Message from the President

Toshihiko Kai
President & Chief Executive Officer
September, 2024
Financial Results for the Six Months Ended June 30, 2024
In 2024, the second year of our medium-term business plan “Nikkiso 2025 Phase 2,” the global economic outlook remains uncertain due to the prolonged unrest in Ukraine, delayed economic recovery in China, and the significant depreciation of the yen. Against this backdrop, we achieved significant increases in orders received, revenue, and operating profit during this semi-annual accounting period.
The increase in orders received is primarily attributable to the growth in Industrial Business orders as investments related to energy security, LNG for decarbonization, and next-generation energy continue to grow.
Revenue increased significantly due to the impact of the weaker yen and a significant increase in revenues from LNG-related products, mainly from the U.S. subsidiary Clean Energy & Industrial Gas Group (“CE&IG Group”) in the Industrial Business, as well as the continued, albeit gradual, recovery in shipments in the Aerospace Business. The Medical Business saw a decline in revenue due to a temporary drop in demand in the Chinese market.
In terms of operating profit, while the Medical Business was affected by lower revenue in the Chinese market, the CE&IG Group saw a significant increase in revenue from the same period of the previous year as a result of progress in manufacturing and shipments from the initial forecast, which was partly due to the advance of deliveries and revenue booked in the second half of the current fiscal year.
In addition, we have recorded a one-time loss of 1.8 billion yen for the review of our business portfolio. We have recorded an impairment loss of 600 million yen related to the transfer of the CRRT business and a loss on valuation of inventories of 1.2 billion yen related to healthcare products and UV-LED packages, both of which are part of our medium-term business plan to concentrate resources and improve capital efficiency.
As a result, orders received was 118.3 billion yen, revenue was 102.6 billion yen, and operating profit was 2.7 billion yen. Profit before tax was 7.1 billion yen due to a foreign exchange gain of 3.8 billion yen resulting from the effect of yen depreciation, and profit attributable to owners of the parent was 5.9 billion yen.
Outlook for the fiscal year ending December 31, 2024
We have revised our earnings forecast for the fiscal year ending December 31, 2024 in light of recent business and foreign exchange trends. We have revised our operating profit downward by an amount equivalent to the one-time loss recorded during the period under review, based on the results of the first half under review and recent trends in our businesses. We have revised our profit before tax and profit during the period under review upward, respectively, due to the uncertain outlook for future foreign exchange rates, and because of the expected increase in foreign exchange gains, calculated on the assumption that the assumed exchange rates at the end of the period will be the same as the rates at the end of the interim period.
By segment, for the IndustrialDivision, orders and revenue are expected to increase from the previous forecast, while operating profit is expected to decrease. While the Industrial Business is expected to see increases in orders received, revenue, and operating profit based on favorable business conditions, the Aerospace Divisionis expected to see declines in both revenue and profit due to the impact of the quality problems at Boeing. In addition, we have revised our forecast downward by 0.9 billion yen to 6.8 billion yen, mainly due to loss on valuation of inventories in the UV-LED business.
For the Medical Business, we have revised our forecasts downward for orders received, revenue, and operating profit. The hemodialysis business is expected to see a decline in revenue due to lower sales in the Chinese market. While we expect operating profit to be generally in line with our initial forecast, we have revised our overall forecast for the Medical Business downward by 1.2 billion yen to 4.6 billion yen, due to lower revenue and profits resulting from the sluggish Chinese market for the CRRT business that will be transferred during the current fiscal year, as well as valuation loss on products in the Healthcare Business.
As a result, we expect the Industrial Divisionand other sectors to offset the downturn in the Aerospace and Medical Division caused by the deteriorating business environment, and overall operating profit is expected to be 7 billion yen, revised downward by the amount equivalent to the one-time loss associated with the business portfolio review.
The business environment surrounding our company remains uncertain, but we intend to continue to strengthen our management foundation by making the current fiscal year an important year for laying the foundation for the long-term growth of our Group.