Toyota Tsusho Corporation Reports Earnings for the Fiscal Year Ended March 31, 2016
OREANDA-NEWS. Toyota Tsusho Corporation (TSE: 8015) reported consolidated net sales of 8,170.237 billion yen and a net loss attributable to owners of the parent of 43.714 billion yen, or minus 124.26 yen per share, for the fiscal year ended March 31, 2016.
Consolidated Results of Operations
In the fiscal year ended March 31, 2016, global economic growth was subdued. While the U.S. and European economies were resurgent, spearheaded by domestic demand, emerging market economies downshifted in the wake of a Chinese economic slowdown, sharp decline in crude oil prices and policy rate rising in the U.S.
The U.S. economy performed solidly as robust personal consumption, while exports and industrial production, both of which were dampened by dollar appreciation and policy rate rising, showed a lack of strength. The European economy continued to gradually recover, aided by monetary accommodation even as refugee inflows and terrorism undermined public safety and, in turn, political and societal stability. With Chinese growth slowing in response to a clampdown on overinvestment amid a transition to a "new normal," emerging market economies continued to slow as their exports to China shrank and commodity prices declined. The Indian economy however, grew briskly, driven mainly by domestic demand against a backdrop of the Modi Government's structural reforms.
Meanwhile, the Japanese economy remained mired in a soft patch marked by sluggish personal consumption and delayed recovery in exports.
Amid this environment, the Toyota Tsusho Group’s consolidated net sales in the fiscal year ended March 31, 2016, decreased 493.2 billion yen (5.7%) year on year to 8,170.2 billion yen, largely as result of crude oil prices' decline. Consolidated operating income decreased 29.157 billion yen (17.2 %) to 140.299 billion yen from 169.456 billion yen in the previous fiscal year, largely because of growth in selling, general and administrative expenses.
Consolidated ordinary income was down 28.172 billion yen (18.0 %) to 128.095 billion yen from the previous fiscal year's 156.267 billion. One-time impairment losses booked as extraordinary losses resulted in a consolidated net loss attributable to owners of the parent of 43.714 billion yen, 111.285 billion yen below the previous fiscal year's 67.571 billion yen in net income attributable to owners of the parent.
Net sales decreased 143.6 billion yen (7.3%) year on year to 1,817.4 billion yen. In the automotive steel business, the Group acquired an equity stake in Mirra & Mirra Industries Private Limited, which has commenced production of automotive specialty steel as a new subsidiary. The acquisition was aimed at gaining a solid foothold in the specialty steel secondary processing business in India, a market with promising growth prospects. In the nonferrous metals business, subsidiary Toyotsu Rare Earths India Private Limited commenced production in earnest after 2 entering into an agreement to source rare earth feedstock from state-owned Indian Rare Earths Limited. Additionally, the Company decided to split off portions of its operations and consolidate them into Toyotsu Tekkou Hanbai Co., Ltd., and Toyotsu Material Inc. to strengthen its management foundations.
Global Parts & Logistics
Net sales increased 71.5 billion yen (7.7%) year on year to 999.0 billion yen. In Malaysia, the Group entered into an exclusive aftermarket sales agreement pertaining to automotive batteries manufactured by the Hitachi Chemical Group. Additionally, the Group launched a joint carbon fiber recycling initiative with Toray Industries, Inc. The joint initiative plans to validate energy-efficient recycled carbon fiber manufacturing technologies and develop applications for recycled carbon fiber at a pilot plant to be constructed on the premises of a plant owned by Group subsidiary Toyota Chemical Engineering Co., Ltd.
Net sales declined 54.2 billion yen (4.1%) year on year to 1,252.3 billion yen. In Indonesia, the Group entered the used-car auction business by acquiring an equity stake in PT. Balai Lelang Serasi, an Astra Group affiliate. Additionally, investee CFAO S.A. established a jointventure with Yamaha Motor Co., Ltd., to manufacture and sell motorcycles in Nigeria. It also opened auto dealerships and state-of-the-art service centers in Côte d'Ivoire and the Democratic Republic of Congo to increase sales to consumers, a market segment with promising growth prospects.
Machinery, Energy & Projects
Net sales decreased 347.8 billion yen (17.9%) year on year to 1,600.3 billion yen. Having designated North America as a key market for the electric power business, the Group signed on as an equity investor to construct and operate a gas-fired power plant in St. Joseph County, Indiana. A consortium to which the Group belongs, together with Tokyu Corporation et al. established Sendai International Airport Co., Ltd., in the aim of privatizing Sendai Airport and started to operate the airport terminal building and other facilities. Additionally, subsidiary EneVision Co., Ltd., completed construction of the Gotsu Biomass Power Plant in Gotsu-shi, Shimane Prefecture and commissioned it into operation.
Chemicals & Electronics
Net sales decreased 23.8 billion yen (1.2%) year on year to 1,923.7 billion yen. In the chemical and synthetic resin business, subsidiary SDP Global Co., Ltd., established SDP Global (Malaysia) SDN. BHD. in Malaysia to meet growing ASEAN demand for hygiene products. The new company is slated to commence production in 2018. In the electronics business, the Group launched a pilot project in Laos to investigate the greenhouse-gas reducing effect of technologies for building and operating modular data centers.
Food & Agribusiness
Net sales increased 5.6 billion yen (1.4%) year on year to 416.0 billion yen. In the agriculture and aquaculture business, the Group signed a memorandum of understanding with Kinki University to collaborate more closely in the aquaculture business and established Tuna Dream Goto Fish Nursery Center in Goto-shi, Nagasaki Prefecture, in the aim of stably producing and supplying Bluefin tuna hatchlings. Additionally, the Group rebranded its high-yield rice under the Shikiyutaka brand name and began supplying the new brand to the ready-made meal and restaurant industries. In the grain business, the Group acquired an equity stake in NovaAgri Infra- 3 Estrutura de Armazenagem e Escoamento Agrícola S.A., an operator of grain infrastructure in central and northeastern Brazil, making it a subsidiary.
Consumer Products & Services
Net sales decreased 1.9 billion yen (1.2%) year on year to 158.2 billion yen. In the living & healthcare business, the Group formed an alliance with Sharp Corporation and Hikari Sports Corporation and ramped up a hitherto pilot venture to provide health management services at fitness facilities. The venture is now pursuing new customers. In Indonesia, the Group completed construction of the second phase of its AXIA SOUTH CIKARANG residential hotel complex for long-term residents and business travelers.
Outlook for Fiscal Year Ending March 31, 2017
For the fiscal year ending March 31, 2017, the Company is forecasting net sales of 7,300 billion yen, a year-on-year decrease of 870.2 billion yen (10.7 %); operating income of 144 billion yen, a yearon-year increase of 3.8 billion yen (2.6 %); ordinary income of 150 billion yen, a year-on-year increase of 22 billion yen (17.1 %); and net income attributable to owners of the parent of 70 billion yen, a year-on-year increase of 113.7 billion yen.