Business and Achievements for Fiscal 2020

Summary of Business and Achievements

We will strengthen business management to increase capital and asset efficiency and enhance corporate value. (Atsushi Igaki / Managing Director, Corporate Business Administration Division Executive General Manager)

Responding to Risks with a Global Cash Management System

As the TS TECH Group operates globally (79 locations in 14 countries), we have formulated “safe funding guidelines” that take into account risks in each region, country, and location so as not to affect the production activities of our customers. We have also developed a cash management system that ensures reserve capital is retained at all times and facilitates flexible procurement of funds in an emergency.

As a result of government-directed restrictions on operations due to the COVID-19 pandemic, the Group’s production plants suspended operations first in China and then in the Americas and Asia and Europe segments. However, we have been able to manage the situation using cash on hand in line with the “safe funding guidelines,” which have been implemented throughout the Group. At present, none of our locations are experiencing any cash management issues. We believe this is the result of prioritizing business continuity and financial stability based on a sound financial foundation (interest-bearing debt ratio of 0.03% in fiscal 2020) supported by high profitability.

Initiatives Under the 14th Medium-Term Management Plan

Under the 13th Medium-Term Management Plan, the Group established “Use of financial strategies to support business growth” as one of its corporate initiatives and worked to solidify the foundation for the company’s further growth from a financial point of view. As a result of working on measures focused on balancing shareholder returns, utilizing funds for strategic investment, and stable finances, many of our indicators, including capital and asset efficiency, have outperformed the industry standard, and we have developed a sound, solid business structure with indicators that show stability at particularly high levels.

Nevertheless, faced with a rapidly changing business environment, the effective and efficient utilization of funds accumulated annually, as well as cash generated by the previous year’s operating activities, is an issue for the Group’s sustained growth going forward. Under the 14th Medium-Term Management Plan, the company will strive to enhance corporate value while focusing on capital and asset efficiency indicators more than ever before.

As we work to achieve a greater share of our main customers’ business and acquire new customers and commercial rights, the Group will not only expand production capacity and establish new locations, it will also formulate strategic investment plans with a view to engaging in M&A activity that includes developing advanced technologies that create new value and boosting cost competitiveness.

The Group will continue working to enhance capital and asset efficiency and continuously improve corporate value over the medium to long term by proactively engaging in such investment while maintaining its sound financial foundation.

Pie chart (Revenue by Business)

Pie chart (Revenue by Region)

Results by Segment for FY2020

Japan

In the fiscal year under review, the Group launched production of seats for Honda’s new N-WGN and Fit.

The impact of the COVID-19 pandemic on segment results for this period is minimal as production was uninterrupted as of the end of March 2020.

Honda Fit seat

The Americas

In the fiscal year under review, the Group worked to create a highly profitable structure by addressing cost containment through enhanced quality assurance capabilities in each process.

Segment results for this period have been impacted by the COVID-19 pandemic as production stopped at select locations in late March 2020.

Honda CR-V seat

China

In the fiscal year under review, the Group launched production of seats for the new Honda Envix in Wuhan and the new Honda Breeze in Guangzhou.

Segment results for this period have been impacted by the COVID-19 pandemic as production was stopped from the start of the Chinese New Year (Jan. 23, 2020) through mid-March.

Honda Envix seat

Asia and Europe

In the fiscal year under review, the Group launched production of seats for Honda’s new Accord and City in Thailand.

Although production stopped at select locations in late March 2020, the impact of the COVID-19 pandemic on segment results for this period is minimal.

Honda Accord seat

Financial/Non-Financial Highlights

Five-Year Financial Summary

(Million yen)
FY2016
(IFRS)
FY2017
(IFRS)
FY2018
(IFRS)
FY2019
(IFRS)
FY2020
(IFRS)
Fiscal year under review on a consolidated basis
Revenue 458,732 425,794 479,490 412,072 359,682
Cost of sales 381,258 355,176 399,329 338,031 300,307
Selling, general, and administrative expenses 39,414 35,755 37,418 36,521 33,531
Operating income 39,279 34,557 47,346 38,793 26,326
Income attributable to owners of parent 23,528 19,622 30,115 25,750 15,064
Depreciation and amortization 9,313 9,036 9,676 9,778 10,225
Total at end of fiscal year
Total assets 303,948 322,202 351,944 358,265 341,820
Interest-bearing liabilities 4,335 3,506 4,182 1,742 4,014
Total equity 219,092 230,989 259,924 277,424 274,552
Shareholders’ equity 189,497 204,800 229,866 249,904 259,233
Revenue per consolidated segment
Japan 92,071 91,830 93,552 92,856 75,134
Americas 247,087 213,008 224,867 195,604 176,346
China 96,513 94,990 121,266 89,187 82,729
Asia and Europe 59,257 59,825 76,041 66,822 51,967
Overseas revenue 395,571 361,980 412,249 342,496 303,544
Overseas revenue ratio (%) 86.2 85.0 86.0 83.1 84.4

Financial Highlights

Revenue/Overseas Revenue Ratio (Consolidated)

We operate in 14 countries around the world, and more than 80% of our revenue is from outside Japan.

Graph (Revenue/Overseas revenue ratio)

Operating Income/Operating Margin (Consolidated)

We have worked to thoroughly enhance our revenue structure, and we maintain a higher operating margin than our competitors.

Graph (Operating income/Operating margin)

R&D Expenses/R&D Expenses to Revenue Ratio (Consolidated)

Even when revenue declines, we devote generous amounts of management resources to research and development that will lead to the creation of new value, including the development of next-generation technologies.

Graph (R&D expenses/R&D expenses to revenue ratio)

Capital Expenditures and Amortization Expenses (Consolidated)

We are focusing on automation and other initiatives for future growth, while leveraging our plants and equipment through investments in capacity expansion made through fiscal 2016.

Graph (Capital expenditures/Amortization expenses)

Return on Equity Attributable to Owners of Parent (ROE)/Return on Assets (ROA) (Consolidated)

We will strive for efficient management of invested capital to further improve profitability.

Graph (Return on equity attributable to owners of parent (ROE)/Return on assets (ROA))

Annual Cash Dividends per Share/Dividends Payout Ratio (Consolidated)

As we strive to increase corporate value, we continue to pay out stable dividends, taking into account a comprehensive range of factors, including consolidated performance and dividends payout ratio.

Graph (Annual cash dividends per share/Dividends payout ratio)

Non-Financial Highlights

Energy Input (Consolidated)

We are actively working to conserve energy in our global operations through means such as ISO 50001 certification for energy management systems.

Graph (Energy input volume)

CO2 Emissions per Unit of Production/CO2 Emissions Volume (Consolidated)

We are working to further reduce and appropriately manage CO2 emissions in all processes, from product development to production.

Graph (CO2 emissions volume/CO2 emissions per unit of production)

Training-Related Expenses (Non-consolidated)

Under our Vision Statement of being “a company dedicated to realizing people’s potential,” we are actively working to create opportunities and environments that encourage employee growth and development.

Graph (Training expenditures/Training expenditures per employee)

Percentage of Employees Taking Paid Leave (Non-consolidated)

For many years, labor and management have worked together to promote the use of paid leave, and we have maintained a high rate of paid leave utilization.

Graph (Percentage of annual paid vacation taken/Percentage of employees using half-day vacations)

Number of Patents Held (Consolidated)

In addition to creating more of the technology that is the source of our competitiveness, we are working to maximize the value of our intellectual property and minimize losses through appropriate management.

Graph (Number of Patents Held (In Japan/Outside of Japan))

Fines and Penalties for Anti-Competitive Practices (Consolidated)

0 cases

In fiscal 2020, the TS TECH Group did not experience any significant non-compliance issues that resulted in fines or penalties.

Cases in Which the TS TECH Group Was Found to Be Involved in Corruption or Bribery (Consolidated)

0 cases

In fiscal 2020, there were no cases in which the TS TECH Group was found to be involved in corruption or bribery.

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