A message from the president about DENSO's mission and a vision
Review of First Half of Fiscal 2012
Following the Great East Japan Earthquake, Japan’s automotive industry has made a concerted effort to recover from the disaster. As a result, the industry has rebounded faster than initially anticipated. In the second quarter, domestic automobile production volume returned to the pre-earthquake level. In the second half of the current fiscal year, various automakers plan to ramp up production volume to make up for lost ground. In response, DENSO is taking steps to prepare for this higher production, including considering plans to bring forward the production increases, and increasing the number of temporary employees.
In the first half of fiscal 2012, the year ending March 31, 2012, the DENSO Group’s performance was impacted by plummeting production volume in the aftermath of the earthquake, despite the second-quarter rebound in production volume. Consequently, the consolidated net sales of the DENSO Group decreased ¥180.4 billion year on year to ¥1,409.1 billion. Due to the lower net sales and the impact of the strong yen, consolidated operating income and ordinary income declined to ¥31.9 billion and ¥39.3 billion, respectively. Consolidated net income was down at ¥23.3 billion.
Looking at our full-year forecasts for fiscal 2012, we expect to see market conditions pick up in the second half of the fiscal year due to an increase in vehicle production, although we may be impacted by such factors as the strong yen and rising materials prices. Taking these factors into consideration, we have revised our full-year net sales forecast to ¥3,160 billion. We are forecasting operating income of ¥135 billion. In regard to the floods in Thailand, we are fortunate to report that none of our four production sites in the country has sustained flood damage at this time.
We are making every effort to avoid any impact on production, such as by providing assistance to our suppliers in Thailand who have been affected by the floods, and by switching to alternative parts and components as necessary. At present, we have not factored in the impact of the floods in Thailand on our full-year business forecasts, due to the difficulty of accurately estimating the impact of the flooding on these forecasts.
We plan to raise the interim dividend by ¥1 from last year to ¥23 per share, bringing the annual dividend forecast for fiscal 2012 to ¥46 per share. Looking ahead, we will continue redoubling our efforts to return profits to shareholders.
The Final Year of Our Structural Reform Program
Faced with seismic shifts in the environment surrounding the automobile industry, DENSO formulated a three-year structural reform program in 2009. Under this program, we have worked to build a streamlined and lean business structure, and establish a framework for renewed growth. At this time, we are proceeding with discussions on how DENSO should evolve over the next 10 years and what issues will arise over that time. We are determined to continue taking the lead in developing products and services that are far ahead of their times and that go well beyond our customers’ expectations in the fields of the environment, safety, and comfort and user-friendliness.
To this end, we will actively develop businesses in the environment and safety field, where we aim to develop an environmentally friendly, accident-free automotive society, while seamlessly linking data communications and Human Machine Interface (HMI) technologies. In the future, we believe that the advent of plug-in hybrid vehicles and electric drive systems will connect automobiles with homes and towns, making them an integral part of society’s electric power infrastructure. Accordingly, we aim to take full advantage of DENSO’s extensive automotive technologies to create innovative products and fields that grow outward from automobiles.
We look forward to your continued support and understanding as we endeavor to reach our goals.
President and CEO