Business situation of 66th period（2018/04/01～2019/03/31）

In concerns about the impact of the US-China trade friction problem, addition to export and production activities, there are improvements in the employment and income environment and corporate profits, Japanese economy in the current fiscal year was on a moderate recovery trend. On the other hand, the global economy is backed by strong US economy, economic slowdowns in China and Europe are becoming apparent and especially in China, there is a sharp decline in imports and exports due to the effects of trade friction with the United States., the economic outlook remains unconcern. Under such a situation, we are aiming for a corporate structure, strong sales force, and strong financial structure that can quickly respond to social changes, develop young employees, we have been working on creating a vibrant and hopeful company. As a resort, sale is 17,831million yen（11.1％ increase from previous year）above the previous year’s results, ordinary profit is 973million yen（5.2％increase from previous year）,net income is 659million yen（5.2％increase from previous year）, so sales and profits increased. A large-scale customer went bankrupt in September last year, causing bad debt, file a claim with the court, transfer all bad debt as a provision, however we have achieved a better performance than the previous year.

And regarding subsidiaries TOKIRON Corporation, built a production system according to the status of orders and strived for leasing business in idle areas of the factory, struggling in profits due to rising cost of sales due to soaring material prices and sales 376million yen（2.5％ increase from previous year）, ordinary profit 66million yen, （21.7％ decrease from previous year ）、net income is 44million yen（17.0％ decrease from previous year）,so increased revenue and decreased profits.
Status by segment for the current fiscal year is as follows.
In the steel products business, demand for major customers and construction machinery-related applications remained firm due to the gradual economic recovery, sale is 6,524million yen（12.0％increase from previous year）, gross profit is 1,191million yen（5.8％increase from previous year） A large-scale customer went bankrupt in September last year, causing bad debt, transfer all bad debt as a provision. As a result of increased selling, general and administrative expenses, operating income was 212million yen（18.0％ decrease from previous year）.
As next year’s challenge, in the situation where the problem of shifting to electric vehicles accelerates, we will endeavor to achieve sales plan （sale 6,768million yen, gross profit 1,226million yen）and expand business domains, accurately capture customer needs, and to expand sales of high value-added products and strengthen the ability to meet delivery dates. In the construction machinery parts business, establishing the No.1 market share and growing strategically, we focused on sales themes for each customer and worked to provide meticulous service. Though there was also fierce price competition in the construction machinery parts industry, due to strong sales related to attachments, sale is 11,276million yen（10.5%increase from previous year）,gross profit is 2,795million yen（5.8％ increase from previous year）. Factor such as rising labor costs and logistics costs, operating income is 623million yen（3.7％decrease from previous year）.
As next year’s challenge, by increasing the ratio of high value-added products, strive to improve gross profit margin, we will continue to maintain appropriate activity policies by region and customer and develop commercial distribution channels, and we will aim to achieve the sales plan（sale 11,718million yen, gross profit 2,893million yen）.