Warmest greetings to all valued shareholders of the Ryoden Group.
During the 2019 consolidated fiscal year, the global economy experienced a widespread slowdown, with the U.S. beginning to be over-shadowed by the impacts of the U.S.-China trade friction after a long period of steady growth, China struggling through a deceleration, and the EU also sliding into a downturn.
Furthermore, from the turn of the year, the COVID-19 pandemic has created an air of uncertainty by stagnating the movement of people and things throughout the world and seriously damping economic activities without any sign of coming to an end.
The Japanese economy is now in the same boat. While it had been enjoying a gradual recovery based on an increase in capital investment and an improvement in the employment situation owing to steady growth in corporate earnings, a slowdown has surfaced as a result of a slump in exports stemming from the U.S.-China trade friction and a shrinking of capital investments. Toward the latter half of the fiscal year, the emerging impacts of the COVID-19 pandemic have also plunged Japan into an unforeseeable future.
Among the industries in which the Ryoden Group operates, capital investment demand remained strong in construction-related industries but continued to be weak in FA industries particularly with regard to the semiconductor manufacturing equipment and machine tool industries. Additionally, the steady demand that had existed for ADAS (advanced driver assistance system) in the automobile-related industries switched to a downturn in response to a rapid deceleration in the market as an impact of the COVID-19 pandemic.
Meanwhile, there has been robust demand in the smart agriculture business (vegetable factories) that had taken off on full scale, and a strong continuing trend has been observed.
Amid this business climate, the Ryoden Group has accelerated the application of a customer value-creating business model that can adapt to changes in the business environment. We have also pursued this year’s business activities under a vision for increasing profitability with the aim of attaching higher added value to existing core businesses, establishing a business model for growth businesses, and creating new, next-generation businesses.
As a result, the Group’s financial results for the consolidated fiscal year saw net sales of 230.087 billion yen (4.3% decrease from the previous year), an operating profit of 5.559 billion yen (1.2% decrease), an ordinary income of 5.758 billion yen (1.9% increase), and net profit attributable to the owners of the parent company of 3.86 billion yen (3.4% increase).
In fiscal 2020 we expect to see loss in final demand, a worldwide drop in the economy activity levels and a sluggish recovery thereafter, until the spreading of COVID-19 settles down.
Furthermore, as our Group has customers in a wide range of industries, including the manufacturing, wholesale, construction, medical and services industries, the decline in demand and investments in these industries may have a large impact on our Group’s performance. We are also subject to the impacts of the business strategies of our major suppliers, as well as of product market strategies and supply trends, and are placed in an environment full of issues.
Under this situation, we have launched our new medium-term management plan “ICHIGAN 2024” this fiscal year. With a focus on the environment, safety and security as our priority areas, we shall continue to create new value as a business creation company and strengthen our earning power with the aim of contributing to realizing a sustainable society. More specifically, we will “establish a business model for growth businesses and create new next-generation businesses,” “increase the productivity of basic core businesses,” and “strengthen our business promotion foundation” and endeavor to produce valid results even in today’s difficult environment.
Although we will continue to accelerate our business activities toward securing steady earning power and will strive to cut down on expenses, we cannot expect to see a recovery of our business performance until the latter half of fiscal 2020. As such, we project net sales of 209 billion yen, an operating profit of 3.1 billion yen, an ordinary income of 3.1 billion yen, and net profit attributable to the owners of the parent company of 2.2 billion yen for the fiscal year.
Please note, however, that our business performance outlook may change if the impacts of the COVID-19 pandemic on economy extend further and continue longer into the future than we can imagine at present.
We thank you for your patronage and hope you will continue to favor us with your support.
* Please note that all forecasts of financial results and other forward-looking statements are based on assumptions we judge to be rational at this point in time, and that actual performance results may differ from those projected above.