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5/16 Effect of Fujitsu Electronics conversion to subsidiary

Next, Fujitsu Electronics became a Group company from January 2019, and its earnings contributed to our overall earnings throughout this fiscal year, which had a very significant impact. This slide explains the financial impact resulting from making Fujitsu Electronics a Group company. Of the 443,615 million yen in net sales mentioned earlier, Fujitsu Electronics sales totaled 200,584 million yen. Without Fujitsu Electronics’ sales, net sales for the former Kaga Electronics Group would have been 243,031 million yen, an increase of 7,342 million yen over the previous year. Gross profit was 47,016 million yen for the Group overall, but Fujitsu Electronics accounted for 13,708 million yen of this, while gross profit for the former Kaga Electronics Group would have been 33,298 million yen, an increase of 1,163 million yen over the previous year. In addition, while the gross profit margin was 6.3% for Fujitsu Electronics in the fiscal year ended in March 2019, it improved by 0.5% to 6.8% in the current fiscal year. The former Kaga Electronics Group’s gross profit margin was 13.7% in the fiscal year ended in March 2020, which is a 0.1-point improvement over a 13.6% margin in the previous year. SG&A expenses were 37,001 million yen overall, of which Fujitsu Electronics accounted for 11,622 million yen and the former Kaga Electronics Group accounted for 25,379 million yen, up 572 million yen over the previous year. Operating income, which is gross profit less SG&A expenses, totaled 10,014 million yen, of which Fujitsu Electronics accounted for 2,086 million yen and the former Kaga Electronics Group accounted for 7,927 million, representing a 599 million yen increase.