To Daifuku’s Shareholders and Investors

To Daifuku's Shareholders and Investors

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 quarter of the fiscal year under review, the global economy benefited from moderate growth of a largely firm economy in the U.S., although a trade conflict between the U.S. and China, a slowdown in economic growth in China, and other issues created uncertainty about the future.

Daifuku Group’s mainstay material handling systems are expected to continue to grow, bolstered by demand in a broad range of sectors, generated from an increase in the global movement of people and goods, changes in the industrial structure associated with transformations of distribution systems and technological innovations including the Internet of Things (IoT), as well as investment in automatization spurred by labor shortages.

Amid these economic and business conditions, the Daifuku Group will continued to see sustained growth in orders; however, during the first quarter of the fiscal year under review, orders reflected a cautious stance on investment in the semiconductor and flat-panel display (FPD) sectors, as well as a delay in the timing for receiving orders from manufacturers and distributors at non-Japan subsidiaries.

Consequently, the Group received orders of 100,467 million yen, down 22.2% from a year earlier, and recorded net sales of 96,160 million yen, down 1.1%.

Operating income principally reflected the increasingly severe operating environment surrounding the semiconductor and FPD sectors, as well as additional costs incurred for systems for the same sectors. Net income attributable to shareholders of the parent company decreased from a year ago, given the absence of the gain on sales of shares in affiliates (Knapp AG, which was an equity-method affiliate in Austria) of 6,948 million yen (balance of consolidated book value) posted in the same period of the previous fiscal year.

Consequently, the Group posted operating income of 6,423 million yen, down 24.5% from a year earlier, and ordinary income of 6,551 million yen, down 27.0%. Net income attributable to shareholders of the parent company was 5,229 million yen, down 53.4%.


2. Outlook for the fiscal year ending March 31, 2020

Daifuku Co., Ltd. has revised its interim and full-year earnings forecasts for the fiscal year ending March 31, 2020, which were announced on May 10, 2019, based on recent performance trends.

The earnings forecast for the fiscal year ending March 31, 2020 (April 1, 2019 - March 31, 2020)
FY2018 FY2019
(announced in May)
FY2019
(revised in August)
Rate of change
(year-on-year)
Orders received 503.3 billion yen 530.0 billion yen 510.0 billion yen up 1.3%
Net sales 459.4 billion yen 480.0 billion yen 460.0 billion yen up 0.1%
Operating income 54.6 billion yen 52.8 billion yen 46.0 billion yen down 15.9%
Ordinary income 55.8 billion yen 53.5 billion yen 46.5 billion yen down 16.7%
Net income attributable to shareholders of the parent company 39.5 billion yen 38.2 billion yen 33.5 billion yen down 15.3%

Reasons

Sales of systems for the electronics sector including semiconductors and flat-panel displays (FPDs) account for about 40% of the net sales of the Daifuku Group. Profits during the first half of the fiscal year ending March 2020 will reflect the increasingly severe operating environment surrounding the semiconductor and FPD sectors, additional costs for systems for the same sectors, and other factors. Meanwhile, systems for manufacturers, distributors, and automakers have been favorable. Daifuku will maintain a sustained growth track based on the comprehensive strength of the Group.

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 adopts a performance-based policy for dividends from surpluses 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.

Under its medium-term business plan, Value Innovation 2020, Daifuku aims to achieve a dividend payout ratio of 30% and increase its corporate value through investment in growth.

For the fiscal year ended March 31, 2019, Daifuku paid an interim dividend of 30 yen per share, and the Board of Directors passed a resolution to pay a year-end dividend of 60 yen per share at a meeting held on May 10, 2019, for an annual dividend of 90 yen per share. The annual dividend rose for the 6th consecutive year from the fiscal year ended March 31, 2014, when the annual dividend increased 3 yen, to 18 yen.

With respect to dividends for the fiscal year ending March 31, 2020, the Company plans to pay an annual dividend of 90 yen (an interim dividend of 30 yen per share and a year-end dividend of 60 yen), taking into consideration the earnings forecast for the fiscal year ending March 31, 2020 and the basic policy described above.

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

August 2019
Hiroshi Geshiro, President and CEO