Concentration of Management Resources and Cost Improvements in Manufacturing, Sales and Administrative Functions

「In the dry-film business at the Thailand (Korat) factory, profitability improved as production volumes increased.」

「The segment benefited from solid orders for medical device components at the Thailand (Korat) plant and solid orders for printer-related components at the Vietnam and Philippines plants, although the Thailand (Korat) plant was affected by customers changing their production locations. The continuing effects of cost reduction activities at ASEAN plants made a significant contribution to segment profit. As a result, segment profit for the current consolidated fiscal year was ¥706 million, up 78.2% year on year.」

「The segment benefited from solid orders for medical device components at the Thailand (Korat) plant and strong orders for printer-related components at the Vietnam and Philippines plants in line with increased customer production. Continuing cost reduction activities at ASEAN plants also made a significant contribution to improving segment profitability. As a result, revenue for the interim consolidated accounting period was ¥3,633 million, up 2.5% year on year, and segment profit was ¥348 million, up 90.8%.」

「The segment benefited from solid orders for medical device components at the Thailand (Korat) plant, while the continuing effects of cost reduction activities for printer-related components at the Thailand (Korat), Vietnam and Philippines plants contributed to segment profit. As a result, revenue for the interim consolidated accounting period was ¥3,544 million, up 5.6% year on year, and segment profit was ¥182 million, up 129.1%.」

「In internal operations, we pursued cost reductions by improving productivity through automation and other measures to strengthen cost competitiveness, improving transportation costs, and changing an accounting policy to ensure rigorous cost management, changing the depreciation method from the declining-balance method to the straight-line method from the beginning of the first quarter of the current consolidated accounting period. As a result, revenue for the nine-month period ended in the current third quarter was ¥11,807 million, up 20.4% year on year, and segment profit was ¥1,174 million, up 56.5%.」

「The segment performed well, as strong orders for powertrain-related components at major ASEAN plants, including the Thailand (Bangkok) and Indonesia plants, offset the impact of production cuts by domestic customers caused by the semiconductor shortage. In addition, we improved productivity through automation and other measures to strengthen cost competitiveness, improved transportation costs, and changed an accounting policy to ensure rigorous cost management, changing the depreciation method from the declining-balance method to the straight-line method from the beginning of the first quarter of the current consolidated accounting period. As a result, revenue for the six-month period ended in the current second quarter was ¥7,300 million, up 8.2% year on year, and segment profit was ¥812 million, up 32.6%.」

「To address these challenges, we will continue our efforts to adjust supply and demand in cooperation with customers and partner companies, level out production through inventory holdings, and strengthen cost competitiveness.」

「As of the end of the current consolidated fiscal year, we completed our withdrawal from the Mexico manufacturing business and eliminated the destabilizing factors affecting consolidated performance.」

「Against this backdrop, our group worked to prevent COVID-19 infections, surveyed business partners' trends, including changes in production plans and supply chains, reduced expenses, pursued the 2 themes set out as the basic policies of Medium-Term Management Plan 2022, namely refining differentiated technologies and cost competitiveness and pursuing the construction of a new business model, and worked on the withdrawal from the Mexico manufacturing business announced on 16 June 2020.」

「The challenges ahead are to pursue the execution strategy of Medium-Term Management Plan 2022, formulated as a three-year plan, together with expense reduction activities to prepare for a decline in orders caused by the COVID-19 pandemic, while assessing structural changes in each business area after the pandemic subsides, particularly changes in supply chains, and flexibly adding measures to and changing the priorities of the execution strategy.」

「The performance of this business was affected by production adjustments by customers at the main ASEAN plants, but benefited from solid orders for winding-related components at the Inazawa plant and lower depreciation expenses following the impairment of property, plant and equipment in the previous consolidated fiscal year. As a result, revenue for the nine-month period ended in the current third quarter was ¥13,770 million, up 6.1% year on year, and segment profit was ¥681 million, up 855.3%.」

「The performance of this business was affected by production adjustments by customers at the main ASEAN plants, but benefited from increased orders for winding-related components at the Inazawa plant and lower depreciation expenses following the impairment of property, plant and equipment in the previous consolidated fiscal year. As a result, revenue for the six-month period ended in the current second quarter was ¥9,273 million, up 10.4% year on year, and segment profit was ¥526 million, up 1,069.1%.」

「At last, both our plastic injection molding business and the metal press business operated by 株式会社富士プレス have reached the stage of transitioning from start-up to mass production. We therefore decided to terminate the joint venture agreement and switch to independent operations. Business separation date 1 July 2019 Business transfer for consideration consisting solely of cash and other assets Property, plant and equipment (Note) ¥1,251 million Non-current liabilities ¥1,073 million」

「At last, both our plastic injection molding business and the metal press business operated by 株式会社富士プレス have reached the stage of transitioning from start-up to mass production. We therefore decided to terminate the joint venture agreement and switch to independent operations.」

「Both our plastic injection molding business and the press business operated by Fuji Press have reached the stage of transitioning from start-up to mass production. We therefore decided to terminate the joint venture agreement and switch to independent operations.」

「Provision for business restructuring losses － 101」

「While proceeding with the transformation into a highly profitable organization through business rebalancing, we are concentrating activities on areas to be developed as strengths.」

「Against this backdrop, during the consolidated fiscal year, the first year of the medium-term management plan, the Group proceeded with steady order-generation and improvement activities to strengthen its foundation while rebalancing its businesses in line with the policies of “select and eliminate businesses” and “focus on activities that generate earnings.” As a result, revenue for the consolidated fiscal year was ¥43,791 million, up 13.9% year on year, and operating profit was ¥497 million, up 73.7%.」

「The business performed well, driven by increased orders at overseas plants, particularly the Bangkok and Vietnam plants, the start of full-scale mass production of coil components, and the effects of operational improvements at each plant. As a result, revenue for the nine-month period ended in the current third quarter was ¥11,244 million, up 21.2% year on year; segment profit before allocation of corporate expenses was ¥260 million, up 82.5%; and segment profit after allocation was ¥151 million, up 50.6%.」

「The business performed well, driven by increased orders at overseas plants, particularly the Bangkok and Vietnam plants, the start of full-scale mass production of coil components, and the effects of operational improvements at each plant. As a result, revenue for the six-month period ended in the current second quarter was ¥7,311 million, up 19.6% year on year; segment profit before allocation of corporate expenses was ¥157 million, up 64.7%; and segment profit after allocation was ¥81 million, up 53.0%.」

「The performance of this business was supported by strong trends in IC cards and related products for the amusement industry, but was affected by a decline in earnings following the closure of the Kyoto facility of 日邦メカトロニクス株式会社.」

「Over the next 3 years, the management strategy will seek to transform the company into a highly profitable organization by rebalancing businesses between growth areas and stable and mature areas, withdrawing from or scaling back loss-making businesses, and developing strengths.」

「However, to address these events and circumstances, the Group has been improving productivity in manufacturing, sales and administrative management, and the effects of these measures are beginning to emerge. In addition, from a financial perspective, the Group has renewed its loan commitment line agreement with its relationship banks, enabling it to raise funds flexibly and stably. Accordingly, the Group has determined that no material uncertainty exists regarding the going concern assumption.」

「The performance of this business was affected by upfront investment costs at the Mexico and Hiroshima plants, but benefited from the effects of operational improvements at each plant, with the Bangkok and Jakarta plants driving performance. As a result, segment revenue for the six-month period ended in the current second quarter was ¥6,113 million, up 3.6% year on year; segment profit before allocation of corporate expenses was ¥95 million, compared with a segment loss of ¥43 million in the previous fiscal year; and segment profit after allocation was ¥53 million, compared with a segment loss of ¥86 million.」

「Against this backdrop, to achieve a return to operating profitability and transform the Group into an organization capable of generating stable earnings, we have pursued steady improvement activities under the slogans “select and eliminate businesses” and “focus on activities that generate earnings.”」

「Improving profitability by shifting toward areas in which management resources are concentrated and pursuing cost improvements covering not only manufacturing costs but also sales and administrative efficiency.」