Financial Results Briefing
First Half of Fiscal 2021
(Ended November 30, 2021)
January 13, 2022
Toyo Denki Seizo K.K.

Program■ Briefing on Financial Results: 40 minutes
1. Overview of Financial Results for First Half of Fiscal
2021
2. Outlook for Financial Results for Fiscal Year Ending May
2022
3. Progress and Specific Initiatives in Medium-Term
Management Plan

■ Q&A: 20 minutes* You can ask questions in text form through the Q&A function.
We will accept questions during the explanation.
11. Overview of Financial Results for First
Half of Fiscal 2021
(From June 2021 to November 2021)

1-1. Overview of Consolidated Financial Results
Both net sales and profits declined year on year as the novel coronavirus infections continued to affectour businesses.
We managed to secure orders received at a level that was comparable to that of a year earlier.

100 million yen
Published value(1H FY2021)

YoY Change

Published value ratio

1H FY2020

1H FY2021

167.2

148.0

-19.1

-11.5%

150.0

-2.0

98.7%

1.7

-3.6

-5.3

ー

-1.0

-2.6

ー

(1.0%)( － %)ー pt－( ー %)ー－

Ordinary Income

3.5

-0.8

-4.3

ー

0.5

-1.3

ー

Net Income

4.5

1.8

-2.6

-58.8%

1.5+0.3

120.0%[Net income per share(yen)]

50.49

20.82

-29.7

－

16.78

+4.04

－

Orders received

143.9

142.1

-1.8

-1.2%

160.0

-17.9

88.8%

Ratio of overseas
sales to net sales

17.2%

14.9%

-2.3pt－Net Sales
Operating Income
(%)

%

%

3

<Reference> Review of Business Environment for the First
Half of Fiscal 2021
Business Environment

Transportation
Systems<Domestic> Although the business environment remained challenging due to theimpacts of the fifth wave of novel coronavirus infections and the reissuance of astate of emergency, the number of railway passengers has been improving evencompared with the pre-pandemic level.
<Overseas> In China, the economic recovery slowed down due to intermittent
restrictions on activities to contain novel coronavirus and the cooling of the realestate market.

<Domestic> Economic activities remained stagnant due to novel coronavirus,
and capital spending in the manufacturing industry was mixed but generally on arecovery trend.

Industrial
Systems<Overseas> The economy has been recovering in many countries, though theoutlook remains uncertain due to the detection of a new variant.

41-2. Factors for Increase and Decrease in Operating Income(YoY change)
Despite the efforts to cut expenses, operating income decreased due to lower net
sales and a shortage of production.

Decrease in sales (nonconsolidated)-430 million yen
Plant profit/loss (nonconsolidated)-170 million yen
Decrease in grossmargin-10 million yen
Decrease in subsidiary
profits, etc.
-10 million yen

Reduction in selling, general& administrative expenses(non-consolidated)+70 million yen

170 million yen-360 million yen

1H FY2020

1H FY202151-3. Breakdown of Non-Operating Income/Expenses andExtraordinary Income/Loss
Non-operating
income/expenses+270 million yen• Dividend income+100 million yen• Equity in profit ofunconsolidated
subsidiaries and affiliates+120 million yen• Foreign exchange gain
+60 million yen• Interest expense-30 million yen• Other+20 million yen

Extraordinary
income/loss+460 million yen• Sales of investment
securities+360 million yen• Other+90 million yen-360 million yen-80 million yen

Operating Income

Ordinary Income

310 million yen

Income taxes
180 million yen

Income before
income taxes

Net Income
61-4. Segment Performance Transportation Systems
Orders received increased slightly. We managed to secure segment income that wascomparable to the level of a year earlier despite lower net sales.
◼ Orders received and order backlog◼ Net sales and segment income

300

300

Order
backlog

233.1
200

217.4

202.6

Ordersreceived

200

128.5
86.6

100

89.0

100

(100 million yen)Segment income

Net Sales

30

20

Net
Sales

121.3

110.7

101.1

10.1

10.6

10.3

10

Segment
income00
1H FY2019

1H FY2020

1H FY2021

0
1H FY2019

1H FY2020

1H FY2021• Orders received from JR decreased, while those from private railway companies, overseas (excluding China) increased.
• Net sales declined due to decreases in sales for private railway companies, China and overseas (excluding China) despite anincrease in sales for JR.
• We managed to secure segment income that was comparable to the level of a year earlier.

71-5. Segment Performance Transportation Systems Factors
for Increase and Decrease in Income
Despite the decreases in net sales and plant profit, we managed to secure
segment income that was comparable to the level of a year earlier.

Decrease in sales (nonconsolidated)-120 million yen

Plant profit/loss (nonconsolidated)-110 million yen
Increase in selling,
general & administrative
expenses (nonconsolidated)-20 million yen
Decrease in subsidiary
profits, etc.
-20 million yen

Improvement in grossmargin (nonconsolidated)+230 million yen

1,060 million yen

1,030 million yen

1H FY2020

1H FY20218

1-6. Segment Performance Industrial Systems
Orders received decreased. Despite the efforts to cut expenses, segment income
decreased due to lower net sales.
◼ Orders received and order backlog◼ Net sales and segment income

Segment income

Net Sales

100(100 million yen)

100

10

Order backlog

80

80

74.3

60

67.1

40

Ordersreceived

58.4

59.8

55.1

49.5

40
20

0

0
1H FY2020

50.3

43.7

4.8
Segment
income

6
4

3.7
2

-0.9
1H FY2019

1H
1H FY2021
FY2021

8

64.5

60

20
1H FY2019

Net Sales

1H FY2020

0

1H FY2021-20-2• Orders received for processing equipment increased, but those for testing equipment and power supplies
decreased.
• Although sales for power supplies increased, net sales decreased due to a decrease in sales for testing equipment
and processing equipment.
• Segment income decreased due to lower net sales and other factors.

91-7. Segment Performance Industrial Systems Factors for
Increase and Decrease in Income
Despite the efforts to cut expenses, segment income decreased due tolower net sales and lower profitability

Decrease in gross margin(non-consolidated)-270 million yen

Decrease in sales(non-consolidated)-200 million yen
Plant profit/loss(non-consolidated)-30 million yen

Increase in subsidiary
profits, etc.
+10 million yen
Decrease in selling, general& administrative expenses(non-consolidated)+20 million yen

370 million yen-90 million yen

1H FY2020

1H FY202110

1-8. Segment Performance Information Equipment Systems
Orders received increased only slightly on the back of continued restraint on equipment
renewal by railway companies, and both net sales and segment income declined.

◼ Orders received and order backlog◼ Net sales and segment income

15

15 Net Sales

10

Ordersreceived

10

7.6
5

0

Segment income

Net Sales

9

6

7.9
6.0

6.7
Order
backlog(100 million yen)

3.4

5

2.1
1.4

Segment
income2.4
1.4

1H FY2019 1H FY2020 1H FY2021

0

3.0
1.7

0.4

3

0

1H FY2019 1H FY2020 1H FY2021• Orders received increased only slightly on the back of continued restraint of equipment
renewal by railway companies.
• Net sales fell for the same reason as orders received.
• Segment income slipped due to lower net sales.
111-9. Consolidated Financial Position

100 million yen
2015年
6月末2November
May 31,
02021
30, 2021
1

ChangeRemarks

519.6

502.9

- 16.7

Current assets

253.0

255.8

+ 2.8

Fixed assets

266.6

247.0

- 19.6 Investment securities: -1,400 million yen

Total liabilities

279.5

272.4

- 7.1

98.8

102.8

+ 4.0

240.0

230.4

- 9.6 for-sale securities: -800 million yen

46.2%

45.8%

- 0.4pt

Total assets

Of which, net interestbearing debt

Net assets
Shareholders’ equity ratio

Unrealized holding gain/loss on available-

122. Outlook for Financial Results for Fiscal
Year Ending May 2022

2-1. Outlook for Financial Results for Fiscal Year Ending May
2022 (Consolidated)
We revised forecasts: orders received of 31.0 billion yen, net sales of 33.0 billion
yen, and operating income of 250 million yen.
100 million yen
FY2020 (Result)
2Q

Full year

FY2021
2Q

Full year

Full year(Result)(Previous forecast)(Revised forecast)

YoY
ChangeFull year

Net Sales

167.2

331.4

148.0

340.0

330.0

-1.4

Operating Income
(%)

1.7

4.2

- 3.6

4.5

2.5

-1.7

(1.0%)(1.3%)( － %)(1.3%)(0.7%)

Ordinary Income

3.5

7.5

- 0.8

7.0

6.0

-1.5

Net Income

4.5

9.7

1.8

8.0

7.0

-2.7

[Net income per share (yen)]

50.49

109.38

20.82

89.48

78.29

-31.09

30.0

30.0

340.0

310.0

Dividend per share(yen)

Orders received

30.0
143.9

300.5

142.1

+9.5

14

2-2. Outlook for Financial Results (by Segment)

100 million yen
Transportation
Systems

FY ending May
2022(Full year)

Information
Equipment
Systems

Net Sales

203.0

120.0

7.0

Segment income

20.5

8.5

0.7

Orders received

183.0

121.0

6.0

Net Sales

-12.2

+14.6

-3.6

Segment income

-1.7

+1.4

-1.9

Orders received

-5.1

+15.1

-0.3

(Revised forecast)YoY Change

Industrial
Systems15

<Reference> Assumptions for Outlook for Financial Results
The business environment assumed in the revised forecast for thefinancial results for the fiscal year ending May 2022
Business Environment

Transportation
Systems• The number of users of domestic railways has returned to 60% of the pre-pandemic level for
medium-to-long distance passengers and 80% of that for short-distance passengers.
• Although plans to build new vehicles may be reviewed or scaled back, we believe that our service
for maintenance and equipment will grow.
• The number of railway passengers in China decreased temporarily due to the spread of the variant,but it remains on a recovery path as a whole. Demand for new railway vehicles and maintenanceservices is expected to increase.
Overseas projects in Southeast Asia have also started to become brisk toward the time after thenovel coronavirus pandemic.

Industrial
Systems• Equipment demand in the manufacturing industry is on a recovery trend, though there are concerns
about supply constraints for components for semiconductors, etc. and soaring material prices that
may affect production.
• With a view to realizing a decarbonized and sustainable society, demand for test equipment for theelectrification of automobiles and dispersed power source systems is projected to grow.
• There are also expectations of expansion and reinforcement of infrastructure equipment, such as
emergency power generators, in the effort to enhance national resilience.

Information
Equipment
Systems• With increasing demand for digitalization and contactless systems, there is a growing need to becompatible with IC train tickets, including those for local lines, whereby demand for products, such as
IC car-mounted terminals, is expected to grow.

16

3. Progress and Specific Initiatives in
Medium-Term Management Plan

3-1. Medium-Term Management Plan Numerical Targets(consolidated)
Efforts are underway with “Revitalize 2022,” the Medium-Term Management Plan through FY ending May
2022.
Due to the prolonged impact of the pandemic, targets may not be achieved except for net income.

100 million yen

Net Sales
Operating Income(Operating margin ratio)
Ordinary Income
Net Income
Equity in profit of unconsolidated
subsidiaries and affiliates
ROE
Payout ratio

FY ended May
2021

FY ending May
2022

FY ending May
2022

ResultRevised forecast

Medium-Term
Management Plan

331.4
4.2
(1.3％)
7.5
9.7

330.0
2.5
(0.7％)
6.0
7.0

360.0
6.0
(1.7％)
8.0
7.0

-0.0

-

1.0

4.1%
27.4%

-

3.0%
30.0%

215.2
105.4

203.0
120.0

220.0
130.0

10.6

7.0

10.0

<Net sales by segment>
Transportation Systems
Industrial Systems
Information Equipment Systems

18

3-2. Medium-Term Management Plan Basic Policies andProgress
Progress with the seven basic policies
1. Expanding the overseas business◆ Transportation Systems:• Our joint venture company in China has increased subway maintenance capacity, and its financial results
remain strong.
◆ Industrial Systems:• The sales base established in Thailand is expanding sales channels in Southeast Asia.
• A joint venture company has been established in China as a production base for industrial motors and it
started rolling out products to the Chinese market.

2. Expanding our business areas using our core technologies◆ Development of a condition-based maintenance (CBM) system that utilizes
our IoT terminals is actively under way. Predict the maintenance timing,
judging from the status of usage of each part. Expanding sales throughtrade shows and other opportunities.

3. Promoting development of technology in advance of market needs◆ Developed a high-speed motor that responds to the electrification of automobiles, and an In-Tyre-House
dynamo that is compatible with advanced driving assist systems. Received an order for the first unit of InTyre-House dynamo.

19

3-2. Medium-Term Management Plan Basic Policies andProgress
Progress with the seven basic policies
4. Establishing a stable business earnings structure◆ Promoting a reduction of fixed costs through the united efforts of administration, sales, and plants.
◆ Established a dedicated team to promote operational efficiency through DX.

5. Developing foundations for expanding production capacity◆ Improved production efficiency by strengthening process control through theuse of a core system.
◆ Introduced a new production facility (large gear cutting machine) for in-houseprocessing of complicated gears to increase production capacity and reduce
costs.

6. Developing human resources to play important roles in the future◆ Efforts are underway to develop the next generation of executives and young managers, including theappointment of women.

7. Promotion of ESGs
◆ Formulated sustainability policies and enhanced initiatives.
◆ Disclosed the skill matrix of directors in the Toyo Denki Seizo Report.
◆ Increased the ratio of outside directors to 1/3 or more of directors.

20

3-3. Specific Initiatives in Medium-Term Management Plan
Our joint venture company in China, which mainly provides maintenance services,
continued to generate strong financial results.
Changzhou Ruiyang
Transmission Technology
Net Sales

Beijing Jingche Shuangyang
Traction System

Chengdu Yonggui Toyo Rolling
Stock Equipment

Operating Income

4,000

1,000 2,000

1,000 1,000

1,000

500

500

500

0

0

0

(in millionsof yen)

2,000

500

0

1,000

0

0

2019 2020 2021 (expected)

2019 2020 2021 (expected)
Net Sales•

2019 2020 2021 (expected)

Operating Income

Regarding drive gear units,
maintenance service has
expanded in addition to
manufacturing of the units forrailway vehicles of new andexisting subway lines.

••

Demand for an overhaul for
Beijing Subway is growing
rapidly. Both net sales andincome increased for FY2021(January through December).
Expanded the floor space ofplants, leading to sparecapacity for other companies’
products.

•

As a pantographmanufacturing base in China,
the company continued togenerate strong financial
results. Demand for
consumables was also strong.

21

<Reference> Situation of the Railway Business in China◆ Changes in Monthly Passenger Transportation Volume on Trunk Railway Lines(from the website of China State Railway Group Co., Ltd. and other sources)

400(Millions of People)

300
200
100

2019
0

January

February

March

April

May

2020
June

July

2021
AugustSeptember

OctoberNovember December• The passenger transportation volume returned to the 2019 pre-pandemic level in the first halfof 2021, though the volume decreased in the second half of 2021 due to activity restrictions
to control the pandemic.

◆Extension and operating speed of high-speed railways• As of 2021, the operating distance reached 40,000 kilometers and is ahead of the plan.
It is planned to extend the lines to 70,000 kilometers in 2035.
• A plan is ongoing to increase the operating speed from the current 350 km/h to 400 km/h,
and Toyo Denki is considering ways to respond to the mass-production of a new type of
400 km/h standard vehicle.
22

<Reference> Trend in the Railway Project in China andoverseas (excluding China)◆ Main projects in China and overseas for which Toyo Denki may take part in a bid
by 2025• In China, the electrical products that we delivered to Beijing Subway and Chengdu
Subway will require an overhaul service in the coming years. Furthermore, we will
strive to win orders for an overhaul service of electrical equipment made by othercompanies.
• For overseas (excluding China), we will strive to win orders for JICA's yen loan
projects and other projects mainly in Southeast Asia.
• Overhaul work for Beijing Subway
and Chengdu Subway
Year foroverhaulName of subway• JICA's yen loan projects and other main railway projects

Numberof railway
vehiclesYear forbidCountry

Name of project

Numberof railway
vehicles2022

Beijing Subway

46

2022

Indonesia

Jakarta MRT North–South line (phase 2)

84

2022

Chengdu Subway

23

2022

TaiwanTaipei Metro

42

2023

Beijing Subway

59

2022

The United States

Philadelphia Subway

222

2024

Beijing Subway

49

2023

Bangladesh

Dhaka Metro Rail Line-1

200

2024

Chengdu Subway

12

2023

Bangladesh

Dhaka Metro Rail Line-5

180

2025

Beijing Subway

61

2023

The United States

Philadelphia LRV

156

2025

Chengdu Subway

13

2025

Indonesia

Jakarta MRT East West line

126

(Research by Toyo Denki)23

3-3. Specific Initiatives in Medium-Term Management Plan
We exhibited our developed products at the Mass-Trans Innovation Japan 2021 (held in
November 2021)◆ VVVF (Variable Voltage Variable Frequency) Inverter
IoT remote monitoring system
Supporting a condition-based maintenance (CBM)
system by introducing IoT to VVVF inverter.

◆ New single-arm pantograph
A lineup of single-arm types with round pipes.

Changed toround pipe

Cloudserver<Cross-section
shape>
Ordinary
type
Control unit

IO Remoter II
New
type

◆ System to monitor condition of drive gear units
By observing the vibration and temperature of the
bearing, any abnormality in the drive gear units is
detected.

AntennaDevice tocollect status
information◆ Grease lubricated traction motor with fully enclosed
inner fans
Totally enclosed motor realizes noise reduction andless maintenance.

Gear units(With a sensor)

Sensor input

24

3-3. Specific Initiatives in Medium-Term Management Plan
Promote development of test equipment that contributes to the electrification andautonomous driving of automobiles.
◆ Development of In-Tyre-House dynamos• Received the first order for test equipment using the In-Tyre-House dynamo.
• Attached to the tire part of an actual vehicle, prototypes are undergoing a simulation of an actual
running test (to replace chassis dynamos).
Expanded sales by highlighting the attractive features including no large-scale construction,
quietness, and compatibility with electrification.
Space saving

Chassis Dynamo

In-Tyre-House dynamo

Comparison of Chassis Dynamo and In-Tyre-House dynamo

Actual vehicle tests with In-Tyre-House dynamo• Going forward, development efforts will be carried out with a view to ensuring applicability to selfdriving vehicle tests and advanced driver assist system tests inside a testing room.
Future potential25

3-3. Specific Initiatives in Medium-Term Management Plan
Distributed power source system for small-scale hydropower◆ Received an order for a distributed power source system for cycling-type wave power pumped-out
power generation.

Collaborating with Soundpower Corporation and Andriz K.K., we received an order for a distributed
power source system for cycling-type wave power pumped-out power generation. We are aiming forpractical use by the summer of 2022.
Toyo Denki’s distributed power generation system combines a permanent magnet synchronous
generator with inverter technology, and has a track record of over 100 cases including small-scalehydropower. We created a new system by combining wave power pumped-out power generation withsmall-scale hydropower generation.
We will continue to contribute to the development of various renewable energies, not limited to wave
power pumped-out power generation.

Soundpower
Corporation

Andriz K.K.

Toyo Denki Seizo K.K.

Cycling-type wave power
pumped-out power
generation that converts
wave energy into waterflow

Pump reversing turbinethat converts water flow
into rotational energy

Distributed powersource system thatconverts rotationalenergy into electricity

Mechanism of cycling-type wave power pumped-out power generation26

3-3. Specific Initiatives in Medium-Term Management Plan
Developing products compatible with DX and introducing them into our business◆ IORemoter II, an IoT Terminal for Remote Monitoring and Control System
We are introducing an IoT terminal IORemoter II, which provides monitoring and control ofmoving objects or remote equipment through simple operation and at a low price, to ourtransportation systems business and industrial systems business.
MonitoringtargetOur scope of offering
Cloud
serverPC
Mobile network

FirewallMonitor station IO Remoter II

Mobile carrier• Transportation Systems: Realizing condition-based
maintenance (CBM) by remotely monitoring electricalequipment for railway vehicles.

The Internet
Tablet• Industrial Systems: Remotely monitoring the production
line of factories to which Toyo Denki delivered electricalequipment.

Cloud
serverControl unit

IO Remoter II

27

Thank you for your interest.

Inquiries
Toyo Denki Seizo K.K.
PR, IR, and CSR Department, Management Planning Division
TEL: 03-5202-8122
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.

29