Message to Investors
We are grateful to our shareholders for their welcome support throughout the preceding year.
Business Performance for Fiscal 2017
In fiscal 2017, the Tsubaki Group’s consolidated net sales totaled ¥215.7 billion, while operating income amounted to ¥20.6 billion (representing an operating income ratio of 9.6%).
Sales increased by 8.5% year-on-year, which represents a record high, thanks to strong sales in Japan from our Chain Operations, Power Transmission Units and Components Operations, and Materials Handling Systems Operations, while outside Japan our Automotive Parts Operations also posted buoyant sales.
However, operating income declined 4.4% measured against the previous fiscal year due to higher prices for special steels and other materials as well as increased prior investment costs for Automotive Parts Operations inside and outside Japan.
Launch of Mid-term Management Plan 2020
In order to strengthen our potential for sustainable growth as a manufacturing company in the years following our centennial, our Group formulated Long-term Vision 2020 in fiscal 2014. This plan outlines the goals the Tsubaki Group should seek to achieve by fiscal 2020. In April 2017, we introduced Mid-term Management Plan 2020 as an action plan outlining the steps we must take to meet these goals. We have already begun to address issues that will enable us to focus on what our goals should be. In keeping with our policy of “Convert our corporate culture to a market-focused approach” and “Exercise comprehensive strengths of the Group”, we will emphasize the need to provide innovative services and develop and launch products closely attuned to market needs. We are committed to expanding our business by strengthening the synergies among our business groups, building on the concept of “One Tsubaki.”
Progress of Our Mid-term Management Plan 2020
The Tsubaki Group intends to establish itself as an ideal global leader in industry by fiscal 2020. In April 2017, we introduced Mid-term Management Plan 2020 as a four-year action plan designed to realize this goal.
Our goal is to achieve consolidated sales of 300 billion yen and operating income of 30 billion yen by fiscal 2020 through our two-pronged strategy of converting to a market-focused corporate culture and exercising the comprehensive strengths of our Group.
We are pleased to note that we have already achieved the following three major milestones in the first year of our Mid-term Management Plan.
- • We successfully launched several new products and expanded sales across our four business segments.
- • Our initiatives to improve productivity are bearing fruit in our Chain Operations and Power Transmission Units and Components Operations.
- • Our factory restructuring and construction of new plants has proceeded on schedule in our Automotive Parts Operations and Materials Handling Systems Operations.
In fiscal 2018, we intend to continue developing products and technologies capable of responding comprehensively to market needs as we promote initiatives to improve productivity. Toward this end, we are actively investing capital in order to strengthen our global production capacity.
As part of this effort, we completed construction of our new materials handling plant in Saitama in March 2018, with full operation getting under way as of June 2018. Designed on the concept of an “attractive plant,” this new plant will spur the growth of our Materials Handling Systems Operations by strengthening our manufacturing base while enhancing our appeal to customers.
Organizational Reforms for Fiscal 2018
On April 1, 2018, we implemented structural reforms with the aim of strengthening our governance; specifically, we clarified our directors’ management responsibilities and our executive officers’ business execution responsibilities. For more details on this initiative, please refer to our press release of February 27, 2018, titled “Reorganization and Personnel Reshuffle.”
Under this organizational reform initiative, we established a new Quality Management Department under our Headquarters Operations to manage quality across our entire Group. With this effort, we are taking steps to further strengthen our quality control and restore customer confidence in addition to preventing any recurrence of the incident of misconduct associated with a quality inspection process, which we addressed on May 15 of this year.
In a similar vein, we established our Work Style Reform Promotion Office, a new organization under the direct supervision of the president. The objective of this office is to take measures to support a contented workforce. Toward this end, we are carrying out reforms within the year that include improving the efficiency of business processes and creating a work environment supportive of a diverse workforce.
Outlook for Fiscal 2018
Our fiscal 2018 forecast for consolidated operating results calls for ¥225 billion in sales and ¥21.3 billion in operating income. During the current fiscal year, we expect a gradual economic recovery in Japan against a background of generally strong markets across the rest of the global economy. As part of our effort to implement Mid-term Management Plan 2020, we are making prior investments for future growth. We expect, however, that our profit growth will be somewhat restricted due to depreciation expenses and an increase in expenses related to plant construction.
Under these circumstances, the Tsubaki Group will strive to enhance corporate value by strengthening our potential for sustainable growth under our guiding principle of “One Tsubaki.”
As we pursue these varied goals, we very much look forward to the continued support and encouragement of our shareholders.
TSUBAKIMOTO CHAIN CO.
Chairman and CEO
President and COO