The global business climate remained uncertain for the Ushio Group in the third quarter of the fiscal year ending March 31, 2024. Downside factors included an ongoing worldwide recession, rising energy and raw materials prices owing to an ongoing war between Russia and Ukraine and further hikes in policy interest rates amid continued inflation in Europe and the United States. On top of that, the world economy slowed down amid sluggish domestic and external demand, one negative factor being a downturn in real estate development investments in China.

Under these circumstances, the semiconductor, electronic devices, and printed circuit board markets are showing signs of recovery from the slowdown in end-use demand for smartphones and other products worldwide. However, related capital investments are currently restrained and operations remain sluggish. Demand for related cutting-edge IC package substrates also continues to be sluggish for final products, resulting in temporary curtailment of capital investment, which is a situation that requires keeping close tabs on trends. On the other hand, 5G deployments and the utilization of Internet of Things and artificial intelligence technologies are progressing, and related demand is expected to grow over the medium to long term. In the flat panel display market, LCD panels manufacturers continue to operate at low levels because stay-at-home demand had run its course. In the visual imaging market, cinema operations worldwide recovered as normal economic activity resumed after the COVID-19 pandemic. The general imaging market environment remained solid as events and other activities continued to turn around. The average exchange rate during the term was \143 to the dollar. The yen depreciated \7 from a year earlier.

Consolidated net sales increased 3.2% year on year, to \132,510 million. Operating profit dropped 24.5%, to \10,206 million. Ordinary profit fell 30.1%, to \12,615 million. Profit attributable to owners of parent declined 28.0%, to \8,691 million.

UV Lamps
Operational adjustments continued for semiconductors and electronic devices along with a slowdown in final demand for PCs, smartphones and other products. In addition, production adjustments continued at panel manufacturers for LCD panels because stay-at-home demand had run its course. Accordingly, sales of UV lamps declined.

OA Lamps
Although demand was solid, sales of OA lamps declined as a reaction to increased demand in the previous term due to the easing of material shortages among set manufacturers.

Optical Equipment Lamps
Sales of light sources, primarily for LCD panels, declined due to ongoing production adjustments by LCD panel manufacturers.

UV Equipment
Although demand for data center servers and others continues to rise along with the progress of 5G deployments and the utilization of Internet of Things and artificial intelligence technologies, sales of the large field stepper for cutting-edge IC package substrates and direct imaging lithography equipment for package and printed circuit boards declined as a result of the curtailment of capital investment due to downturns in the market for servers and PCs.

Optical Equipment
Sales of optical equipment related to LCD panel declined mainly due to a slowdown in capital investments for LCD panels as stay-at-home demand had run its course, resulting in revenues to fall.

In addition to the decrease in sales, earnings declined from greater strategic investments in R&D and other activities to drive future growth, primarily for optical equipment, and shrinking profit margins from lower sales of such high-value-added offerings mainly for optical equipment.

Industrial Processes business sales thus dropped 9.5% from the previous corresponding term, to \60,365 million. Operating profit fell 46.6%, to \8,035 million.

Projector Lamps
Although there was an improvement in cinema operations following the recovery from the circumstances during the COVID-19 pandemic, sales of xenon lamps for cinema projectors declined due to the impact of deterioration in the Chinese economy. In addition, sales of lamps for projectors in general imaging field declined due to the shift toward solid-state light sources. Accordingly, sales of projector lamps declined.

Cinema Projectors
Sales of digital cinema projectors increased as a result of the progress in resolving the previous fiscal year’s material shortages as well as our capturing demand for projector replacements in cinemas. The yen’s depreciation also contributed to higher sales.

General Imaging Projectors
Sales increased due to solid demand for events and other activities and the acceptance inspection for a large deal in the second quarter of the current fiscal year. The yen’s depreciation also contributed to higher sales.

In addition to the increase in sales, earnings increased despite strategic investments in human resources and other areas. Drivers included on an improved cost of sales ratio in imaging equipment from an easing in the material cost hikes experienced in the previous fiscal year.

Visual Imaging sales therefore rose 19.4%, to \59,276 million. Operating profit increased 70.3%, to \4,597 million.

Sales were down primarily because of lower revenues from light source for environmental hygiene solutions. Earnings were up, however, from lower inventory write-downs than in the previous term and constrained investments stemming from a strategic review of the environmental hygiene business.

Life Sciences sales accordingly declined 0.6%, to \4,017 million. An operating loss of \1,676 million was improved from the \3,983 million loss posted a year earlier.

Sales increased on higher revenues for laser modules for R&D microscopes. Earnings were off, however, amid higher strategic investments in R&D and other areas.

Photonics Solutions sales advanced 18.0%, to \7,939 million. There was an operating loss of \845 million, however, from an operating loss of \112 million in the previous corresponding period.