To Our Shareholders and Investors

(May 2022)

Overview of Operating Results for the Fiscal Year Ended March 31, 2022

Despite soaring raw material prices and supply chain issues across the globe, as well as the impact of COVID-19, the Sanwa Group posted record sales and profit, exceeding the revised forecast made in fiscal 2021.

In Japan, sales for Sanwa Shutter Corporation rose due to strong demand from logistics centers and a recovery in maintenance services. While the increases in material prices exceeded our expectations, they were mitigated by applying higher product prices, resulting in a rise in profits. Profits grew for Sanwa System Wall Corporation and Suzuki Shutter Corporation due to improved sales volumes. In the US, sales increased in response to a strong residential market. The sharply higher price of raw materials was dealt with by pass-through pricing, while growth in profits was secured despite the impact of disruptions on the supply chain. In Europe, sales were up due to a recovery in demand from the residential market because of the pandemic. Profit also improved significantly due to the sales volume effect, price pass-throughs, and productivity improvements. In Asia, profit rose substantially year on year and a surplus was achieved, partly from the recovery of Shanghai Baosteel-Sanwa Door Co., Ltd. and Vina-Sanwa Company Liability Ltd.

Outlook for Fiscal 2022

Both sales and income improved significantly from the previous year, reaching record highs.
Consolidated net sales to exceed ¥500 billion. Overseas sales ratio expected to be above 50%.

Financial results for 2022 are projected to exceed the record highs set in fiscal 2021. We are forecasting sales growth in every business segment due to higher sales volumes. Operating profit is expected to be at the same level as fiscal 2021, reflecting upfront investments for business growth and a hefty rise in raw material prices. Profit growth is forecasted for the US, as we will continue to deal with higher raw material prices with pass-through pricing and improved productivity. In Europe as well, we will mitigate raw material price increases with pass-through pricing, and we are expecting an improved operating income margin. However, the impact of the conflict in Ukraine remains uncertain. In Asia, we anticipate a surplus from all companies.

Sanwa Global Vision 2030 and Medium-Term Management Plan 2024

To be a Global Leader of Smart Entrance Solutions

In fiscal 2022, the Sanwa Group launched the Sanwa Global Vision 2030 and Medium-Term Management Plan 2024. Under the Sanwa Global Vision 2030, we will provide smart entrance solutions that meet the changing requirements of society due to factors that include climate change and digitalization. By enhancing sustainability management and strengthening our 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&A
5. Become a corporate group valued globally with enhanced sustainability management

To establish a foundation for becoming a global leader, we have established the Medium-Term Management Plan 2024 as a three-year plan through fiscal year 2024 for the entire Group to work together to:
1. Expand and strengthen core businesses (shutters, doors & service) at 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

Fiscal 2021, the dividend per share rose by ¥2 to ¥36, and we anticipate an increase for fiscal 2022 by ¥9 to ¥45, while raising the target payout ratio to 40% from 35%.

The Sanwa Group considers returns to shareholders 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. While our target payout ratio has been 35% of earnings per share (EPS) since fiscal 2015, we will raise this to 40%.

For fiscal 2021, we increased the annual dividend by ¥2 to ¥36. For fiscal 2022, we plan to raise the annual dividend by ¥9 to ¥45 due to the change in the payout ratio. 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 to our policy of buying back shares, which we do when necessary after considering our capital position and other factors. To further increase our corporate value, we will continue to push toward the goal of becoming a global leader.