Securities Code: 5333

FY2023

Interim Business Report for Shareholders

(From April 1 to September 30, 2023)

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Note: This document has been translated from part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect, or any other forms of damages arising from this translation.

Message

With sincere gratitude for your continued support, we hereby present the NGK Group Business Report for the first six months of FY2023 / 158th term (from April 1, 2023, to September 30, 2023).

During the first six months of FY2023, the Japanese economy saw economic and social activities normalizing following the reclassification of COVID-19 into a Class 5 disease, showing a mild recovery in improved employment and income environments. Overseas, with China's recovery stalled by its sluggish real estate market and consumer spending picking up primarily in the United States, the economy made a modest recovery. However, outlook remains uncertain regarding an economic slowdown in the wake of the global trend of extended monetary tightening, developments in the Chinese economy, and so on.

Under these circumstances, the Environment Business of the Group saw an increase in shipments of automotive-related products mainly for the Chinese market, as the number of automobiles produced rebounded amid an easing supply shortage of semiconductors and as emission controls were tightened. In the Digital Society Business, lacklustre investments in semiconductors and data centers caused drops in shipments of products for semiconductor manufacturing equipment and electronic components. In the Energy & Industry Business, shipments of insulators increased mainly for the U.S. market.

As a result, net sales for the first six months of FY2023 increased 3.0% year-on-year to 282,884 million yen. In terms of income, operating income fell 16.3% year-on-year to 32,485 million yen as affected by soaring labor costs associated with inflation in addition to a decline in volumes of products for semiconductor manufacturing equipment, etc., despite the positive effect of an increase in volumes of automotive-related products. Ordinary income decreased 16.2% to 28,940 million yen, while net income attributable to owners of the parent fell 31.4% to 18,181 million yen for reasons of lower ordinary income and the recognition of income taxes for prior fiscal years during the same period of the previous year.

In terms of forecasting the FY2023 full-year results, a downturn in investments in semiconductors and data centers has been protracted, and demand for the Digital Society Business products is declining. Meanwhile, the Japanese yen has significantly weakened compared with the exchange rates estimated at the beginning of the period (1 USD=130 yen and 1 EUR=140 yen), and strong demand is seen in the Environment Business. Thus, our forecasts on a full-year basis are: net sales will increase 2.8% year-on-year to 575 billion yen, operating income will decrease 7.1% to 62 billion yen, and ordinary income will fall 12.0% to 58 billion yen, with net income attributable to owners of the parent down 29.2% to 39 billion yen.

For the period under review, we will pay an interim dividend of 25 yen per share. The year-end dividend is expected to be 25 yen per share at this point.

Our business environment for the second half of FY2023 should continue to be uncertain due to an economic slowdown triggered by the global trend of extended monetary tightening, concerns about sluggish semiconductor investments, and so on. Nevertheless, we will aim to become a company that continues to grow globally, by addressing the following key issues set at the beginning of the fiscal year:

  1. Advancement of ESG management
  2. Initiatives for Improving Earning Capacity of Existing Businesses and Creating New Businesses Through these initiatives, the NGK Group will work to further reinforce its management base, offer

products that exceed society's expectations by using its unique ceramic technology, and continue to grow for a sustainable future. We would deeply appreciate your continued support.

December 2023

President

Shigeru Kobayashi

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Consolidated financial highlights

Six month total

Full year

Full year (forecast)

Net sales

Operating income

Profit attributable to owners of parent

(100 million yen)

(100 million yen)

(100 million yen)

(FY)

(FY)

(FY)

Topics

NGK Exhibited at CEATEC 2023

NGK participated in CEATEC 2023 Exhibition, which took place at Makuhari Messe (Chiba City, Chiba) from October 17 to 20, 2023, and had a total of around 90,000 visitors.

Under the theme of "a clean and smart future society made by ceramic technology," the exhibit featured products that contribute to the realization of a carbon neutral and digital society by harnessing NGK's unique ceramic technology, such as ceramic substrates for direct air capture (DAC) to absorb CO2 from the atmosphere, power sources for standalone IoT devices "EnerCera," and hybrid bonded wafers for high- performance optical devices, showcasing our products to visitors to our booth.

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Business Overview by Segment

FY2023-1H

FY2022-Q2

Year-on-year

(100 million yen)

(100 million yen)

change

Environment Business

Net sales increased 17.5% year-on-year to

Net sales

1,798

1,531

+17%

179,849 million yen. A short supply of components

such as semiconductors subsided, followed by a

recovery in auto production. Demand for our

Operating

products also increased due to a rising number of

322

262

+23%

truck sales in China and other factors. Operating

income

income increased 23.0% to 32,246 million yen.

Digital Society Business

Net sales decreased 25.0% year-on-year to

Net sales

661

882

-25%

66,083 million yen. Reduced semiconductor

investments led to falling demand. Demand for

piezoelectric elements for hard disk drives (HDD)

Operating

also fell as a result of reduced data center

7

137

-95%

investments. Operating income saw a 94.6% drop to

income

735 million yen.

Energy & Industry Business

Net sales increased 9.9% year-on-year to 38,014

Net sales

380

346

+10%

million yen. Shipments of insulators increased

mainly for the U.S. market. In addition to sale price

revisions, robust demand from the U.S. was seen.

Demand for firing furnaces for positive-electrode

materials for lithium-ion batteries also increased.

Operating

(5)

(11)

-

Operating losses of 506 million yen were recorded

income

(operating losses were 1,089 million yen for the

same period last year).

(Note) Net sales stated above are before elimination of intersegment transactions.

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Condensed Financial Statements (Consolidated) for the Second Quarter

Consolidated Balance Sheets for Six Months (as of September 30, 2023)

(Million yen)

Assets

Liabilities

Account

Amount

Account

Amount

Current assets

608,466

Current liabilities

161,190

Cash and deposits

189,101

Notes and accounts payable-trade

46,527

Notes and accounts receivable-trade,

127,237

Short-term borrowings

11,300

Current portion of long-term borrowings

and contract assets

36,757

(Payment planned within one year)

Securities

41,216

Income taxes payable

7,645

Inventories

229,746

Other

58,959

Non-current liabilities

234,690

Other

21,323

Bonds payable

40,000

Long-term borrowings

160,192

Allowance for doubtful accounts

(159)

Retirement benefit liability

20,922

Other

13,574

Non-current assets

474,519

Total liabilities

395,880

Property, plant and equipment

378,665

Net assets

Shareholders' equity

578,765

Buildings and structures, net

130,124

Share capital

70,064

Capital surplus

70,390

Machinery and vehicles, net

175,188

Retained earnings

448,603

Other, net

73,353

Treasury shares

(10,293)

Accumulated other comprehensive

100,851

Intangible assets

6,622

income

Valuation difference on available-for-

21,476

Investments and other assets

89,231

sale securities

Deferred gains on hedges

19

Investment securities

63,980

Foreign currency translation adjustment

74,276

Other

25,558

Remeasurements of defined benefit

5,078

plans

Allowance for doubtful accounts

(307)

Share acquisition rights

878

Non-controlling interests

6,611

Total net assets

687,105

Total assets

1,082,986

Total liabilities and net assets

1,082,986

(Amounts of less than 1 million

yen omitted.)

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Consolidated Statement of Income for the Six Months (from April 1 to September 30, 2022)

(Millions of yen)

Account

Amount

Net sales

282,884

Cost of sales

207,958

Gross profit

74,926

Selling, general and administrative expenses

42,440

Operating income

32,485

Non-operating income

1,989

Non-operating expenses

5,534

Ordinary income

28,940

Extraordinary income

443

Extraordinary losses

1,501

Income before income taxes

27,883

Income taxes - current

8,976

Income taxes - deferred

790

Net income

18,116

Net losses attributable to non-controlling interests

(65)

Net income attributable to owners of the parent

18,181

(Amounts of

less than 1 million yen omitted.)

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Stock Information (As of September 30, 2023)

Major shareholders

Shareholder name

Number of shares held (1,000 shares)

Shareholding ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust

51,293

16.73

Account)

Meiji Yasuda Life Insurance Company

21,695

7.08

The Dai-ichi Life Insurance Company, Limited

21,457

7.00

Custody Bank of Japan, Ltd. (Trust Account)

18,260

5.95

MUFG Bank, Ltd.

7,204

2.35

National Mutual Insurance Federation of

7,029

2.29

Agricultural Cooperatives

STATE STREET BANK WEST CLIENT-TREATY

4,437

1.44

505234

Aioi Nissay Dowa Insurance Co., Ltd.

4,387

1.43

Goldman Sachs Group, Inc., BNYM

4,365

1.42

JP MORGAN CHASE BANK 385781

3,397

1.10

(Notes)

  1. We hold 5,538,241 treasury shares but they are excluded from the major shareholders listed above.
  2. The shareholding ratio above is calculated based on the number of shares after deducting the number of treasury shares (5,538,241 shares) from the total number of shares issued and rounded down to the second decimal place.

Stock information

Total number of shares authorized Total number of shares issued Number of shareholders

735,030,000

311,956,996

52,332

Individuals and others 46,413 thousand shares (14.9%)

Foreign corporations, etc. 84,382 thousand shares

Number of shares 311,956 thousand shares

Financial institutions 165,312 thousand shares (53.0%)

(27.0%)

Domestic corporations 15,849 thousand shares (5.1%)

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Stock price

Trading volume (1,000 shares)

Stock price (yen)

High

Low

The Company's stock price

Trading volume

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Company Information (As of September 30, 2023)

Company profile

Way of writing company name

日本ガイシ株式会社 (Japanese)

Registered trade name

日本碍子株式会社 (Japanese)

NGK INSULATORS, LTD.

Representatives

Representative Director and Chairman

Taku Oshima

Representative Director and President

Shigeru Kobayashi

Representative Director and Executive Vice President

Chiaki Niwa

Representative Director and Executive Vice President

Ryohei Iwasaki

Founded

May 5, 1919

Share capital

70,064 million yen

Directors

* Representative Director

* Director and Chairman

Taku Oshima

* Director and President

Shigeru Kobayashi

* Director and Executive Vice President

Chiaki Niwa

* Director and Executive Vice President

Ryohei Iwasaki

Director and Senior Vice President

Tadaaki Yamada

Director and Senior Vice President

Hideaki Shindo

Director (Outside)

Hiroyuki Kamano

Director (Outside)

Emiko Hamada

Director (Outside)

Kazuo Furukawa

Statutory Auditor

Nobumitsu Saji

Statutory Auditor

Naoya Yagi

Auditor (Outside)

Masayoshi Sakaguchi

Auditor (Outside)

Takashi Kimura

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Executive Officers

* Concurrently serving as a director

* President

Shigeru Kobayashi

* Executive Vice President

Chiaki Niwa

* Executive Vice President

Ryohei Iwasaki

* Senior Vice President

Tadaaki Yamada

Senior Vice President

Shuhei Ishikawa

Senior Vice President

Tsutomu Nanataki

Senior Vice President

Hiroto Matsuda

* Senior Vice President

Hideaki Shindo

Senior Vice President

Jun Mori

Senior Vice President

Hiroshi Kurachi

Senior Vice President

Masanobu Inoue

Senior Vice President

Hiroharu Kato

Senior Vice President

Atsushi Miyajima

Senior Vice President

Hiroyuki Shinohara

Vice President

Iwao Ohwada

Vice President

Tatsumi Ichioka

Vice President

Ryo Ishihara

Vice President

Mayumi Inagaki

Vice President

Hirofumi Sakamoto

Vice President

Hideki Shimizu

Vice President

Kazushi Tada

Vice President

Ryugo Takeda

Vice President

David Miller

Vice President

Takao Onishi

Vice President

Takashi Yoshino

Vice President

Motoo Noritake

Vice President

Yoshihide Natsume

Vice President

Masato Nozaki

Vice President

Yasuyoshi Imai

Vice President

Hiroki Fujita

Shareholder's memo

Business year

From April 1 of each year to March 31 of the following year

Annual shareholders' meeting

June

Record date for distribution of surplus

(Year-end) March 31

(Interim) September 30

Shareholder registry administrator

Mitsubishi UFJ Trust and Banking Corporation

Account management institution for special accounts

Contact information

137-8081

Shin-Tokyo Post Office, PO Box #29

Stock Transfer Agency Dept., Mitsubishi UFJ Trust and

Banking Corporation

Phone: 0120-232-711 (toll free; 9:00-17:00 weekdays)

Method of public notice

Public notices will be posted on our company website

(https://www.ngk.co.jp/ir/koukoku). If an electronic public

notice cannot be posted due to an accident or any other

unavoidable circumstances, it will be released in the Nihon

Keizai Shimbun and the Chunichi Shimbun, which is

published in Nagoya City.

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Disclaimer

NGK Insulators Ltd. published this content on 01 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 December 2023 01:48:13 UTC.