Yamano Holdings' mid- to long-term growth strategy.
2. Global strategy
In the medium-term management plan positioning the first phase towards accomplishing the "2030 Vision", the theme is set as "connecting" to further enhance the management foundation of the group. The focus policy is on "management that utilizes human capital more effectively," "stabilization of revenue in existing businesses," and "management that takes capital costs and stock prices into consideration".
(1) Management that utilizes human capital more effectively As the declining birthrate and aging population continue, it is expected that it will become increasingly difficult to secure and retain human resources. The Yamano group possesses a large number of diverse personnel from different companies via M&A, and features a high female employee ratio of 72.1%. However, the results of an ES survey implemented in the March 2024 period revealed that its strengths were not fully utilized within the company. Therefore, the focus initiative is "to connect the diverse personnel's activities and organic relationships to improve productivity." The entire group is advancing permeation of the corporate philosophy (mission, vision, values) through inner branding, enhancing the CHRO function (Chief Human Resource Officer abbreviated as CHRO, responsible for overseeing personnel strategy and organizational building in line with management strategy) that spans the group, and promoting workplace environments that encourage individual career development. In addition, each department that operates on the front line is advancing policy that promotes flexible work styles, work-life balance, improvements in organizational management ability by management positions, overall review of training systems categorized by job type/hierarchy, and review of the personnel evaluation system (items and criteria), among other things. In doing so, it is also assumed that efforts will be made to conduct unified employment, education, and training of all employees throughout the entire group at Yamano, and we would also like to expect the functioning of the CHRO that crosses departments and group companies to help create an organization and structure in which everyone works well together. The company plans to newly appoint and establish a CHRO during the first half of the term.
(2) Stabilization of revenue in existing businesses In the financial statement for the March 2024 period, problems such as a sense of shortage of sales personnel (due to decreased force with the departure of leading sales staff), mismatches between regional characteristics and store management (disparities in sales performance between stores), lack of customer appeal to stores (high standing ratio of event sales), and delays in diversification of sales channels (undeveloped sales routes for non-visiting customers) became apparent. Therefore, the focus initiative is "to solve the issues in store management across all businesses, contributing to improved productivity" while leveraging the customer network and accumulated know-how that has been constructed since the founding. The entire group is advancing an overhaul of retail business-oriented sales management system from April 2025 through DX that results in more efficient indirect operations, executing M&A that produces synergy with existing businesses, and enhancing outer branding, which is necessary for customers to continue to choose the group. At each department, the policy is to advance efforts on the front line such as improving the level of store management through visualization of sales processes and OJT education, strategic relocation of unprofitable stores and opening new ones, refurbishment of stores, improvement in store sales through introduction of original products and services, expansion of customer layers through effective use of SNS and EC sites, and exploration of new ways to gather customer and store management know-how that is possible even with a shortage of staff.
Management that takes capital costs and stock prices into consideration
The company aims to meet the expectations of shareholders and achieve sustainable stock price increases by generating stable net income that exceeds WACC. In the period from March 2019 to March 2024, which includes the COVID-19 pandemic, the company experienced three accounting periods in which ROE exceeded the cost of shareholder capital. Instability in ROE due to fluctuations in operating margins resulting from changes in gross profits and advertising and promotional expenses represents a recognized challenge for the company. In order to improve PER, the company will focus on appropriate sales price management for each existing business, strict cost management, and increasing productivity per employee to improve EBITDA margin and achieve profitability improvements in addition to making proactive investments in business succession-type M&A to improve group enterprise value. The company will also optimize its holding portfolio through business replacement to improve ROE and focus on efforts to improve its investor relations activities, including promoting understanding of the company's growth strategy through dialogue and enhanced information disclosure to reduce capital costs.
(4) Quantitative Objectives
The quantitative objectives include the pursuit of profit growth through both existing businesses and M&A to achieve revenue of 175-18.5 billion yen (average annual growth rate of 1.6%) and EBITDA of 7-0.8 billion yen (22.2% per year) by March 2027. The primary goal for existing businesses is profit stabilization and the most emphasis will be placed on increasing productivity in store operations, with planned revenue of 14.5 billion yen and EBITDA of 0.4 billion yen by March 2027. The goal for M&A is to expand business capacity by realizing synergies with existing businesses and acquiring new businesses, aiming for revenue of 30-4 billion yen and EBITDA of 3-0.4 billion yen.
The company's financial objectives include improving business profitability and achieving ROE that exceeds the cost of shareholder capital. The targets for March 2027 are EBITDA margin of 5.0% or higher (operating profit of 520 million yen), equity spread of 7.0% or higher (ROE of 15.0%- shareholder capital cost of 8.0%), and PBR of 2.5 times or higher.
(5) Profit Distribution Policy
The company plans to prioritize balanced profit distribution that includes stable and continuous stock dividends, human investment that contributes to improving stock value, business growth investments, and accumulation of self-capital. Dividend payout ratio will be appropriately considered in line with the profit distribution policy and linked to annual performance.
(Author: FISCO Guest Analyst Shuji Matsumoto)