To our shareholders/Investors

The global economy in the fiscal year under review faced increased uncertainties starting with the higher crude oil prices due to the situation in the Middle East. Consumer spending was sluggish in the U.S. triggered by higher inflation caused by tariffs, whereas performance in China was steady with strong overseas demand due to the shift in exports destined for the U.S. to other regions, despite employment uncertainties. The trend in Japan was firm due to higher wage and increased investment while also being subject to the impact of rising prices.

In the automotive sector, to which the Group is mainly related, in the U.S., sales of hybrid vehicles increased, despite sluggish sales mainly of EVs. In China, domestic sales and exports remained strong, particularly among Chinese manufacturers. In ASEAN, however, demand growth slowed and sales were sluggish due to high interest rates and stricter lending standards. In Japan, sales remained weak.

In this business environment, for the fiscal year under review, the Group’s consolidated net sales decreased year on year due mainly to a decline in sales in the Faltec Group, and operating profit decreased due to the effect of a change in product mix. Ordinary profit, and profit attributable to owners of parent increased due to the share of profit of entities accounted for using equity method and gain on sale of assets held.

We are steadily advancing our 2026 Medium-Term Management Plan, which is based on a two-wheeled management strategy combining our existing Powertrain Business and the Frontier Business as a new growth area.

In the Powertrain Business, we are strengthening production capacity in markets where demand for engine-equipped vehicles is expected to grow. At the same time, we are systematically introducing high-efficiency production lines to streamline our global manufacturing structure.

In the Frontier Business, in order to address the growing demand for lightweight solutions driven by the shift toward EVs, we have decided that one of our consolidated subsidiaries will acquire an equity stake in a company possessing aluminum die-casting technology, with the aim of expanding our aluminum business. Furthermore, we have been selected as one of five major participating companies in the Tokyo Metropolitan Government’s “Open Innovation Promotion Program Utilizing Assets Held by Large Corporations (Tokyo Cross Lab),” and we expect to collaborate with startup companies in next-generation mobility and advanced industrial sectors going forward.

In addition, to create a more accessible environment for investors to hold and trade our shares, we implemented a stock split and strived to improve capital efficiency and enhance shareholder returns through measures such as reducing low-profitability assets and share repurchases. Going forward, we will continue to strengthen our earning capacity and further improve capital efficiency, while placing ongoing emphasis on dialogue and communication with our shareholders and investors.

We sincerely appreciate the continued support and patronage of our shareholders.