To our shareholders

Thank you very much for your continued support and patronage.

The Nihon Parkerizing Group has created a multitude of original technology over the years, pursuing innovation to enhance our surface modification technology in line with the ever-changing needs of our customers. In the future, we will continue to sharpen our technological capabilities to provide high-quality products and services globally and actively seek solutions for social issues such as the need to reduce the environmental load.

Recently the business environment has changed dramatically due to numerous factors, such as an increase in extreme weather events due to global warming, the COVID-19 pandemic, and geopolitical risks such as the invasion of Ukraine. To respond effectively to such rapid changes in the business environment, in May 2021, the Nihon Parkerizing Group announced its "Vision2030", a management vision indicating the company's direction and how we envisage it in 2030, positioning sustainability at the core of management. In addition to sustainability-oriented management, the vision specifies key issues (materiality) from both perspectives of "responding to the requirements of society" and "creating social value through business." It includes initiatives such as establishing target reductions of CO₂ as we aim to contribute to the goal of carbon neutrality and disclosing information related to the environment, society, and governance (ESG).

Regarding the consolidated business achievements in March 2023, the first year of our fourth mid-term management plan, the global economy experienced a mild recovery following the easing of restrictions that were in place around the world in response to the pandemic and the normalization of economic and social activity. While we raised sales prices in Japan and overseas, the effects of the continuing increases in energy and raw materials costs were significant. Our consolidated net sales rose slightly year on year to 119,100 million yen. Operating income fell by 700 million yen to 12,600 million yen. The economic outlook for FY2023 in Japan and overseas is one in which resource and energy prices will remain high, inflationary pressures will persist, and there are concerns for an economic downturn due to fiscal tightening by governments around the world as well as other risk factors such as the conflict in Ukraine. While the outlook is uncertain, we expect that a mild recovery will continue for now, supported by the current firm personal consumption and equipment investment. Against such an economic backdrop, the forecast for the Nihon Parkerizing Group's consolidated business results for the next fiscal year is for an increase in both income and profit, assuming a certain level of recovery in the equipment business, which was lagging, and in business in the U.S. and Europe. We anticipate that the cost of raw materials will remain high. Energy prices will rise, and these and other factors will affect the business results of the Nihon Parkerizing Group. However, the Group will work hard to ensure a recovery in our business results by cutting costs and improving productivity.

The basic policy for returning profits to shareholders is to continue to provide stable dividends. However, for the foreseeable future, the company will pay dividends above the policy and implement share buybacks to improve capital efficiency.

The Nihon Parkerizing Group, as the leading company in surface modification technology, will continue to strengthen its research and development organization and pursue innovation. At the same time, we are promoting sustainability-oriented management to ensure sustainable growth and improve our corporate value in the mid to long term.

Kazuichi Satomi
Chairman President & CEO
Nihon Parkerizing Co., Ltd.