Top Interview
tell us about the business conditions for theQ Please
current fiscal year.

AUnder the newly formulated“Revitalize 2020” mediumterm management plan, wewill establish a “leaner”
business operation structure.
Based on the results and issues identified in our previous mediumterm management plan “NEXT 100,” we formulated a new mediumterm management plan “Revitalize 2020,” taking advantage of the100th anniversary of our foundation. In the following interview, I would
like to explain the targets and direction of the new medium-term
management plan.
President1Kenzo Terashima

Net sales increased compared to the previous
fiscal year, holding steady at 42.5 billion yen.
Income declined due to the effect of some projects
in the Transportation Systems and Industrial
Systems segments.

We achieved net sales of 42.5 billion yen, an all-time high since
2000, owing to increases in the Industrial Systems and Information
Equipment Systems segments. Orders received decreased
compared to the previous fiscal year to 39.5 billion yen, as a resultof carefully examining profitability. Operating income declined due
to continually unprofitable projects in the Transportation Systemsand Industrial Systems segments.
Ordinary income and net income attributable to owners of theparent turned to a decrease year on year owing to the effects ofexpenses on consolidation of production sites to Shiga Ryuo Plant
in the Industrial Systems segment, despite the gain on sales ofinvestment securities. The ratio of overseas sales stood at 25.3%
due to a decline in sales for the high-speed railroads in China
owing to the transition to new vehicle models.
By segment, the Transportation Systems segment has seen adecrease in orders received because of a decline in orders received
in Japan. Net sales declined due to a drop in sales from the highspeed railroads in China. Segment profit fell as engineering
expenses were additionally expensed for some overseas projects.
In the Industrial Systems segment, orders received were below theprevious year level, as we fully emphasized profitability of testing
equipment for automobile development as well as power sources. Net
sales rose owing to increases in orders for electrical equipment,
including processing machinery and printing machinery, and powersources. Segment profit declined significantly due to the occurrenceof depreciation at Shiga Ryuo Plant ahead of schedule and a greaterthan-expected increase in cost of some ongoing projects of testing

TOP INTERVIEW

equipment for automobile development. To improve profits, the wholebusiness unit is making efforts to turn into a business management
structure organized by model, rebuild the supply chain and enhance
process management.
In the Information Equipment Systems segment, orders received,
net sales, and segment profit all increased significantly due to large
projects for composite commuter pass vending machines capableof issuing a variety of tickets.

tell us about the new medium-term manageQ Pleasement plan.

AWe will enhance our “earning power” to establish
a “leaner” business management structure
capable of steadily generating profits.

Under our medium-term management plan “NEXT 100: Beyond 100years” launched in fiscal 2014, and “NEXT 100: Beyond 100 years, Ver.
2,” initiated in fiscal 2016, we promoted measures to enhance themanagement foundation through two priority policies: “building a stablebusiness earnings structure” and “restructuring production systems,”
looking toward the 100th anniversary of our foundation and beyond andwith a view to creating a Toyo Denki Seizo Group suited to the new era.
As a result, we pushed forward with the restructuring of production
systems. For example, with the launch of Shiga Ryuo Plant, a newfactory, we consolidated the production sites of the Industrial Systems
segment in Japan, which were previously divided between part ofYokohama Plant and former Shiga Factory (Moriyama, Shiga
Prefecture). In addition, we pushed forward with the improvement of thefoundation of the Transportation Systems segment by establishing
Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd., a joint
venture to serve as a pantograph manufacturing base, in Chengdu,China, and making additional investments in Taiping Zhanyun AutomaticDoor (Changzhou) Co., Ltd. (currently Changzhou Yangdian Zhanyun
Transport Equipment Co., Ltd.), a production base for important parts. Inaddition, we have at last confirmed our plan to commercialize a superhigh-speed, low-inertia dynamo featuring 20,000 rotations that iscompatible with testing equipment for development of electric vehicles(EVs). Meanwhile, with regard to numerical management targets setunder the medium-term management plan, issues remain about factorsof decline in earning power, particularly concerning the improvement ofprofitability and the speed of product development.
With these results and issues as our starting point, we re-examined
our management resources on the occasion of the 100th anniversaryof our foundation and, with the year 2020 set as the nearest target,
formulated the new four-year medium-term management plan
“Revitalize 2020,” the final year of which is fiscal 2021.
In the first two years (from fiscal 2018 to fiscal 2019), which weregard as a period for strengthening our base, we will focus on thepressing issue of improving our profitability. In the latter two years (fromfiscal 2020 to fiscal 2021), which we consider as a period for achieving
growth to realize net sales of more than 47 billion yen, we will focus on
strategically developing our businesses, including new businessalliances and M&As, both in Japan and abroad.
Under the new medium-term management plan, we added equity inprofit of unconsolidated subsidiaries and affiliates, ROE (Return onEquity) and dividend payout ratio to numerical management targets. We
will aim to achieve equity in profit of unconsolidated subsidiaries andaffiliates of 0.4 billion yen through the expansion of overseas
businesses, and ROE of 5% through the establishment of a stablebusiness earnings structure, while realizing stable return toshareholders by targeting a dividend payout ratio of 30%.
Under the basic policies of this plan, we will make new progress inorder to enhance our “earning power” and establish a “leaner” business
management structure to steadily generate profits.
* We put a middle dot between “re” and “vitalize” in katakana, a form of Japanese syllabic
writing, in order to emphasis the meaning of “again.” Under the “Next 100” medium-term
management plan, we were able to establish a foundation for future growth, including thelaunch of Shiga Ryuo Plant. We named the new medium-term management plan with theintention to gain a solid footing and make a new start toward the future in order to produce
certain results by 2020.

2

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Ryuo Plant, a new production site of the Industrial
Q ShigaSystems segment, came on stream in June 2018.
Please tell us about its performance so far.

AWe have started to see tangible results since
shortly after the consolidation.

We consolidated production sites of the Industrial Systems segment, which had been divided between part of Yokohama Plant andformer Shiga Factory (Moriyama, Shiga Prefecture), and commenced operations of Shiga Ryuo Plant in June 2018. With theintegration of development, design and manufacturing functions at
the new site, we are now capable of responding to customer needs
with speed and flexibility. Communications between divisions havebecome more active, and we now see entirely new proposals for
improvement and original ideas. Furthermore, Shiga Ryuo Plant has
gained much positive response from people in the local communityand our customers, partly because it was reported in the media.
The number of requests for factory tours and inquiries is increasing
as well.
Going forward, we will further promote research and development in the newly established R&D building and provide productsthat satisfy diverse needs of our customers.

Please allow me to take this opportunity to express my sincere gratitude to our stakeholders, including shareholders and customers,
for their guidance and support, both tangible and intangible, for us.
Concerning year-end dividends for this fiscal year (fiscal 2017),
we have decided upon 50 yen per share by adding a commemorative dividend of 20 yen to the regular dividend of 30 yen to express
our gratitude to our shareholders in commemoration of the 100th
anniversary of our founding.
We will continue to strive to further raise our position as a specialized manufacturer befitting the name of “Toyo as a technologycompany,” centering on our motor drive technology developed over
100 years since our foundation.
We hope that our shareholders look forward to the continued
growth and expansion of the Company and we would like to ask fortheir continued support.

Dividends per share
Regular dividend

tell us any comments you would like to make to
Q Please
the shareholders.

AThe Company was founded in 1918 in an aim to “domesticallymanufacture electrical equipment for railway vehicles.” Since then,we have overcome many difficulties and was able to come this far.
350204030

To live up to your expectations, we will furtherraise our position as a specialized manufacturer
befitting the name of “Toyo as a technologycompany.”

Commemorative dividend(Yen) 50

[30]

[30]

[30]

303030

20
10
06

66

2014/5

2015/5

2016/52017/5

2018/5

2019/5(Forecast)* A reverse stock split of 5 common shares into 1 was conducted on December 1, 2016. Dividends
before fiscal 2016 are stated in their actual amounts before the reverse stock split. The amounts inbrackets (“[ ]”) are those after the reverse stock split.