing
issue for all companies, regardless of industry, and AIrux8 is a truly groundbreaking solution for reducing
electricity consumption to achieve carbon neutrality, which is becoming increasingly important factor in theglobal trend to promote the SDGs.
Through the sale of AIrux8, which solves these social issues, we will contribute to the realization of asustainable society.

47

KAGA ELECTRONICS CO.,LTD.

Repair and provision of support for electronic equipment, manufacture and sale ofamusement equipment, sale of sports goods, and other activities    

Review of FY2023/3 performance

3m

AIrux8’s structure

Business description

In this segment, the PC product and PC peripheral recycling business performed
well. Sales of arcade game machines for the amusement industry and golf equipment also recovered, reflecting the easing of restrictions on activities during theCOVID-19 pandemic.
As a result, net sales amounted to ¥22,044 million (up 12.5% year-on-year), andsegment income amounted to ¥1,101 million (up 76.0% year-on-year).

Net salesUpSegment income

12.5%(millions of yen)

19,590Up

76.0%(millions of yen)

22,044

1,101626

2022/32023/32022/32023/3Integrated Report 202348