Business results of the third quarter
Fuji Oozx Inc. has publicly announced its business results for the third quarter (October to December 2021) of the current business year FY2021 ending March 2022. In this web message of the Company’s president, I wish to outline the announced business results.
As we projected at the end of the second quarter, the third quarter witnessed the semiconductor shortages and the logistics bottlenecks continuing from the earlier period of FY 2021 and the outbreak of production slowdowns among automakers due to parts supply disruptions caused by coronavirus clusters at some Japanese parts production plants. Moreover, the semiconductor shortage problems spread over to many other machine manufacturing industries including trucks, construction machines, and industrial machinery.
Despite this hostile business environment, we exerted ceaseless efforts to increase productivity and reduce costs while we were aided by a favorable change in our sales composition. As a result, although the total sales in the third quarter slipped somewhat down from our projection, we were able to record profits that have surpassed the projected marks.
The current outlook is that a similar harsh environment will prevail in the fourth quarter. But with our additional efforts to improve productivity and cost performance, we expect that our full-term operating profit and ordinary income will exceed the earlier projections. Accordingly,we have revised upward our earnings forecast for the business year FY2021 ending March 2022 by a modest margin. However, we are keeping our cautious projection unchanged for consolidated net income. This is because, as the slowdown in automobile production continues under semiconductor crunches in North America, a US $3.1 million impairment loss is resulting from the decrease of recoverable amount generated through the use of the fixed asset at our Mexican production plant.
Next, I wish to report on the progress of the Company’s management projects in the third quarter. One of the projects is to partly replace our corporate group’s electricity requirement by solar power generation. The installation of a 900 kw solar power generation system has just completed at our main Shizuoka Plant in Japan, which will start generating power this mid-February and will put the Fuji Oozx group’s total solar power generation capacity at 1,400 kw. Our plan calls for the addition of another 4,700 kw in FY2022 and a minimum 4,000 kw in FY2023 for the group’s final solar power generation capacity of 10,000 kw or more.
Our management projects also include the development of new technologies to serve new types of automotive combustion engines powered by carbon-free fuels. As one achievement, we have completed the basic development of a new valve processing method with a plan to install necessary processing equipment during the next fiscal year.
As for our project to diversify the Company’s business lines, we have selected some candidates from dozens of energetically studied possibilities, and we are probing into the final candidates. We hope to decide and launch a new business line within the current Midterm Management Plan period spanning from FY2021 to FY2023.
While the global logistic condition is likely to improve in the upcoming FY2022, semiconductor supply looks to be less optimistic. Our prediction is that new semiconductor production plants are beginning to enter operation from the latter part of this fiscal year so that semiconductor supply will make a very gradual recovery through FY2022. We fear, however, that the depletion of rebuilding of finished vehicle inventory and the prolongation of delayed vehicle delivery will not be resolved until FY2023 or even later.
Nevertheless, the Company is determined to cope with the changeable needs of customers by making its manufacturing operations even more flexible, whether the customers will pace up or down their production depending on ups and downs in semiconductor supply. The Company will press ahead with the necessary reforms laid out in its Midterm Management Plan. We, therefore, look forward to unswerving cooperation and support from our shareholders. Thank you.
