(May 2024)
FY2023 Consolidated Results
Amid numerous uncertain factors such as prolonged inflation, high interest rate levels, a widening US-Japan interest rate differential driving further yen depreciation, the protracted Ukraine conflict and Middle East tensions, as well as concerns over China's economic outlook, Sanwa Group saw favorable performance in Japanese operations and North American operations, achieving record-breaking highs in both sales and profits. The operating profit margin reached 10.7% on a consolidated basis, exceeding our double-digit target.
In Japan, operations remained solid, driven by strong demand for factory construction and large-scale redevelopment projects. In particular, sales of doors for buildings and condominiums as well as partitions grew, contributing to an increase in revenue. Although material costs rose more than expected, the company strived to pass on the higher costs to selling prices, resulting in a significant increase in profits. In North America, while stagnation in the residential market led to a decline in sales volume, efforts to stem the decline in selling price and cut costs, achieving a substantial increase in operating profit. In Europe, the challenging economic environment persisted, and the impact of lower sales volume was significant. Despite efforts to pass on increased costs to selling prices and implement cost-cutting measures, these were not enough to offset the impact, leading to a decline in profits. In Asia, operations in Hong Kong and Taiwan maintained strong performance, resulting in a substantial increase in revenue and profits.
FY2024 Consolidated Forecasts
Although sales are expected to increase while profits decline from the previous fiscal year, the operating profit margin is forecast to maintain a double-digit level.
For fiscal year 2024 performance forecasts, we expect an increase in sales due to higher sales volumes compared to FY2023, but a decrease in profits. The operating profit margin is expected to remain in the double digits, as it did in the previous year. In the Japanese market, sales of doors for buildings and condominiums as well as entrance systems are performing well, and factory and warehouse construction remain steady, leading us to expect an increase in sales. Although operating profits will be impacted by higher costs associated with addressing the 2024 issues, we will strive for appropriate cost management, on-time delivery, and price revisions to achieve profit growth. In North America, we will promote expanded sales efforts to capture the gradual recovery in the residential market and steady demand in the non-residential market, resulting in expected sales growth. However, for operating profits, the negative impact of lower sales prices is expected to outweigh the positive effects of higher sales volumes and cost reductions, leading to a projected decline in profits. In Europe, although the market environment remains challenging, we aim to offset this through sales initiatives and secure performance on par with the previous year. For operating profits, despite being unable to forecast volume growth, we expect a decline due to the significant impact of various cost increases. In Asia, we will focus on expanding sales in our East China operations, leading to an expected sales increase driven by higher volumes. However, we anticipate a decline in profits due to a rebound effect from the previous year.
Sanwa Global Vision 2030 and Med -Term Management Plan 2024
To Be a Global Leader of Smart Entrance Solutions
Sanwa Global Vision 2030 and Med -Term Management Plan 2024, initiated in fiscal 2022, have reached their final year. We have surpassed our quantitative targets, significant progress remains to be made on the qualitative aspects of each initiative. Sanwa Group will continue to implement the following basic strategies to achieve these objectives, with the focus on building the foundation to be a global leader of smart entrance solutions.
In Sanwa Global Vision 2030, We will globally provide high-performance entrance solutions to meet the changing needs of society due to factors that include climate change and digitalization, and by sustainability management and strengthening human resources, we intend to be a corporate group 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: Japan, North America, Europe, and Asia
- 2. Create customer value through products for preventing disasters and responding to climate change, as well as smart products and services
- 3. Increase productivity through digitalization and innovative manufacturing
- 4. Strengthen core businesses and expand into new business areas through M&As
- 5. Become a corporate group valued globally through enhanced sustainability.
To establish the foundation for becoming a global leader, we established the Medium-Term Management Plan 2024 as a three-year plan through 2024 fiscal year specifically sets forth the following five basic strategies, and the entire Group will work together to achieve the targets.
- 1. Expand and strengthen core businesses (shutters, doors, and services) in Japan, North America, and Europe
- 2. Strengthen a basis for growth of Asian businesses
- 3. Expand the product 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 FY2023, year-end dividend per share increased 20 yen, for total annual dividends of 78 yen, and FY2024 dividend forecast to remain unchanged at 78 yen.
Sanwa Group regards shareholder returns as an important management issue. In order to further promote management aimed at increasing corporate value while continuing to improve our corporate structure, strengthen our management base, our basic policy is to maintain a stable dividend payout ratio and distribute profits in proportion to consolidated business performance. Since FY2022, we have increased our target payout ratio to 40% of earnings per share (EPS).
For FY2023, we plan to increase the annual dividend by 20 yen to 78 yen. For FY2024 as well, we maintain the annual dividend at 78 yen, the same level as FY2023. Regarding our allocation of funds, our policy of prioritizing the allocation of free cash flow to strategic investments remains unchanged. Our approach of conducting share buybacks as appropriate while considering our cash position also remains unchanged. Furthermore, in our "Med-Term Management Plan 2024," we have set a target of around 54 billion yen for total shareholder returns (the sum of dividends and share buybacks). Sanwa Group will continue to vigorously push forward with initiatives aimed at becoming a global leader and further enhancing corporate value.