Business performance
In this message, I wish to report the business performance of Fuji Oozx Inc. in the fiscal 2020 ended March 2021 and present the Company’s business projection for the current FY 2021. In the first half of FY 2020 the Company suffered business losses under the corona pandemic that was, and still is, ravaging the world. During this half year period, however, the Company successfully pared down both fixed and variable costs as well as stock and investment, resulting in a significant lowering of the sales break-even point. These efforts for streamlining bore fruits from September when market demand started recovering much earlier than we had expected. Thus, the Company was able to earn sufficient profits in the second half to more than offset the losses recorded in the first half, and finally registered an ordinary profit for the full FY 2020 exceeding the ordinary profit of the preceding fiscal year.
The critical force behind the Company’s quick business recovery was the profound sense of crisis shared by all the employees, which motivated them to perform their tasks with remarkable concentration, proficiency and speed. We hope to continue this high level of productivity into the current fiscal year and further onward.
Although the current FY 2021 poses a serious problem of semiconductor shortage, there is an encouraging and well-founded outlook that market demand will remain as vigorous throughout the current fiscal year as was in the second half of FY 2020. As our investment in high-functionality valve development and production settles down to normal after years of unquenchable demand, we expect that the Company’s overall production will resume an off-peak but healthy pace, compared to the rush production pace we experienced in 2018. This will enable the Company to appropriate more of its management resources into the enhancement of productivity and the development of new business lines.
FY 2021 marks the starting year of our new Midterm Plan covering up to FY 2023. This June we will publicize the ambitious Midterm Plan containing many new activities for contributing to the achievement of the Sustainable Development Goals set by the United Nations. The shareholders of the Company are therefore kindly requested to provide unswerving support to our business operation in the current fiscal year and throughout the Midterm Plan period.
Corporate policy
Since founded in 1952, the Company has been supplying intake valves, exhaust valves, and related products to our internal combustion engine manufacturing clients in the transport equipment, industrial machinery, agricultural machinery, power generator, and marine equipment industries. Over these years, we have developed original high-functionality valves and, in collaboration with our parent company Daido Steel Co., Ltd., we have striven to develop new materials, manufacturing techniques, and testing technologies in order to meet the ever-sophisticated needs of our clients. We feel proud that the Company has been contributing to the advancement of industrial base by assisting in the improvement of internal combustion engine technology.
The Japanese government recently announced its intention to reach Carbon Neutrality by 2050, which is considered to necessitate a dramatic shift from petrol to electric vehicles. Yet the reality is that electric vehicles are not necessarily greener on a Life Cycle Assessment (LCA) basis. In many regions of the world including Japan, the LCA-based amount of CO2 emissions is known to be larger among electric vehicles than among gasoline and diesel vehicles. With the worldwide moves to develop e-fuels (synthetic hydrocarbon fuels produced by carbon neutral method) and hydrogen engines in which hydrogen gas is directly burnt, we have good reason to predict that the reduction of CO2 emissions in the transport sector will be best accomplished by a combination of electric vehicles and e-fuel engine vehicles.
The Company intends to continue its active R&D in the business mainstay of engine valves and related products in order to meet the future progress in engine combustion technology and fuel properties and to offer product proposals that will satisfy the future need of our clients for quicker and shorter development periods.
Nevertheless, it is also true that the current economic and technological environment will not allow the Company to grow simply on the strength of its business mainstay alone so that we must explore new business lines that will not only contribute to the Sustainable Development Goals but mature into one or more new business lines of mainstay caliber within a ten-year period. This diversification policy has been laid out in FY 2021, the first year of the new Midterm Plan, with appropriate amounts of management resources effectively arranged.
Reinforced governance
A listed company having Daido Steel Co., Ltd. as parent company, Fuji Oozx Inc. last year took measures to consolidate its corporate governance aimed at erasing and forestalling conflicts of interest between the parent company and other shareholders. We created the governance committee in which independent outside directors comprise a majority of the membership; we increased the number of independent outside directors to one third of the board; we became a company with an audit and supervisory committee in which the number of parent-company-affiliated directors are decreased to no more than five-twelfth of the board. The governance committee has already reviewed and presented a proposal to change the criteria for determining the performance-based amounts of officer remunerations, and another proposal on how to evaluate the development of each new business line within the framework of the Midterm Plan. Our board of directors considers these instances of advice highly valuable and motivating, and regards last year’s governance reinforcement measures to have been truly effective.
Taking full advantage of the new arrangement for enhanced governance, the Company intends to attain more transparency and objectivity in the questioned areas such as officer remunerations, supplier appointments, and transactions with the parent company in order for our management to make decisions that are fair to all the shareholders.
