■Takiron CI ＜4215＞ Medium-Term Management Plan
4. Business portfolio management and growth investments
Business portfolio management has been enhanced by targeting the long-term target of 10 billion yen in consolidated net profit, and we aim to achieve a company-wide average of 7% or more for the fiscal year ending 2027/3 as an ROIC target. Therefore, businesses are classified into 35 units and categorized into A to C according to ROIC levels, and priority issues for each category are set as A) maintaining and expanding business scale, B) increasing operating profit, reducing inventory, and improving fixed asset efficiency, and C) eliminating the deficit on a profit basis after tax. The business structure reform meeting (separated from the important monitoring meeting) will manage progress against the ROIC improvement plan formulated by the management headquarters after analyzing improvement points by the management headquarters. Ultimately, we aim for an ROIC that exceeds WACC (4%) in each business, but for ROIC business units below 4%, it is determined whether or not management can continue after implementing priority improvement measures, and businesses where ROIC is negative on the 3-term average are withdrawn as a general rule. Thus, the accuracy of business growth will be raised, and consolidated net profit of 10 billion yen and PBR will be 1 times or more over the long term. On the other hand, it seems that they are also considering lowering WACC itself due to growth investments, including loans.
In the previous medium-term management plan, which was followed as a result, the company's allocation of cash flow (32.4 billion yen over 3 years), which has active investment as an advantage, was underinvested, with dividends 6.2 billion yen, capital investment 14.3 billion yen, and internal reserves of 11.8 billion yen, which can be said to be a source of reflection. Therefore, in the current medium-term management plan, which is turning aggressive, dividends of 7 billion yen and capital investment of 30 billion yen are planned for the estimated cash flow of 37 billion yen for 3 years, and the policy is to focus on allocating cash to capital investment for growth purposes. The ratio of capital investment to maintenance and renewal investment is also planned to be drastically changed from 61:39 to 85:15 of the previous medium-term management plan, and it is calculated that the actual amount of growth investment will nearly triple from 8.7 billion yen to 25.5 billion yen. The contents of growth investments are planned to be 1.5 billion yen for business structural reforms, 8 billion yen for increased production, 6 billion yen for production rationalization, 3 billion yen for IT/DX, and 5.5 billion yen for research and development, and the maintenance and renewal quota is 4.5 billion yen. Furthermore, 40 billion yen has been prepared as a special investment quota for additional growth investments and M&A, and a maximum investment quota of 70 billion yen is expected. Preparations for such a bullish investment plan are structurally achieved with the achievement of a single-year management plan for the fiscal year ending 2024/3, and financially, it can be said that everything is perfect by securing loan quotas and collecting deposits in addition to operating cash flow. Note, of the 30 billion yen capital investment, what has been decided is already about 18 billion yen, such as capacity building investments in the United States, and it seems that the direction of the remaining 12 billion yen, such as making factories smarter, has also been decided.
Aiming to contribute to a sustainable society
5. Sustainability Initiatives
Based on the group corporate philosophy, the company has newly formulated a basic sustainability policy that clarifies the details to be specifically addressed, such as environmental conservation, diversity & inclusion, human rights, sustainable procurement, governance, and sustainable corporate value improvement. Regarding materiality, it was determined that alignment with social demands and linkage with business strategies was necessary, and a review was carried out from an ESG perspective. Initiatives to address climate change, promotion of diversity, respect for human rights, sustainable procurement activities, enhancement of corporate governance, and resolution of social issues through business were identified as new material issues. By incorporating materiality into action plans for each segment, it aims to contribute to a sustainable society through improving the company's profitability and corporate value.
(Written by FISCO Visiting Analyst Miyata Hitomitsu)