Top Message

Expanding businesses globally that supports
transportation and social infrastructure and the industry,
while contributing to environmental conservation

Although both revenue and operating income
increased, profit did not reach planned figures.
Orders received reached a record-high level.
Although we were able to largely meet our revenue growth plan in
fiscal year ended May 31, 2014 as the growth in theTransportation Systems segment made up for the decreased
revenue in the Industrial Systems segment, we failed to achieve
our profit plan due to factors such as development and design
costs being recorded in advance for increased number of newcontracts in the Transportation Systems segment. Orders received
reached a record-high level due to the robust Transportation
Systems segment, and we are in a situation where an increase inrevenue for this fiscal year (fiscal year ending May 31, 2015) canbe expected.
Both revenue and profits for the Transportation Systems
segment increased significantly, backed by the recovery indemand for rail vehicles in Japan and strong maintenancedemand for high-speed railroad networks and city transit
networks mainly in China and the U.S. Overseas railroad contractsincluding electrical equipment for a new type of light rail vehicle(LRV) in Los Angeles, U.S., for which the order was received in theprevious fiscal year and driving gear units for the Chinese highspeed railroads, contributed to the expansion of sales, and wehave newly received orders for electrical equipment for increasedrail vehicles on Beijing Subway Line 10.

President

Kenzo Terashima

5

In the Industrial Systems segment, while the testing equipment
for automobile development was strong, production facilities
including printing equipment and processing equipment wasweak and overall revenue declined. Nevertheless, we were able tomaintain an increase in profits due to the effects of improved
profitability of factories. Overseas, we proceeded with businessdevelopment of factory system solutions, such as high-efficiency
motors and inverters, in order to capture rising demand for energy
saving at manufacturing sites centering on the Southeast Asianmarket.
Both sales and profits expanded for the Information Equipment
Systems segment through reprogramming of railway station
operating equipment, etc. corresponding to the increase in
consumption tax.

New three-year medium-term management plan“NEXT 100: Beyond 100 years” has been launched.
We will accelerate our overseas expansion to achieve
net sales of 50.0 billion yen.
Although we promoted our three-year medium-term management
plan “DASH 2015” for two years, we have formulated a new
medium-term management plan “NEXT 100: Beyond 100 years,”with the fiscal year ending May 31, 2017 as its final year, after
reviewing our strategies and goals based on the changes in thebusiness environment and new challenges facing the Company.
In “NEXT 100,” we plan to achieve net sales of 50.0 billion yen
and operating income of 3.0 billion yen (operating income ratio of6%) through promotion of globalization and increase our overseas
net sales ratio to 50% from the current 27.3%. Also, byimplementing the six principal measures, we will build the basefor “next” growth focusing on the year of our 100th anniversary offounding to come in 2018 (see page 6 for details).
Going forward, to promote globalization, we will accelerate
overseas expansion of the Transportation Systems and Industrial
Systems segments, while implementing measures such as
strengthening production capacity, increasing the number ofemployees, developing suppliers, and improving quality andcapabilities.
In the Transportation Systems segment, we plan to proceedwith our global operations of the Japanese and overseas rail
vehicle manufacturers mainly from our business bases in China,
the U.S., Southeast Asia, and India, and enter the local rail vehicle

maintenance business.
In the Industrial Systems segment, while promoting increased
sales of factory systems in Southeast Asia from our base at therepresentative office in Thailand, we will launch two newbusinesses. One is the sales of biomass power generation system
mainly focusing on the Philippines. This is a circulating energy
system that generates power from strained lees of sugar canes
emitted by sugar mills, and that enables utilization of generated
power and refined ethanol at sugar mills. The other business ismechanicalizing of presses, molds, and other production facility
equipment. Leveraging our strength in servo-control technologies
using permanent magnet motors, we will advance the business incollaboration with machine manufacturers.

We aim to increase our level of contribution to thesociety by our businesses and achieve sustainablecorporate growth through promoting globalization.

of transportation and social infrastructure and the industry
through the offering of superior and highly reliable products, butalso largely contribute to protecting the environment throughelectrification and energy-conservation technologies.
As such, we aim to promote our business, in which such
relationships play a key role, through overseas expansion andincreasing our level of contribution to the society while further
improving efficiency and reducing environmental burden withrespect to our production activities. We will also aim to promote
globalization and diversification of our organization, through suchmeans as hiring foreign employees at our head office, and hiring
locals at our overseas offices. We believe that, going forward,these initiatives will be vital themes for our CSR as well as
essential elements for achieving sustainable corporate growth.
We would like to ask for the continued support of ourstakeholders as we continue our commitment to meeting yourexpectations for future business development.

Looking from the perspective of relationships with the society, ourbusinesses not only play the role of supporting the development

New three-year medium-term management plan <Fiscal 2014 to Fiscal 2016>“NEXT 100: Beyond 100 years”
The Toyo Denki Group is committed to drastically enhancing its corporate value and thoroughly strengthening
its management foundation in order to become a Group well adapted to the new era in anticipation of the yearof our 100th anniversary of founding in 2018 and beyond.

23

Build a stablebusiness earnings
structure
Restructure
production system

1

Strengtheninternational
competitiveness

Fundamental Policy

4

Promotedevelopment oftechnology

65

Train humanresources to support
global development
Establish newbusinesses

Numerical Targets (Billions of yen)
Net sales
Operating income
Operating income ratio
Ordinary income
Net income
Overseas net sales
Overseas net sales ratio

Fiscal 2013 (Actual Results) Fiscal 2016 (Forecast)
34.95
50.00
1.07
3.00
3.1%
6.0%
1.03
3.20
0.64
1.90
9.56
25.00
27.3%
50.0%

Segment Net Sales (Billions of yen)Transportation Systems Segment
Industrial Systems Segment
Information Equipment Systems Segment

Fiscal 2013 (Actual Results) Fiscal 2016 (Forecast)
22.20
31.00
10.92
16.00
1.83
3.00

Overseas net sales
Domestic net sales
Overseas net sales ratio

50.00 billion yen

40.00 billion yen
34.95 billion yen

50.0%

27.3%

Domestic net sales around 25.00 billion yen
Fiscal 2013
Actual Results

Fiscal 2014

Fiscal 2015

Fiscal 2016

NEXT 100 Targets

Toyo Denki Seizo Report 20146