To our shareholders/Investors

During the consolidated fiscal year under review, the global economy showed signs of recovery partly due to slowing inflation. However, uncertainty persisted amid concerns about the impact that the tariff policies of the new administration in the United States might have on global trade. The Japanese economy remained subdued, even though it was in a recovery trend as income conditions improved. In China, following a prolonged slump in the real estate market, the economy began to recover owing to automobile replacement incentives and the relaxation of property purchase restrictions in major cities. In the United States, policy interest rates remained high, although the economy remained strong thanks to domestic demand centered on personal consumption amid favorable income conditions.

In the automotive sector, which is the area to which the business of the Group mainly relates, sales volume increased in China, especially for Chinese-made vehicles, due to the government’s incentive measures designed to support replacement purchases. In contrast, production began to decline in Japan at the beginning of the period amid the certification fraud issue.

In this business environment, the Group’s consolidated net sales and operating profit for the fiscal year under review decreased year on year due to a decline in certain demand stemming from external factors in Japan, despite contributions from the weak yen and increased automobile sales in China. Net income attributable to owners of parent increased due to a gain on the sale of investment securities and other factors.

In the coming fiscal year, we expect that the uncertain situation will continue due to factors such as the impact of the yen’s appreciation, concerns over economic downturns related to monetary, tariff, and other policy measures in various countries around the world, and ongoing geopolitical risks. However, we will make efforts to meet the expectations of our shareholders by focusing on proactive investment in growth markets and cost reduction initiatives.

The business environment surrounding the Company is expected to undergo a once-in-a-century revolution, such as the shift to EVs due to the acceleration of carbon neutrality and the development of CASE technology, as well as changing to an era that emphasizes beautiful and fulfilled lifestyles that are in tune with the diversifying and changing preferences and thoughts of people. Under these circumstances, the Company has broadened the conventional concept of power mechanisms to engage with all aspects of “motion”—not limited to vehicles and products, but also including people and their minds, and we hope to become an indispensable presence in people’s living spaces. We have recently set our corporate message as “TPR: Your World in Motion.” To realize this corporate message, we have summarized what we should do over the next three years in our new medium-term management plan, “26 MTP,” as a stage for “preparing for further growth” with an eye toward the future. As an initiative for the first year of 26 MTP, we continued to invest in growth markets and introduced more efficient production lines at our main plants in order to respond to strong orders in the existing Powertrain Business. In the Frontier Business, which is our non-powertrain operations, we accelerated the mass production of EV-related products and the development of thermal management systems, while also engaging in hydrogen engine development and investing in startup companies involved in in-vehicle infotainment and the aerospace businesses. We also made efforts to improve capital efficiency and enhance shareholder returns by selling some of our securities holdings, conducting share buybacks, and raising the dividend payout ratio. We aim to achieve sustainable growth and increase corporate value by strengthening our management foundation and engaging in sustainability management.

We greatly appreciate the continued support of our shareholders.