MARUWA CO.,LTD.

Business Overview

A Business Structure Built Around Two Segments

As of the fiscal year ended March 31, 2022, the MARUWA CO., LTD. (MARUWA) Group consisted of MARUWA, 17 subsidiaries, and 1 other affiliated company, operating the Ceramic Components Business and the Lighting Equipment Business.

The Ceramic Components Business handled high thermal conductivity substrates, high-strength substrates, special ceramic substrates, components for semiconductor manufacturing equipment, automotive magnet products, medical products, faucet-related products, information and communication products, antenna products, and noise suppression products. In Japan, MARUWA, MARUWA QUARTZ Co., Ltd., and MARUWA CERAMIC Co., Ltd. were responsible for manufacturing. Overseas, the Group had manufacturing and sales companies in Malaysia and sales companies in Taiwan, the United Kingdom, the United States, South Korea, China, and India.

In the Lighting Equipment Business, MARUWA SHOMEI Co., Ltd. handled manufacturing and sales, while YAMAGIWA Corporation sold products purchased from MARUWA SHOMEI and external suppliers. Major products included high-intensity LED lighting, LED light-source modules, facility lighting, residential lighting, design lighting, dimming control systems, lighting-space design, and lighting design. (Annual Securities Report for the fiscal year ended March 31, 2022)

This two-segment structure, centered on the Ceramic Components Business and the Lighting Equipment Business, remained in place through the fiscal year ended March 31, 2026. From the fiscal year ended March 31, 2025, the Group began describing its business as the manufacture and sale of ceramic components for semiconductor, automotive, and information and communication applications, as well as lighting equipment, making the principal application areas of ceramic components more explicit at the outset. (Annual Securities Reports for the fiscal years ended March 31, 2025–2026)

Reorganization of Domestic Ceramic Components Production

A major change in the business structure during the period occurred in the domestic Ceramic Components Business. As of the fiscal year ended March 31, 2022, MARUWA CERAMIC Co., Ltd. and MARUWA QUARTZ Co., Ltd. were manufacturing companies within the Group, but both were absorbed into MARUWA effective April 1, 2022.

Following the mergers, MARUWA, Maruwa (Malaysia) Sdn. Bhd., and MARUWA MELAKA SDN.BHD. became responsible for manufacturing and sales of ceramic components. In May 2023, MARUWA also opened the Seto Plant in Seto, Aichi Prefecture. (Annual Securities Reports for the fiscal years ended March 31, 2022–2024)

The reportable segments did not change after this reorganization, and the basic structure of the Ceramic Components Business and the Lighting Equipment Business continued.

Ceramic Components Products and Overseas Operations

In the Ceramic Components Business, high thermal conductivity substrates, high-strength substrates, special ceramic substrates, components for semiconductor manufacturing equipment, information and communication products, antenna products, and noise suppression products remained major product categories throughout the five-year period. In automotive applications, the wording changed from "automotive magnet products" in the fiscal years ended March 31, 2022 and 2023 to the broader "automotive ceramic products" from the fiscal year ended March 31, 2024. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Overseas, the Group maintained production bases in Malaysia and sales companies in locations including Taiwan, the United Kingdom, the United States, South Korea, China, and India. Maruwa Electronics GmbH was established as a sales subsidiary in Düsseldorf, Germany, in 2021, and by the fiscal year ended March 31, 2026, both that company and Maruwa Electronics Israel Ltd. were listed as sales companies for ceramic components.

MARUWA MELAKA SDN.BHD., which had been listed as a manufacturing and sales company through the fiscal year ended March 31, 2025, was no longer included in the manufacturing and sales company list under "Business Overview" for the fiscal year ended March 31, 2026. However, it remained a consolidated subsidiary in that fiscal year. Accordingly, this review does not treat the change as indicating a withdrawal or discontinuation of its business.

Across the five years, MARUWA's two core businesses—ceramic components and lighting equipment—remained unchanged. Within the Ceramic Components Business, the Group reorganized its domestic manufacturing structure through the absorption of manufacturing subsidiaries and expanded its overseas sales network. The wording used in the Annual Securities Reports also changed in the automotive field from "automotive magnet products" to the broader "automotive ceramic products."

Business Environment and Strategy

Management Policy and Business Environment

Throughout the five-year period, the MARUWA Group maintained a management philosophy that views the development of the company, employee happiness, shareholder satisfaction, and social prosperity as inseparable. Under this philosophy, the Group continued to pursue technological innovation and quality enhancement while seeking to increase corporate value through contributions to society based on ESG and the SDGs.

Its medium- to long-term growth strategy also remained consistent: leverage ceramic materials technologies and characteristics, concentrate management resources on markets expected to grow, make forward-looking research and development and capital investments, and develop and manufacture differentiated, high-value-added products.

In the fiscal year ended March 31, 2022, MARUWA identified the EV, optical communications, and semiconductor-related markets as growth areas amid progress toward a decarbonized society. In the Ceramic Components Business, it emphasized high-strength substrates capable of withstanding the high-temperature and high-voltage environments of EVs, as well as products addressing the higher performance and miniaturization required of electronic components for next-generation high-speed communications. It identified 4 priority issues: development of differentiated products, business expansion through selection and concentration, strengthening of the global organization, and enhancement of crisis management. (Annual Securities Report for the fiscal year ended March 31, 2022)

MARUWA explained that the mergers were intended to accelerate unified decision-making amid major market changes, shift the organization from classification by material to a company structure adapted to markets, and combine advanced technologies to improve market competitiveness. (Annual Securities Reports for the fiscal years ended March 31, 2022–2023)

This basic direction remained unchanged thereafter. From the fiscal year ended March 31, 2024, the wording for the automotive market broadened from "EVs" to "new energy vehicles," while the Group continued to concentrate management resources on new energy vehicles, optical communications, and semiconductor-related markets as growth areas. In crisis management, references to COVID-19 included in the fiscal years ended March 31, 2022 and 2023 were later removed, while emphasis shifted to the situation in Ukraine and subsequently to the Middle East situation and natural disasters. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

In the fiscal year ended March 31, 2026, "technological innovation in generative AI" was added at the beginning of the medium- to long-term strategy discussion. For the information and communications market, MARUWA highlighted demand for improved power efficiency in addition to next-generation high-speed communications, while for the semiconductor market it cited medium- to long-term expansion of the semiconductor manufacturing equipment market. This added technological changes related to generative AI, semiconductors, and communications to the growth markets previously centered on decarbonization. MARUWA continued to identify the operating profit margin as a key indicator throughout the five years, and in the fiscal year ended March 31, 2026, it explicitly added the adoption of AI to measures for improving the margin, alongside development of high-value-added products, productivity improvements, and process improvements. (Annual Securities Report for the fiscal year ended March 31, 2026)

Sustainability Policy and Initiatives

As early as the fiscal year ended March 31, 2022, MARUWA referred to ESG, the SDGs, and responses to a decarbonized society in its management policies and business strategy. From the fiscal year ended March 31, 2023, "Sustainability Policy and Initiatives" became a separate disclosure item, with explanations of climate change, human capital, and risk management that included management structures and indicators.

In the fiscal year ended March 31, 2023, MARUWA positioned key sustainability issues, including climate change measures, as important management elements and described a structure in which the Board of Directors, management, and relevant departments worked together to analyze and discuss them. For human capital, it emphasized developing "professional personnel" capable of thinking and acting independently and creating a workplace environment in which employees can work safely and in good health. Targets for fiscal 2030 were a 100% paid leave utilization rate, women accounting for 50% of new hires, and foreign personnel accounting for 50% of new hires. Fiscal 2022 results were 80%, 42%, and 40%, respectively. (Annual Securities Report for the fiscal year ended March 31, 2023)

The basic framework was maintained in the fiscal year ended March 31, 2024, and the paid leave utilization rate rose to 91.8%. Meanwhile, women accounted for 29.3% of new hires and foreign personnel for 18.0%. The company also specifically described efforts to eliminate overtime as part of improvements to the internal work environment. (Annual Securities Report for the fiscal year ended March 31, 2024)

In the fiscal year ended March 31, 2025, the disclosures became substantially more specific. MARUWA clearly described the reporting and oversight flows from the Sustainability Committee and Risk Management Committee to the Board of Directors, as well as a structure in which factory management departments responsible for sustainability implementation coordinated with departments responsible for risk management.

On climate change, MARUWA viewed the transition to a decarbonized society not only as a source of risks such as natural disasters and higher energy costs but also as a business opportunity for xEV, information and communication, and semiconductor-related products. New targets included reducing greenhouse gas (GHG) emissions intensity for Scope 1 and 2 by 30% from the fiscal 2023 level by fiscal 2030, achieving carbon neutrality by fiscal 2050, and tripling renewable energy generation from the fiscal 2023 level by fiscal 2030. (Annual Securities Report for the fiscal year ended March 31, 2025)

Human capital disclosures also became more specific, covering on-the-job training, external training, university programs, and development of foreign personnel. The principal indicators disclosed in the Annual Securities Report changed to the paid leave utilization rate and the paternity leave utilization rate. MARUWA set a fiscal 2030 target of 100% for both, while fiscal 2024 results were 88.1% and 25.0%, respectively. The company also explicitly addressed human rights across the supply chain, not only within its own operations. (Annual Securities Report for the fiscal year ended March 31, 2025)

In the fiscal year ended March 31, 2026, GHG emissions intensity was 0.59 tCO2 per JPY million, down 13.2% from fiscal 2023. Renewable energy generation was 1,733,434 kWh, or 2.13 times the fiscal 2023 level. For human capital, the paid leave utilization rate rose to 93.8% and the paternity leave utilization rate to 75.0%, both higher than in the previous fiscal year. (Annual Securities Report for the fiscal year ended March 31, 2026)

Over the five-year period, the basic emphasis on decarbonization and human capital did not newly emerge. Rather, disclosures became progressively more specific regarding management structures, risks and opportunities, numerical targets, and actual results.

Note: The dedicated disclosure section for "Sustainability Policy and Initiatives" was introduced in Annual Securities Reports following disclosure rule revisions in January 2023.

Business Risks

The composition of major risks did not change substantially over the five-year period. MARUWA identified international affairs and economic conditions, individual businesses, technological innovation, legal risks, foreign exchange, and natural disasters and infectious diseases as major risks that could affect operating results and financial condition. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Because the Group manufactures and sells globally, it may be affected by economic conditions, market environments, and changes in policies and regulations in individual countries. In addition, because it manufactures in Japan and Malaysia and sells around the world, foreign exchange fluctuations associated with transactions denominated in currencies such as the U.S. dollar remained an ongoing risk.

In the Ceramic Components Business, MARUWA anticipated market expansion associated with decarbonization, new energy vehicles, increasingly multifunctional and miniaturized electronic components, AI, and IoT, while recognizing the potential effects of economic slowdowns and weaker consumption as risks. Regarding technological innovation, it also noted the impact that could arise if its product development lagged behind competitors as the pace of market change accelerated. Its response continued to be the development of new products and capital investment with a view several years ahead.

In the Lighting Equipment Business, because public lighting and high-intensity lighting are major products, MARUWA identified delays in construction schedules caused by natural disasters or infectious diseases as risks. It also continued to identify legal risks such as intellectual property rights associated with new product development, as well as operational interruptions and logistics disruptions at domestic and overseas production and sales sites caused by earthquakes, floods, typhoons, infectious diseases, and other events. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Meanwhile, the description of the risk management structure became more specific alongside sustainability disclosures. In the fiscal year ended March 31, 2023, MARUWA described a system in which the department responsible for risk management oversaw risk management and reported actual and potential risks at each site to the Board of Directors each month. From the fiscal year ended March 31, 2025, the structure was more clearly defined as reporting from the Risk Management Committee and Sustainability Committee to the Board of Directors, followed by supervision and instructions and feedback to operating departments. (Annual Securities Reports for the fiscal years ended March 31, 2023–2026)

Management's Analysis of Financial Position, Results, and Cash Flows

Management's explanations of performance over the five years show how demand affecting the Ceramic Components Business shifted among EVs and new energy vehicles, information and communications, and semiconductors, with conditions in each market influencing results.

In the fiscal year ended March 31, 2022, economic activity recovered from the COVID-19 pandemic, while supply chain disruptions, the situation in Ukraine, and higher raw material and fuel costs emerged. Against this backdrop, demand expanded for EVs, 5G, and semiconductor manufacturing equipment, and differentiated products for EV and 5G applications performed well in the Ceramic Components Business. Revenue reached JPY 54.3 billion and operating profit JPY 18.2 billion, both record highs, while the operating profit margin was 33.5%. (Annual Securities Report for the fiscal year ended March 31, 2022)

In the fiscal year ended March 31, 2023, MARUWA cited high inflation, monetary tightening in various countries, China's zero-COVID policy, and rapid exchange-rate fluctuations as elements of the business environment. Orders for some China-related markets slowed, while demand for EVs and semiconductor manufacturing equipment remained steady. In response to higher purchased-material and electricity costs, the company increased high-value-added products and pursued process and productivity improvements. Revenue reached JPY 58.8 billion and operating profit JPY 20.1 billion, again setting record highs, while the operating profit margin was 34.3%. (Annual Securities Report for the fiscal year ended March 31, 2023)

In the fiscal year ended March 31, 2024, delayed recovery in the Chinese economy, U.S.-China tensions, and continued monetary tightening were accompanied by broader use of new technologies, including generative AI. Demand for new energy vehicles, semiconductor manufacturing equipment, and new markets remained steady, while a full recovery in high-value-added products for China's communications market was delayed. At year-end, MARUWA recorded an allowance for doubtful accounts related to overdue China-related receivables. Revenue increased to JPY 61.6 billion, but operating profit decreased 1.7% year on year to JPY 19.8 billion. (Annual Securities Report for the fiscal year ended March 31, 2024)

In the fiscal year ended March 31, 2025, demand for general-purpose memory products within the semiconductor field softened, while next-generation high-speed communications expanded and demand for new energy vehicles remained steady. Both the Ceramic Components Business and the Lighting Equipment Business recorded higher revenue and profit. Consolidated revenue reached JPY 71.8 billion and operating profit JPY 26.9 billion, both record highs. (Annual Securities Report for the fiscal year ended March 31, 2025)

In the fiscal year ended March 31, 2026, technological advances and investment related to generative AI continued, while automotive market conditions softened and the anticipated recovery in demand for general-purpose memory products in the second half was delayed into a later period. Meanwhile, next-generation high-speed communications remained at a high level, and production increases associated with the launch of next-generation models began in the fourth quarter. Revenue increased 3.7% year on year to JPY 74.5 billion, while operating profit decreased 7.2% to JPY 25.0 billion. In the Lighting Equipment Business, LED demand, office renovations, and lighting for high-end new condominiums performed well, and both revenue and profit increased. (Annual Securities Report for the fiscal year ended March 31, 2026)

These developments show that MARUWA maintained its basic strategy of targeting EVs and new energy vehicles, communications, and semiconductors as growth markets, while the specific performance drivers changed from year to year. These included 5G, next-generation high-speed communications, China's communications market, semiconductor manufacturing equipment and memory, and generative AI-related demand.

Regarding funding, MARUWA identified capital investment in growth fields, research and development investment, dividends, and working capital as its main funding needs, with a policy of financing them primarily from internal funds. Its approach of continuing forward-looking capital investment and research and development investment remained unchanged. (Annual Securities Reports for the fiscal years ended March 31, 2023–2026)

Material Contracts

"Material Contracts Related to Management" or "Material Contracts" was stated as "Not applicable" in all 5 fiscal years from the fiscal year ended March 31, 2022 through the fiscal year ended March 31, 2026. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Research and Development Activities

Throughout the five-year period, MARUWA maintained a policy of developing products suited to decarbonization and anticipating markets several years ahead, based on ceramic materials technologies and elemental technologies cultivated over many years.

In the Ceramic Components Business, MARUWA developed new materials and products with heat dissipation, strength, quality, and reliability for automotive, information and communications, semiconductor, and industrial equipment applications. Continuing development areas included high thermal conductivity substrates, high-strength substrates, special ceramic substrates, GPS and NFC antennas, surge protection components, and noise suppression components. In the Lighting Equipment Business, the company developed differentiated products including road lighting aligned with energy-saving policies, high-intensity and high-efficiency LED facility lighting, and systems for controlling light. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Research and development expenses were JPY 1.4 billion in the fiscal year ended March 31, 2022, JPY 1.4 billion in 2023, and JPY 1.4 billion in 2024, remaining broadly unchanged before rising to JPY 1.7 billion in 2025 and JPY 2.1 billion in 2026. The fields targeted by research and development did not change substantially. MARUWA continued materials and product development for growth markets such as automotive, information and communications, and semiconductors, while research and development expenses increased in the latest 2 fiscal years. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Financial Overview

Expansion in Assets and Accumulation of Net Assets

At March 31, 2022, total assets were JPY 95.9 billion, total liabilities JPY 16.2 billion, and net assets JPY 79.7 billion, with an equity ratio of 83.1%. By March 31, 2026, total assets had increased to JPY 162.7 billion, total liabilities were JPY 15.4 billion, and net assets were JPY 147.3 billion, while the equity ratio had risen to 90.5%. (Annual Securities Reports for the fiscal years ended March 31, 2022 and 2026)

The increase in assets over the five years reflected both the accumulation of cash and deposits and capital investment. Cash and deposits increased from JPY 44.6 billion at March 31, 2022 to JPY 71.8 billion at March 31, 2025, before declining to JPY 67.2 billion at March 31, 2026.

Property, plant and equipment increased from JPY 23.5 billion at March 31, 2022 to JPY 31.0 billion in 2023, JPY 36.7 billion in 2024, JPY 39.4 billion in 2025, and JPY 57.3 billion in 2026. In particular, construction in progress increased from JPY 5.5 billion at March 31, 2025 to JPY 16.4 billion at March 31, 2026, while total fixed assets increased substantially from JPY 42.0 billion to JPY 59.5 billion. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Meanwhile, total liabilities did not increase materially, moving from JPY 16.2 billion at March 31, 2022 to JPY 15.4 billion at March 31, 2026. Short- and long-term borrowings, which totaled JPY 1.7 billion at March 31, 2022, were subsequently repaid, and long-term borrowings had been eliminated by March 31, 2024. Retained earnings increased from JPY 59.3 billion at March 31, 2022 to JPY 122.7 billion at March 31, 2026. As the asset base expanded, the proportion funded by net assets also increased. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Revenue Growth and Profit Fluctuations

For the fiscal year ended March 31, 2022, consolidated revenue was JPY 54.3 billion, operating profit JPY 18.2 billion, and net income attributable to owners of the parent JPY 13.4 billion. In the fiscal year ended March 31, 2023, revenue increased to JPY 58.8 billion, operating profit to JPY 20.1 billion, and net income attributable to owners of the parent to JPY 15.0 billion. (Annual Securities Reports for the fiscal years ended March 31, 2022–2023)

In the fiscal year ended March 31, 2024, revenue increased to JPY 61.6 billion, while operating profit declined from the previous year to JPY 19.8 billion. Selling, general and administrative expenses included JPY 123 million of provision of allowance for doubtful accounts, while the allowance for doubtful accounts at year-end increased from JPY 9 million in the previous year to JPY 133 million. The "Business Environment and Strategy" section explained that an allowance had been recorded for overdue China-related receivables. (Annual Securities Report for the fiscal year ended March 31, 2024)

In the fiscal year ended March 31, 2025, revenue was JPY 71.8 billion, operating profit JPY 26.9 billion, and net income attributable to owners of the parent JPY 19.2 billion, all substantially higher than in the previous year. In extraordinary gains and losses, MARUWA recorded JPY 2.6 billion in subsidy income as an extraordinary gain and JPY 2.4 billion in Loss on tax purpose reduction entry of non-current assets as an extraordinary loss.

The subsidy income consisted mainly of subsidies granted by the Ministry of Economy, Trade and Industry under a program to promote domestic investment for supply chain resilience. The Loss on tax purpose reduction entry of non-current assets reflected a direct reduction in the acquisition cost of property, plant and equipment corresponding to those subsidies. Accordingly, the JPY 2.6 billion of subsidy income should not be viewed in isolation as a one-time gain; it needs to be considered together with the corresponding JPY 2.4 billion Loss on tax purpose reduction entry of non-current assets. (Annual Securities Report for the fiscal year ended March 31, 2025)

In the fiscal year ended March 31, 2026, revenue increased to JPY 74.5 billion, while operating profit decreased to JPY 25.0 billion and net income attributable to owners of the parent to JPY 18.2 billion. Gross profit decreased from JPY 39.5 billion in the previous year to JPY 39.2 billion, while selling, general and administrative expenses increased from JPY 12.6 billion to JPY 14.2 billion. As a result, operating profit was lower than in the previous year. (Annual Securities Reports for the fiscal years ended March 31, 2025–2026)

Across the five years, revenue expanded from JPY 54.3 billion to JPY 74.5 billion. Profit increased from the fiscal year ended March 31, 2022 to 2023, operating profit declined in 2024, rose substantially in 2025, and declined again in 2026. Revenue continued to expand, while profit fluctuated from year to year. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Operating Cash Flow Funding Capital Investment

Cash flows from operating activities remained positive throughout the five-year period. They were JPY 14.8 billion in the fiscal year ended March 31, 2022, JPY 15.6 billion in 2023, JPY 17.2 billion in 2024, JPY 25.4 billion in 2025, and JPY 16.9 billion in 2026. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Meanwhile, cash outflows from investing activities increased from JPY 3.5 billion in the fiscal year ended March 31, 2022 to JPY 8.8 billion in 2023 and JPY 10.8 billion in 2024. The outflow narrowed to JPY 7.7 billion in 2025, although MARUWA spent JPY 9.9 billion on purchases of property, plant and equipment. JPY 2.7 billion of subsidy proceeds reduced the net investing cash outflow. (Annual Securities Reports for the fiscal years ended March 31, 2022–2025)

In the fiscal year ended March 31, 2026, cash outflows for purchases of property, plant and equipment increased to JPY 22.5 billion, while cash flows from investing activities were an outflow of JPY 21.8 billion. This was the largest investing cash outflow in the five-year period. At the same time, cash flows from operating activities were JPY 16.9 billion, so investing cash outflows exceeded operating cash inflows.

Cash flows from financing activities remained negative throughout the five-year period, with outflows of JPY 1.1 billion in the fiscal year ended March 31, 2022, JPY 1.9 billion in 2023, JPY 1.4 billion in 2024, JPY 1.5 billion in 2025, and JPY 1.2 billion in 2026. The main items were repayments of borrowings and dividend payments, and there was no large-scale external financing. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

The year-end balance of cash and cash equivalents increased from JPY 44.4 billion in the fiscal year ended March 31, 2022 to JPY 49.6 billion in 2023, JPY 55.0 billion in 2024, and JPY 71.6 billion in 2025. In 2026, it decreased by JPY 4.6 billion to JPY 67.0 billion amid large-scale capital investment. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Over the five years, MARUWA continuously generated cash from operating activities while expanding capital investment, yet still accumulated cash through the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2026, capital investment increased further, and investing cash outflows exceeded operating cash inflows, resulting in a decline in the cash balance.

Key Notes to the Financial Statements

From the fiscal year ended March 31, 2022, MARUWA applied the Accounting Standard for Revenue Recognition and related standards. For certain transactions in the Lighting Equipment Business, this changed revenue recognition from shipment to the point when contractual performance obligations are satisfied. MARUWA stated that the effect on profit or loss for the year and retained earnings at the beginning of the year was immaterial. (Annual Securities Report for the fiscal year ended March 31, 2022)

In the fiscal year ended March 31, 2024, as noted above, JPY 123 million was recorded as provision of allowance for doubtful accounts. In the fiscal year ended March 31, 2025, the amount was JPY 67 million, and by March 31, 2026, the balance of the allowance for doubtful accounts had decreased to JPY 8 million. (Annual Securities Reports for the fiscal years ended March 31, 2024–2026)

Subsidy income and Loss on tax purpose reduction entry of non-current assets related to fixed asset acquisitions were recorded in multiple fiscal years. In the fiscal year ended March 31, 2025, the amounts were comparatively large at JPY 2.6 billion of subsidy income and JPY 2.4 billion of Loss on tax purpose reduction entry of non-current assets. In the fiscal year ended March 31, 2026, each amount was JPY 42 million. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

From the fiscal year ended March 31, 2025, MARUWA also applied the Accounting Standard for Current Income Taxes and related standards, and stated that the change had no impact on the consolidated financial statements. (Annual Securities Report for the fiscal year ended March 31, 2025)

Dividend Policy

Stable Dividends Alongside Growth Investment

Throughout the five-year period, MARUWA maintained a basic profit allocation policy that emphasized continuing stable dividends to shareholders while flexibly investing in new growth fields, maintaining and strengthening research and development, and enhancing ESG and SDG initiatives. The company generally pays dividends twice a year, through interim and year-end dividends, and this policy remained unchanged from the fiscal year ended March 31, 2022 through the fiscal year ended March 31, 2026. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

The basic policy did not set numerical targets such as a dividend payout ratio or dividend on equity (DOE). Rather than prioritizing shareholder returns independently, MARUWA pursued stable dividends in parallel with capital investment and research and development in growth fields.

Dividend Increases of ¥8 in Each Fiscal Year

Annual dividend per share increased from ¥70 in the fiscal year ended March 31, 2022 to ¥78 in 2023, ¥86 in 2024, ¥94 in 2025, and ¥102 in 2026. Each of the 5 fiscal years in the review period represented an increase of ¥8 per share from the previous fiscal year. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

In the Annual Securities Report for the fiscal year ended March 31, 2026, MARUWA stated that the annual dividend of ¥102 per share represented 30 fiscal years of non-decreasing dividends since listing, excluding commemorative dividends, and 13 consecutive fiscal years of dividend increases since the fiscal year ended March 31, 2014. (Annual Securities Report for the fiscal year ended March 31, 2026)

The Annual Securities Report for the fiscal year ended March 31, 2025 also stated that MARUWA planned to raise the annual dividend to ¥102 per share in the following fiscal year and would continue to increase dividends. The Annual Securities Report for the fiscal year ended March 31, 2026 again indicated a policy of continued dividend increases, with a planned dividend of ¥110 per share for the fiscal year ended March 31, 2027, which would represent 31 fiscal years of non-decreasing dividends since listing and 14 consecutive fiscal years of dividend increases. (Annual Securities Reports for the fiscal years ended March 31, 2025–2026)

Accordingly, MARUWA's formal basic profit allocation policy remained the continuation of stable dividends throughout the five-year period. More recently, however, the company has made its policy of continuing dividend increases more explicit, in addition to the record of increases already accumulated.

Share Repurchases

Share repurchases based on resolutions of the general meeting of shareholders or the Board of Directors were stated as "Not applicable" from the fiscal year ended March 31, 2022 through the fiscal year ended March 31, 2026. MARUWA acquired some treasury shares in each fiscal year, but these were purchases of shares constituting less than one unit under Article 155, Item 7 of the Companies Act. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Accordingly, shareholder returns over the five-year period centered on continuing cash dividends rather than share repurchases.

Key Financial Indicators

Five-Year Key Indicators

(Annual Securities Report for the fiscal year ended March 31, 2026)

Revenue expanded throughout the five-year period, and operating profit remained at a high level, but profit did not increase in a straight line. Operating profit was lower than in the previous fiscal year in 2024 and 2026, showing that expansion in revenue and profit growth did not always move together.

Meanwhile, net assets continued to accumulate and the equity ratio rose throughout the five-year period. MARUWA expanded its asset base without increasing reliance on borrowings, while its equity-funded financial base increased. At the same time, ROE trended downward, and there were periods when profit growth did not keep pace with the increase in net assets.

In cash flows, MARUWA generated funds consistently from operating activities and continued to direct those funds toward capital investment. In particular, investing cash outflows exceeded operating cash inflows in the fiscal year ended March 31, 2026, resulting in the use of part of the cash accumulated over the five-year period. MARUWA's approach of funding growth investment primarily from internal funds became more evident in the most recent fiscal year.

Five-Year Review

Over the five years, MARUWA's two business pillars—the Ceramic Components Business and the Lighting Equipment Business—remained unchanged. At the same time, the Ceramic Components Business reorganized its structure through the absorption of domestic manufacturing subsidiaries and expanded its overseas sales network, strengthening its response to growth markets while reshaping its existing business foundation. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

In management strategy, MARUWA consistently concentrated management resources on markets expected to grow, including EVs and new energy vehicles, information and communications, and semiconductors, while making forward-looking research and development and capital investments based on its ceramic materials technologies. The markets directly affecting performance changed from year to year, including 5G, China's communications market, semiconductor manufacturing equipment, memory, and next-generation high-speed communications, but the basic approach of developing differentiated products for growth markets remained in place. More recently, technological innovation in generative AI also became positioned as an important change in the business environment. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Financially, revenue expanded while profit fluctuated from year to year, and MARUWA continued to generate cash from operating activities, accumulate net assets, and invest in capital expenditures. In the fiscal year ended March 31, 2026, the scale of investment increased substantially and investing cash outflows exceeded operating cash inflows. The company's financial management, centered on growth investment funded primarily from internal resources without increasing reliance on borrowings, became more apparent in the most recent fiscal year. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

MARUWA's emphasis on decarbonization and human capital did not newly emerge during the five-year period. Rather, disclosures around existing policies became more specific in terms of management structures, numerical targets, and actual results. In shareholder returns, MARUWA maintained its basic policy of pursuing stable dividends alongside growth investment. By the fiscal year ended March 31, 2026, it had achieved 30 fiscal years of non-decreasing dividends since listing, excluding commemorative dividends, and 13 consecutive fiscal years of dividend increases since the fiscal year ended March 31, 2014. (Annual Securities Reports for the fiscal years ended March 31, 2022–2026)

Source: MARUWA CO., LTD. Annual Securities Reports, 2022–2026.