FY2020 Financial Results Meeting

In late May, we held a briefing session on our group's financial results for FY2020.

A financial results meeting is an opportunity for us to explain the financial figures and their background, and to answer questions from institutional investors and analysts of securities firms.

This was our first online financial results meeting due to the State of Emergency declaration, and I was a little disappointed as we could not give a face-to-face explanation.

Even so, we were able to double the number of participants to 56, compared to 30 the year before last.

This may mean that our company is attracting more attention than before.

In addition, analyst reports issued by analysts also have a significant impact on the investment trends of investors, making financial results meetings an extremely important venue for information disclosure.

We answered the questions we received as follows (in part).

Q: Business profit for the second half of fiscal 2020 was 15.4 billion yen, and the annual forecast for fiscal 2021 is 13.5 billion yen. However, your company seems to have the potential to make more profit. What do you think?

A: In the second half of fiscal 2020, we were cutting costs in response to the crisis caused by the Corona Pandemic, and demand recovered rapidly, leading to higher plant utilization rates, which contributed to the increased profits. For fiscal 2021, however, we expect the impact of the sharp rise in prices of raw materials such as steel, mainly in the U.S., to be a major factor in the decline in profits, but we feel that we are making steady progress in improving our business structure through the Corona disaster.

Q: Could you explain the impact of electrification in detail?

A: As I have explained in the past, I have not changed my belief that the shift to fully electric vehicles (BEVs) is not a negative factor for our group, but rather a business opportunity.

In the case of anti-vibration rubber, one of our main products, we expect that the demand for anti-vibration rubber, which contributes to the support of the power source and the stability of the vehicle steering, will remain unchanged no matter how much progress is made in electrification, such as the replacement of engine mounts with motor mounts.

In addition, among automotive hoses, while fuel system hoses will decrease, demand for cooling system hoses, which are used not only for cooling but also for utilizing the waste heat generated from electric components in other circuits, is expected to increase in order to extend the cruising range of EVs.

We are also producing components for fuel cell vehicles (FCVs).

To our employees

This time, investors were focusing on “whether we can maintain our profit margin in the second half of FY20” and “whether we can continue to grow in the midst of major changes such as CASE”.

Last fiscal year, we were able to achieve the announced figures that we forecasted in July, despite the significant decrease in sales and profits due to the impact of Corona in the first half.

And we were able to achieve the highest ever business profit (half year) by controlling expenses through your efforts such as overhead and unit cost reduction.

Investors are looking at us and asking, "Is this profit structure real? And is it sustainable?”

This year's expected sharp rise in raw material prices will have a significant impact on our business, but we must continue to achieve good results in spite of this business environment, in order to win the trust of society.

It is also important for us to change our business flexibly in response to changes in the social environment.

With our limited resources, we will also be making investments this fiscal year so that we can be more cost effective.

The more credibility we have in society, the more people outside our company will say, "You are working for a good company!", and this will surely motivate you more.

In addition, interest rates on loans will be reduced, which will lead to lower overhead costs, higher business profits, and better treatment for you all.

In this way, the world keeps turning.

And while seeking profits, as I always say, I would like you to work with the mindset of "Banji-Nisssei" with principle of “Shinyo-Kakujitu” and“Fusu-Furi”.

SUMITOMO RIKO President's Blog

The contents of this blog are compiled by the Public Relations and Investor Relations Department of Sumitomo Riko Company Limited as the secretariat and posted on the blog based on the speeches and wr