Growth Strategy of Japan Hume <5262>

1. Mid-term management plan "23-27 Plan R"

The company established the mid-term management plan "23-27 Plan R" in May 2023. This five-year period is positioned as a time for reform to create a growth trajectory towards becoming a 200-year company in response to upcoming expected business changes, and the mission is stated as "inheritance and renewal." President Masubuchi, who assumed office on April 1, 2023, commented on the mid-term management plan as follows: "Even in this era of upheaval, I want to 'inherit' the founding spirit of NH-ism that contributes to social infrastructure formation and a good corporate culture while 'renewing' the management foundation for the next 100 years. The tradition of long-lived companies may tend towards maintaining the status quo; therefore, while strengthening corporate governance towards decision-making and execution of operations, smooth communication will be promoted to connect management with the field. Promising strategic products that capitalize on strengths, such as the ICT tools 'Pile-ViMSys(R)', 'ViMCam(R)', and 'Wellman storage tanks(R)', synthetic steel pipes, precast wall railings, and environmentally friendly materials like 'e-CON(R)' have also been prepared. Furthermore, we want to promote reforms and foundational building aimed at sustainable growth, including nurturing human resources that will carry the company beyond its 100th anniversary."

The management target values include projected revenue of 36.5 billion yen, operating profit of 1.7 billion yen, ordinary profit of 2.55 billion yen, and net income attributable to shareholders of the parent company of 1.88 billion yen for the fiscal year ending March 2026, the third year of the plan, and for the final fiscal year ending March 2028, projected revenue of 40 billion yen, operating profit of 2.2 billion yen, ordinary profit of 3.05 billion yen, and net income attributable to shareholders of the parent company of 2.27 billion yen. The first half of the plan period will focus on strengthening research and development and capital investments for future growth foundation, while the latter half aims to recover profit levels and embark on a further growth trajectory.

As for the strategic approach by business, a growth foundation will be built by enhancing the promotional trajectory of the core business and strengthening strategic businesses. The business-specific planned figures for the fiscal year ending March 2028 include revenue (consolidated 40 billion yen) from the core business 22.75 billion yen, sewerage-related business 7.75 billion yen, precast products business 8 billion yen, and other businesses 1.5 billion yen, with operating profit (consolidated 2.2 billion yen) from the core business 0.9 billion yen, sewerage-related business 1.6 billion yen, precast products business 1 billion yen, and other businesses 0.87 billion yen, as well as a total company expense adjustment of -2.17 billion yen. To achieve the planned figures, the core business is positioned in the existing field of conventional core and sewerage-related business, while the strategic business is identified with a new group of precast products in the sewerage-related business (which differs from common precast products) and other businesses (such as new ventures). The reporting segment categories disclosed in the financial statement will remain as before (core business, sewerage-related business, Photovoltaic Technology and A-REIT ETF business, and other businesses).

(Written by Fisco guest Analyst Masanori Mizuta)