To Our Shareholders and Investors

(May 2023)

Overview of Operating Results for the Fiscal Year Ended March 31, 2023

Despite an increasingly difficult economic environment due to the impact of soaring raw material and energy prices, business in North America remained strong, and as a result, the Sanwa Group posted record sales and profit. We significantly surpassed our operating profit target for the final year of our Medium-Term Management Plan 2024, achieving this result two years ahead of schedule.

In Japan, sales rose due to marked growth in heavy-duty shutters for factories and logistics warehouses following robust demand as well as solid performance in the maintenance and service business. Although raw material and other prices surged, we still managed to increase profit by passing on the rising costs to our prices. In North America, despite increasing raw material and other costs, sales and profit were up substantially by successfully passing on the cost hikes to our prices. In Europe, we had a strong showing in industrial doors, leading to significant sales growth. We posted profit here as well by passing on rising raw material and other costs to our prices. In Asia, impressive results were recorded in Hong Kong and Taiwan, with both sales and profit up substantially.

Outlook for Fiscal 2023

Operating profit is forecast to exceed the target set in the Medium-Term Management Plan 2024, despite projections of a year-on-year decline in sales and profit.

For the performance outlook for fiscal 2023, both sales and profit are projected to fall short of the levels posted in fiscal 2022. Despite this, operating profit is expected to continue to climb, surpassing the target set in the Medium-Term Management Plan 2024. In Japan, sales are forecast to increase due to expected growth in sales volumes resulting from large-scale urban development and factory construction. Although costs are expected to continue rising, operating profit is projected to increase primarily on the back of efforts to pass on the cost increases to our prices. In North America, sales volumes are expected to increase as we absorb the impact of a slowdown in the housing market from the nonresidential sector. Sales and profit are forecast to decline, however, considering the potential of softening prices.
In Europe, although the market environment remains challenging, we anticipate growth in sales by securing orders primarily in the nonresidential sector. At the same time, operating profit is forecast to grow, despite a significant increase in costs, due to passing on these rising costs to our prices. In Asia, we expect significant growth in sales and profit amid expectations of higher sales volumes from new consolidations, such as Sanwa Novoferm (Changshu) Co., Ltd. and AUB Limited.

Sanwa Global Vision 2030 and Medium-Term Management Plan 2024

To be a Global Leader of Smart Entrance Solutions

The Sanwa Global Vision 2030 and Medium-Term Management Plan 2024, which were launched in fiscal 2022, entered the second year. The Sanwa Group will continue to implement the following basic strategies with a focus on establishing the foundation to become a global leader in smart entrance solutions.
We will provide solutions that meet the changing requirements of society due to factors that include climate change and digitalization. By enhancing our sustainability management and strengthening human resources, we intend to be a corporate group that is highly valued by all stakeholders.

Specifically, we have set the following five priority policies:
1. Expand and strengthen core businesses in a four-polar global structure at Japan, North America, Europe, and Asia
2. Create customer value through products for disaster prevention and climate change response, as well as smart products and services
3. Increase productivity through digitalization and manufacturing innovation
4. Strengthen core businesses and expand into new business areas through M&As
5. Become a corporate group valued globally with enhanced sustainability management

To establish a foundation for becoming a global leader, we established the Medium-Term Management Plan 2024 as a three-year plan through the fiscal year 2024 for the entire Group to work together to:
1. Expand and strengthen core businesses (shutters, doors & service) in Japan, North America, and Europe
2. Strengthen a basis for growth of the Asian business
3. Expand products for disaster prevention and climate change response and enhance smart products and services
4. Increase productivity through digitalization and manufacturing innovation
5. Enhance sustainability management

Shareholder Returns

In fiscal 2022, the dividend per share rose by ¥22 to ¥58, and for fiscal 2023 we plan to issue a dividend of ¥58, the same amount as the current fiscal year

The Sanwa Group considers returns to shareholders as a key management priority. Our policy is to maintain a stable dividend payout ratio and distribute profits in proportion to consolidated results, while continuing to improve our corporate base, strengthen our management infrastructure, and implement management policies designed to raise corporate value. We have increased our target payout ratio to 40% of earnings per share (EPS) since fiscal 2022.

For fiscal 2022, we improved the annual dividend by ¥22 to ¥58. For fiscal 2023, we plan to pay an annual dividend of ¥58, the same amount as the current fiscal year. In addition, while there is no change to our funding allocation policy of prioritizing free cash flow for strategic investments, there is also no change in our policy of buying back shares, which we do when necessary, after considering our capital position and other factors. As stated in our Medium-Term Management Plan 2024, we are aiming for a total shareholder return (dividends and share repurchases combined) of approximately ¥54 billion. To further increase our corporate value, we will continue to push toward the goal of becoming a global leader.