Greetings from the President
to Our Shareholders and Investors
During the fiscal year 2023 (April 1, 2023 to March 31, 2024), the domestic economy was on the road to recovery, with improved employment and income conditions and expectations of a gradual recovery in the future.
In the construction industry, orders from both the public and private sectors increased, resulting in an increase in total orders from the previous consolidated fiscal year. On the other hand, the price of construction materials remained high, and the tight supply and demand for labor affected the increase in construction costs, leading to a challenging business environment.
In May 2022, the Group announced the “Medium-Term Management Plan 2024 - Rolling Plan” to promote the evolution of value provided to customers in the core businesses of architectural construction, civil engineering, and strategy. In addition, the Company has identified the construction of new TODA BUILDING, overseas business, and renewable energy business such as floating offshore wind power generation as key management priorities, and is making growth investments in these businesses and strengthening its business portfolio. During the period under review, the Company continued to invest in growth under the active involvement of top management in order to achieve medium- to long-term growth. To achieve ROE (return on equity) target of 8% or more in the medium- to long-term while promoting growth investments, the Company has also set ROIC (return on invested capital) of 5% or more as a management indicator of profitability, and is working to strengthen its investment process.
Under these circumstances, the Group’s consolidated results were as follows:
Consolidated net sales were ¥522.4 billion, down 4.5% from the previous consolidated fiscal year, due to lower sales in the Architectural Construction Business and the Civil Engineering Business as large-scale projects did not proceed as expected, although sales in the Domestic Investment and Development Business increased due to an increase in sales of real estate for sale and the Overseas Group Companies Business increased due to the consolidation of PT Tatamulia Nusantara Indah and its seven subsidiaries in the previous consolidated fiscal year.
Regarding operating income/loss, gross profit increased 14.4% compared to the previous consolidated fiscal year to ¥65.5 billion, mainly due to the impact of the provision for loss on construction contracts on several projects in the Architectural Construction Business in the previous consolidated fiscal year. Selling, general and administrative expenses increased 10.4% compared to the previous consolidated fiscal year to ¥47.6 billion due to an increase in personnel expenses and research and development costs among others, but operating income rose 26.7% compared to the previous consolidated fiscal year to ¥17.9 billion.
Ordinary income was ¥25.4 billion, up 33.9% from the previous consolidated fiscal year, due to an increase in non-operating income, including interest income and foreign exchange gains resulting from the yen's depreciation.
Net income attributable to owners of the parent was ¥16.1 billion, a 46.4% increase from the previous consolidated fiscal year. The Environment and Energy Business recorded impairment losses and losses expected to be incurred in the future, while a gain on sales of investment securities was recorded due to the proceeds from the sale of cross-shareholdings.
As is said to be the era of VUCA, the business climate in which we operate is rapidly changing, and uncertainty about the future is rapidly increasing.
In particular, the impact of the current spread of the COVID-19 is projected to be a paradigm shift in the business model from a mid-to long-term perspective, as well as in terms of performance.
There has been also a need for management that emphasizes social value (ESGs and SDGs) and economic value, such as proactively addressing social issues associated with climatic change, resource shortages, and demographic changes.
Furthermore, this will be a "transformation phase" to build a new earnings base, including the construction of the (tentative) new TODA building (headquarters building) scheduled for completion in 2024.
Our group, based on this recognition, will promote this plan, implement continuous reforms, and continue to change itself (Transform) to realize sustainable growth.
We are pleased to advise that we have revised the "Medium-Term Management Plan 2024"announced in May 2020 and formulated the "Medium-Term Management Plan 2024 - Rolling Plan" covering the three-year period through FY2024.
In the "Medium-Term Management Plan 2024", we positioned the five-year period from FY2020 to FY2024 as a "transformation phase" for developing a new revenue base and has been working to reform our business portfolio by strengthening the competitiveness of our construction business and investing in growth.
In the meantime, the assumptions we made for the original plan are rapidly changing against the backdrop of the prolonged COVID-19 outbreak, soaring prices, and stagnant construction investment. In addition, we recognize that it is important for us to clarify strategies to realize the "Future Vision CX150" announced in July 2021, and to make group-wide efforts to achieve the goals. Based on these recognitions, we have revised some of our performance targets, strengthen our strategies to achieve them, and achieve sustainable growth by promoting further reforms.
Toda Corporation Group Formulation of "Medium-Term Management Plan 2024 - Rolling Plan"（PDF：248KB）