Message from the President

We are pressing forward with our initiatives for the second
two years of the medium-term management plan (“Revitalize2022” for the period from fiscal 2020 to fiscal 2021) as “a period foraccumulating earning power and returning to a growth path.”lower sales to clients other than JR Group. Segment profit declined due to decreases in net sales and profits at subsidiaries
despite efforts to step up cost and process control.
In the Industrial Systems segment, orders received fell below
the previous fiscal year due to a decrease in orders for processing
equipment. Net sales declined primarily due to lower sales fortesting equipment and power supply. Segment profit decreased

mainly owing to the impact of lower net sales, despite efforts toenhance cost control.
In the Information Equipment Systems segment, orders received, net sales, and segment profit all declined year on year
mainly due to a negative rebound from the previous fiscal year’srecording of large-scale orders, in addition to the impact of
COVID-19.

Future outlook and message to our stakeholders
Akira Watanabe

Kenzo Terashima

President

ChairmanResults for the fiscal year ended May 2021
Although both net sales and profits decreased year on year due to the impact ofCOVID-19, profits exceeded the published forecasts.
The business environment for the fiscal year ended May 2021 remained harsh throughout the year due to the impact of COVID-19
and three declarations of a state of emergency triggered by it.
Amid restrictions imposed on economic activities both in Japanand overseas, the significant decline in tourism demand as wellas the spread of teleworking caused a sharp decrease in thenumber of passengers transported by railway operators. In addition, capital investments were called off in the manufacturing industry due to uncertain outlook. In the latter half of the year, somerecovery was observed thanks to measures to prevent the spreadof infection and large-scale economic packages both in and outof Japan. China, in particular, experienced an economic recovery
as the impact of COVID-19 quickly subsided.

5In such an environment, the Group’s orders and sales were impacted as there were some revisions and postponements in railway operators’ plans for rolling stock production and replacement
as well as equipment renewal plans in the manufacturing industry.
As a result, orders received, net sales, and operating income all
decreased year on year to 30.0 billion yen, 33.1 billion yen, and
420 million yen, respectively. However, profits exceeded the published forecasts, helped by improved profitability. Ordinary income
was 750 million yen mainly due to foreign exchange gains, andnet income attributable to owners of the parent was 970 million
yen as a result of efforts to reduce certain cross holdings.
By segment, the Transportation Systems segment saw a yearon-year decrease in both orders received and net sales due to

We will work on measures to establish a “muscular” business management systemthat can generate stable profits and to expand the scale of our business.
While the domestic and overseas economic conditions remain severe due to concerns over the resurgence of COVID-19 caused bymutant strains, there are signs of recovery in the form of visible
effects of various policies and developments in the recovery ofoverseas economies such as China. Measures to prevent thespread of infection and vaccination are being rolled out both inJapan and overseas, and it is hoped that personal consumption
and capital investment will recover as the easing of movement restrictions will progress with the subsiding of COVID-19.
In the Transportation Systems segment, the number of railway
users in Japan is predicted not to return to the level seen in thepast due to the decline in demand for transport as well as the intensifying population drop and increasingly aging population.
However, in China, the number of passengers on trunk railways
has generally recovered to the past level, raising expectations fora recovery in maintenance demand for high-speed railways andurban transport systems. Projects in overseas markets other thanChina, such as Southeast Asia, have also started to pick up.
In the Industrial Systems segment, production facilities andprinting machines are returning to the levels seen in the past, andthere has been an increasing number of inquiries from the UnitedStates, China, and South Korea. Furthermore, efforts toward therealization of a sustainable society, such as decarbonization, aregathering pace, and test equipment for the electrification of automobiles and autonomous driving as well as dispersed powersource systems are projected to grow. There are also expectations
for the expansion and reinforcement of infrastructure equipment,such as emergency power generators, as part of efforts to build
national resilience.
In the Information Equipment Systems segment, with increasing demand for digitalization and contactless systems, there is a
growing need for compatibility with IC train tickets, including
those for local lines, and as such, demand for products such as IC
car-mounted terminals is expected to rise.
As new customer needs are emerging in the wake of changes
in behavior and values in a post-COVID society, we believe thatthe areas in which our business can make contribution will furtherexpand.
In response to these changes in the business environment, theGroup reviewed the medium-term management plan “Revitalize2020,” which will be completed in fiscal 2021, and relaunched it
as “Revitalize 2022” in January 2021. Based on the achievements of efforts to improve profitability during the first two years(from fiscal 2018 to fiscal 2019), we conducted a review to address changes in the business environment and designated thesecond two years (from fiscal 2020 to fiscal 2021) as “a period
for accumulating earning power and returning to a growth path.”
We are working on measures to establish a “muscular” business
management system that can generate stable profits and to expand the scale of our business.
We hope that our stakeholders will look forward to the development and expansion of our business and would like to ask fortheir continued support.

Toyo Denki Seizo Report 2021

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