I would like to extend my sincerest appreciation for your patronage of TOKYO KEIKI.
In FY2024 (fiscal year ended March 31, 2025), our group’s consolidated business results for the current fiscal year showed 22.2% increase in net sales to \57,650million. This was primarily due to the following factors. First, in the Marine Systems Business, deliveries of systems for new shipbuilding and maintenance services performed well, and the weak yen also provided a tailwind. Second, in the Defense & Communications Equipment Business, sales of avionics equipment remained strong, supported by an increase in defense budgets. As a result, operating profit increased by 75.4% to \4,856million and ordinary profit increased by 67.2% to \5,001 million, both having reached record highs. Also profit attributable to owners of parent also significantly increased by 66.8% to \3,797 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 FY2024 were as follows:
With regard to “improving earning power,” we will examine 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 has entered into a research contract with the Acquisition, Technology & Logistics Agency (ATLA) regarding the MEMS Hemispherical Resonator Gyroscope/Inertial Navigation Technology and started R&D. 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.
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.
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.
- 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.
- 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.
- 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 FY2025 (fiscal year ending March 2026)
In the next fiscal year (ending March 31, 2026), uncertainties are expected to continue, including the impact of rising prices triggered by soaring crude oil and raw material prices and U.S. policy trends such as trade policy, and the accompanying concerns about fluctuations in financial and capital markets, as well as further increases in geopolitical risks such as the situation in the Ukraine, the conflict between the U.S. and China, and the situation in the Middle East.
Under these challenging business conditions, net sales are expected to increase in the next fiscal year, particularly in the Defense & Communications Equipment Business. However, due to higher personnel expenses and relocation costs for the headquarters, we expect net sales to increase but profits to decrease year on year.
As a result, we forecast net sales will increase by 3.4% to \59,600 million, operating profit will decrease by 19.9% to \3,890 million, ordinary profit will decrease by 21.8% to \3,910 million, and profit attributable to owners of parent will decrease by 35.2% to \2,460 million.
Basic profit-appropriation policy and dividends for the current and next fiscal years
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 ¥35 per share.
For the next fiscal year (ending March 31, 2026), we plan to increase the ordinary dividend by ¥5 per share to ¥40 in order to make stable and progressive dividends. This will be record high for three consecutive years since FY2000.
I would like to close by asking all stakeholders for your ongoing and further support and cooperation.