IRMessage from the President
Observation of whole FY2021 (April 2020 to March 2021)
During Fiscal Year (FY) 2021, TOMOEGAWA Group had struggled in First Half, as COVID-19-caused economic stagnation suppressed demand for our product in large scale. However, in Second Half, rapid recovery was achieved in Semiconductor and Electronic Devices industry, where we maintain a competitive edge. Also, demand for Toner business and Functional Paper Business showed recovery from the decline in First Half. As a result, final Consolidated Revenue number of FY2021 reached \30,768 million, which is ▲\226 million or ▲0.7% lower than that of previous FY. (When the numbers of 2 subsidiaries that are newly added to consolidation at the end of FY2020 are excluded, Consolidated Revenue is \26,476 million, which is ▲\4,519 million less than that of previous FY.)
As for the profit, while we recorded large negative numbers in First Half due to the demand suppression, Second Half recovery enabled us to almost offset that loss and limit FY total Operating Loss at ▲\15 million. Second Half recovery was brought by the demand recovery for high-profitability products such as Semiconductor and Electronic devices, fixed cost reduction through the discontinuation of toner manufacturing in North America, and other short-term cost-cutting activities. The addition of 2 new companies to consolidation also helped. (When the numbers of 2 subsidiaries that are newly added to consolidation at the end of FY2020 are excluded, Consolidated Operating Income is ▲\324 million, ▲\259 million less than that of previous FY.)
Ordinary Income was positive \145 million, which means the negative numbers at Q3 end was wiped out during Q4. Net Income was negative at ▲\1,152 million. The asset impairment loss for Coated Paper business whose shrinkage was accelerated by COVID-19, and special loss attributed to North America toner production discontinuation are the main factors of this Net Loss. Thanks to the increase of asset value evaluation amounts, \1,612 million of Other Comprehensive Income was recorded, which made Comprehensive Income reach \766 million, more than offsetting the negative number at Net Income level.
During FY2021, we executed aggressive inventory reduction of more than \2.4 billion from the FY beginning balance, which lead to the significant Operating Cash Flow improvement. Also, at the end of March 2021, we issued \2 billion worth of Preferred Stock that does not carry conversion right to common stock. As a result of those efforts in addition to the increase of Comprehensive Income, our Net Asset ratio improved to 37.7%, up from 26.7% at Q2 end.
The Projection of FY2022 and beyond
Our Electronic Device products, such as “Lead frame fixing tape used in semiconductor production” and “electrostatic chuck for silicon wafer” own high market shares in the currently booming semiconductor industry. Sales for those products are expected to keep growing. Also, we expect demand for our Toner products, that was the key factor of FY2021 Second Half recovery, will continue to be steady as the world economy enters into the moderate recovery stage.
In addition to those, as the new application of Wood Pulp (Cellulose) material technology, Functional Paper Division will start the mass production process of Cellulose Micro Fiber product “CMF”, which has superiority to other materials in environmental burden reduction effect. Above-mentioned improvement of financial structure enabled us to accelerate the process of bringing development stage new products up to mass production stage. The cost reduction effort will also continue. Taking those into consideration, we set the target for FY2022 as Revenue of \32 billion, Operating Income of \600 million, Ordinary Income of \600 million and Net Income of \500 million. “The new accounting standard for sales recognition” is applied to those projections, and its effect is about \1 billion reduction on Revenue and no effect on Income level.
Today, we have released the new “5 year Mid-term Business Plan” that started in April 2021. In that plan, included are the above-mentioned Growth Strategy, Re-evaluation of Business Portfolio and Structural Reform such as closure of some production and/or sales locations. By steadily following this plan, we expect to improve our Financial Structure to the level with Operating Margin of 5% and ROA of 3% in FY2026.