I would like to extend my sincerest appreciation for your patronage of TOKYO KEIKI.
In FY2025 (fiscal year ended March 31, 2026), our group’s consolidated business results for the current fiscal year showed 6.1% increase in net sales to ¥61,186million. This was primarily due to the following factors. First, in the Defense & Communications Equipment Business, sales of avionics equipment and shipboard equipment remained strong, supported by an increase in defense budgets. Second, all segments recorded revenue growth including the Marine Systems Business. As a result, operating profit increased by 10.4% to ¥5,362million and ordinary profit increased by 9.8% to ¥5,492 million, both having reached record highs. Also profit attributable to owners of parent also increased by 5.5% to ¥4,005 million.
Our group has positioned the three years from fiscal 2024 as a period of leap forward toward growth in order to achieve the TOKYO KEIKI Vision 2030, released in June 2021. In the new Medium-term Business Plan starting from fiscal 2024, for us to shift to a stage of sustainable growth and enhancement of corporate value over the medium to long term, we have set “improving earning power” as the top priority in our basic policy, which emphasizes profit growth, and work on “expanding business domains” and “strengthening management foundation.”
Major initiatives in FY2025 were as follows:
With regard to "improving earning power," we have been continuously examining corporate strategy for our businesses on an ongoing basis based on an understanding of the "earning power" of each business unit and an analysis of its capital profitability and growth potential.
With regard to "expanding business domains," the Defense & Communications Equipment Business is advancing R&D of the MEMS Hemispherical Resonator Gyroscope / Inertial Navigation Technology under a research contract with the Acquisition, Technology & Logistics Agency (ATLA), and has also invested in and formed a business alliance with Metro Weather Co., Ltd., with the aim of developing and mass-producing Doppler lidar for the defense market. In addition, we have invested in Logic and Design Inc., with the aim of developing products that integrate image enhancement and AI camera technologies. In addition, R&D for an edge AI system for image inspection is in progress using Digital Application Processor Distributed Network Architecture (DAPDNA), a product of the Hydraulics and Pneumatics Business. Additionally, in the Railway Maintenance business within the Other Businesses segment, we launched sales of an "inertial track geometry measurement system" that can contribute to improving the efficiency and productivity of track maintenance operations.
With regard to "strengthening management foundation," we will promote digital transformation (DX), including the renewal of the company-wide core system, and utilize digital technologies, including AI and IoT. We will not only improve our business processes, but also transform our products, services, and business models themselves to gain competitive advantage. In addition, we will strengthen our human capital by increasing our workforce in line with sales growth and enhancing education and training. Additionally, through the relocation of our head office, we will establish an environment to accommodate continuous business expansion, with the aim of sustainably enhancing corporate value. At the same time, we will create a comfortable workplace environment for our employees, striving to facilitate communication and strengthen engagement.
The Medium- to Long-Term Corporate Strategy and Challenges to Be Addressed
On June 10, 2021, our group formulated and announced its long-term vision for 2030, TOKYO KEIKI Vision 2030. The vision outlines the future of our group in 2030, as we approach our 125th anniversary and look ahead to our 150th and 200th anniversaries, with the aim of achieving sustainable growth. Accordingly, our company has set a target for 2030 to achieve consolidated net sales of 100 billion yen or more, a consolidated operating profit margin of 10% or more, and a return on equity (ROE) of 10% or more.
Under this vision, we will transition to a stage where we achieve sustainable growth and enhance our long-term corporate value by leveraging the innovative technologies we have developed over the years to create “global niche top businesses” focused on the SDGs (Sustainable Development Goals).
Going forward, our company aims to further expand its business scale and is working to establish a growth cycle in which profits from existing businesses and growth drivers that have been cultivated as sources of revenue are reinvested.
We aim to achieve sustainable growth and enhance long-term corporate value, while responding to the requests and expectations of our stakeholders. Based on this target, we have formulated guidelines for our three-year Medium-term Business plan starting in the fiscal year ended March 31, 2025 that focus not only on expanding sales but also on improving earning power. To achieve this, the following three basic policies have been established.
(i)Improving earning power
Our company has set a target of achieving a consolidated operating profit margin of 10% or more and a return on equity (ROE) of 10% or more in the fiscal year ending March 31, 2031. To achieve this target, we will promote a business strategy that prioritizes improving earning power aimed at achieving the profit margin target in the fiscal year ending March 31, 2031 while ensuring the sustainability of our corporate activities.
(ii)Expanding business domains
Our Group aims to achieve sustainable expansion of its business domains by proactively promoting its “Niche Top Strategy,” which focuses on creating and nurturing new products and businesses targeted at specific markets to address social issues and developing them into market leaders. To achieve this, we will fully leverage the various tangible and intangible experiences and strengths we have cultivated over the years. In addition, for new products and businesses, we will respond to challenges such as the acceleration of technology and product cycles, intensifying competitive environments, and rising R&D costs by adopting a global perspective and utilizing strategies such as M&A and open-and-close strategies when appropriate.
(iii)Strengthening business foundation
Our group aims to improve earning power and expand our business domains, and we have set the achievement of the management indicators for TOKYO KEIKI Vision 2030 as an important target. To achieve this target, we will focus on strengthening human capital, enhancing governance, improving capital efficiency, promoting DX (digital transformation), and executing development investments across the entire group, thereby further strengthening our management foundation.
Outlook for FY2026 (fiscal year ending March 2027)
In the next fiscal year (ending March 31, 2027), uncertainties are expected to continue, including the impact of rising prices triggered by soaring crude oil and raw material prices, the impact of U.S. policy trends such as trade policy, the accompanying concerns about fluctuations in financial and capital markets, as well as further increases in geopolitical risks such as the intensifying conflict in the Middle East and the prolonged situation in Ukraine, and tightened Chinese export controls on rare earths.
Under these challenging business conditions, we forecast the fifth consecutive year of revenue growth and the fourth consecutive year of profit growth, as higher net sales are anticipated, particularly in the Defense & Communications Equipment Business, although increases in personnel expenses and depreciation associated with the relocation of the head office are also anticipated.
As a result, we forecast net sales will increase by 11.6% to ¥68,300 million, operating profit will increase by 19.4% to ¥6,400 million, ordinary profit will increase by 18.5% to ¥6,510 million, and profit attributable to owners of parent will increase by 24.8% to ¥5,000 million.
At this point, the impact of the escalating conflict in the Middle East has not been incorporated into the earnings forecast, as the situation remains highly uncertain and fluid.
The Basic Policy on Profit Distribution and Dividends for the Current and Next Fiscal Years
Our basic policy is to implement optimal shareholder return measures with an awareness of the optimal capital structure, while giving top priority to investment in growth and balancing it with our financial base, toward enhancing corporate value by realizing the TOKYO KEIKI Vision 2030. On this basis, we will strive to provide stable and continuous shareholder returns, taking into consideration past dividend results for each fiscal year.
The dividend for the current fiscal year is expected to be ¥40 per share.
For the next fiscal year (ending March 31, 2027), we plan to increase the ordinary dividend by ¥8 per share to ¥48, as we expect to achieve record-high operating profit and ordinary profit for the third consecutive fiscal year.
I would like to close by asking all stakeholders for your ongoing and further support and cooperation.