Shareholder Communication: Mar 31, 2023

Shareholder Communication 10/1/2022~3/31/2023

  • Top Message
  • Medium-term Management Plan
  • Focus

Top Message

We would like to express our sincere gratitude to our shareholders for their continued support.
One year has passed since the company launched its Holdings structure in April, 2022. Here we will report our financial results for the fiscal year ending March 31, 2023.

Business Results for the Fiscal Year Ending March 31, 2023Record-high sales for the second consecutive fiscal year and record-high operating income for the fourth consecutive fiscal year

The measuring and weighing instruments business remained strong on the back of the global economic recovery. In the medical and health care equipment business, despite a decline in consumer purchasing sentiment due to global inflationary concerns, sales and income increased from the previous fiscal year, due in part to our entry into e-commerce in Europe and renewed contracts for large orders in the Americas. Furthermore, the semiconductor-related business achieved a significant year-on-year increase in both sales and income, supported by strong orders since the previous fiscal year.
As a result, net sales were 59,000 million yen (14.1% increase year-on-year), operating income was 7,500 million yen (36.0% increase year-on-year), ordinary income was 7,600 million yen (36.4% increase year-on-year), and net income attributable to shareholders of the parent company was 5,500 million yen (54.6% increase year-on-year).

President Yasunobu Morishima

Business Results Forecast for the Fiscal Year Ending March 31, 2024Both sales and operating income are expected to increase from the previous fiscal year.

The future of our business environment remains uncertain due to concerns about rising raw material prices, geopolitical risks, and economic recession caused by monetary tightening policies.
However, we will continue to view the rapid changes occurring throughout society and industry as an opportunity to proactively invest in new and growing fields. We expect to continue to increase sales and operating income in the fiscal year ending March 31, 2024.

Dividend Increase

Regarding dividends, since the results for the fiscal year ended March 31, 2023 significantly exceeded our initial forecast, we will increase the year-end dividend for the fiscal year ended March 31, 2023 by 5 yen from the initial forecast of 15 yen to 20 yen, and the annual dividend will be increased from 30 yen to 35 yen. The annual dividend for the fiscal year ending March 31, 2024 is also anticipated to be 35 yen per share.

We sincerely appreciate your continued understanding and support.

Performance highlights

― FYE March 31, 2023 ―

  • Net Sales 59,000 Million Yen YoY Comparison 14%UP
  • Operating Income 7,500 Million Yen YoY Comparison 36.0%UP
  • Net Profit Attributable to Shareholders of Parent Company YoY Comparison 54.6%UP

― Business Results ―

(unit: hundred million yen)

Financial Results for FYE March 31, 2023

Introducing A&D HOLON HD's Medium-Term Business Plan!

The below are excerpts from interviews with President Morishima about A&D HOLON Holdings’ medium-term business plan conducted by Keiryou Keisoku.

I understand that you have revised the numerical targets in your medium-term business plan (FY2023-FY2025).

Yes, we have revised some of the numerical targets from the original plan announced in May 2022, and our aim is to achieve net sales of 66,000 million yen, operating income of 9,200 million yen, and an operating margin of 13.9% in the fiscal year ending March 2025, the final year of the medium-term business plan.

Why is the semiconductor-related business positioned as a growth driver in your medium-term business plan?

Demand for semiconductors is increasing as an increasingly digital society picks up pace.
The semiconductor industry is expected to see an increase in new demand in the medium- to long-term due to technological innovations in device miniaturization and an increased need for semiconductors to be utilized for 3D processing and EVs.
We meet the needs of the semiconductor industry by providing semiconductor inspection equipment that is indispensable in semiconductor manufacturing.

What will be the benefits of the management integration in 2022?

Through our business integration, we aim to strengthen our business through technological collaboration and effective utilization of management resources within the group.
We also expect that by refining A&D and HOLON’s world-class technological capabilities, we will be able to expand our business domain in the semiconductor industry and beyond.
In particular, we will proactively pursue growth areas as our society increasingly becomes more digitally connected, health-conscious and carbon-neutral.

Three Expected Growth Areas

You bring up three very large shifts – a digital society, a long-lived society, and carbon neutrality. Can you provide an example of how A&D’s technologies will be utilized to align with these trends?

We possess the measuring technology that is essential for the development and safety of electric vehicles.
For a vehicle to run properly, various conditions must be researched during its development. For example, the pressure and temperature applied to various parts. Also, suspension movement and changes in tire direction and balance under actual driving conditions, etc.
All movements can be quantified and digitized with our measuring technology to properly control, inspect, and adapt the vehicle’s operation.

So, does measuring technology lead to safe, secure driving?

Measuring technology is an indispensable part of our lives.
We measure our height, weight, temperature and blood pressure to measure our health. We measure the force to pull an object, and we measure the durability of a chair to see how much weight it can withstand. Nowadays, with global warming becoming such a serious problem, it is also important to measure the level of CO2. In the natural world, all information is analog.
Our strength in measurement technology is correctly converting this analog information to digital information. We will gain the trust of society by providing this information reliably.

So, measuring technology enables our way of life. I wonder, does “A&D” in the company name come from the terms analog and digital?

Yes, it does. “A” stands for “analog” and “D” for “digital.”
For a long time, we have specialized in converting invisible analog signals such as weight, temperature, force, etc. into digital values. But we also specialize in converting digital values in the form of electrical signals into analog equivalents for various industries. Conversion technology in both ways has been a core technology of our company since its inception.
With the rapid acceleration of an increasingly digital society, there is a demand for faster and more accurate measurement technologies. There are still many more business opportunities that can take advantage of our core technologies and will allow us to grow into the future.

Are measuring technologies being utilized in EVs, which are attracting a lot of attention? How about in the field of telemedicine both in Japan and overseas?

Of course.
With IoT, all things are connected via the Internet, and it is increasingly necessary to convert analog information to digital information which can then be stored and used effectively.
Another example is the importance of telemedicine which has drastically increased due to the spread of COVID-19.
To give an example of one of our related activities, we are currently building a regional telemedicine system in Japan in cooperation with Jichi Medical University. We are also promoting the telemedicine business through software development in partnership with mmHg* of Canada.
I would also like to mention that we have jointly developed a real-time simulator for EV development with Toyota Technical Development Corporation (TTDC), and we are currently expanding sales of this product.
In addition, we are providing measurement technologies and equipment essential to the realization of a carbon-neutral society.
We will continue to invest in growth areas and expand our business.

In the field of measuring technology, do you possess advanced, high-precision, niche technology that other companies cannot match?

You will find our technology in the products or in those products R&D all around you.
Our business areas include semiconductor-related, medical and health care equipment, and measuring and weighing instruments.
Our measuring technology is contributing to the development of a future advanced society and to create a sustainable society.
We will do our best to meet your expectations and ask for your continued support.
For further details, please refer to the Medium-Term Business Plan.

Medium-Term Business Plan

*mmHg Inc: Dr. Raj Padwal, president of mmHg, a Canadian corporation, is a professor at the University of Alberta, a leading researcher on hypertension disease, and a former guideline member of the Canadian Society of Hypertension.

A&D HOLON Technology – Contributing to Electric Vehicle Development

Electric vehicles (EVs) are attracting attention as environmentally friendly vehicles with low CO2 emissions.
As they grow in popularity, automakers are speeding up development of electric vehicles. At A&D HOLON, we are developing and providing EV-related equipment from our measuring and weighing equipment business, in particular in DSP equipment (measurement, control, and simulation systems).
In this issue, we will introduce how our technology contributes to EV development.

There are already many different types of EVs around the world
The market is expanding rapidly, with countries aiming to reach 100% electric vehicles by 2030 to 2040

There are four types of EVs: FCVs (fuel cell vehicles), BEVs (battery-powered electric vehicles), HEVs (hybrid electric vehicles), and PHEVs (plug-in hybrid vehicles).
FCVs are motor-driven vehicles that use hydrogen to generate electricity. BEVs are vehicles that also run on a motor but use only battery electricity, a well-known example being Tesla’s cars. HEVs are hybrid vehicles that run on both an electric motor and a fossil fuel-powered engine. Finally, PHEVs drive in the same way as HEVs but can also recharge themselves, a representative example being the Toyota Prius.
Countries around the world have set targets for switching to EVs between 2030 and 2040. Worldwide the number of automobiles is increasing and is projected to reach 95.38 million by 2040*, of which about 50% will be electric vehicles.

* Source: “Automotive Industry 2040” by Nikkei Business Publications, Inc.

EV development is accelerating worldwide
A&D HOLON technology utilized in virtual verification of electric vehicles

An electric vehicle is a car that runs solely on electricity stored in its battery, while a motor serves as its power source.
It is also equipped with a computer that electrically controls and regulates this motor. It is the development of this computer for controlling the motor which is critical to the development of new EVs.
We have jointly developed a real-time simulator for electric vehicle development with the Toyota Technical Development Corporation called EV-Sim HELIOS Edition.

When the EV-Sim simulator is connected to a computer, it functions as the motor and simulates its movement. In other words, by recreating a motor in software and connecting it to a controller, a simulation can be run on a desktop without the need to manufacture the motor.

Here, we will describe some of the simulation contents. The motor uses only battery power to convert electrical energy into rotational force for the tires.
During this process, battery consumption will depend on how much electricity is being used, the distance being driven, and the number of people in the vehicle. Since battery consumption varies depending on the state of the motor, being able to simulate how much power a motor will use under differing conditions is essential for automobile motor development.

In cases where accurate simulation is not possible, parts and materials must be procured and assembled to manufacture the motor, and then finally, it must be tested in a real vehicle. This is time-consuming and enormously expensive.
However, by using EV-Sim to reproduce these processes on a computer, not only can costs be reduced, but the development time required for control development and verification can be shortened significantly. We have observed a reduction of development time by 50% to 90% for certain manufacturers.

In terms of performance, the simulator should offer increased virtual verification coverage, larger scale, high accuracy, and high speed. This is where technology that we have cultivated over many years is being utilized.

Awareness of A&D HOLON’s high-speed, high-precision measuring technology is growing

In order for more accurate simulation, high speed and high accuracy input/output of motor electrical signals is required. Our “high-speed, high-precision input/output of electrical signals” technology is being utilized for these simulations. Our recent joint development project with the Toyota Technical Development Corporation was regarded highly and helped raise awareness of our technical capabilities.

Additionally, this technology has recently been adopted at Yamaha Motor Co. For the motorcycle industry, reaching carbon neutrality is also being pursued during technological development. For simulation tests, Yamaha Motor Co. has adopted EV-Sim HELIOS Edition to develop a SMG (Smart Motor Generator)*1 technology for use in motorcycle internal combustion engines to improve their efficiency and reduce development lead time. They reported that by maximizing the use of existing systems to build a HILS*2 environment, they were able to reduce the SMG evaluation period by 90%. Yamaha Motor Co., Ltd. Introduction case *3

  • *1 SMG (Smart Motor Generator): Technology to realize quiet and low-vibration engine starting
  • *2 HILS: A testing device for computers installed in automobiles
  • *3 Japanese language only

Realizing an environmentally friendly society via our measuring technology

The issue of global warming is a critical one. In order to solve this problem, Japan has stated its goal of achieving zero emissions of CO2 and other greenhouse gases by 2050.
Incidentally, the transportation sector including automobiles accounts for 17.7% of CO2 emissions in Japan, and 45.7%* of that amount is CO2 emissions from private cars, making the automotive industry’s move to EVs extremely important for reducing CO2 emissions.

We aspire to have our technologies contribute to the development of more environmentally friendly and safer EVs which in turn indirectly contributes to the reduction of CO2 emissions and the realization of a healthier environment globally.

*Referenced from “Carbon Dioxide Emissions in the Transportation Sector,” Ministry of Land, Infrastructure, Transport and Tourism, July 5, 2022.