Tsuzuki Denki Co., Ltd.
Financial Results for the Fiscal Year Ended
March 31, 2021
May 27, 2021
Stock code: 8157
URL https://www.tsuzuki.co.jp/english/

Copyright © 2021 Tsuzuki Denki Co., Ltd.

FY03/21 Results

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Agenda1

FY03/21 Results

2

Progress of Medium-termManagement Plan

3

FY03/22 Forecast

4

Shareholder Return５ Sustainability Initiatives
1

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FY03/21 Results

1

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

FY03/21 Results

2

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FY03/21 Results

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Highlights
Steady growth in existing businesses even with COVID-19 impact andresults exceeded initial forecasts despite lower sales and profits YoY

Information Network Solutions segment(+) Remote work demand, growth in SaaS contact center services, and
GIGA School Concept*1-related orders(-) Decline due to absence of special demand which existed in FY03/20*2, COVID-19 impact(postponement and work delays for development and construction projects, restrictions on
overall sales activities)*1 GIGA School Concept: An initiative by Ministry of Education, Culture, Sports, Science and Technology to develop an
educational ICT environment including high-speed and high-capacity networks and ensuring that every primary and secondary
school student has a computer or tablet*2 Special demand: Replacement demand for PCs following the end of technical support for Windows 7

Electronic Devices segment(+) 2H recovery in demand for electronic devices in the factory automation equipment andautomotive markets(-) Stagnation in supply chain caused by COVID-19 pandemic
3

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FY03/21 Results

Medium-term
Progress

Shareholder
ReturnFY03/22 Forecast

Sustainability

Impact of COVID-19
Orders recovered from Q3 onward➢ Previously delayed sales activities resumed➢ However, some industries were greatly affected by the pandemic (substantial
declines in healthcare, railway, and travel industries)

Quarterly orders(Millions of yen)
State of emergency declaration (April to endMay) caused orders to be postponed
Q2 orders: -10.0% YoY■FY03/20■FY03/21

29,91829,955 (-0.1% YoY)

34,19030,759(-10.0% YoY)

2Q
Q2

121,226

30,55930,419(+6.5% YoY)(+7.2% YoY)

28,6991Q
Q1

121,655

3Q
Q3
4(+0.4% YoY)

28,382

4Q
Q4

20/3期

21/3期

Full-year

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FY03/21 Results

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnStatement of Income
FY03/20

Sustainability(Millions of yen)

(Reference)
Initial forecast

FY03/21

Change(amount)

Change(YoY)

Net sales

125,366

112,000

120,004-5,362-4.3%

Gross profit

23,075－

21,465-1,609-7.0%(Cost ratio)(81.6%)－(82.1%)(0.5pt)－SG&A expenses

18,618－18,263

-354

-1.9%

Operating income

4,457

2,700

3,202

-1,254-28.2%(Operating margin)(3.6%)－(2.7%)(-0.9pt)－

Profit attributable toowners of parent

3,155

1,800

2,346

-809

-25.6%

Orders121,226－

121,655

429

+0.4%

Order backlog

20,815－

22,467

1,651

+7.9%

5

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FY03/21 Results

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ReturnSustainability

Factors Affecting Sales(Billions of yen)

125.4

+10.6
-12.0

+2.0
-5.6

FY03/20 Reactionary
Sales
decline

COVID-19
impact
(-)

120.0

-5.4
-4.3% YoY

+2.1

-2.5

Sales of COVID-19
impactsubsidiary
（+）

GIGA
school- Large orders FY03/21- Services
Sales

Negative factors

Positive factors➢ Reactionary decline caused by special
demand in FY03/20: -JPY12.0bn➢ COVID-19: -JPY5.6bn• Delays of development and construction
projects, restrictions on sales activities• Sluggish demand for electronic devices in
1H and stagnation in supply chain➢ Change due to sale of subsidiary: -JPY2.5bn➢ COVID-19: +JPY2.0bn• Remote work demand➢ GIGA school orders: +JPY2.1bn➢ Build-up of large order negotiations, growth in service
businesses, and impact of the consolidation of
ComDesign Inc.: +JPY10.6bn

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Factors Affecting Operating Income(Millions of yen)

-1,254-28.2%
YoY

-992
-795
Decrease in gross profit-1,609FY03/20
OperatingincomeLower sales

Deteriorationof cost ratio

Decrease inunprofitableprojects

Lower SG&A
expenses

FY03/21
OperatingincomeNegative factors

Positive factors➢ Lower sales: -JPY992mn• Reactionary decline caused by special
demand in FY03/20, COVID-19 impact➢ Deterioration of cost ratio: -JPY795mn• Large equipment installation projects withhigh cost ratio➢ Decrease in unprofitable projects: +JPY178mn➢ Lower SG&A expenses: +JPY354mn• Reduction in sales activity-related expenses due
to restrictions on going out

7

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FY03/21 Results

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Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Results by Segment(Millions of yen)

Net sales

Operating income

FY03/20

FY03/21

Change(amount)

Change(YoY)

FY03/20

FY03/21

Change(amount)

Change(YoY)

Information
Network
Solutions

102,104

97,848-4,256

-4.2%

4,289

2,960

-1,329-31.0%

Electronic
Devices

23,261

22,155-1,105

-4.8%

163

242

78

+48.2%

Consolidated
Total

125,366

120,004-5,362

-4.3%

4,457

3,202

-1,254-28.2%*Operating income adjustments are excluded.
8

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Sales by Business Model(Millions of yen)
Ratios in parentheses

118,872

125,366

120,004
YoY

Equipment

39,391(33.1%)

44,790(35.7%)

44,207(36.8%)Development&
Construction

17,665(14.9%)

19,668(15.7%)

14,518(12.1%)-26.2%

Service

36,647(30.8%)

37,645(30.0%)

39,122(32.6%)+3.9%

25,168(21.2%)

23,261(18.6%)

22,155(18.5%)-4.8%

FY03/19

FY03/20

FY03/21

Electronic
Devices9-1.3%

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Orders and Backlogs by Business Model(Millions of yen)Orders122,916

Equipment

40,659Development&
18,563
Construction

Order backlog

121,655
121,226 (+0.4% YoY)
24,95544,55743,733

20,815
9,532

17,995

8,825

14,296

9,299
5,526

Service37,257

22,467(+7.9% YoY)

37,145

39,104
2,646

3,630
3,853

2,128

2,146

Electronic
Devices

26,435

21,52824,521

7,249

19/3期
FY03/19

20/3期
FY03/20

21/3期
FY03/21

19/3期
FY03/19

10

5,516

20/3期
FY03/20

7,882

21/3期
FY03/21

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FY03/21 Results

2

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Progress of Medium-term Management Plan

11

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FY03/21 Results

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Overview of Medium-term Management Plan (FY03/21 to FY03/23)
Medium-term Management Plan "Innovation 2023”
Help customers achieve digital transformation andboost competitiveness＝

VisionCreate a prosperous
societyInnovation Service Provider

Key priorities
1. Reforming our business structure by
expanding the service we offer
2. Promoting data-driven businesses
3. Strengthening our management base

FY03/23
Targets

Sales
JPY126bn

Operating income
JPY4.6bn
12

ESG Activities
SDGs

ROE
9%
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Medium-term
Progress

FY03/21 Results

FY03/22 Forecast

Shareholder
ReturnSustainability

Digital Transformation (DX) Business: Progress and Future
FY03/21

FY03/22

COVID-19 pandemic

FY03/23

Recovery fromCOVID-19 pandemic

Customer ICT investments:
Workstyle reforms
Business continuity

Innovation
Modernization
New Normal support(Existing businesses, modernization)

Existing businesses

13

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Key priority 1: Reforming our business structure by expanding the service we offer (1)Service sales grew as a result of steadily capturing demand emerging fromthe COVID-19 pandemic
Service Sales
Composition (%)

Service sales and composition rose

80,00070,000

30.0%

32.6%

30.0%

60,00050,00037,645 39,122

40,000Service sales(Millions of yen)

Operations/LCM services and cloudservices grew

35.0%

30,000

YoY

+3.9%

25.0%

20.0%

20,00015.0%
10,00010.0%

0FY03/20
20/3期 FY03/21
21/3期➢ Operations/LCM*1 services for major customers expanded
Newly acquired major restaurant chain operators, food manufacturers,
and financial industry customers*1 Life Cycle Management (LCM): A monthly subscription service providing support from hardware
setup to disposal➢ Strengthened in-house services
Made major revisions to KitFit*2 Operation Service offering*2 KitFit: In-house developed industry-specific software➢ SaaS contact center services grew
14

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FY03/21 Results

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Progress

FY03/22 Forecast

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ReturnSustainability

Key priority 1: Reforming our business structure by expanding the service we offer (2)Strengthened cloud services by making ComDesign a subsidiary➢ CT-e1 offering (SaaS contact center service) of ComDesign grew rapidly amid the
COVID-19 pandemic
Capturing work-from-home demand and steadily building a track record

CT-e1
•
•
•

No dedicatedequipment
Affordable
Quick installation

FY03/21 installation examples••

Financial institutions (online banks
and regional banks)
Local governments across the country(For COVID-19 vaccination
registration desks)

30,000Reach installationbase of 30,000
23,000seats within 19,000
3 years

FY03/20 FY03/21 FY03/24

Provide unique value by implementing next-generation functions (AI-based
voice recognition, voice print recognition, and emotion analysis)

Demonstrate group synergy(use subsidiary contact center for demonstration testing)Strengthen marketing(focus on advertising and promotion to raise awareness)
15

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Key priority 2: Promoting data-driven businesses (1)Focus areas started producing results
D-VUE Service (industry-specific proprietary service using AI)
deals closed: 16➢ Service mainly introduced to customers in the construction and food
manufacturing industries➢ Steady progress in developing digital transformation (DX) human resources(data scientists, etc.)

Zero Trust Security negotiations: 17➢ Progress in implementation for customers in manufacturing industry➢ Strengthened organization from FY03/22 to better respond to customer
demandEstablishing the “Tsuzuki zero trust security lab” with an aim to reach awide range of customers
16

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Key priority 2: Promoting data-driven businesses (2)Progress in digital transformation (DX) initiatives
Development of Electronic Contract DX Service➢ Scheduled to be adopted by three model companies, making steady progress toward
service launch in October➢ Established sales structure consisting of sales promotion teams by industry andregionAiming to capture 10% of domestic electronic contract market share by 2023

IoT business➢ Completed a framework that offers one-stop services from sensor design to data analysis

IoT Framework
AI Analysis Platform(D-VUE Service)
Application infrastructure(Pelion, VANTIQ, GeneXus)

TrackrecordBusiness reform in the logistics industry••

FutureIoT Sensors and Devices
17•

Applied to operations management
services
PoC with food manufacturers andconvenience stores (4 companies)
Aiming to achieve quick profitability
through expansion to existingcustomers in the logistics industry
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Key priority 2: Promoting data-driven businesses (3)Collaboration with JIG-SAW to accelerate IoT businessStarted discussions on building a strategic collaborative
relationship that leverages each others' strengths

Expansion of operation services
through outsourced cloud monitoringand operation collaboration

Offer an IoT service businessthat incorporates
Examples (vending machine)• Fault detection• Stockouts• Energy-savings support• Timely collection of sales
data

•
•

18

Cloud system monitoring
Outsourced operations

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Key priority 3: Strengthening our management base (1)Aiming to strengthen profitability by spinning off the Electronic Devices business➢ Established Tsuzuki Embedded Solutions on July 1, 2021
Operatingenvironment- Decline in competitiveness of Japan's semiconductor and electronic
component manufacturing industries- Rise of large distributors with a global presence

Areas to improve- Profitability - Business efficiency - Self-sustainability of business

Importanceof thespin-off

By speeding up management decisions and clarifying management
responsibility, we will quickly achieve the followings:
1) Create a new business model that makes the most of ourrelationships with customers and suppliers
2) Thoroughly pursue efficiency and productivity

Strategy
and goals

Aiming to become a business integrator
1) Improve the quality of new negotiations and assess existing ones
(avoid deals with low profitability and low capital efficiency)
2) Concentrate on selected customers and products
3) Accelerate collaboration with existing customers
19

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FY03/22 Forecast

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ReturnSustainability

Key priority 3: Strengthening our management base (2)-1

Building a foundation to support our endeavors➢ Head office renewal
Aiming to achieve "decent work” (rewarding work that respects employees)

An office with a clear purpose
Autonomous, proactive, and exciting
Open seating, completely paperless
Designed with a clear conceptMore opportunities for creative communication

Turn head office into a compact office by reducing floor space by 30% in pursuit ofefficient company management
Implement new workstyles using ICT ourselves
Create opportunities for co-creation with customers and digital transformation(DX) experiences to share the excitement and surprise
20

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FY03/21 Results

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FY03/22 Forecast

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ReturnSustainability

Key priority 3: Strengthening our management base (2)-2Started in-house experiments of the latest digital transformation (DX) solutions➢ Introduce the next-generation "unmanned store", which is increasingly
needed amid the COVID-19 pandemic, within the company+ unmanned + new purchasing experience
Achieve ContactlessSolves social issues Solves labor shortage
Brings excitement and surprise
While shopping

When entering the store

When leaving the store￥

Just take yourgoods and go

Verification(via smartphone)Onceverified…

• Recognize human activity (edgecameras)• Detect changes in shelf productinventory (weight sensor)

just take yourgoods…

••

Links users to products
Payment, e-receipt
issuance

and go(cashierless)Aiming to expand into offices, hospitals, movie theaters, etc. going forward
Expand business domains such as by using purchase history data
21

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FY03/21 Results

3

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

FY03/22 Forecast

22

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FY03/21 Results

Medium-term
Progress

Shareholder
ReturnFY03/22 Forecast

Sustainability

FY03/22 Forecast
Sales and profit forecasts based on market conditions and COVID-19 recovery trends➢ Market environment
Information Network: COVID-19 pandemic triggered digitization among companies and ICT
investment is on the riseElectronic Devices: Demand for semiconductors and other electronic devices, which grew rapidly from2H FY03/21, is expected to continue in FY03/22. Market environment is favorable.
➢ We will aim to achieve our targets by steadily executing key priorities of our medium-term
management plan.
Address the need for workstyle reforms, focus on shifting to a service-oriented business, and improve
profitability of the Electronic Devices business(Millions of yen)

FY03/21

FY03/22
Forecast

Change(amount)

Change(YoY)

120,004

122,000

1,995

+1.7%

Operating income

3,202

4,000

797

+24.9%(Operating margin)(2.7%)(3.3%)(0.6pt)－Profit attributable toowners of parent

2,346

2,700

353

+15.1%Net sales

23

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FY03/21 Results

4

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Shareholder Return

24

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FY03/21 Results

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Shareholder Return
FY03/21 dividend at JPY46, payout ratio at 34.3%
Aiming to maintain stable dividends with a payout ratio of around 30%.
Dividend per share and payout ratio
Commemorative dividend
following listing change to
TSE 1st section JPY5

Dividend yield

34.3%

Year-end
price
JPY1,100

34.0%

4.6%

30.6%

30.3% 30.2%
30.2% 30.2%

2.8%

29.0%

5.0%

3.3%

Year-end
price
JPY1,657

2.8%

JPY55
JPY46 JPY47

24.0%

JPY39
JPY29

FY03/17

17/3期

19.0%

FY03/18

18/3期

FY03/19

19/3期

FY03/20

20/3期

FY03/21

21/3期*Dividend yield = Dividend per share / Share price at theend of the period (final record date)
14.0%

Shareholder benefits
9.0%

FY03/18
18/3期

FY03/19
19/3期

一株当たり配当額
Dividend per share

FY03/20
20/3期

FY03/2121/3期

配当性向
Payout ratio

FY03/22
22/3期（予想）
Forecast

Number of shares held

Products

Over 100 shares, butless than 1,000 shares

JPY1,000 worth offood items
JPY3,000 worth offood items

Over 1,000 shares
25

Donation
JPY1,000

JPY3,000

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FY03/21 Results

5

Medium-term
Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Sustainability Initiatives

26

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FY03/21 Results

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Progress

FY03/22 Forecast

Shareholder
ReturnSustainability

Sustainability at the Tsuzuki Group
Materiality
Determined three key issues (providing value to society)We will continue to work with our customers to create a sustainable society throughour business

Three key sustainability issues (delivering value to society)

Develop people and teams
that are healthy and loved,
both physically and mentally

Contribute to harmonious
coexistence by capturingchanges in people, society,and the global environment

Provide reliable andinnovative services throughinformation andcommunication technology••• Provide safe and secure services• Take on the challenge of solvingsocial issues

Specific initiatives••

Build a foundation to support ourendeavors
Support the advancement ofdiverse talent

Reduce environmental impact
Promote communication withstakeholders.

27

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Reference

Press Releases
No.

Date

Content

1

2020/10/6

Functional enhancements to IntrameriT, our proprietary groupware

2

2020/11/10

Started in-house demonstration testing of digital transformation (DX) services for the
new normal era

3

2020/11/13

Started development of electronic contract DX service

4

2020/12/8

Started offering the new model of cloud-based unit for Toyota Motor Corporation's
rehabilitation assist robot

5

2021/01/13

Renewed affiliate agreement with professional golfer Mone Inami

6

2021/02/09

Recognized as a Sports Yell Company by Japan Sports Agency and a Tokyo
Metropolitan Sports Promotion Company by Tokyo Metropolitan Government for two
consecutive years

7

2021/02/10

Released frailty prevention app, “nationwide squat challenge,” free of charge

82021/02/16

Released “health promotion self-care system” free of charge

92021/03/05

Recognized as one of the Health and Productivity Corporations (White 500) by Ministryof Economy, Trade and Industry for the fourth consecutive year102021/05/14

Notice of spin-off of the Electronic Devices business (company split)
28

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Reference

Stock Price History (as of May 26, 2021)(Volume: Shares)(Stock price: Yen)

1,400,000

2,500

1,200,000
2,000
1,000,000

1,500
800,000

600,000
1,000

400,000
500
200,000

0

0

29

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Contact
Contact

Tsuzuki Denki Co., Ltd.
Corporate Planning Division, Management Strategy Office

Address

6-19-15 Shinbashi, Minato-ku, Tokyo 105-8665, Japan (Tokyo Art Club Building)
Phone: 050-3684-7780
ir-tantou@tsuzuki.co.jp
https://www.tsuzuki.co.jp/english/

Disclaimer
The forward-looking statements, including earnings forecasts, contained in this document are based on
information available to the company at the time of this document's release and are subject to a number of
uncertainties. Please note that actual results may differ significantly due to various factors. Although every
effort has been made to ensure the accuracy of the information contained in this document, please note thatthe accuracy and certainty of its content is not guaranteed. The names of companies, products, and services
mentioned in this document are registered trademarks or trademarks of their respective owners.
30

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Copyright © 2021 Tsuzuki Denki Co., Ltd.