■Kazusho Kamaboko's Medium- to Long-Term Growth Strategy ＜2904＞

2. Second Mid-Term Management Plan and Priority Measures

The basic policy of the second medium-term management plan is to “establish a foundation for business growth and profitability through bold challenges to domestic and international markets, and realize the “5 years to a growth trajectory” set out in the 1st stage. In the domestic market, we aim to improve product power, productivity, and sales power, achieve competitive advantage, and expand market share. In overseas markets, growth markets are analyzed and sales expansion is promoted. To that end, we will implement tactics and measures based on the five key keywords “transformation and creation,” “selection and concentration,” “DX,” “new business,” and “alliances,” and achieve sales of 40 billion yen, operating income of 2.6 billion yen, ROE 10.0%, and ROIC 9.0% for the 2026/6 fiscal year.

The company introduced ROIC in earnest from the 2023/6 fiscal year with the aim of realizing management that is conscious of stock prices and capital costs, but the actual results for the 2024/6 fiscal year have ROE 6.8% and ROIC 3.6%, and there is still a large gap between target figures. Also, the stock price at the end of the 2024/6 fiscal year is 766 yen, and PBR is 0.97 times lower than 1 times. Since there is a high possibility that interest rate increases will be implemented in the future, it is planned to brush up ROIC management such as investment decisions that are conscious of capital costs and PDCA of business-specific ROICs by using the weighted average of costs obtained by adding debt costs to stock profit returns that have been applied to capital costs as the new capital cost, and setting the target stock price for the 2026/6 period to 900 to 1,100 yen and the PBR target by 1.1 to 1.3 times. The plan is to create funds of 0.5 billion yen with operating cash flow of 9 billion yen and policy stock sales in 3 periods from the 2024/6 fiscal year to the 2026/6 fiscal year, and allocate 2.8 billion yen to capital investments such as maintenance, renewal, environmental measures, etc., 5.8 billion yen to growth investments such as rationalization/labor-saving investments, human capital investments, research and development investments, DX investments, M&A, etc., and 0.9 billion yen for shareholder returns, but capital costs · It would be necessary to invest while being aware of capital profitability such as ROIC and ROE.

The priority measures are as follows.

a) “Change and Creation”

Through the operation of IWS, which emphasizes life and work balance, we actively invest in human resources, such as working on new ways of working by devoting 10% of working hours to ability development and intellectual creation activities, and aim to be a rewarding company where “individual” employees and companies as “organizations” grow mutually. We create human resources with autonomous thinking and flexible imagination, and work to create new value.

b) “Choice and Focus”

In the fishery products and delicatessen business, we will proceed with business structural reforms through “selection” and “concentration” of products, markets, production, etc. We will organize businesses and products from a profit and future perspective, and aim to achieve both improving production efficiency/productivity and strengthening and improving sales efficiency. The marketing development headquarters was newly established in 2024/7 as a control tower. Furthermore, the research and development division will thoroughly invest in high-profit product/technology development. Headquarters Plant 2, a factory dedicated to “salad sticks,” is already in a situation where production capacity cannot keep up due to strong sales. There is a need to maximize asset efficiency by performing functional evaluations and restructuring of each production site. Additionally, costs and expenses will be reviewed across all businesses and organizations, and cost reduction will be promoted.

c) “DX”

The entire company will work to promote DX and create customer value by advancing productivity improvements and work style reforms. We will promote digitization of data by reviewing company-wide business processes, automation/labor saving of operations, productivity improvement through digitalization of production data and effective use of data aimed at smart factories, promotion of quality improvement and efficiency through production management systems, and efficiency improvement of sales activities through SFA/CRM, online business negotiations, etc.

d) “New business”

The business area will be expanded in order to build a third business after the fishery products and side dishes business and the mushroom business. As a business area, it will be examined by dividing it into 3 areas: adjacent areas derived from existing businesses, peripheral areas located around existing businesses, and innovation areas through M&A and open innovation.

An adjacent area is the development of a product group for alternative fishery products. They have taken on the challenge of reproducing the taste and texture of seafood that are becoming rare with fish meat surimi, and they are already selling “Next Seafood Sea Urchin Flavor” and the eel Kabayaki style fish paste “Unajiro.” As a peripheral area, joint research and development has been underway with Maruha Nichiro and Integriculture to establish muscle cell culture technology for fish since 2022, and they are aiming for sustainable product development through “cell agriculture,” which makes food, raw materials, etc. from animal-derived cells. In addition, we are proceeding with research with Yamagata University in 3D food printer research that is expected to be effectively used in “future dining tables.”

As an innovation area, a new business development office was established in 2023/7 as an organization under direct control of the management meeting, and new businesses including M&A are being actively explored and developed while building networks with the government, specialized agencies, venture investment companies inside and outside the prefecture, etc., and it seems that specific projects are also being raised.

Additionally, with Southeast Asia, North America, and the Middle East as target markets, we will continue to advance resource input for overseas business expansion. We proceeded with business negotiations with overseas buyers and export trading companies through exhibiting at overseas exhibitions in the Asian and North American markets (“Food Japan 2023” in Singapore, “Seafood Expo North America 2023/2024” in Boston, “Bar & Restaurant Expo 2024” in Las Vegas) and the “Japanese Food” Export EXPO during the two periods of 2023/6 and 2024/6 . In addition to “Next Seafood Sea Urchin Flavor” and “Next Seafood Mentaiko Flavor,” “JUMBO Crab Sticks Large Crab Sticks,” which feature ultra-fine fibers and an oversized size that imaged snow crab legs, room temperature type crab sticks “Sea Salad” and “Kanikama,” and crab-flavored fish paste “MARINE STICK PLUS (Marine Stick Plus),” made with fish surimi.” Strategic products for overseas markets such as “FISH NUGGET” (fish nugget) and “unajiro” are being expanded, and it seems that they are also receiving inquiries from overseas buyers. The 2025/6 fiscal year aims for full-scale export growth overseas, and we will rebuild a strategy that will become the “2nd stage of overseas business,” such as improving the organization and human resources of overseas departments, and cooperation including redefinition of functional sharing between Indonesian joint ventures that are responsible for manufacturing halal compatible and mass-produced products and domestic factories and are exported to North America, the Middle East, etc.

e) “Alliances”

Aiming to build a strong and high-quality alliance system with business partners, we are strengthening activities such as implementing workshops on food safety and hygiene management through the “Issho Yamabiko Association,” etc., which is an exchange meeting with business partners, establishing the “Kazusho Kamaboko Supplier Code of Conduct” in conjunction with the establishment of the “Ichisho Kamaboko Human Rights Policy,” and disseminating information emails “Ichimasa Tsusho.” In addition, we are promoting cooperation with industry, academia, and government, strengthening and building external networks such as collaboration with companies in different industries and fields, and open innovation, etc., and are exploring product development and new businesses in new fields centered on technology development divisions and biotechnology research divisions. We participate in the business co-creation program “Innovation Labo NIIGATA” established by Niigata Prefecture and KDDI ＜9433＞, and aim for regional revitalization centered on entrepreneurship and establishment within Niigata Prefecture, resolution of regional issues through DX promotion in regional industries, and realization of regional co-creation. In fact, employees take turns to participate in the same program, learn methods and ways of thinking to create ideas, and explore opportunities for matching with new technologies and startups and business co-creation.

(Written by FISCO Visiting Analyst Matsumoto Akihiro)