Financial Results Briefing
Fiscal 2018
(Ended May 31, 2019)
July 12, 2019
Toyo Denki Seizo K.K.

Program Briefing on Financial Results: 25 minutes
1. Overview of Financial Results for Fiscal Year
Ended in May 2019
2. Outlook for Financial Results for Fiscal YearEnding in May 2020
3. Medium-term Management Plan / Topics

 Q&A: 30 minutes

1. Overview of Financial Results for
Fiscal Year Ended in May 2019
(From June 2018 to May 2019)

1-1. Overview of Consolidated Financial Results
Integration of industrial works at Shiga Ryuo Plant led to a significant
improvement in the Industrial Systems segment and operating income
increased as planned in general.
2018.52019.5YoY Change%

Published value(May 2019)

Published value ratio(%)

Net Sales

425.2

411.7

-13.5

-3.2%

425.0

-13.3

+96.9%

Operating
Income (%)

3.6

5.5

＋ 1.9

+52.0%

6.0-0.5+91.7%(0.9%)(1.4%)(+0.5%)-(1.4%)(+0.0%)

Ordinary Income

5.1

4.9

-0.2

-3.8%

6.5

-1.6

+75.4%Net Income[Net income pershare (yen)]

6.9

6.9

-0.0

-0.3%

7.0

-0.1

+98.6%

73.33

75.27

+1.94

-

74.69

+0.58

-

ROE

2.7%

2.7%

+0.0%

-

Orders received

395.9

406.8

＋ 10.8

+2.7%

409.0

-2.3

+99.4%

Ratio of overseas
sales to net sales

25.3%

22.9%

-2.4%

-

-

3

<Reference> Changes in consolidated orders received and net sales
Steadily making progress toward achieving the targets—over 47 billion yen in orders
received and net sales—for Fiscal 2021, the final year of the medium-term management
plan.

Over 47 billion yen in orders
received and net sales(100 million yen)

500
400
300

200
100
0
'11/5 '12/5 '13/5 '14/5 '15/5 '16/5 '17/5 '18/5 '19/5 '20/5 '22/5

Net sales

Orders received(Result) (Forecast) (Medium-term
management
plan)

4

<Reference> Changes in investment gain on equity method
Changes in three companies under the equity method ((1) Hunan Xiangyang Electric, (2) Changzhou
Ruiyang Transmission Technology, (3) Beijing Jingche Shuangyang Traction System)
Aiming to expand investment gain on equity method toward Fiscal 2021, the final year of the medium-term
management plan.
Net sales- Line graphInvestment gain on equity method, etc.
Bar graph(100
80million yen)(100 million
yen)
8.0

70

7.0

60

6.0

50

5.0

40

4.0

30

3.0

20

2.0

10

1.0

0

0.0
'11/5 '12/5 '13/5 '14/5 '15/5 '16/5 '17/5 '18/5 '19/5 '20/5 '22/5
 Net sales(Result) (Forecast) (Medium-term
management
plan)

Investment gain on equity method, etc.
(Including dividends, technology transfer fees, etc.)51-2. Factors for increase and decrease in operating income (YoY change)
Improvement in gross margin, favorable production efficiency and cost reduction covered
the factors for decrease in operating income and the increase in depreciation expenses.

<Fiscal year ended
in May 2019><Fiscal year ended
in May 2018>

Factors for decrease inoperating income-180 million yen

360 million yen

Plant profit/loss-230 million yen

Decrease in subsidiary profits(Increase in rent expenses, etc.)-90 million yen

Change in selling,
general & administrative
expenses+370 million yen
Improvement ingross margin+340 million yen

550 million yen

Absorbed the increase in depreciation
expenses of 500 million yen for Shiga
Ryuo Plant by improving production
efficiency and reducing expenses.

6

1-3. Breakdown of non-operating income/expenses andextraordinary income/loss
Non-operating
income/expenses-60 million yen

Extraordinary
income/loss+750 million yen• Gain on sales ofinvestment
securities+800 million yen• Dividend income• Centennial+240 million yen
anniversary• Interest
expenses
expense/commission-50 million yen
fee-210 million yen• Foreign exchange
losses-80 million yen

Incometaxes

550 million yen

490 million yen

1,240 million yen

690 million yen

OperatingincomeOrdinary
incomeIncome before
income taxes

Net income
71-4. Segment Performance Transportation Systems
Domestic performance covered the decline overseas and the overall result was flat.
 Net sales and segment income

 Orders received and order backlog(100 million yen)

250
200
150
100

281.9

279.4

272.3

60 300293.6
Order backlog

Net sales

50 25040 200

Segment income

258.6

260.8

258.3
237.5

225.9

30 150

30.7
25.7

24.2

50
0

Orders received

Segment income

Net sales

300(100 million yen)

Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 201920 100

10

50

0

0

Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 2019

• Orders received slightly increased due to strong demand from domestic private railways and orders won for driving gear
units overseas.
• Net sales decreased as the Chinese high-speed railway was in the process of switching its train model types, but will
recover from the year ending in May 2020.
• Segment income slightly decreased due to higher costs of overseas projects although efforts were made to improve
profitability.

8

1-5. Segment Performance Industrial Systems
Orders expanded thanks to the effects of integrating industrial works at Shiga Ryuo Plant
and business profitability improved.
 Net sales and segment income(100 million yen)Segment income

Net sales

140

120

 Orders received and order backlog

Net sales

110.7

117.6

123.3

Orders received

121.9

128.3
113.0

10 100

Segment income

80

7.4

6.5

40
20

14 14012 120100

60(100 million yen)

2.7

0
Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 2019

8

80

6

60

4

40

2

20

0

0

Order backlog

71.5

66.9

71.8

Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 2019

• Orders received and net sales both increased for testing equipment and processing & printing
machines.
• Improvements in profitability and production efficiency covered the impact of increase in9
depreciation expenses of 500 million yen on segment income.

1-6. <Reference> Segment Performance Industrial Systems
Breakdown of improvement in business profitability. (YoY comparison ofIndustrial Business Unit (non-consolidated))(100 million yen)

120
100
80

Net sales
97

Net sales
92
Cost of sales
81

Cost of sales
82

60
40
20
0

• Breakdown of effects of integrating
industrial works at Shiga Ryuo Plant
 Orders received exceeded 10 billion
yen (non-consolidated) after four
fiscal years.
 Production efficiency increased.

Selling,
general &administrative
expenses
12 Segment
income-0.6
Fiscal year ended in
May 2018

Selling, general& administrative
expenses
10 Segment income
4.5

Fiscal year ended in
May 2019-20
Net sales
Cost of sales
Selling, general & administrative expenses
Segment income

 Reduced selling, general &administrative expenses.
 Recorded profits by covering theincrease in depreciation expenses of
500 million yen, which reflects a
substantial increase in profits of
1 billion yen.

10

1-7. Segment Performance Information Equipment Systems
Sales decreased in reaction to the large projects in the previous fiscal year. Maintained
business profitability by handling functional enhancement & software repair deals.
 Net sales and segment income
Net sales(100 million yen)Segment income

28.0

30

15
10
5
0

Net sales

15.8

13.8
Segment
income

3.1

3.0

2.9

Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 2019••(100 million yen)

12 30

25
20

 Orders received and order backlog

10 25

Ordersreceived

8

20

17.8

6

15

4

10

2

5

0

0

24.1
17.5

Order backlog

9.1
5.2

7.0

Fiscal year ended Fiscal year ended Fiscal year ended
in May 2017
in May 2018
in May 2019

Both orders received and net sales decreased in reaction to large
projects in the previous fiscal year.
Maintained segment income by handling software repair and otherprojects.

11

1-8. Consolidated Financial Position

100 million yen
JJune 30, 2015u
May 31, 2019ne

YoY Change

632

580

-52

Current assets

286

260

-26

Fixed assets

346

319

-27 Sale of investment securities -15

Total Liabilities

369

331

-38

161

154

-7

263

248

-15 Treasury stock -8

41.6%

42.8%

May 31, 2018

Total Assets

Of which, interestbearing debt

Net Assets
Shareholders’ Equity
Ratio (%)

Main increase and decrease factors

+1.2%
12

1-9. Changes in Consolidated Cash Flows• Cash flows from operating activities improved to +3.7 billion yen → includes depreciation and amortization of
1.7 billion yen and income before income taxes of 1.2 billion yen• Cash flows from investing activities was -1.0 billion yen → Sale of cross-held shares of 1.4 billion yen, capital
investment/investment & loans of -2.3 billion yen• Net interest-bearing debt decreased 1.4 billion yen year on year

(million yen)
Fiscal year
ended in May
2015

Fiscal year
ended in May
2016

Fiscal year
ended in May
2017

Fiscal year
ended in May
2018

Fiscal year
ended in May
2019

Fiscal year
ending in May
2020

1,514
881
- 988
- 830
- 126
0

1,505
801
- 4,691- 3,901- 619
93

Purchases of treasury stock
Cash dividends paid
Free cash flow

2,868
- 302
- 289
- 3,186- 1,572
1,237- 3,087- 3,448
- 132
1,100
- 491
4,140
-2
- 283
- 4,659

3,720
1,774
- 1,019- 2,277
- 49
1,441

18
-4
- 287
526

1,135
850
- 937
- 451
- 336
19
- 196
- 1,314
-3
- 296
198

- 2,012
- 800
- 471
2,701

2,600
1,600
- 500
- 760
- 40
1,000
- 750
- 1,775
0
- 275
2,100

Cash at the end of the period
Interest-bearing debt
Net interest-bearing debt

3,570
9,423
5,853

2,401
8,305
5,904

2,091
11,755
9,664

1,555
16,171
14,6162,240
15,423
13,1832,500
14,00011,500 13

Cash flows from operating activities
Depreciation and amortization
Cash flows from investing activities
Purchases of property, plant and equipment

Purchases of intangible assets
Proceeds from sales of investment securities

Investments in affiliates
Cash flows from financing activities

1-10. Dividends
Based on the basic policy to continue stable payout of dividends,
the Company distributes dividend of 30 yen per share.
100 million yen
FY ended in May 2019
(Result)
2Q
Net Sales

Operating Income (%)

Full year

196.3

411.7

-1.2

5.5
(1.4%)

Ordinary Income

-0.2

4.9

Net Income [Net income pershare (yen)]

1.4

6.9

15.62

75.27

30.0

Dividend per share (yen)Orders received

192.1

406.8

 Year-end dividend for
Fiscal 2018: 30 yen per share
Payout ratio of 39.9%
14

2. Outlook for Financial Results for
Fiscal Year Ending in May 2020

2-1. Outlook for Financial Results for Fiscal Year Ending in May 2020
(Consolidated)

Aiming to achieve orders received of 43.0 billion yen and net salesof 42.0 billion yen.
100 million yen
FY ended in May 2019
(Result)
2Q

Net Sales

Operating Income (%)

Full year

FY ending in May 2020
(Forecast)
2Q

Full year

YoY Change
Full year

196.3

411.7

201.0

420.0

+8.3

-1.2

5.5

3.0

9.0

+3.5

(1.4%)(2.1%)

Ordinary Income

-0.2

4.9

4.0

11.0

+6.1

Net Income[Net income per share(yen)]

1.4

6.9

4.0

9.0

+2.1

15.62

75.27

44.73

100.65

25.38

30.0

Dividend per share (yen)Orders received

192.1

406.8

30.0
205.0

430.0

+23.2
16

2-2. Forecast of Financial Results (by Segment)
100 million yen
Transportation

Information
Equipment

267.0

138.0

15.0

28.0

9.5

2.5

273.0

145.0

12.0

-5.3

＋14.6

-0.8

Segment income

＋3.8

＋3.0

-0.4

Orders received

＋12.2

＋16.6

-5.5

FY ending in Net sales
May 2020
Segment income
Forecast(Full year)
Orders received

Net sales

YoY Change

Industry17

3. Medium-term Management Plan
“Revitalize 2020” / Topics

3-1. Medium-term Management Plan - Numerical Targets
Steadily moving forward with measures toward achieving the numerical targets set for net sales
and operating income for the year ending in May 2020 under the medium-term management plan
to improve earning power and establish a strong operating system.
(100 million yen, %)FY ended in
May 2019(Result)
Net Sales

FY ending inMay 2020(Plan)FY ending inMay 2022(Plan)

411.7

430Over 470

5.5

9

20

(1.4%)(2.1%)(4.3%)

Ordinary Income

4.9

11

24

Net Income

6.9

7

16

Investment gain on equity
method

0.1

1.2

4.0

ROE

2.7%

3.3%

5.0%

Payout ratio

39.9%

30.0%

30.0%

Transportation Systems

272.3

290

310

Industrial Systems

123.3

130

150

Information Equipment
Systems

15.8

10

10

Operating Income(Operating margin ratio)<Net sales by segment>193-2. Expanding Overseas BusinessBusiness activities in overseas by segment
2005

China

Transportation

08
Beijing
Olympics &Paralympics

Electrical equipment for
high-speed railways

2015

10
ShanghaiExpo

14
Formation of
CRRC Group

Local production (newly
manufactured vehicles)

Entry into themaintenance business

Large-scale delivery(E27, E28)

Standalone motors

OEM

2020

2025

20
Tokyo
Olympics &Paralympics

25
Osaka Expo

Expansion ofmaintenance business

Delivery for standard trains

Establishment ofChinalco Toyo

June 10, 2019

Industry
ThailandElectrical equipment for
urban transportation

2010

Systems

Automotive electricalequipment

Sales structure
reinforcement

Respond by deal

Respond by deal

Establishment of
SIAM TOYO

June 4, 201920

3-3. Began Overseas Activities in the Industrials Systems Business on Full
Scale
Established Chinalco Toyo, a joint venture with a Chinese local company forthe first time in the Industrial Systems business.
Chinalco Rare Earth& Metals

Toyo Denki Seizo

35% investment

Beijing Ling Yang
Trading

35% investment

30% investment
Capital: 60 million
Chinese yuan
(Approximately
960 million yen)

Chinalco Toyo Permanent-Magnet
Electric Co., Ltd.
Beijing Jingche
Shuangyang
Traction System

Beijing

North Korea

Sea of Japan

Toyo Denki (Beijing)

Japan
South Korea
China
ChengduChengdu Yonggui
Toyo Rolling
Stock Equipment

Changzhou Ruiyang
Transmission
Technology
Changzhou
Yangdian Zhanyun
Transport
Equipment

Yellow Sea

Changzhou

Hunan Xiangyang
Electric

Tokyo

Osaka

Chinalco Toyo
@ Changshu
City
Affiliates in the Transportation Systems
business
Shanghai

Changsha

NagoyaEast China Sea

Affiliates in the Industrial Systems
business
Affiliates common to all businesssegments21

3-4. Production Targets of Chinalco Toyo Permanent-Magnet Electric Co., Ltd.
Established a company for manufacturing permanent-magnet synchronous motors for
production and processing facilities in order to respond to the energy-saving needs in China
and ASEAN. Launch a plant for producing 5,000 units per year one year later.
•••

Chinalco Toyo is a joint venture established among three firms—Chinalco Rare Earth &Metals Co., Ltd., an affiliate of China’s leading corporate group Aluminum Corporation ofChina (CHINALCO), Beijing Ling Yang Trading Co., Ltd., a local trading company, and Toyo
Denki Seizo.
Initial efforts will be focused on replacing plant facilities of CHINALCO (holding 350,000
motors) with energy-saving equipment, followed by moves toward market expansion.
Line-ups of motor capacity range from 11 to 250 kW.
Motor capacity (kW)Chinalco Toyo’s line-up
Toyo Denki Seizo’s line-up

•

11

200

400

600

800

Expecting to establish a mass-production structure of producing 20,000 units per year in
2024.

Net sales (million yen)
Number of motor units
sold2020/12330

2021/127002022/12
890

1,600

3,700

5,000

2024/122,500
20,00022

3-5. Electrical Equipment for Rolling Stock for Jakarta Mass Rapid Transit(MRTJ)
Delivered electrical equipment for Indonesia’s first subway andcontributed to establishing railroad infrastructure in Asia.

••

Jakarta Mass Rapid Transit (MRTJ), Jakarta’s first subway was launched in
the spring of 2019. Introduced 16 pieces of 6-car rolling stock. Plan to expand
facilities in conjunction with the line expansion going forward.
Japanese firms have been in charge of all aspects of this project, fromfacilities on the ground to rolling stock. Toyo Denki Seizo delivered VVVF
inverters, motors, pantographs, driving gear units, information systems forrolling stock, etc.
23

3-6. New Development
Have become the prime contractor for a superconducting flywheel power storage
systems for railway applications.
Received consignment of project operation, such as overall coordination toward verification testing andmanufacturing of power conversion devices.
Made efforts to build a power storage system that contributes to increasing energy efficiency in the railroad
sector and to promoting stable use and technological development of renewable energy.
Ground breaking ceremony for verification testing facility was held at Anayama Substation on the ChuoLine. Begin delivery of primary goods.
Superconducting flywheel power storage
systemChargeAt discharge:
Supplies power to the train.
Flywheel decelerates.

TimePower generator motor
FlywheelSuperconducting
magnetic bearing

Discharge

ChargePower conversion
deviceDischarge

Rotations offlywheel

When charging:Absorbs the train’s
regenerative power.
Flywheel accelerates.

Strong magnetic repulsion achievedby the superconducting magnetic
bearing uplifts the flywheel.

Overhead power line

When the train isdecelerating
regenerative power isgenerated.

Braking

Train accelerates.
It consumes power.

Accelerating24

3-7. New Development
On-board IC device: Ticket gate device installed on board the train.
It identifies the station where the train stops and records the gate
entry/exit information on the IC card.

Beep

Exit R/W
Exit door

•
•
•

Entry

Entry door

Entry

Driver’s
seat

Exit

Exit

Fare
box

Beep

Entry R/W

Movable ticket gate device. It eliminates the need to install devices at stations andpromotes adoption of IC cards.
Even when traveling from a large metropolis to a rural region, train fares under acomplicated network structure can be settled at one time when getting off the train.
It began operation for West Japan Railway’s Sakai Line in the spring of 2019.
25

3-8. Topics• Automotive Engineering Exposition 2019
Exhibited the new product of a flat-type dynamo installed in a car
at the Exposition in May. There are high expectations fromautomakers and others.
• Opening of SIAM TOYO (June 2019)
Made the representative office in Thailand into a local affiliate torespond to the needs of customers.

• Handing down technologies and skills
Employee who has been engaged in the manufacture of electricalequipment for railway rolling stock for 40 years at the Company’s
Yokohama Plant received the Medal with Yellow Ribbon for the
first year of the Reiwa Era.

<Automotive Engineering
Exposition 2019>• Social contribution
Shiga Ryuo Plant: Received visits from local elementary and highschool students.
Yokohama Plant: (1) Conducted cleaning activities in theneighborhood together with the local
government and neighboring firms.
(2) Received the Yokohama Global Warming
Prevention Award from Yokohama City.
Solar power generation on the roof of theplant contributed to reducing CO2 emissions.

<Opening of SIAM TOYO>

26

Thank you for your interest.
https://www.toyodenki.co.jp<Inquiries>
Toyo Denki Seizo K.K.
PR, IR, and CSR Department, Management Planning Division
TEL: +81-3-5202-8122
Email: contact@toyodenki.co.jp

Disclaimer• Statements concerning financial results forecasts are based ondata available as of the date of publication of this material andassumptions concerning the elements of uncertainty that willaffect future business performance as of the date of publicationof this material. Actual financial results may differ depending
on a variety of factors.
• Forward-looking statements contained in this material are thejudgments of the Toyo Denki Group based on data available atthe time of publication of this material. Such statements anddescriptions are by no means comprehensive.