Analysis of Business Results
1. Overview of Operating Results
In the fiscal year under review (from April 1, 2010, to March 31, 2011), corporate revenues improved in the Japanese economy during the first half of the year due to increased demand for exports and the results of economic stimulus measures, resulting in a gradual trend toward recovery. While the second half of the year was plagued by sluggish demand for exports and poor sales of automobiles in Japan, halting growth, these conditions too began to recover in the 2011 calendar year. However, the Great East Japan Earthquake, which occurred on March 11, 2011, brought a renewed state of opaqueness with it at the end of the fiscal year.
Under these circumstances, conditions in the Group’s operating environment remained strong, regardless of low sales of automobiles in Japan during the latter half of the year. This was due to factors such as the recovery of capital investment in industries related to machine tools, liquid crystal displays (LCD), and semiconductors.
As a result, consolidated orders in the fiscal year rose 22.9% year on year, to ¥138,431 million. Net sales increased 22.6%, to ¥138,243 million. Both operating income and ordinary income rose year on year, with operating income increasing by 132.6%, to ¥11,022 million, and ordinary income increasing by 122.7%, to ¥11,111 million. This increase in income was a result of higher net sales and the effects of measures to improve profitability implemented throughout the Group. Net income grew by 91.9% to ¥6,093 million.
Segment results are summarized as follows.
The Chains segment sales of mainstay products such as drive chains, small-sized conveyor chains, and cable and hose protection and guidance products for such industries as the machine tool industry, LCD and semiconductor related industry, automotive industry, and food industry were strong.
Due to these factors, orders received were up 29.1%, to ¥47,899 million, net sales rose 27.1%, to ¥47,022 million, and operating income increased by 9.0 times, to ¥2,780 million.
Power Transmission Units and Components
The Power Transmission Units and Component segment saw a trend toward recovery in sales of mainstay products including reducers, linear actuators, locking devices, and shaft couplings for the machine tool industry as well as the LCD and semiconductor related industry.
As a result of these factors, orders received were up 28.4%, to ¥20,217 million, net sales rose 29.9%, to ¥19,738 million, and operating income increased by 16.5 times, to ¥2,065 million.
In the Automotive Parts segment, the favorable trends in production of automobiles continued in Japan and overseas regardless of the poor sales of automobiles seen in Japan during the third quarter. Accordingly, sales of timing chain drive systems used in automotive engines, one of the segment’s mainstay products, were strong.
Accordingly, orders received were up 11.7%, to ¥42,742 million, net sales rose 13.4%, to ¥43,302 million, and operating income increased by 47.1%, to ¥5,382 million.
Materials Handling Systems
In the Materials Handling Segment, harsh operating conditions continued. However, sales of conveyance systems for the steel and automotive industries as well as sorting systems for the distribution industry were relatively strong.
As a result, orders received were up 31.0%, to ¥25,673 million, net sales rose 28.9%, to ¥26,304 million, and operating income was ¥215 million, compared to an operating loss of ¥8 million in the previous fiscal year.
Other orders received fell 1.4%, to ¥1,897 million, and net sales were down 4.0%, to ¥1,875 million. Regardless though, operating income increased by 43.9%, to ¥173 million.
2. Outlook for the Current Fiscal Year
The Group will devote its efforts to improving profitability through the implementation of the measures to strengthen operating foundations outlined in the Medium-Term Management Plan 2012.
However, in regard to our forecast for the fiscal year ending March 31, 2012, the Great East Japan Earthquake significantly affected the operating environment, disrupting the supply chain of the automotive industry and other principle industries, causing electricity shortages, and creating other issues that are cause for uncertainty. Therefore, we are unable to make a rational forecast for consolidated business results as this point in time. We will disclose such forecasts at the earliest date possible.
3. Basic policies for profit allocation and dividends in the fiscal year under review
The Tsubaki Group views returning profits to its shareholders as one of the highest priorities of management. Our fundamental policy regarding shareholder returns is to focus our attention on meeting the interests of our shareholders through the provision of steady dividend payments, while also adjusting dividend payments based on such factors as our consolidated results.
In concrete terms, we intend to maintain a stable dividend of ¥6.0 per share as a low-end threshold and distribute profits as our consolidated results, funding conditions, finances, and other overall criteria dictate.
We plan to utilize retained cash for strengthening our underlying financial standing, promoting future business expansion, and other purposes.
Taking into consideration our operating results, we have decided to raise the year-end dividend for the fiscal year under review by ¥1.00 from the predetermined amount of ¥3.00 per share to ¥4.00 per share. Combined with the interim dividend of ¥3.00 yen per share, this will make for total dividend payments of ¥7.00 per share in the year under review.