Transforming into a Highly Profitable Company and Prioritizing Operating Margin

「Accordingly, at this point, we will not revise our consolidated full-year earnings forecast for the fiscal year ending March 2027, announced on 27 April this year, regarding the outlook going forward.」

「Against this backdrop, the Group has formulated the Long-Term and Medium-Term Management Plan 2030. While rebuilding its management foundation with safety as the top priority, it aims to sustainably enhance corporate value by pursuing an integrated growth strategy based on its core competencies and a financial strategy.」

「As disclosed in the Long-Term and Medium-Term Management Plan 2030 dated 30 July this year, under a policy of strengthening initiatives that prioritize safety following reflection on the Fujioka Plant accident, …… The company will implement a growth strategy centered on strengthening product capabilities, entering new fields and reducing costs, a financial strategy centered on growth investment required to realize that strategy and shareholder returns as its other pillar, and work to enhance corporate value.」

「As its medium-term management policy, the Group has formulated a Long-Term and Medium-Term Management Plan through FY2027. Through strengthening product capabilities, entering new fields and achieving groundbreaking cost reductions, it aims to develop products that continue to earn trust and to propose better products to customers. The plan sets targets of consolidated sales of ¥110 billion, operating profit of ¥5.5 billion, an operating profit margin of 5% and ROE of at least 5%.」

「This year is the second year of the Long-Term and Medium-Term Management Plan 2027, formulated last year and updated in May, and is positioned as a period of upfront investment. Alongside further growth investment, we will steadily advance 3 strategies: strengthening product capabilities, centered on developing high-value-added products and responding to EV adoption; expanding into new fields, centered on further strengthening global business operations, including the India joint venture, and expanding non-automotive fields; and groundbreaking cost reduction, centered on in-house production of processing technologies, improving global procurement and improving productivity. Through these efforts, we will work to further improve profitability and achieve the FY2027 targets of sales of ¥110 billion, operating profit of ¥5.5 billion, an operating profit margin of 5% and ROE of at least 5%.」

「To achieve consolidated sales of at least ¥110 billion, operating profit of ¥5.5 billion, an operating profit margin of 5% and ROE of at least 5% by FY2027, the company has formulated the following strategy to become a creative company and is advancing these initiatives.」

「Operating profit increased by ¥507 million to ¥992 million, up 104.6% year on year. Ordinary profit increased by ¥877 million to ¥2,422 million, up 56.8%, and quarterly net income attributable to owners of the parent increased by ¥990 million to ¥1,464 million, up 209.1%. Regarding the full-year earnings outlook, the company will revise its forecasts for sales, operating profit, ordinary profit and net income attributable to owners of the parent to the figures announced today. Although sales are expected to increase, the production stoppage at one major customer and lower-than-planned sales volumes in China are anticipated. Costs related to responding to the incident and further strengthening safety measures are expected to exceed the increase in profit accompanying the higher sales, so operating profit is forecast to decline from the initial full-year outlook.」

「Regarding operating results, operating income increased by ¥340 million, or 99.8%, year on year to ¥681 million. The effects of higher sales and rationalization improvement efforts outweighed the impact of inflation in steel, materials, power and utility costs, as well as increases in fixed costs undertaken deliberately, including research and development expenses for new product development and investments in personnel to improve employees' living standards, resulting in higher income.」

「Operating profit is expected to exceed the announced full-year figure due to higher automobile production volumes at major customers from the second quarter, the pass-through of inflation-related price increases in accordance with customary business practices, and accelerated company-wide efficiency improvements.」

「To achieve consolidated sales of at least ¥100 billion, operating profit of ¥5 billion, an operating profit margin of 5% and ROE of at least 5% by FY2027, the company has formulated the following strategy to become a creative company and is advancing these initiatives.」

「[Reference] Revision to the full-year consolidated earnings forecast for the fiscal year ending March 2023, announced on 2 February 2023 (Unit: ¥ million) Previous forecast Current forecast Change Sales 92,500 91,500 △1,000 Operating profit 1,500 750 △750 Ordinary profit 2,700 1,450 △1,250 Net income attributable to owners of the parent 1,600 400 △1,200」

「Regarding the outlook, the company revised its full-year sales and operating profit forecasts on 27 October 2022. Although the sales forecast was revised upward in absolute terms, the increase reflects higher selling prices for steel and other materials, which do not contribute to profit, and the pass-through of foreign exchange movements. These factors outweighed the underlying forecast decline in sales due to lower production volumes at major customers and will act as a negative factor for operating profit. Accordingly, the operating profit forecast was revised downward. [Reference 2] Revision to the full-year consolidated earnings forecast for the fiscal year ending March 2023, announced on 27 October 2022 (Unit: ¥ million) Previous forecast Current forecast Change Sales 89,000 92,500 +3,500 Operating profit 2,300 1,500 △800 Ordinary profit 2,700 2,700 － Net income attributable to owners of the parent 1,600 1,600 －」

「Operating loss was ¥391 million, compared with operating profit of ¥338 million in the same quarter of the previous year.」

「Based on the following 4 items, we aim to reach consolidated sales of ¥100 billion and an operating profit margin of 5% by FY2025.」

「Sales for the 3-month period of the third quarter were ¥21,964 million, the highest quarterly figure for the current year. Operating income for the same 3-month period was ¥809 million, an increase of 395.3% from operating income of ¥204 million in the second quarter (April to September).」

「The company expects sales volumes to major customers in the second half of the fiscal year to remain below the initial plan and has therefore revised downward its full-year consolidated sales and earnings forecasts as shown below. [Reference] Full-year consolidated earnings forecast announced on 28 October 2021 for the fiscal year ending March 2022 (Unit: ¥ million) Sales 80,500 Operating profit 1,700 Ordinary profit 2,050 Net income attributable to owners of the parent 1,200」

「The pace of progress toward this year's target profit has been affected somewhat by material inflation and semiconductor-related impacts, but the Company expects to achieve its full-year target through higher sales from the second quarter onward, this year's cost reduction activities, and the realization of benefits from cost reduction activities accumulated during the COVID-19 pandemic in the previous year.」

「Based on the three pillars for achieving Global Vision 2025, we aim to reach consolidated sales of ¥100 billion and an operating profit margin of 5% by FY2025.」

「By reducing labor and operating costs through productivity improvements, reducing raw material costs through lower scrap volumes, converting fixed costs to variable costs, and pursuing other total cost reduction initiatives undertaken across the Group to turn challenges into opportunities, cumulative consolidated profit for the quarter turned positive.」

「For the six-month period ended 30 September, sales declined by ¥10,540 million, or 25.1%, from the same period of the previous year to ¥31,518 million. Due to the impact of the substantial decline in revenue, operating loss was ¥845 million, compared with operating profit of ¥1,354 million in the same period of the previous year. Ordinary loss was ¥462 million, compared with ordinary profit of ¥1,508 million, while net loss attributable to owners of the parent was ¥573 million, compared with net income attributable to owners of the parent of ¥936 million in the same period of the previous year.」

「Regarding the earnings situation, the company undertook further company-wide efforts to reduce total costs in response to the decline in sales and worked to build a business structure capable of securing profitability. However, due to the impact of the substantial decline in revenue, operating loss was ¥1,342 million, compared with operating profit of ¥788 million in the same quarter of the previous year. Ordinary loss was ¥695 million, compared with ordinary profit of ¥948 million in the same quarter of the previous year. Net loss attributable to owners of the parent was ¥604 million, compared with net income attributable to owners of the parent of ¥631 million in the same quarter of the previous year.」

「The increase in value added from higher sales and steady progress in cost improvements offset fluctuations in selling prices, fixed costs associated with the transformation of the North American business structure, and costs related to the COVID-19 response. As a result, operating income increased by ¥463 million, or 20.8%, from the previous consolidated fiscal year to ¥2,692 million.」

「As sales increased and cost improvement activities steadily progressed, operating income increased by ¥586 million, or 34.2%, year on year to ¥2,302 million. Ordinary income was ¥2,824 million, up 24.4%, and net income attributable to owners of the parent was ¥1,696 million, up 24.3%.」

「As sales increased and cost improvement activities steadily progressed, operating income increased by ¥326 million, or 31.7%, year on year to ¥1,354 million. Ordinary income was ¥1,508 million, up 3.6%, while net income attributable to owners of the parent was ¥936 million, down 0.5%.」

「Regarding operating results, as sales increased and improvement activities, including procurement and productivity improvements, progressed, operating income increased by ¥209 million, or 36.3%, year on year to ¥788 million. Ordinary income decreased by ¥48 million, or 4.9%, to ¥948 million.」

「The company uses operating profit, ordinary profit and net income as earnings metrics, together with standalone and global sales, trends in automotive and non-automotive sales, future investment in people, equipment and funds, and R&D expenditure, to assess progress toward its targets.」

「Regarding operating results, operating income decreased by ¥613 million, or 26.3%, year on year to ¥1,715 million, due to lower sales, market fluctuations in steel prices, the weaker Indonesian rupiah and the impact of tariffs in North America, among other factors. Ordinary income was ¥2,271 million, down 14.5%, and net income attributable to owners of the parent was ¥1,364 million, down 0.8%.」

「Regarding operating results, operating income decreased by ¥134 million, or 11.6%, year on year to ¥1,028 million. Ordinary income was ¥1,456 million, up 13.6%, due to the management of foreign-currency-denominated assets and other factors, while net income attributable to owners of the parent was ¥940 million, up 34.3%.」

「Operating profit was ¥578 million, up ¥25 million, or 4.7%, from the same quarter of the previous year. Ordinary profit was ¥997 million, up 30.5%, due to the impact of foreign exchange gains and losses. Net income attributable to owners of the parent was ¥705 million, up 50.0%.」

「Operating profit reached a record high of ¥3,358 million, an increase of ¥621 million, or 22.7%, from the previous consolidated fiscal year. Ordinary profit also reached a record high of ¥3,350 million, an increase of ¥422 million, or 14.4%.」

「The Group aims to transform itself into a high-profit company and uses operating profit margin as a key management metric.」