To Our Shareholders

On behalf of Press Kogyo, I offer my heartfelt appreciation for the continued support of our shareholders. I will now give an overview of the results for FY 2019 (from April 1, 2019 to March 31, 2020), and a report on our business strategy going forward.

Qualitative information on FY 2019 results

FY 2019 (from April 1, 2019 to March 31, 2020) was the first year of our new medium-term business plan that runs for the five-year period from FY 2019 to FY 2023.
This plan was created based on an expectation of difficult times ahead for the business environment and demand trends. The entire automotive industry, including parts manufacturers, has entered a period of major transformation thought to come about “once in a century” due to the introduction of next-generation CASE (connected, autonomous, shared, and electrified) technologies. In addition, trade friction coupled with economic and political risks in emerging countries continues to hamper the global economy, while the domestic economy is facing a shrinking workforce and social security issues.
Aware of these factors, we have set “Focus on the Quality Management” that emphasize quality over quantity to survive and adapt in an era where the future is uncertain and the business environment is undergoing immense change. Based on the forecast of a tough business environment in FY 2019 relative to FY 2018, we concentrated on priority measures in management. We worked to maintain and expand our market position in existing businesses and core products by improving product appeal and competitiveness throughout the Group, and to pursue opportunities to grow our business by continuing to examine the potential of new business opportunities. We also worked on the systematic development of human resources to carry out these measures and tocreate an environment where our employees can maximize their abilities. In addition, our three-year plan to ensure safety, implement 5S operations, maintain equipment, and pass down skills through initiatives that activities to transform our awareness of monozukuri (manufacturing) came to a close in FY 2018. Consequently, we decided to continue these initiaitives in FY 2019 and beyond to make further improvements and engrain this approach as part of our corporate culture.
Looking at consolidated results year on year for FY2019, net sales fell 7.0% to ¥205,292 million, operating income dropped 45.9% to ¥7,459 million and net income attributable to owners of the parent was down 50.7% to ¥3,728 million, representing decreases in sales and profit indicators for the period. Note that we do not believe that COVID-19 affected overseas business in FY2019 due to the year-end closing date of December 31 for our consolidated overseas subsidiaries.
On a segment basis, in the automotive-related segment, demand for medium- and heavy-duty trucks in Japan increased by 400 units year on year to 91,900 units, despite slow demand for automobiles on the whole, due mainly to a hike in the consumption tax. At the same time, exports were impacted by US-China trade disputes and slowed primarily in the ASEAN region and Australia in the second half-year. In Thailand, production volume of one (1)-ton pickup trucks decreased in line with slowing domestic demand due to stricter criteria for automotive loans and the business downturn, as well as sluggish exports owing to the appreciation of the baht. Although demand for automobiles in the United States decreased year on year, demand for pickup trucks and SUVs increased. In addition, demand for commercial vehicles in Indonesia decreased year on year, and demand for automobiles in Europe remained on par with the previous year.
Given this business environment, although parts sales for medium- and heavy-duty trucks increased, overall sales were down in Japan due mainly to lower demand for parts for light-duty trucks and vehicles assembly. At the same time, profit was down due to the impact of reduced production and falling mold and equipment costs. In the United States, sales decreased due primarily to production adjustments at major customers. Despite this, profit increased on the back of measures to improve profitability. In Indonesia, although demand was down domestically, sales increased due to new launches and a more extensive range of orders, with profit remaining unchanged year on year. Sales and profit decreased in Thailand and Sweden due mainly to the impact of reduced production.
As a result, segment sales declined 4.5% year on year to ¥175,792 million and segment income was down 31.7% to ¥10,372 million.
In the construction machinery-related segment, demand for hydraulic excavators increased in Japan year on year (despite the effect of Typhoon Hagibis) due in part to a rush in demand prior to the consumption tax hike, while exports were down. Demand for hydraulic excavators in China increased year on year, backed by solid investment in infrastructure.
Against this backdrop, in Japan sales and profit were down due to production disruptions following Typhoon Hagibis. In China, despite an increase in domestic demand, sales and profit decreased due to suchfactors as a decline in the share of foreign-investment manufacturers and the discontinuation of production for export products for North America.
As a result, segment sales decreased 20.8% year on year to ¥30,178 million and segment income was down 67.8% to ¥766 million.