Top Interview

Top Interview

Special Features

TopicsAn Interview with the President

QAPresident Kenzo Terashima

Chairman Hiroshi Tsuchida

Striving to promote overseas
development and expand profits
under the basis of medium-term
management plan.
In the business environment which began to become favorable from thesecond half of fiscal 2012, “Dash 2015,” the Toyo Denki Group’s
medium-term management plan, finished its first fiscal year. Here areexplanations on these efforts and future development by Chairman
Hiroshi Tsuchida and President Kenzo Terashima, nominated at the152nd Ordinary General Meeting of Shareholders and the meeting of
the Board of Directors which followed.

August 2013

Hiroshi Tsuchida
President Kenzo Terashima
Chairman1

Please tell us about the business conditions
and results for fiscal 2012.
Orders received increased for the first time in threefiscal terms due to growth in the Transportation Systemssegment. Although revenue and profits decreased, weachieved improvement of profits in the Industrial
Systems segment.

In fiscal 2012, the fiscal year ending May 31, 2013, first of all, starting withthe status of orders received, orders received in the Industrial Systemssegment decreased due to customer companies’ careful stance towards
investment and intensifying competition. Orders received in the Information
Equipment Systems segment also decreased due to market saturation of theticket issuing handy terminals that were a breakthrough in the previous fiscalyear. However, in the Transportation Systems segment, orders received wasfavorable with a 19.6% increase compared to the previous fiscal year. As aresult, orders received by the Company overall increased 3.9% compared tothe previous fiscal year, the first time we have achieved an increase in threefiscal terms. In the Transportation Systems segment, break out from thecyclically low period of domestic demand for renewals, and orders forelectrical equipment for the LRV (Light Rail Vehicle) in North America havecontributed to the increase in the number of orders received.
From a sales perspective, due to a sharp decline in Chinese projects, inaddition to stagnant domestic demand in the Transportation Systems
segment, net sales decreased by 27.8% compared to the previous fiscal yearand results in the Industrial Systems and the Information Equipment Systems
segments also fell from the previous fiscal year.
From a profits perspective, although the Transportation Systems segment
faced a large, unavoidable decrease in profits, in the Industrial Systems
segment an increase in testing equipment for automobile development and a
price decline in rare earth raw materials (neodymium magnets) used in motors
have linked to improvement of profits. However, in the Information Equipment
Systems segment, declining profit margin has expanded due to increased
burden from development expenses of the next-generation multi-functional
issuing machine which will be launched in the future.
In addition, foreign exchange gains emerged from the progression of theyen depreciation since the second half of fiscal 2012, and since this wasrecorded as non-operating income, the decrease in profits has lessened inordinary income and net income.

QA

Please explain how you have addressed efforts to achieve themedium-term management plan goals and the outlook for thecurrent fiscal term (the fiscal year ending May 31, 2014).
We are continuing to further expand overseas
development while expanding profits. In the current
fiscal term, all three business segments are expected tosee increased revenue and profits.

“Dash 2015,” our three-year medium-term management plan which started infiscal 2012, aims for net sales of 52.0 billion yen in fiscal 2014 (the fiscalyear ending May 31, 2015), an overseas net sales ratio of no less than 50%(26.0 billion yen), an operating income of 3.6 billion yen (operating incomeratio of 7%), an ordinary income of 3.6 billion yen, a net income of 1.8 billion
yen and an ROE of 8% or higher. In an environment where it is hoped what wecall “Abenomics effect” will bring economic recovery, to realize these goals,
the Company is striving to further promote overseas development as well as
domestically in the Transportation Systems and Industrial Systems segments.
In the current fiscal term, the demand for renewals in the domestic railway
market shifted to recovery, and overseas, in addition to start of the shipping of
aforementioned electrical equipment for LRV in North America, we havesecured high-speed railroads projects and subway line projects backed by thestrong Chinese market. Therefore, we expect successful expansion of sales in
the Transportation Systems segment. In sales activities overseas, while Chinaand North America continue to be our most important targets, we are also
entering into the Indian and Southeast Asian markets mainly from TOYODENKI SEIZO K.K. DELHI LIAISON OFFICE in India established in August 2012.
In the Industrial Systems segment, we expect recovery in capital
investments due to upturn of domestic economy along with a large increase inorders for testing equipment for automobile development. Furthermore, tostrengthen Southeast Asian development in motors and inverters forproduction facilities, we plan to set up liaison offices in Southeast Asia suchas in Thailand during the current fiscal term. On the other hand, since thesummer of 2012, the development of motors and inverters for construction
equipment has also been well underway. Through these efforts, we plan tosecure a greater profit increase in the Industrial Systems segment for thecurrent fiscal term.
In the Information Equipment Systems segment, we will make use of theincreased customers gained through the development of the ticket issuing
handy terminals, and respond actively to demands from support for revision ofconsumption tax for railway station operating equipment.
For the current fiscal term, we expect all three business segments to see
increased revenue and profits. For our consolidated business results, weproject net sales of 36.0 billion yen, operating income of 1.5 billion yen,ordinary income of 1.5 billion yen and net income of 0.75 billion yen.

QA

Do you have any comments you would like tomake to shareholders?
Along with sustainable growth, we will work together
with our many stakeholders to build mutually beneficial,ongoing relationships.

The Company aims to contribute to the society through its businessdevelopment which supports the development of transportation infrastructure
and industries, alongside seeking increased profits and sustainable growth. In
this, we value our mutually beneficial, ongoing relationships with many
stakeholders such as our shareholders, customers, business partners, local
society and employees.
Based on this belief, we place emphasis on maintaining a stable return ofprofits to our shareholders. We have set the fiscal year-end dividend at six yen
per share (the same as the previous fiscal year).
We kindly ask for the continued support and understanding of allshareholders.

Career summary of the new President
NameBirth place
Date of Birth
Education

Kenzo Terashima
Kyoto, Japan
August 18, 1948
March 1972 Graduated from the College of Science and Engineering,
Ritsumeikan University
Major positions April 1972
Joined Toyo Denki Seizo K.K., and assigned to Design
Department in Totsuka Plant
July 2001
General Manager of Overseas Sales Department,
Transportation System Business Unit
June 2002
Deputy General Manager of Sales Unit
August 2002 Operating Officer; Deputy General Manager of Sales Unit
August 2004 Director; General Manager of Sales Unit
August 2008 Managing Director; General Manager of Transportation
Business Unit
August 2009 Senior Managing Director; General Manager of Transportation
Business Unit
August 2012 Representative Director, Executive Vice President
August 2013 Assumed the office of Representative Director, President
Memorable Work •Technical discussions with high-level manufacturers in the same industry at
design meetings for Shinkansen bullet train equipment in the Japan National
Railways era (1970s)•Design of towing locomotives for the Panama Canal and the onsite start-up(around 1999)
Motto
Increase sensitivity, analyze logically and decide.
Interests
Travelling abroad, reading2

Special Features

Results of the Questionnaire to Shareholders

Q5.

JAPAN COMPANY HANDBOOK/
Nikkei Corporate Quarterly

47.6%
32.3%

Newspapers or magazine articles

Questionnaire to Shareholders background information

12.6%

Recommendations from brokerage firms

The top five responses are shown

Q6.

Please tell us what you hope for from the Company’s Investor
Relations activities. (Choose all appropriate responses)
43.8%

Enhancement of shareholder reports
Mass media activity such as innewspapers or on TV

Q1.

Q2.

What will be important when considering buying moreshares in the Company? (Choose all appropriate responses)

24.8%
20.0%

Utilization of information magazine
for individual investors

Share price and technical index 2.4%
Financial standing and financial health 2.7%
Management policy andbusiness description 5.8%
Recommendations from brokerage firms
and information magazines, etc. 7.5%

Future potential,
growth potential(capital gain expected)
56.7%

29.7%

Dividend increase

The top five responses are shown

Introduction of preferential
treatment for shareholders

In the event that the Company held factory tours for shareholders,when would be the best time? (Choose all appropriate responses)

On the same day as the General Meetingof Shareholders (late August)Late July to the end of August(during the summer holidays)

17.6%

New product development

Stability, dividend yield(dividends expected) 19.6%

Q7.

19.4%

Will not buy more shares

11.9%
The top five responses are shown

Late December (during the winter holidays)

19.9%
28.1%
4.9%
34.7%

Late March to early April (during the spring holidays)
OtherQ3.

Please tell us about your future plans for yourshares of the Company. (Choose one response only)

Other 4.2%

Q4.

l I think that the partnership with Hitachi is not reflected in business performance. TheAlready sold 1.0%
Sell if there is a loss 4.3%
Sell if there is a profit margin 29.9%

I have no expectations forthe Company’s future potential
or growth potential 9.1%
I am a fan of the Company 9.4%
I have unrealized loss 22.5%

I have expectations
for the Company’s
future potential andgrowth potential
52.9%

Opinions
andRequests

Company should be more proactive in overseas infrastructure.
l I hope that new products useful to society will be developed, and the Company will growl Holding of Factory Tours for Shareholders l

In the spring of 2014, we will hold a factory tour of
Yokohama Works, the Company’s major production
base. We will notify shareholders of the application
guidelines in the Business Report that will be sent
to shareholders in early February 2014.

You can find out about the plans for these briefings
on our website, or contact us by telephone or email.

along with society, utilizing the current strengths.
l Do not be limited to rail vehicles only, develop and utilize technology and expand to the BRICs.

For more detailed questionnaire results please refer to our website. (Japanese version only)

http://www.toyodenki.co.jp/html/images/survey_results_152_2q.pdf

3In October 2013, we will publish an Integrated
Report of financial information and other nonfinancial information such as CSR information.

l Holding of Company Briefings for Individual Investors l

Other 3.5%

Continue tokeep the shares
60.6%

21.6%

Please give a reason for your response toQuestion 3. (Choose one response only)

I have unrealized gain 2.6%

In June 2013, we established an easy to understandwebpage with summary page of the Company
Profile and changes in our performance in the IRInformation section of the Company website.
l Publication of an Integrated Report l

13.6%

46.3%

Rise in profitability

l Establishment of a Website Aimed at Individual Investors l

17.6%

Enhancement of the Company’s website

Other 4.8%
Name recognition and brand 0.5%

will be carrying out IR activities aimed at
individual investors in the following ways.

Factory tours for shareholders

What was most important when you bought sharesof the Company? (Choose one response only)

Based on the questionnaire results, we18.5%(1) Survey period

Friday, February 1, 2013 to Friday, March15, 2013
Postal survey via postcard attached to the(2) Method
152nd Business Report for the Second Quarter(3) Persons eligible
7,714 shareholders as of November 30, 2012
(4) Number of Response 445 (collection rate 5.8%)(5) Male/Female Ratio
Male 81.6%, Female 18.4%

Aimed at Individual
Investors

20.4%

Stock information websites on the Internet
This booklet and “To the Shareholders”

The Company attached a questionnaire to the 152nd Business
Report for the Second Quarter “To the Shareholders” published inearly February 2013. From this we gathered valuable opinions fromour shareholders. Here the questionnaire results are presented in a
simple format. These replies and opinions will be used as areference in our future corporate management and Investor
Relations (IR) activities.
We are deeply grateful for your cooperation.

Future IR Activities

How do you receive information about the Company?
(Choose all appropriate responses)

Inquiries
PR, IR and CSR Department, Management
Planning Division
TEL : 03-5202-8122
Email : contact@toyodenki.co.jp

4

TOPICS
Overseas Development

Social Initiatives

Operations have begun at the TOYO DENKI SEIZO K.K. DELHI LIAISON OFFICE in India

Joint factory tour with Seaside Line was held.

We have started operations at the TOYO DENKI SEIZO K.K. DELHI LIAISON OFFICE inIndia, which was established as the facility for information collection and sales support
to expand and reinforce the business activities of the Transportation Systems segment.

We held a “Seaside Line Collaboration Plan Premium Exploration
Tour” together with YOKOHAMA NEW TRANSIT Co., Ltd., a tour of theYokohama Works.

Name:Date

TOYO DENKI SEIZO K.K. DELHI LIAISON OFFICE

Wednesday, December 26, 2012 10:15 AM - 11:45 AM

Official
Monday, June 3, 2013
opening date:

Tour background There was a request to hold a joint tour from YOKOHAMA
information
NEW TRANSIT Co., Ltd.

Address

Number of42 participants from the public
participants

301-A 3rd Floor Rectangle-1 District Centre Saket, New Delhi 110017

Inside the officeDuring the factory tour

Exhibition Information

Participated in electric vehicles related exhibition the 9th IEVE CHINA 2013
We participated in an electric vehicles, hybrid electric vehicles and charging stations exhibition held in Beijing,
China.

5Exhibition’sName

The 9th Beijing International Pure Electric Vehicles, Hybrid Electric Vehicles and Charging Station
Exhibition 2013(IEVE CHINA 2013)

Venue

China International Exhibition Center (Old Hall)

Dates

Saturday, July 6, 2013 to Monday, July 8, 2013

Details of theCompany’sExhibit

1) EV and HEV Drive System (Motor and Inverter, etc.)
2) Dynamo equipment for testing equipment for automobile development
3) Door system for bus

The Company’s exhibition booth