Message from the President

The four-year medium-term
management plan “Revitalize2020” made a good start and is
progressing as planned.
President

Kenzo Terashima

improvement in the Industrial Systems segment in the fiscal year end-

From an ESG point of view, we revised the Operating Officer system

ed May 2019, the first year of the plan. The earnings forecast for theto strengthen governance by having a Director responsible for gover-year ending May 2020 is net sales of 42 billion yen, operating incomenance, while transferring executive authority to Operating Officers forof 900 million yen, and net income attributable to owners of the parent

higher management flexibility. Moreover, we will reconsider the sig-of 900 million yen. With this in mind, we will strive to gain a footholdnificance of our cross holdings in compliance with the Corporate

for the latter half of the medium-term management plan.

Governance Code so that we make effective use of our assets. As for

Ryuo Integration effect by the Shiga Ryuo Plant which began opera-environmental contributions, we received the Yokohama Global

tion in June 2018 and a shift to a business promotion system by prod-Warming Countermeasures Award from Yokohama City for our global

uct have brought about changes in the attitudes of employees. In fact,warming prevention activity.

this was reflected in the improved profitability of the Industrial Systems

We were particularly recognized for installing 500 kW PV solar power

segment. Amid sound orders received, we will take advantage of thepanels on the roof of the Yokohama Plant in 2012 with an output of ap-

integration effect so that we can meet greater production needs in theproximately 600,000 kWh per year, achieving a plant-wide CO2 emission

future. In addition, for the Yokohama Plant, a production site of thereduction of approximately 330 tons (about 8%).

Transportation Systems and Information Equipment Systems segments,
we have started modifying the layout for greater productivity.
Among overseas development, the Industrial Systems segment has

Ribbon for the spring of 2019 for being a model employee endeavoring

started fully fledged operation of SIAM TOYO DENKI Co., Ltd., a local

to manufacture electric motor coils for railway vehicles. Currently, he issubsidiary that has been upgraded from a local representative office inengaged in coaching the younger members of the workforce so that

Bangkok, Thailand, in response to increased demand for power gener-

they can succeed our manufacturer spirit and expert techniques.

ators and processing machinery in China and the ASEAN regions.

The efforts made in the initial year for fully fledged operationof the Shiga Ryuo Plant and for strengthening the operational
structure improved the profit structure of the Industrial
Systems segment, providing a solid footing for the second year.

crease in profit in China exceeded the increase in domestic profit.
The Industrial Systems segment saw a YoY increase in orders received, helped by an increase in orders for testing equipment for automobile development and for processing machinery. On a
non-consolidated basis, orders received exceeded 10 billion yen for

Net sales were 41.1 billion yen on a consolidated basis due to a nega-

the first time in four years. Net sales increased YoY accordingly. Seg-tive rebound in the Information Equipment Systems segment from thement profit rose significantly despite an increase in depreciation andprevious fiscal year and a decrease in the Transportation Systems seg-amortization expenses due to greater-than-expected improvementsment. Orders received were 40.6 billion yen, boosted by the growth ofin efficiency and productivity resulting from the Ryuo Integration.

the Industrial Systems segment. Operating income was 550 million

In the Information Equipment Systems segment, both orders re-yen, positive growth almost as expected in the revised plan, due toceived and net sales decreased YoY due to a rebound from a large-

dramatically improved efficiency and productivity through “Ryuo Inte-scale project in the previous fiscal year, but segment profit wasgration,” the integration of production sites to the Shiga Ryuo Plant.

unchanged, boosted by software improvement projects and others.

The first year of fully fledged operation at the Ryuo site was a great

Moreover, in China, we have established Chalco-Toyo Permanent

idated subsidiaries and affiliates, while net income attributable to owners of the parent was 690 million yen, unchanged from the previous

We will go further as planned with the aim of increasing
our “earning power” and establish a “leaner” business
operation structure that generates a stable profit.

fiscal year, as a result of efforts to reduce certain cross holdings. Over-Earth & Metals Co., Ltd., an affiliate of a primary state-owned enterprise Aluminum Corporation of China (CHINALCO), and Beijing Ling

Numerical Management Targets of Medium-term Management Plan
(Unit: Billions of yen)

Yang Trading Co., Ltd., a local trading company. The aim is to begin

Fiscal year ended
May 31, 2019(Results)

manufacturing motors on a fully fledged basis in China starting from2020. As for the Transportation Systems segment, we delivered elec-

Fiscal year ending Fiscal year ending
May 31, 2020
May 31, 2022(Plan)(Plan)Net sales

41.17

43.0

Over 47.0

Operating income(Operating margin)

0.55
1.4%

0.9
2.1%

24.3%

Ordinary income

0.49

1.1

2.4

way, so as to contribute to development of the railway infrastructure in

Net income

0.69

0.7

1.6

Asia for years to come.

Equity in profit ofunconsolidated
subsidiaries and affiliates

0.01

0.12

0.4

ROE
(Return on Equity)

2.7%

3.3%

5.0%

Dividend payout ratio

39.9%

30.0%

30.0%

trical equipment for railway vehicles to Jakarta Mass Rapid Transit(MRTJ), the first subway construction project in Indonesia, where agroup of Japanese companies was responsible for handling from facilities to vehicles. In China, we plan to further expand the maintenancebusiness of electrical equipment for railway vehicles on Beijing Sub-I believe we have made a good start toward creating
a robust Toyo Denki Seizo Group.
The year-end dividends for the fiscal year under review are 30 yenseas sales accounted for 22.9% of net sales amid the process ofWe are implementing “Revitalize 2020,” the medium-term manage-per share in line with the Company’s distribution policy based on aSegment net sales

switching vehicle models for the high-speed railroads in China.

ment plan that runs for four years from June 2018, when the Company

payout of stable dividends. We will continue to pay dividends on themarked its 100th anniversary, until the end of the fiscal year ending

basis of a payout ratio of 30% that is a management index given in theTransportation Systems

27.23

29.0

31.0

May 2022.

medium-term management plan. With the medium-term management

Industrial Systems

12.33

13.015.0

Information
Equipment Systems

1.58

1.0

1.0

By segment, the Transportation Systems segment saw a YoY increase in orders received, boosted by those from both Japan and over-5I would highly appreciate our shareholders’ understanding and continued support for further development of our business.

Magnet Motor Co., Ltd., a three-way joint venture with Chinalco Raresuccess. Ordinary income was 490 million yen, negatively affected byforeign exchange losses and a decrease in equity in profit of unconsol-As for the succession of technologies and skills, one of the employees at the Yokohama Plant was honored to receive a Medal with Yellow

seas excluding China. Net sales decreased due to a fall in sales inDuring the first two years, we focus on enhancing profitability, andChina and other overseas markets. Segment profit fell because the de-successfully increased operating income due mainly to a significant

plan progressing well in the first year, we will contribute to internal andexternal stakeholders for further growth.

Toyo Denki Seizo Report 20196