IRMessage from the President

Observation of whole FY2020 (April 2019 to March 2020)

井上 善雄

During Fiscal Year (FY) 2020, TOMOEGAWA Group realized a large contribution from new product launch sales increase. Still, the sales of existing products has been weak throughout the FY, and negative impact from COVID-19, such as temporary shutdown at our factories in China and restrictions and lockdowns in our major markets, limited our 4th Quarter recovery effort. As a result, we experienced large declines in sales and profit amounts in FY2020.

In our Functional Paper business, even though markets of some of its product lines continue to shrink, its profit margin showed improvement, thanks to active marketing and intense cost reduction activities. As for our Toner business, domestic and overseas sales efforts kept the overall sales volume at a similar level as the previous FY. Still, the sales amount declined due to the spreading of fierce price competition to the global market, Yen appreciation, and COVID-19. Our Electronic Material business did not fully recover from previous FY. The semiconductor market showed the sign of improvement, but customers of our product were affected by COVID-19.

Our whole FY2020 sales figure was \30,995 million, which is △\2,444 million or △7.3% lower than the sales figure of previous FY. As for the profit, our consolidated Operating Income and Ordinary Income were △\64 million (△\737 million) and △\146 million (△\820 million), respectively. Despite our effort of company-wide cost reduction and productivity improvement, effect of sales decline and fixed cost increase caused by aggressive capital investment during previous FY lead to this result.

As for the Net Income, there is Special Income and Special Loss caused by the additional purchase of shares of Shoei Printing Co., Ltd. at FY end, which changed Shoei’s status from our equity-method affiliated company to our consolidated company. Because of this Special Income and Special Loss, TOMOEGAWA’s FY2020 Net Income is \510 million, \2,543 million improvement from last FY’s △\2,032 million.

The Projection of FY2021

We expect our new relationship with Shoei will lead to a profit increase. And at the same time, there is concern on major economic slow-down in public consumption and production activities caused by COVID-19, both domestically and internationally. Under such circumstances, making a reasonable estimation of FY2021 business result becomes extremely difficult, so TOMOEGAWA decided not to announce estimates of FY2021 numbers. Even though the future business environment outlook is extremely unclear, TOMOEGAWA aim to return to the “Track of Growth” soon, by executing profit improvement plan that includes fixed cost reduction, by the pursuit of synergy among whole Group companies including newly added Shoei Printing, and by launching new products in each area of TOMOEGAWA’s business, especially in “5G” related products in Electronic Material business.

Dividend payment

One of Tomoegawa’s goals is the steady increase of its shareholder value throughout the foreseeable future. Our basic dividend policy is to make stable and continuous dividend payments. We make the deliberate decision of dividend payments based on that policy and by taking into consideration consolidated and non-consolidated financial statements, amount of retained earnings and the strength of our financial condition. For this fiscal year, we are very sorry to announce that there will be no dividend payment at Fiscal Year-end, due to the poor performance of that FY. To our shareholders, we express our utmost regret about not fulfilling your expectation. We will make every effort to become eligible for a dividend payment again as soon as possible.
Your continuous support of TOMOEGAWA will be greatly appreciated.

President and CEO
Yoshio Inoue
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