I would like to extend my sincerest appreciation for your patronage of TOKYO KEIKI.
In fiscal 2022 (fiscal year ended March 31, 2023), the global economy resumed economic activity in each country in earnest, despite the impact of China’s zero COVID policy. Amid these conditions, there were continued concerns about economic recovery because of soaring resource prices caused by the protracted situation in Ukraine and monetary tightening across the world.
The Japanese economy also remained uncertain, due to a shortage of components such as semiconductors, soaring raw material prices, rapid exchange rate fluctuations, and a sharp rise in energy prices.
FY2022 Operating Results
Under these economic conditions, the TOKYO KEIKI Group has engaged in the following basic policies of the Medium-term Business Plan: “Expanding business domains,” “Promoting globalization,” and “Continuously strengthening existing business,” in order to realize our TOKYO KEIKI Vision 2030 that we announced in June 2021.
Regarding “Expanding business domains,” in order to expand our space business, our Defense & Communications Equipment Business began constructing a space building (formerly named the satellite assembly building) to enable the simultaneous production of several small satellites. Regarding “Promoting globalization,” we stepped up efforts to expand sales of our new model Electronic Chart Display and Information Systems (ECDIS) to Europe in Marine Systems Business. In Defense & Communications Equipment Business, the performance specifications of our high-resolution Ku-band solid-state radar for coastal surveillance “SeaKu,” which was delivered to Europe in the previous fiscal year, have been listed in the recommendations of VTS radar issued by International Association of Marine Aids to Navigation and Lighthouse Authorities (IALA). Accordingly, we expect further progress of sales overseas in the future. Furthermore, in Other business, we released a new product M-CAP V2 for material inspection to strengthen sales expansion in the Asian region, where demand is strong.
Regarding “Continuously strengthening existing business,” in Marine Systems Business, we have begun joint R&D with Nabtesco Corporation with the aim of further reduction of vessel fuel consumption and labor-saving. In addition, capital expenditures were made to increase production in order to meet increasing demand for mechanical gyrocompasses and fiber optic gyrocompasses.
Under such measures, with regard to the Group’s consolidated earnings for fiscal 2022, net sales increased by 6.7% compared with the previous fiscal year to ¥44,296 million with increased revenue in all segments as a result of the substantial increase in orders received, the effect of the yen’s depreciation, and the Company’s continued efforts to optimize selling prices on a company-wide basis. On the other hand, because of the increase in the cost of sales ratio due to soaring raw material prices and changes in the product mix, as well as the increase in SG&A expenses, there was a 19.8% decrease in operating profit from the previous fiscal year to ¥1,312 million, and a 12.4% decrease in ordinary profit to ¥1,687 million. In addition to the above, a ¥662 million gain on sales of shares was recorded as extraordinary income for the purpose of a reduction in cross shareholdings, but Hydraulics and Pneumatics Business recorded an impairment loss of ¥1,115 million as extraordinary losses. As a result, there was a 41.6% decrease in profit attributable to owners of parent from the previous fiscal year to ¥873 million.
The operating profit margin declined 0.9 percentage points compared with the previous fiscal year to 3.0% and the return on equity (ROE) declined 1.9 percentage points compared with the previous fiscal year to 2.7%. Going forward, we will focus on further improving business earnings and strengthening our financial bases while strengthening risk management.
In fiscal 2023 (fiscal year ending March 31, 2024), we expect the uncertain conditions to continue including rising energy and raw material prices, exchange rate fluctuations caused by interest rate gaps between Japan and the United States, heightened geopolitical risks such as the situation in Ukraine and the conflict between the United States and China, and inflation and monetary tightening in various countries.
Amid this business environment, we forecast net sales will increase by 3.2% to ¥45,700 million for fiscal 2023, thanks to a backlog of orders at a record high level for the past 10 years, and an increase in the national defense budget. In addition, by working to optimize selling prices in each business, while investing in human resources and R&D, we forecast operating profit will increase by 2.9% to ¥1,350 million, ordinary profit will decrease by 8.1% to ¥1,550 million, and profit attributable to owners of parent will increase by 38.7% to ¥1,210 million.
The currently anticipated impact on our business performance from factors including the higher price of raw materials has been factored in to a certain extent. If any matter to be disclosed arises, such information will be promptly announced.
For the fiscal 2022 dividend we have decided to distribute the ordinary dividend of ¥30 per share. Furthermore, for fiscal 2023, we intend to increase the ordinary dividend by ¥2.5 to ¥32.5 per share, with the aim of achieving stable and continuous dividends, after taking into account our business performance and past dividend results.
On behalf of the senior management and workforce at TOKYO KEIKI, I would like to close by asking all stakeholders for your ongoing and further support and cooperation.