Business results of the first quarter
In this web message, I am pleased to outline the financial results of Fuji Oozx Inc. for the first quarter (April to June 2021) of the current business year ending March 2022. While at the beginning of this business year we took into account the negative impact of semiconductor shortages, our overseas bases sustained an unexpectedly sharp drop in the amount of orders received as the automakers slowed down their vehicle production at a rate far exceeding our projection. Our overseas bases tried to stay profitable through rigorous cost cuts, but their combined performance fell short of the initial target.
In Japan’s market, however, we were well supported by two pluses: One, our reception of orders from the manufacturers of trucks, industrial, construction and agricultural machinery was so strong as to offset the decreased orders from both Japanese and overseas carmakers. Two, our devotion to higher cost efficiency brought benefits exceeding the initial target. As a result, our combined domestic and overseas operations remain favorable on a semiannual basis in our business projection for the first half of FY 2021.
While the Company’s total production in Japan was within the course of initial projection, there were wide variations in operation rates among different products. We responded to this by increasing the mobility of helping staff from not-so-busy to busy departments and, simultaneously, by training more workers to master multiple skills. At our overseas bases where the operation rates have clearly declined, we are utilizing the temporarily surplus resources for further streamlining and cost reduction.
As for our facilities investment, the plan to introduce solar power generation systems in all our production plants is in steady progress for greater self-sufficiency in electric power. Step-1 of this plan is scheduled to start by the end of the current business year with a good promise of reducing both CO2 emissions and power consumption costs. Furthermore, yet another project is underway to introduce new production lines for the achievement of higher productivity, with a model production line scheduled to enter operation within 2021 for the validation of its new functions. Meanwhile, our endeavor to develop or acquire new business lines is continuing, and we need more time to make a decision on this vitally important project for business diversification.
Regarding the outlook for the remaining period of the current business year, regrettably the semiconductor shortage which is dampening the recovery of the automobile market is likely to last longer than initially foreseen. Consequently, at this moment we cannot anticipate just when the automobile market will start rebounding. As one example of uncertainty, faced with a rapid surge in COVID-19 patients in Indonesia, we have been asked by the Indonesian government to take additional measures to protect the employees at our Indonesian plant, including the limiting of plant operation.
Despite the continuing presence of these uncertain factors, however, we would like to keep unchanged our initial prediction of 2021 business year results. We are confident that we will be able to surpass the initially targeted full-year business results for two reasons: (a) our cost reduction activities shall be persevered to bring greater benefits, and (b) should the semiconductor shortage be rectified so that the demand for automobiles including the demand for automobile stock replenishment will bounce back, we will be very quick to take advantage of the awaited automobile market recovery.
As the Company intends to pour the greatest possible effort into further improving its profitability, we look forward to unswerving understanding and support from our shareholders. Thank you.
