Message from Management

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Management is determined
to resume dividend payments
by quickly rebuilding
the Company’s earnings base
and financial structure.

Miyuki Ishihara
Representative Director & President

Concerning the COVID-19 pandemic

At the time of preparing this message, countless people around the world have been forced to cope with disruptions to their lives caused by the global COVID-19 pandemic. On behalf of the entire UACJ Group, I would like to express my sincere condolences to those who have lost loved ones due to COVID-19, and my deepest appreciation to the health care workers and other professionals providing medical treatment every day on the front lines of this crisis.

Overview of the first half of fiscal 2020

During the six-month period from April 1 to September 30, 2020, all of the UACJ Group’s employees worked together to carry out structural reforms initiated in October 2019 while fulfilling our basic mission as an aluminum products supplier to support industries and people’s livelihoods. Due to the impact of the global COVID-19 pandemic, however, our operating environment became very challenging for each of the Group’s businesses.

Rolled Aluminum Products Business sales volume by product (thousands of tons)

The performance of the Group’s main segment, the Rolled Aluminum Products Business, varied during the six-month period. On the one hand, subsidiaries UACJ (Thailand) Co., Ltd., and U.S.-based Tri-Arrows Aluminum Inc. both posted increased sales volume of flat-rolled aluminum for can stock. In Japan, we recorded brisk sales of general-purpose aluminum foil and aluminum materials for IT-related devices, demand for which grew amid a shift to teleworking and staying at home following the outbreak of COVID-19. On the other hand, segment results were severely affected by sluggish sales of aluminum components for automobiles, aircraft, and ships due to the impact of the pandemic on transport industries. Consequently, total segment sales and profits decreased compared with the same period of the previous fiscal year.

Likewise, in the Precision-Machined Components and Related Businesses segment, both sales and profits were down due to a decline in sales volume of auto parts and air conditioning-related products, reflecting the impact of COVID-19. There are no results to report for the Wrought Copper Products segment because these operations were sold off in September 2019.

Due to the factors, above, consolidated financial results in the first half of fiscal 2020 decreased across the board compared with the same period of fiscal 2019. The Company posted net sales of ¥264.6 billion, down 15.9%, along with an operating loss of ¥1.1 billion and an ordinary loss of ¥2.6 billion, compared with income of ¥3.4 billion and ¥0.4 billion, respectively, in the same period of fiscal 2019. Net loss attributable to owners of the parent came to ¥5.1 billion compared with a loss of ¥3.4 billion in the first half of the previous fiscal year.

In addition, interest-bearing debt increased during the period as we secured more loans to strategically prepare funds needed for responding to COVID-19. To offset the higher debt, we stepped up measures to cut costs and more strictly selected investment targets. As a result, the Company was able to generate free cash flow of ¥5.6 billion during the first half of fiscal 2020.

Factors underlying the year-on-year change from ordinary income to a loss


  • 1. Excluding impact of inventory valuation and COVID-19
  • 2. Excluding impact of inventory valuation
  • 3. Difference between ingot prices at time of purchase and product sale

Progress of structural reforms

About a year has passed since we launched our structural reforms. The main objectives of the reforms are to rationalize production in Japan, generate returns on large investments made in the past, withdraw from non-profitable and non-core businesses, and make improvements to corporate governance and management. Since fiscal 2020 began in April, the reforms have been proceeding according to plan despite the impact of the COVID-19 pandemic.

Contribution of structural reforms to profits (Billions of yen)

Among measures for rationalizing production in Japan, we stopped running some equipment at Fukaya Works as we phase out product finishing processes, and transferred manufacturing of general-purpose materials to Nagoya Works with the goal of ending operations at Fukaya Works midway through fiscal 2021. In addition, we are now in negotiations with customers and other stakeholders about our plan to shut down Nikko Works.

At the same time, we have been seeing steady returns on large investments made in the past to expand production capacity, particularly in terms of rising sales volume of flat-rolled aluminum for can stock produced by UACJ (Thailand) and Tri-Arrows Aluminum. Due to the impact of COVID-19, however, we expect UACJ (Thailand) to post lower sales in fiscal 2020 than initially forecasted, and then return to forecasted levels in fiscal 2021. Both subsidiaries are implementing structural reforms according to plan, so I am confident they will contribute to achieving our ordinary income targets.

Meanwhile, we have been taking decisive steps to withdraw from non-profitable and non-core businesses. Most recently, we decided to close down two factories operated by UACJ Metal Components Corporation in the cities of Fukaya and Osaka, and to withdraw from an extruded aluminum parts joint venture in Indonesia.

Finally, with a view to improve corporate governance and management, we revised our remuneration system for directors, which included adopting total shareholder return as an indicator for performance-linked compensation.

Such measures to improve the Group’s structure and organization have resulted in one-time structural reform expenses over the past year, but we expect the reforms to produce results going forward. The reforms are currently proceeding according to plan, and we believe they will contribute ¥3.0 billion to profits in fiscal 2020. Indeed, regardless of when the COVID-19 pandemic comes to an end, I am confident that our structural reform measures will be carried out as planned and lead to solid results in the future.

Timeline of the structural reforms

Fiscal 2020 forecast and dividends

We believe that the COVID-19 pandemic will have a prolonged impact on the Group’s operating environment. Accordingly, the same trends and results in the first half of fiscal 2020 can be expected to continue through to the end of the fiscal year in March 2021. Specifically, we foresee favorable sales volume of flat-rolled aluminum for can stock overseas along with aluminum foil and materials for IT-related devices in Japan, but declining sales volume of can stock, auto parts, and general-purpose materials in Japan. Having taken these factors into account, our forecast of fiscal 2020 consolidated financial results includes net sales of ¥550.0 billion, an operating loss of ¥3.5 billion, and an ordinary loss of ¥3.5 billion. We also forecast a net loss attributable to owners of the parent of ¥9.5 billion, mainly due to one-time expenses associated with the structural reforms.

Such results would be very disappointing, of course, and I sincerely regret to say that based on this forecast, management decided to not pay dividends in fiscal 2020. Nevertheless, we are determined to resume dividend payments as soon as possible by quickly rebuilding the Company’s earnings base and improving its financial structure.

FY2020 forecast of consolidated results (Billions of yen)
  • 1. Net income (loss) attributable to owners of the parent
  • 2. Operating income + depreciation and amortization + amortization of goodwill – inventory valuation

Toward that end, in the second half of this fiscal year, the UACJ Group will continue to carry out the structural reforms and aim to promptly capture demand for aluminum auto parts, which has been picking up following a steep decline.

The Group is united in its efforts to overcome these challenging times and fulfill its responsibility to stakeholders. As all of us work toward these ends, we ask for their continued understanding and support.