TO OUR SHAREHOLDERS
I would like to repor t to you about NACHI-FUJIKOSHI’s business performance for the fiscal year ended November 30, 2009.
Business Environment
The environment surrounding the NACHI-FUJIKOSHI Group was unprecedentedly harsh with the sudden and broad-based contraction of markets across a wide range of areas, including domestic and overseas automobiles, industrial machinery, electrical/electronics, etc.
Business Progress and Results
In this environment, the NACHI-FUJIKOSHI Group continued its efforts to expand into new markets leveraging our proprietary engineering business, reduce fixed costs, re-engineer production systems to improve productivity, and strengthen our earnings base.
The decrease in demand, however, could not be stopped and revenues fell 47.5% year-on-year to 107.5 billion yen. By geography, revenues in the Japan market were 70.1 billion yen (a decrease of 49.7% compared to the previous period) and revenues in the rest of the world were 37.5 billion yen (a decrease of 42.9% vs. the previous period).
Facing a sudden and dramatic fall in sales and production levels, we endeavored to lower materials and external vendor costs, reduce fixed costs including labor, and reduce various expenses such as selling, general, and administrative costs. Despite these efforts, however, the impact of reduced operating levels was significant, and the Group recorded an operating loss of 3.2 billion yen, and an ordinary loss of 5.0 billion yen.
When extraordinary income and loss from gains on sale of fixed assets and re-structuring costs, as well as corporate taxes, etc., are accounted for, we recorded a net loss of 7.4 billion yen for the period.
Cash Dividends
In consideration of our operating results during the period, and the prospects for business growth in the future, dividends were set with regret at 1.50 yen per share.
Future Action
While recovery of demand can be observed in certain areas, primarily in emerging countries and in certain industrial segments such as automobiles, production levels across the industrial machinery field as a whole remain at low levels. The overall harsh environment is forecasted to continue.
The NACHI-FUJIKOSHI Group will continue its efforts to expand the “Nachi Business,” which integrates industrial tools, components, and materials/heat treatment technologies, expand into emerging markets where long-term growth can be expected, and explore new markets such as energy and infrastructure. We shall endeavor to improve our operating results through fundamental improvement of all aspects of our business including manufacturing, procurement, distribution, research & development, organization and human resources, reduce costs, and build a stable platform for earning growth.
I thank all of our shareholders for your continued support and understanding.
February 2010
President and Representative
