To our shareholders/Investors

Chairman and CEO Hiroshi Suehiro

Thank you for your continued support.

I am pleased to report that our 90th consolidated fiscal year has ended.

June 2023

Chairman and CEOHiroshi Suehiro

Summary of the 90th consolidated fiscal year

In the business environment surrounding this consolidated fiscal year, concerns of an economic slowdown intensified due to the significant depreciation of the yen, the continued sharp rise in raw material and energy prices triggered by the situation in Ukraine, accelerating inflation, rising interest rates in various countries, and sluggish consumer behavior due to China’s zero COVID-19 policy.

In the automotive industry, too, soaring resource prices put pressure on the industry's overall earnings, and supply chain disruptions due to a shortage of semiconductors and other factors continued to have a major impact on automakers' production plans, although parts supply problems are now easing.

With this business environment, in this fiscal year our sales of 178.6 billion yen (up 9.2% on prior year) was an increase on prior year with the impact of yen depreciation, however, due to the soaring costs of raw materials, energy, transportation, labor, and other overhead expenses, as well as the sluggish Chinese market, operating profit was 6.8 billion yen (down 35.9% on prior year), ordinary profit was 10.2 billion yen (down 30.2% on prior year), and net profit returned to parent company shareholders was 3.8 billion yen (down 52.5% on prior year), thus, all income lines saw a decrease in profit on prior year.

Despite this difficult business environment, the year-end dividend is proposed at 28 yen per share, taking into consideration the expectations of our shareholders and other factors.

In the next fiscal year, while the impact of semiconductor and component supply shortages is expected to ease, the business environment is expected to remain challenging due to persistently high inflation, ongoing geopolitical risks, and pressure on earnings from soaring raw material, energy, and other costs. We will focus on thorough cost reduction, rationalization, and price reflection.

Promotion of two-wheeled management

The automotive industry has entered an era of great reform, and the environment surrounding the company is undergoing drastic changes, including economic and social transformations and the emergence of global environmental and energy issues. Our corporate philosophy is to contribute to the realization of a clean and high-quality global society, and our growth strategy is to maximize profits from our existing powertrain business, and to use those profits to actively invest in new business for sustainable growth. This is our promotion of two-wheeled management. In the existing powertrain business, we will promote the development and supply of products that contribute to the improvement of engine thermal efficiency and the diversification of fuels such as environmentally friendly hydrogen and biofuels. As for new business, the entire group is moving forward with numerous projects with the aim of creating 50 billion yen in sales from new business by 2040. In China, where EV sales are rapidly growing, we will actively work to create products in new fields, using TANE (TPR ARN (Anhui) New Energy R&D Co., Ltd.), a research and development base established with our joint venture partner in China, as a foothold.

I look forward to the continued patronage of our shareholders.

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