To our shareholders and investors

1. Operating and financial review

During the first half of the fiscal year (from April 1, 2024 to September 30, 2024), the global economy remained generally favorable, despite downside risks associated with the sluggish Chinese economy and concerns about a slowdown in the U.S. economy.

In terms of the business environment, logistics related investment in Japan is on the road to recovery. In the semiconductor industry, while legacy semiconductor investment in China continues at a high level, investment in certain advanced semiconductors is recovering with increased demand for AI applications. In addition, investment in automation in the back end processes of semiconductor manufacturing has become apparent. In the automotive industry, investment in xEVs (a generic term for electric vehicles, including BEVs, HEVs, PHEVs, and FCEVs) continues at a high level. Investment in automation at airports has also grown in line with the recovery in the number of air passengers.

In this economic and business environment, during the first half of the fiscal year, orders increased year on year, with significant growth in airport systems in North America and favorable growth in intralogistics systems for manufacturers and distributors, cleanroom systems for the semiconductor sector, and automotive systems.

Sales increased in intralogistics systems, cleanroom systems, and airport systems, which benefited from an extensive order backlog at the end of the previous fiscal year.

Specifically, the Daifuku Group received orders of 333,922 million yen, up 13.5% from the same period of the previous fiscal year, and recorded sales of 302,621 million yen, up 7.6%.

In terms of profits, the operating margin improved in intralogistics systems, cleanroom systems, automotive systems, and airport systems, mainly reflecting progress in revising prices to keep pace with higher costs associated with rising raw material and labor expenses.

Consequently, the Group posted operating income of 38,144 million yen, up 100.1% from the same period of the previous fiscal year, and ordinary income of 38,186 million yen, up 83.3%. Net income attributable to shareholders of the parent company was 29,712 million yen, up 109.2%.

Sales, operating income, ordinary income, and net income attributable to shareholders of the parent company reached new record highs for the first half of the fiscal year.

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

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.

Note:
Due to the change in fiscal year-end, the fiscal year ending December 2024 will be a 9-month period in Japan and a 12-month period outside of Japan. In the table above, "Year ending December 2024 forecast" reflects results for 9 months in Japan and 12 months outside of Japan, and "Year ending December 2024 forecast (Japan: 12 months)" is calculated assuming a 12-month period in and outside of Japan.

3. Basic policy for dividends

We regard 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. We will appropriate the remaining surplus to invest for future growth.

Under the four-year business plan for 2027, we have increased the target of consolidated dividend payout ratio to 35% or more for each year to enhance shareholder returns.

With respect to dividends for the fiscal year ending December 31, 2024, as announced on November 8, considering the favorable progress in the Group’s performance, especially in terms of profits, the Company has decided to increase its interim dividend by 3 yen per share from the forecast announced on August 8, to 23 yen per share. The Company also revised its year-end dividend forecast, increasing it by 4 yen per share, to 24 yen per share. The annual dividend, including the interim and year-end dividends, is expected to be 47 yen. Accordingly, the consolidated dividend payout ratio for the fiscal year ending December 31, 2024 is expected to be 35.8%.

In addition, to improve capital efficiency and further enhance shareholder return, the Company has decided to repurchase 10.0 billion yen worth of its own shares. Accordingly, the consolidated total payout ratio for the fiscal year ending December 31, 2024 is expected to be 56.3%.

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

November 2024
Hiroshi Geshiro, President and CEO