Investor relationsManagement policyMessage from the President

The TOCALO Group’s business environment is rapidly changing. We are responding by improving our ability to react quickly and flexibly to changes while focusing on establishing sustainable growth to enhance our corporate value and fulfilling the expectations of our shareholders and stakeholders. It is my pleasure to share the results of our business performance for the fiscal year ended in March 2024 and to present our management outlook for the years ahead.

Applying our extensive experience in manufacturing to provide solutions for customer

Since joining the company in 1989, I have mainly worked in the manufacturing department. I served as the plant manager of the Kitakyushu and Akashi plants then as general manager of the Production Headquarters, where our main objective was to ensure that safety is always the highest priority in our manufacturing operations. Looking back on the past year, I realize that making decisions as top management carries heavy responsibility. In that spirit, I will continue to maximize both the tangible and intangible management resources cultivated by my predecessors and to focus the Group on enhancing corporate value.
My many years of being deeply involved in the Company’s manufacturing operations have shown me that our business strength is our technological capabilities, which are rooted in our patents and unique expertise.
Another of our strengths is our ability to find solutions for clients by having our sales representatives dig deep into the clients’ businesses and applying an integrated manufacturing, sales, and engineering approach to each specific challenge.
One experience that left a strong impression on me was the monumental challenge of building the Akashi Plant production line from scratch and then having to continuously scale it up through the 2000s as flat panel display (FPD) products continued growing larger and larger each year. I’ll never forget the last modification we made so the production line could accommodate the largest “Generation 10” FPDs. We always do everything in our power to overcome obstacles, which is why we have earned the trust of clients at the forefront of Japanese industry.
I believe the Company’s steady growth is attributable to our ongoing efforts to overcome challenges not just in the FPD field, but in the semiconductor, iron & steel, and industrial machinery fields as well.
I would like to express particular gratitude to our clients in the iron & steel industry for our enduring relationships and the constant support they have given us for developing our technology and growing our business.

Impact from the temporary semiconductor market slowdown

As anticipated at the start of the year, the temporary slowdown in the semiconductor industry resulted in declines in both sales and profits for our Company in the fiscal year ended in March 2024. The semiconductor industry is a core market for our products, and the industry’s temporary adjustment phase and subsequent reduced of capital investment impacted our overall performance.
Looking ahead, outlook for the semiconductor market is for new stage of growth.
Base on that projection, while focusing during the past year on our current business results, we also were preparing our facilities and refining our technologies to ensure we are positioned to seize the earnings opportunities we anticipate in the medium term. We also prepared for the future in the iron & steel and industrial machinery fields by developing new technologies specifically geared to client needs and introducing automation to enhance our productivity. With the market and industrial structures changing so drastically, we believe that accurately understanding client needs during the change is essential to providing the most effective solutions.
These efforts during the year led to growth in sales and profits in the iron & steel, industrial machinery, and other fields, but ultimately were unable to overcome the contractions in the semiconductor and FPD markets.

Preparing for when manufacturers reactivate their capital investment

We are currently at the stage of preparing for the return of demand in the semiconductor field by steadily investing in construction and capacity expansion at our plants in Tokyo, Akashi, Kurashiki, and Kitakyushu.
We are also leveraging our leading technological capabilities to further bolster our ability to propose solutions to equipment manufacturers in the iron & steel and industrial machinery fields.
Amid these preparations, we remain fully committed to our shareholder return policy of maintaining a consistent dividend level with a target consolidated dividend payout ratio near 50% and a dividend on equity ratio of 5% or higher. We will consider repurchasing company shares and other capital policies.

Medium-term management plan progress

True to our reputation as a patent producer, we are eagerly pursuing new frontiers for our surface modification technology as we steadily advance the strategies in our medium-term management plan.
In the semiconductor & FPD field, we are aggressively proposing to existing and potential new clients ways to use our highly refined and advanced thermal spraying technologies that will boost the high-value-added in products and add functionality to production facilities.
We are also developing applications for our technologies beyond thermal spraying by further extending research into existing technologies, such as our CDC-ZAC coating and the TD process, and innovating with our coating formation technologies that use chemical reactions to develop new highly functional coatings. We are also going even further by combining thermal spraying and heat treatments in new ways to uncover promising practical applications that will add to our business growth in the medium and long term. We are continuing to advance our unique technologies to further refine our world-leading surface modification technologies and accelerate the global expansion of our business. We are combining productivity-boosting automation in our manufacturing processes with human craftsmanship to build a unique and unrivaled competitive advantage for TOCALO.

Looking ahead to fiscal year 2025

In fiscal year 2025, we will continue developing new technologies and improving our production systems while also actively advancing development of our non-financial capital, which a priority area for management. Our non-financial initiatives encompass developing our human capital and diversity as well as our sustainability, particularly in environmental matters.
We anticipate an ongoing challenging environment in the year ahead but remain resolute in our drive to overcome the adversity and continue expanding our business.