Valve Manufacturing Business (Semiconductor Equipment market)
Q
In Q1, what is the background to the increase in sales and the decrease in profits.
How do you forecast the Q2? Please provide more information about the current recovery status of the Japanese domestic distributors, including their inventory levels.
How is the current situation in Semiconductor equipment market?
A
The increase in sales was attributed to Forex (+1.1 billion yen) and the effect of price revisions (+550 million yen). The decrease in profits was due to a change in product mix. The sales quantity of high margin products (for semiconductor equipment and stainless steel products) decreased, while sales with low-profit margin for one-off projects increased.
In Q2, the Japanese domestic distributors showed signs of recovery. Their inventory levels were maintained at an appropriate level, and there was a rebound in shipment activity, particularly for high margin stainless steel products. April and May saw strong order volumes.
We expect the market to bottom out in the Q2 and recover in the 2nd half, and it is currently at the level we expect. Semiconductor-related investment is already underway in various parts of Japan, but demand for our products will be delayed because they will be used after the factory building is completed. In addition to semiconductor manufacturing equipment, filters for chemical liquid and valves for general piping etc. are also used, so the demand will spread to a wide range of fields. To prepare for the expected increase in demand, we are making investments to expand our capacity by 20% from the current level of 30 billion yen per year.
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KITZ CORPORATION is mainly engaged in the manufacture and sale of valves and copper products. The Company operates in two business segments. The Valves segment provides bronze valves, steel valves, valve-related products, as well as filtration-related products. The Rolled Copper segment provides rolled copper products and copper processed products. The others businesses include the operation of hotels, restaurants and others.
KITZ CORPORATION 
