Message from the President

Be a 未来-Creator as Your Partner

I would like to start by thanking you all for your continued support on behalf of the group.

During the consolidated fiscal year under review, the global economy suffered severe damage from the COVID-19 pandemic. As the novel coronavirus exerted its fury over the entire world, governments and medical institutions were unable to stem its spread. Restrictions on the movement of people and goods and on economic activities were imposed worldwide, resulting in an economic recession that some have called the worst since the end of the Second World War.

Distortions in supply and demand wrought havoc everywhere. Supply was severely impacted, as cross-border supply chains were severed and services that involve face-to-face contact were curtailed. As people in every country were advised and even ordered to restrict travel and even outings outside their homes, demand for restaurant meals, hotel accommodations, travel, transportation and much else contracted on an unprecedented scale. Even demand for durable goods collapsed as the entire globe entered an entirely new dimension in economic crisis.

In Japan the effects of the pandemic were felt in varying ways. The national government declared a state of emergency. On an annualized basis, the drop in GDP in the period from April to June 2020 was the nation’s worst of the postwar era. Uncertainty over the prospects of a second and third wave of the pandemic fed lingering weakness in domestic demand, including both personal consumption and capital investment. These developments engendered a broadening gap in growth rates between industries.

As the corporate group of an electronics trading company, the Ryoden Group, led by Ryoden Corporation, is involved in a range of industries. Many were impacted by the COVID-19 pandemic. Although results related to next-generation (5G) communication standards and data centers remained firm, capital investment in industrial and fabrication machinery in Japan was depressed. Although the domestic automobile manufacturing industry found a recovery keynote, the global shortfall in semiconductors for on-board applications worsened. From February 2020 onward, many automakers were compelled to scale back or adjust production.

Under these challenging circumstances, the Ryoden Group moved forward with business activities based on ICHIGAN 2024. ICHIGAN 2024 is the Group’s current medium-term business plan, launched in April 2020 as a five-year strategy for new growth. Guided by the plan’s key theme of “contributing to the achievement of an eco-friendly, secure, safe and sustainable society,” the Group aimed to create new value as a business-generating corporate entity, transcending its traditional confines as dealers and trading companies.

In the consolidated business results of the Ryoden Group for the fiscal period under review, all key indices declined. Net sales fell 14.4% against the same period of the previous fiscal year (YoY) to ¥196.841 billion. Operating income dropped 38.6% YoY to ¥3.415 billion, while ordinary income contracted 36.6% YoY to ¥3.653 billion. Net income attributable to owners of parent decreased 39.3% YoY to ¥2.343 billion.

In its forecast of worldwide economic growth in 2021, the International Monetary Foundation (IMF) announced a remarkably high figure of 6.0% YoY growth. While this forecast in part represents a rebound from the 3.3% contraction in 2020, growth is also buoyed by the spread of vaccines and the unprecedented stimulus measures undertaken in many countries, particularly in the developed world. In particular, global growth is seen to be driven by factors such as the massive financial stimulus spearheaded by the Biden administration, which is thought to have enabled the United States to emerge from the pandemic earlier than expected, and by China, which had already maintained sufficient pace for growth. On the other hand, recovery is sluggish in Europe, which is suffering under the threat of mutant strains of COVID-19, while low-income countries with no public finances to spare are limited in the economic measures they can implement, exacerbating the disparity in economic recovery.

In Japan, the number of infections is rising again, in what is being called a fourth wave. Widespread vaccination, which is expected to prevent the spread of infections, has proceeded slower in Japan than in Western countries, raising concerns that Japan’s economic recovery will proceed at a more leisurely pace than in North America and Europe.

The business results of the Ryoden Group are expected to be affected differently in each of the industries with which the Group does business. Orders for industrial and fabrication machinery are expected to trend at a high level, amid demand in China for new smartphones and EVs. However, the shortage of semiconductors for automotive applications is forecast to continue to prompt decreases and adjustments in automobile production. These factors are expected to impact the Group’s business results.

This fiscal year the Ryoden Group enters the second year of its current medium-term business plan, ICHIGAN 2024. The Group aims for the continuous creation of new value as a business-generating corporate entity, transcending its traditional confines as dealers and trading companies, thereby contributing to the achievement of a sustainable society. For this purpose, the Ryoden Group is conducting the necessary reorganization to galvanize its income-earning capabilities.

In its forecast of business results in FY2021, the Ryoden Group anticipates consolidated net sales of ¥220 billion, operating income of ¥4.3 billion, ordinary income of ¥4.4 billion and net income attributable to owners of parent of ¥3.0 billion. Although the Group is pressing forward with efforts to accelerate business activities and trim expenses, in its bid to improve profitability, returning to the levels enjoyed before the COVID-19 pandemic is expected to take considerable time.

If the status of the COVID-19 pandemic continues to restrain the Group’s business activities, the forecast of business results may be subject to change.

On behalf of the Ryoden Group, I ask once more for your continued support and encouragement.

正垣信雄

Note: Forecasts of business results and other forward-looking statements are based on certain assumptions that Ryoden considers reasonable at the time of publication. Actual business results and other outcomes may differ from those forecast.

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