Business results of the second quarter
Fuji Oozx Inc. has publicly announced its business results for the second quarter (July to September 2021) of the current business year ending March 2022. I am pleased to outline the announcement in this web message.
Notably, the second quarter featured the continuation of semiconductor shortages from the first quarter, slowdown in the procurement of parts due to the raging of COVID-19 in Southeast Asia, and persisting production cuts by automakers. These circumstances led to a rapid drop in the amount of orders received, which caused the Company’s second quarter business performance to fall short of the projection.
Currently, as the corona pandemic is slackening in many of the Southeast Asian countries, their lockdown measures are being relaxed so that we see growing prospects of auto parts supply to normalize by the end of this calendar year. However, outlook for the semiconductor shortage remains hazy for automakers and for Fuji Oozx. In addition, there are looming possibilities of material and fuel prices surging in the third quarter and onward. In particular, we fear that the prices of scrap iron and alloy elements such as nickel will go up. Steelmakers add surcharges to the prices of their steel products in step with increases in the prices of the above raw materials.
Although we also add surcharges on our products, our surcharge scheme takes effect a half year after the start of our suppliers’ surcharges. This time lag serves as a major suppressing factor for our profits in the second half of the current business year. Since the adverse impacts of semiconductor shortages and material price increases are likely to prevail throughout the current business year, the Company has been compelled to revise its initial full-term business projection downward.
Regarding the progress of the Company’s business projects in the second quarter, a 500kw solar power generation system has been completed at our Mexican plant, thus setting off our plan to generate solar power at all the group plants. Favored by longer sunshine hours, the Mexican solar investment phase-1 will bring 20% of the plant’s power requirement, and additional investments are expected to boost the solar share to 50% at the Mexican plant. At our main Shizuoka Plant in Japan, the 1,000kw solar generation system phase-1 is scheduled to enter operation from January 2022. An actual effect of CO2 emission reductions and electricity cost cuts is expected to surface within the current business year. According to its midterm management plan, the Company will install solar power generation systems at all its group plants by the end of FY2023.
With respect to our technology development, an innovative production method for mirror valves has been developed and is undergoing patent examination. Although the use of mirror valves in mass-produced cars is still at the very beginning, we see a huge market potential of mirror valves growing into a hit product and are therefore constantly polishing our production techniques for these new valves.
Regarding business diversification, we are carefully studying three target areas. Area 1: Possibility of corporate takeover in any industrial field. Area 2: Possibility of developing a new business line in which corporate group synergy can be maximized. Area 3: Possibility of expanding the business capacities of our subsidiaries. With respect to Area 1, we have received a good number of introductions a large majority of which are firms without a successor. We feel as though we became an eyewitness to the population aging combined with youth depopulation that is steadily engulfing Japan’s whole industrial community. As for Area 2, we focus on the industrial fields known generally as “growth industries” ─ especially, medicine and semiconductor and aerospace. From among these potential candidates the Company hopes to find the seed which will grow into a second business engine. Hopefully, we will select and plant the seed into the actual business world within the three-year period of the current midterm management plan.
Taking into account the fact that the consumers’ real (not imaginary) demand for passenger cars remains strong and that customers’ need to replenish their stock will revive once the semiconductor bottleneck is resolved, we are preparing ourselves so that, in next fiscal year and later, we will be able to recoup the profits that are deflecting away from our hands in the current business year. The Company, therefore, would like to seek unflinching cooperation and support from our shareholders. Thank you.
