To our shareholders and investors

Hiroshi Geshiro, President and CEO

We would like to begin this message by expressing gratitude to our shareholders and investors for their ongoing support.

1. Operating and financial review

During the first three quarters of the fiscal year (from April 1, 2023 to December 31, 2023), the global economic outlook remained uncertain, with concerns about an economic slowdown due to rising interest rates and a sluggish Chinese economy.

The business environment surrounding the Daifuku Group has seen accelerating capital spending associated with the shift to electric vehicles in the automotive industry. In addition, investment in automation at airports has grown in line with the recovery in the number of air passengers. Over the past several years, while investment in e-commerce, which had been robust in North America and Japan, has been experiencing a temporary lull, capital spending in the general manufacturing sector has been recovering. Investment in the semiconductor industry has been restrained, with the exception of legacy semiconductors in China.

In this economic and business environment, orders received during the first three quarters of the fiscal year under review were largely in line with plans, despite the absence of the large increase in orders received in the previous fiscal year associated with the impact of foreign exchange rates and despite a reactionary fall in orders for cleanroom systems for semiconductor and flat-panel display production lines from the orders received ahead of schedule in the previous fiscal year.

Sales were strong in automotive systems and airport systems, benefiting from an extensive order backlog from the end of the previous fiscal year, while sales of intralogistics systems for manufacturers and distributors and cleanroom systems fell short of the results of a year ago.

Specifically, the Group received orders of 448,182 million yen, down 25.3% from the same period of the previous fiscal year, and recorded sales of 437,389 million yen, up 0.4%. Sales reached a new record high for the first three quarters of the fiscal year.

In terms of profits, profitability improved in intralogistics systems in North America, mainly reflecting progress in revising prices in line with higher costs due to soaring raw material and labor costs. Meanwhile, cleanroom systems were affected by lower sales. Profitability declined in airport systems, mainly because of soaring raw material and labor costs, and one-time costs were recorded for certain projects in Oceania. Overall, income exceeded the plan, backed by an increase in sales and profitability of automotive systems.

Consequently, the Group posted operating income of 37,091 million yen, down 7.7% from a year earlier, and ordinary income of 39,298 million yen, down 3.5%. Net income attributable to shareholders of the parent company was 27,444 million yen, down 4.6%.

2. Outlook for the fiscal year ending March 31, 2024

  Year ended March 2023 Year ending March 2024 (forecast) Y/Y rate
Orders received 737.4 billion yen 630.0 billion yen down 14.6%
Net sales 601.9 billion yen 605.0 billion yen up 0.5%
Operating income 58.8 billion yen 57.0 billion yen down 3.2%
Ordinary income 59.7 billion yen 59.5 billion yen down 0.4%
Net income attributable to shareholders of the parent company 41.2 billion yen 41.5 billion yen up 0.6%

The above forecast values are our projections based on information available at the time of this release and contain various uncertainties. Actual results may differ materially from forecast values due to factors such as changes in the business performance of the Company.

3. Basic policy for dividends

Daifuku regards the return of profits to shareholders as its most important management task and has adopted a performance-based policy for cash dividends based on consolidated net income, with the aim of achieving additional profit distribution to shareholders. We appropriate the remaining surplus to internal reserves for future growth.

As part of our Value Transformation 2023 three-year business plan that began in April 2021, we aim to increase corporate value by investing in growth and achieve a consolidated payout ratio of 30% or higher.

We respectfully ask our shareholders and investors for their continued support.

February 2024
Hiroshi Geshiro, President and CEO

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