TO P I NTERVIEWR E VIE W O F S E G M E N T O P E R A T IO N S

T O P I N T E RV I E W

QPresident Terashima (left) inspects testing equipment for automotive development

We will continue to expand
internationally, whilestrengthening the income
structure of the Industrial
Systems segment.
Under the new management structure, fiscal 2013
marks the second year of the DASH 2015 mediumterm management plan, and our results arerecovering strongly buoyed by the upturn of thebusiness environment. President Kenzo Terashima
hereby explains the business condition for the firsthalf of fiscal 2013 and future development.

Kenzo Terashima
President

1

Could you tell us about the businessconditions and results for the first half?

In terms of orders received, the Transportation Systems
segment was particularly strong both in Japan andoverseas. In Japan, demand for renewal of rail vehicles has
increased among both JR and private railway companies,
and we have won several large orders, including theHokuriku Shinkansen Class E7 and new rail vehicles for
local lines in the Niigata region. Overseas, orders havecome back for components for high-speed railroads inChina. We have also won an order for approximately 1.7
billion yen in electrical equipment for the Beijing Subway
Line 10, although this will appear in our results for thesecond half. Our record of deliveries for core lines in major
cities like Beijing and Chengdu has won us a strong
reputation not only for our products, but for our after-sales
service as well, and this has led to repeated orders.
In the Industrial Systems segment, orders for systems for
production facilities were below expectations due to weakcapital investment in Japan, despite increased orders fortesting equipment for automotive development buoyed byfavorable conditions in the automobile industry. The
Industrial Systems segment has been reviewing businessstructure since the start of fiscal 2013, with the aim ofachieving stable profitability. Specifically, the segment isinvesting corporate resources to reorganize its structure ofindustrial plant as well, with a focus on increasing the added
value of the testing equipment for automotive development
business. We believe that we will see the results of thisinvestment starting in the second half of the 153rd term.
In the Information Equipment Systems segment, orders
fell due to a rebound from the increase in orders for ticket
issuing handy terminals in the previous fiscal year. We are
currently reprogramming our railway station operating
equipment corresponding to the hike of consumption tax
set for April 2014.
Due to the previous fiscal year’s increase in orders in theTransportation Systems segment as well as expansion of
testing equipment for automotive development, net sales
and income for the first half of fiscal 2013 increased andreturned to profitability, generally according to our plan.

Q

Please explain the Company’s
initiatives to expand internationally.

In the DASH 2015 medium-term management plancurrently in progress, one of the fundamental policies isstrengthening our business overseas. We plan, by the final
year of the plan (fiscal year ending May 31, 2015), toexpand current overseas net sales ratio of approximately
35% to 50%.
In the Industrial Systems segment in particular, we areaccelerating our business development with a focus onoffering factory system solutions, such as high-efficiency
motors and inverters, in order to capture rising demand forenergy saving at manufacturing sites in Southeast Asia.
Moving forward, we will open a representative office inBangkok, Thailand during fiscal 2013, and we will actively
approach the local market and markets in nearby countries.
Meanwhile, in the Transportation Systems segment, weare also strengthening our systems for receiving orders andmaintenance requests in Asia and North America, with theaim of gaining more international contracts. We are working
on initiatives to increase transactions, such as acquiring“International Railway Industry Standard (IRIS)” set by theAssociation of the European Rail Industry (UNIFE) on ourauxiliary power supply in November 2013.
International expansion is changing over time, evolvingfrom exports to overseas procurement, overseas
production, technology transfer, and expansion of bases.
The Company is also in the midst of this evolution, and wemust undergo a qualitative transformation to be ready forthe future. Our first challenges in this transformation are tobuild a supply chain and to develop global humanresources.
As for supply chain, amid increasing the proportion oflocal production, we must move out from a previous exportbased industry, toward a purchasing system that can deal
with overseas suppliers, and strive to work on
manufacturing which meets the needs of the market. At thesame time, we must establish a management system
initiated by the Company for quality maintenance andquality assurance responsibility for components procured
overseas.
In order to develop human resources who can implement
these initiatives, we will increase the number of local hires
and promote education, while enhancing the global
awareness of the Company as a whole.

Q

Please tell us about the outlook for thefull fiscal year and future development.

We have not changed our initial forecast for the full fiscal
year results, and aim to increase income and profits in linewith our plan. Although the Transportation Systems
segment is expected to remain strong, we must ensure that
we contribute to the results for the current fiscal year withinitiatives in the Industrial Systems segment to increase
orders of the systems for production facilities with relatively
tight delivery period. In the Information Equipment Systems
segment, we will develop new technologies andapplications, including the remote monitoring field, such as
status monitoring systems for plastic greenhouses forfarmers, while dealing with the revision to the consumption
tax on railway station operating equipment.
“Stable profitability of the Industrial Systems segment”
mentioned earlier is an absolute requirement for theCompany to become robust. In the second half of theDASH 2015 three-year plan, we will accelerate and execute
our strategy to create high added value through the testing
equipment for automotive development business, andincrease orders for systems for production facilities in Japanand overseas.
This is a vital time for restructuring of the Company’sbusiness, and we would like to ask for our shareholders’patience and continued support as we move forward withthese initiatives.
2

TO P I NTERVIEWR E VIE W O F S E G M E N T O P E R A T IO N SREVI E W O F S E G ME N T OPE RAT ION S

Transportation
Systems Segment
Percentage of
total net sales

62.3%

Orders Received

10,622 million yen

Orders Received (Unit: Million yen) Net Sales (Unit: Million yen) Segment Income (Unit: Million yen)First half

(Up 33.5% year on year)

Net Sales

9,860 million yen

24,00020,940

Segment Income

23,9918,786(Forecast)

1,913

17,324
7,958

10,622

1,377

12,033
7,657

1,064

9,860
565

1,064 million yen(Up 88.3% year on year)

IndustrialSystems Segment
Percentage of
total net sales

33.7%

Orders Received

6,592 million yen

2012/5

2013/5Net Sales

5,332 million yen(Up 1.8% year on year)

2012/5

2013/5

2014/5Percentage of
total net sales

4.0%

Orders Received

1,034 million yen(Up 6.9% year on year)

Net Sales

12,439(Down 5.8% year on year)

6,574

6,348

6,592

6,326

5,236

2012/5

2013/5

2014/55,332433
253

2012/5

2013/5

2014/5

2012/5172-45
2013/5

2014/5

Orders Received (Unit: Million yen) Net Sales (Unit: Million yen) Segment Income (Unit: Million yen)First half

2,303

2,714

967

1,034
465

2012/5666

1,701(Forecast)

1,518

2,000(Forecast)

Full fiscal year

1,544

17 million yen

3(Forecast)(Forecast)

52

Segment Income(Down 68.5% year on year)

Full fiscal year990

13,00012,265 11,542

11,4572,000630 million yen

2014/515,000(Forecast)

172 million yen

Information EquipmentSystems Segment

2013/5First halfSegment Income(Same year on year)

2012/5

Orders Received (Unit: Million yen) Net Sales (Unit: Million yen) Segment Income (Unit: Million yen)

(Up 3.8% year on year)

2014/5Full fiscal year

2,410

21,000(Forecast)

17,506(Up 28.8% year on year)

(Forecast)

2,701

2013/5

2014/5

2012/5669

2013/5265

630

2014/5260(Forecast)

3954

17

2012/5

2013/5

2014/5

Orders received recorded a slight increase in Japan andsaw a sharp upturn outside Japan, primarily in China. In
overall terms, orders received increased 33.5% comparedwith the corresponding period of the previous fiscal year
to 10,622 million yen.
Net sales increased sharply as a result of a recovery invehicle demand in Japan, as well as increased
momentum outside Japan, and totaled 9,860 million yen
representing 28.8% year-on-year increase.
Due to mainly to increased revenue, segment income
totaled 1,064 million yen representing 88.3% year-on-yearincrease.

Orders received increased 3.8% compared with thecorresponding period of the previous fiscal year to 6,592
million yen, due to an increase in orders for testing
equipment for automobile development amidst subdued
capital investment both in and outside Japan.
Net sales in this segment increased 1.8% year on year
to 5,332 million yen, mainly for the same reasons
underlying the increase in orders received.
In the period under review, this segment recorded asegment income of 172 million yen, mainly attributable toimproved profitability of factories as a result of increased
operating efficiency.

Orders received in this segment increased 6.9%
compared with the corresponding period of the previous
fiscal year to 1,034 million yen, due to a large orderplaced for remote monitoring systems, despite low
performance in orders for railway station operating
equipment.
Net sales in this segment decreased 5.8% year on year
to 630 million yen, mainly due to a winding down indeliveries for ticket issuing handy terminals. In the first halfof fiscal 2013, segment income for this segment
decreased 68.5% year on year to 17 million yen.

TOPICS
Won the Order for Electrical Equipment for Increased
Rail Vehicles on the Beijing Subway Line 10
In December, the Company won theorder for electrical equipment for
192 rail vehicles on the Beijing
Subway Line 10.
(1) Name of line: Beijing Subway
Line 10(2) Number of rail vehicles:
32 trains/192 vehicles(3) Items ordered: Electricalequipment for rail vehicles(VVVF propulsion inverter,auxiliary power supply, train
information system, driving gear unit)(4) Amount of order: Approximately 1.7 billion yen(5) Delivery: May 2014 to July 2015

Beijing Subway Line 10

Acquired Certification of International Railway
Industry Standard (IRIS) on Auxiliary Power Supply
for Rail Vehicles
The Company has acquired certification ofInternational Railway Industry Standard(IRIS) on “auxiliary power supply (SIV)” in thefield of auxiliary systems for rail vehicles.
IRIS is an international standard requiringhigh quality and safety in the railwayindustry. IRIS certification is recommended
IRIS logo
for railway-related transactions including
major manufacturers of rail vehicles inEurope.
This is the first time Japanese auxiliary power supply has been certified
under IRIS. The Company is working to acquire IRIS certification for otherproducts as well. In addition, the Company remains committed toexpanding its Transportation Systems segment globally, and increasing
sales of its electrical equipment for rail vehicles.

Certified auxiliary power supply (SIV)

4