Shin Etsu Chemical : Consolitated Financial Results(855 KB)

Press Release

Consolidated Financial Results for the Fiscal Year Ended March 31, 2024

Shin-Etsu Chemical Co., Ltd.	(JP GAAP)
	April 25, 2024

Listing Code: No. 4063 (URL: https://www.shinetsu.co.jp/en/)

Listing Stock Exchange: Tokyo and Nagoya

Representative: Yasuhiko Saitoh (Mr.) Representative Director/President

Personnel to contact: Toshiyuki Kasahara (Mr.) Corporate Officer, General Manager of Finance & Accounting Department

Tel: [phone]
Date of the annual shareholders' meeting	……	June 27, 2024
Date of the filing of the consolidated financial statements	……	June 20, 2024
Date of year-end dividend payment	……	June 28, 2024

Preparation of supplemental explanatory materials: Yes ("Appendix" is attached.)

Holding of financial results meeting: Yes (for investment analysts and institutional investors)

Amounts are stated in millions of yen by discarding fractional amounts less than 1 million.

Percentage figures indicate increase (decrease) over previous fiscal year.

1. Consolidated Operating Performance for the Fiscal Year Ended March 31, 2024

(From April 1, 2023 to March 31, 2024)

(1) Results of consolidated operations												(Millions of yen)
		Net sales		Operating income		Ordinary income		Net income attributable to
						owners of parent
April 2023 - March 2024	2,414,937	(14.0%)		701,038	(29.8%)		787,228	(22.8%)		520,140	(26.6%)
April 2022 - March 2023	2,808,824	35.4%		998,202	47.6%	1,020,211	46.9%		708,238	41.6%
(Note) Comprehensive income (Millions of yen) April 2023 - March 2024:	746,804[(25.4%)]
			April 2022 - March 2023: 1,000,984[49.8%]
		Net income	Diluted net	Ratio of net income	Ratio of ordinary		Ratio of
		per share	income per		to stockholders'		income to total		operating income
		(yen)	share (yen)		equity				assets		to net sales
April 2023 - March 2024		259.41	259.13			12.8%			15.9%				29.0%
April 2022 - March 2023		347.84	347.61			19.7%			23.2%				35.5%
(Reference) Equity in earnings (losses) of affiliates (Millions of yen) April 2023 - March 2024: 8,607
							April 2022 - March 2023: 9,522

(Note) The Company enacted a five-for-one stock split of its common stock with an effective date of April 1, 2023. Based on "Accounting Standard for Earnings Per Share," per share information for the fiscal year ended March 31, 2023 represents the amount after the stock split.

(2) Consolidated financial position

(Millions of yen)

Total assets

Net assets

Stockholders'

Net assets per share

equity ratio

(yen)

March 31, 2024

5,147,974

4,424,073

82.7%

2,133.17

March 31, 2023

4,730,394

4,026,209

81.8%

1,918.37

(Reference) Stockholders'

equity (Millions of yen)

As of March 31, 2024: 4,257,922

As of March 31, 2023: 3,870,394

(3) Consolidated cash flows

(Millions of yen)

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents at the end of

operating activities

investing activities

financing activities

fiscal year

April 2023 - March 2024

755,183

(1,099,208)

(369,466)

590,135

April 2022 - March 2023

788,013

(186,488)

(423,559)

1,247,344

2. Cash Dividends

Cash dividends per share

Total annual cash Dividend

Ratio of

for the fiscal year (yen)

dividend paid

payout

dividend payout

1st

2nd

3rd

Year-

Fiscal

(Millions of yen)

ratio

to net assets

quarter

quarter

quarter

end

year

April 2022 - March 2023

-

225.00

-

275.00

500.00

202,469

28.7%

5.7%

April 2023 - March 2024

-

50.00

-

50.00

100.00

200,079

38.5%

4.9%

(Note) The Company enacted a five-for-one stock split of its common stock with an effective date of April 1, 2023. "Cash dividends per share" for April 2022 - March 2023 represents the actual amount prior to the stock split, and the annual dividend for April 2022 - March 2023 reflecting the stock split would be ¥100 per share.

3. Forecast of Consolidated Operating Performance for the First Quarter Ended June 30, 2024

(From April 1, 2024 to June 30, 2024)			(Millions of yen)
	Net sales	Operating income	Ordinary income	Net income	Net income
	attributable to	per share
					owners of parent	(yen)
1st quarter	585,000	(2.4%)	165,000 (13.5%)	190,000 (12.5%)	120,000 (21.9%)	60.10

(Note) As it is difficult to make a reasonable prediction of the performance in the fiscal year ending in March 2025 at this point, we only release the forecast for the first quarter. Please see [1. Results of Operations and Financial Overview (2) Business Prospects] on page 10 for further details.

Forward-looking statements such as the forecast of results of operations made in this document involves risks and uncertainties since they are based on management's assumptions and beliefs in light of the information currently available to it. The reader should be aware that actual results may be materially different from any future results expressed herein due to various factors. Material factors affecting the actual results may include overall economic conditions in which the businesses of our company and our group companies are involved, the relevant market trends and fluctuations in foreign exchange rates of the yen, in particular, the exchange rate between the U.S. dollar and the yen; provided, however, that such factors as may affect results of operations are not limited to those enumerated above.

(Notes)

(1) Changes in significant subsidiaries which affected the scope of consolidation during the current fiscal year: No

(2) Changes of accounting policies applied, changes in accounting estimates and retrospective restatement

Changes of accounting policies applied due to revisions of accounting standards: No

Changes of accounting policies other than the above: No

Changes in accounting estimates: No

Retrospective restatement: No

(3) Number of shares outstanding (common stock)	March 31, 2024	March 31, 2023
Number of shares outstanding at the year end	2,001,691,765	2,024,122,965
Number of shares of treasury stock at the year end	5,637,568	6,576,200
Weighted-average number of shares	April 2023 - March 2024	April 2022 - March 2023
2,005,085,165	2,036,096,654
outstanding over the year

(Note) Number of shares after the stock split is shown.

(Reference) Summary of Non-consolidated Financial Results

Non-consolidated Operating Performance for the Fiscal Year Ended March 31, 2024

(From April 1, 2023 to March 31, 2024)

(1) Results of non-consolidated operations						(Millions of yen)
	Net sales	Operating income	Ordinary income	Net income
April 2023 - March 2024	730,352	(8.6%)	160,431	(13.9%)	342,832	29.3%	303,739	40.4%
April 2022 - March 2023	799,346	15.2%	186,327	14.3%		265,224	31.8%	216,344	43.4%
	Net income per share	Diluted net income
	(yen)	per share (yen)
April 2023 - March 2024		151.48	151.34
April 2022 - March 2023		106.25	106.19

(Note) Based on "Accounting Standard for Earnings Per Share," per share information for the fiscal year ended March 31, 2023 represents the amount after the stock split.

(2) Non-consolidated financial position				(Millions of yen)
	Total assets	Net assets		Stockholders' equity	Net assets per share
		ratio	(yen)
March 31, 2024	1,462,097	707,892		48.1%	352.41
March 31, 2023	1,342,714	705,368		52.3%	347.92
(Note) Stockholders' equity	(Millions of yen) As of	March 31, 2024: 703,439	As of March 31, 2023: 701,948

Stockholders' equity used for the calculation of indices is net assets excluding share subscription rights.

(Information regarding audit procedures)

The financial information contained in this report is not subject to the audit procedures by independent auditors.

	Shin-Etsu Chemical Co., Ltd. (4063)
	Fiscal Year Ended March 31, 2024
(Attached Documents)
	INDEX
1. Results of Operations and Financial Overview	2
(1) Results of Operations and Financial Position Overview	2
(2) Business Prospects	10
(3) Management Policies	11
2. Basic Approach to the Selection of Accounting Standards	11
3. Consolidated Financial Statements	12
(1) Consolidated Balance Sheets	12
(2) Consolidated Statements of Income and Statements of Comprehensive Income	14
(3) Consolidated Statements of Changes in Net Assets	16
(4) Consolidated Statements of Cash Flows	18
(5) Notes to Consolidated Financial Statements	19
	(Notes on Premise of Going Concern)	19
	(Segment Information)	19
	(Per Share Information)	21
	(Major Subsequent Events)	21
(Appendix)
1.	Quarterly Operating Results	22
2.	Capital Expenditures and Depreciation and Amortization	23
3.	Forecast of Investments and Depreciation and Amortization of FY 2024 (Annual)	23
4.	Other Financial Items (Consolidated)	24
5.	Comparative Balance Sheets (Consolidated)	24
6.	Cash Dividends per Share	25
7.	Sales by Manufacturing Location for Each Segment	25
8.	Sales by Region	26
9.	Assets by Segments	26
10. Average Exchange Rate	26
11. Topics (Apr. 2023 - Apr. 2024)	27
12. Capital Investments	27

1

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

1. Results of Operations and Financial Overview

(1) Results of Operations and Financial Position Overview

1) General Overview

During the fiscal year ended March 31, 2024 (April 1, 2023, to March 31, 2024), while the "probability of a soft landing" became a hot topic in the United States, the Chinese economy entered the phase of major adjustment. In a situation where geopolitical risks are added to the Chinese economic slowdown and the resulting oversupply, the economies of Japan and the Eurozone shifted in contrast with each other, and several emerging countries sustained their growth. There was a difference between strong and weak performances in individual industries. In such a situation, we maintained close communication with our customers, continued to provide a reliable supply of products with required quality, and conducted sales with agility. On the other hand, to ensure financial soundness, we recorded losses based on market fluctuations. We will continue working to improve our operating performance. To that end, we will accelerate the development of products that are valuable to our customers and continue capital investments with a medium- to long-term perspective in order to meet the needs and demands of customers and markets in a timely manner.

The business results for the fiscal year ended March 31, 2024, are as follows:

				(Billions of yen)
		Fiscal year	Fiscal year	Increase
		22/4 - 23/3	23/4 - 24/3	(Decrease)
	Net sales	2,808.8	2,414.9	(14%)				(393.9)
	Operating income	998.2	701.0	(30%)			(297.2)
	Ordinary income	1,020.2	787.2	(23%)		(233.0)
	Net income attributable to	708.2	520.1	(27%)	(188.1)
	owners of parent
	ROIC	33.6%	19.4%	(14 points)
	ROE	19.7%	12.8%	(7 points)
	ROA	23.2%	15.9%	(7 points)
	Per Share (Yen)
	Net income	348	259	(89)
	Cash dividends	100	(Forecast)100	-

Quarterly

Apr-Jun	Jul-Sep	Oct-Dec	Jan-Mar
599.2	596.7	627.5	591.5
190.8	191.0	177.6	141.5
217.1	210.3	188.2	171.4
153.6	147.8	105.0	113.6

Note 1 ・ The Company enacted a five-for-one stock split of its common stock with an effective date of April 1, 2023.

"Net income per share" and "Cash dividends per share" for the fiscal year ended March 31, 2023 represents the amount after the stock split.

Note 2 ・ ROIC: Return on invested capital

Net operating income after tax / (Net assets + Interest-bearing liabilities－Cash)

• ROE: Return (Net income attributable to owners of parent) on equity

Equity used for this calculation is net assets excluding both share subscription rights and non-controlling interests in consolidated subsidiaries.

• • ROA: Return (Ordinary Income) on total assets.
• Amounts are stated in billions of yen by discarding fractional amounts less than 0.1 billion on this summary.

2

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

2) Business Segment Overview

Net sales and Operating income by Segment

(Billions of yen)

		Net sales	Operating income
	Fiscal year	Fiscal year	Increase	Fiscal year	Fiscal year	Increase
	22/4 - 23/3	23/4 - 24/3	(Decrease)	22/4 - 23/3	23/4 - 24/3	(Decrease)
Infrastructure	1,308.0	1,010.2	(23%)	541.3	321.9	(41%)
Materials	(297.8)	(219.4)
Electronics	875.6	850.4	(3%)	301.4	272.1	(10%)
Materials	(25.2)	(29.3)
Functional	493.3	425.2	(14%)	130.6	85.0	(35%)
Materials	(68.1)	(45.6)
Processing &	131.6	128.9	(2%)	26.3	24.1	(8%)
Specialized Services	(2.7)	(2.2)
Total	2,808.8	2,414.9	(14%)	998.2	701.0	(30%)
(393.9)	(297.2)

	Processing &			Processing &
	Specialized Services
	5%			Specialized Services
			Functional	3%
Functional			Materials
		12%
Materials
18%	Net			Operating
	sales	Materials		income	Materials
	2,414.9		701.0
		Infrastructure			Infrastructure
Electronics	Billions of yen	42%	Electronics	Billions of yen	46%
		Materials
Materials			39%
35%

3

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

Infrastructure Materials

	Fiscal year 22/4 - 23/3	Fiscal year 23/4 - 24/3	Increase /
	(Billions of yen)	(Billions of yen)	(Decrease)
Net sales	1,308.0	1,010.2	(23%)
Operating income	541.3	321.9	(41%)

As for PVC, the export pressures from Chinese manufacturers continued, but we strove to maintain the price level. The caustic soda market was in a similar situation.

Net Sales				Annual
						First Half
(Billions of yen)
1,400.0			1,308.0
1,050.0					1,010.2

700.0			651.6
			490.9
350.0
0.0

Operating Income

(Billions of yen)

600.0 541.3

450.0

300.0 289.8

150.0

0.0

Annual

First Half

321.9

165.2

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

• Continuing price level correction.
• Launching of the capacity increases of the US operation and conducting sales activities that take advantage of it.
• Further improvement of the comprehensive strength of PVC business.

4

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

Electronics Materials

	Fiscal year 22/4 - 23/3	Fiscal year 23/4 - 24/3	Increase /
	(Billions of yen)	(Billions of yen)	(Decrease)
Net sales	875.6	850.4	(3%)
Operating income	301.4	272.1	(10%)

In the semiconductor market, the adjustment phase since the autumn of the year before last continued during the period under review, but there were also signs that the market had bottomed out. Under these circumstances, we focused on shipping semiconductor materials such as silicon wafer, photoresist and photomask blanks as planned. As for rare earth magnets, adjustment also continued in industrial application, but we focused on expanding sales to automotive and other markets.

Net Sales

(Billions of yen)

Annual First Half

Operating Income

(Billions of yen)

Annual First Half

1,000.0 875.6

800.0

600.0

439.3

400.0

850.4

424.8

350.0

280.0

210.0

140.0

301.4

159.5

272.1

154.2

200.0

0.0

70.0

0.0

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

• Providing materials and technologies that are indispensable to the progress of devices including AI applications.
• Implementing as soon as possible the mass production of magnet technology without using heavy rare earths.
• Contributing to the reduction of greenhouse gas emissions by proposing technologies that enhance energy saving and electrification.
• To strengthen and expand the supply system for semiconductor lithography materials, a new production base will be built (investment amount: approximately 83 billion yen).

5

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

Functional Materials

	Fiscal year 22/4 - 23/3	Fiscal year 23/4 - 24/3	Increase /
	(Billions of yen)	(Billions of yen)	(Decrease)
Net sales	493.3	425.2	(14%)
Operating income	130.6	85.0	(35%)

In the commodity product group, the inventory adjustment and the slowdown in the market caused by the slump in the Chinese economy continued and their impact intensified in the second half of the fiscal year. In response, we strove to make up for it by increasing the sales of highly functional product groups. We booked an impairment loss of 10.5 billion yen on silicone polymer manufacturing facilities in Thailand.

Net Sales

(Billions of yen)

500.0 493.3

400.0

300.0 255.3

200.0

100.0

0.0

Annual First Half

425.2

215.4

Operating Income

(Billions of yen)
150.0			130.6
120.0
90.0			73.5
60.0
30.0
0.0

Annual First Half

85.0

51.7

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

• Significant and focused promotion of higher silicone product functionality and raising of the level of environmental impact reduction.
• Continuous development of highly functional products for automotive applications, personal care application, healthcare application, etc.
• Capital investment to strengthen the pharmaceutical cellulose business (10 billion yen).

6

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

Processing & Specialized Services

	Fiscal year 22/4 - 23/3	Fiscal year 23/4 - 24/3	Increase /
	(Billions of yen)	(Billions of yen)	(Decrease)
Net sales	131.6	128.9	(2%)
Operating income	26.3	24.1	(8%)

The demand for semiconductor wafer-related containers continued to be adjusted particularly for in-process products, and the sales of input devices for automobiles remained strong as the automobiles industry recovered. The sales of PVC wrapping films have increased for the food service and lodging industry against the background of the increase in inbound tourist demand.

Net Sales

(Billions of yen)

Annual First Half

Operating Income

(Billions of yen)

Annual First Half

150.0

120.0

131.6

128.9

1. 26.3

20.0

24.1

90.0

63.0

60.0

30.0

0.0

64.6

15.0 14.0

10.0

5.0

0.0

11.9

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

Fiscal year 22/4 - 23/3

Fiscal year 23/4 - 24/3

• Going ahead with the enhancement of the production capacity of semiconductor wafer-related containers. Further development and market penetration of EV-related products.

7

Shin-Etsu Chemical Co., Ltd. (4063)

Fiscal Year Ended March 31, 2024

3) Information on Assets, Liabilities and Net assets

At the end of FY 2023 (March 31, 2024), total assets increased by ¥417.6 billion compared with that at the end of the previous fiscal year to ¥5,147.9 billion. It was mainly due to increases in overseas consolidated subsidiary assets because of yen depreciation, and property, plant and equipment.

Total liabilities increased by ¥19.8 billion from that at the end of the previous fiscal year to ¥723.9 billion.

Total net assets increased by ¥397.8 billion compared with that at the end of the previous fiscal year to ¥4,424.0 billion. This increase was mainly due to net income attributable to owners of parent of ¥520.1 billion for FY 2023, ¥168.6 billion for foreign currency translation adjustments due to yen depreciation, offset by ¥211.2 billion for a cash dividend payment and ¥107.7 billion for purchases of treasury stock.

4) Status of Cash Flows

				Billions of yen
			April 1, 2022 -	April 1, 2023 -	Increase
			March 31, 2023	March 31, 2024	(Decrease)
Cash and cash equivalents at beginning of fiscal year	1,008.9	1,247.3	238.4
	1.	Cash flows from operating activities	788.0	755.1	(32.9)
	2.	Cash flows from investing activities	(186.4)	(1,099.2)	(912.8)
	3.	Cash flows from financing activities	(423.5)	(369.4)	54.1
Net	4.	Effect of foreign exchange and others	60.4	56.2	(4.2)
increase (decrease) in cash and cash equivalents	238.4	(657.2)	(895.6)
Cash and cash equivalents at end of fiscal year	1,247.3	590.1	(657.2)

The balance of cash and cash equivalents at the end of FY 2023 decreased by 53% (¥657.2 billion) compared with that at the end of the previous fiscal year to ¥590.1 billion.

Cash flows from operating activities

Net cash provided by operating activities amounted to ¥755.1 billion, a decrease of ¥32.9 billion from the previous fiscal year. This consisted mainly of ¥795.6 billion in income before income taxes and non-controlling interests, ¥227.6 billion in depreciation and amortization, and ¥208.9 billion for the payment of income taxes.

Cash flows from investing activities

Net cash used for investing activities increased by ¥912.8 billion from the previous fiscal year to ¥1,099.2 billion. This was mainly due to ¥781.3 billion for net increase in time deposits and ¥374.4 billion for purchases of property, plant and equipment.

Cash flows from financing activities

Net cash used for financing activities decreased by ¥54.1 billion from the previous fiscal year to ¥369.4 billion. This was mainly due to ¥107.7 billion for purchases of treasury stock and a cash dividend payment of ¥211.2 billion.

8