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Medium Term Management Plan

Medium Term Management Plan 2021

The Company, in Nobember 2015, formulated the “Medium Term Management Plan 2018 (2015-2018),” stated the establishment of “profit-focused management” as a key management policy, and aimed for sustainable growth as a company.
As a result of this, the gross profit margin, which is the source of profit, improved to close to 14%, and for the period ending March 31, 2018, ordinary profit posted record high for the first time in thirteen years. Furthermore, in addition to autonomous growth achieved through the expansion of the EMS business*1 focused on overseas and the expansion of the trading company business targeted at growth fields such as automotive and communications, as announced on September 10, the Company determined the “Acquisition of Shares in Fujitsu Electronics Inc.(and Making It a Subsidiary),” etc. and through such activities has boldly challenged towards dramatic business expansion with a focus on further industry reorganization.
The performance forecast for the period ending March 31, 2019 (FY2018), which is the final year of this plan, as announced today, shows that of the management targets indicated in the plan*2, sales (290.0 billion yen) and ROE (8.0% or above) have the prospect of being achieved.

The Company celebrated the 50th anniversary of its founding in September,2018, and in order to make a new starting point towards the creation of the “KAGA ELECTRONICS GROUP of the Future” that looks towards the next fifty years and further ahead, formulated the “Medium Term Management Plan 2021 (2019 - 2021) ” as a three-year plan spanning from the period ending March 31, 2020 to the period ending March 31, 2022. An outline of this is provided below:
1.Basic Policies
●Enhancement of Revenue Base
Utilizing the Group’s DNA since the founding in which current trends are always foreseen, we shall focus on markets that are expected to see high growth and profitability in the future, and shall endeavor to strengthen the Group’s revenue base.
(1) Strengthening initiatives for growth sectors: Focusing on in-vehicle, communications, environment, industrial equipment, and medical/healthcare.
(2) Strengthening and expanding the EMS business and overseas business

●Stabilization of Management Base
Aiming to strengthen the management base towards early improvement of efficiency and financial soundness after conversion of Fujitsu Electronics to a subsidiary.
(1) Continuation of group-wide cost reduction measures
(2) Promotion of the improved group management efficiency through the development of organizational structure
(3) Strengthening of corporate governance, development of human resources

●Creation of New Business
In order to strengthen resistance to changes in the external environment, we shall endeavor to create new business through the proactive use of our own resources and M&A.
(1) Launching of social issues (childcare, welfare, nursing care, etc.) business and materials business
(2) Promotion of open innovation through venture investment
(3) Active use of M&A

2.Management Targets
The management targets serving as goals for the period ending March 31, 2022, which is the final year of the plan, are as shown below:
Sales
Operating Income
ROE
500.0 billion yen
13.0 billion yen
8% or higher
 
3.Positioning of the “Medium Term Management Plan 2021 (2019-2021)”
The Company, through the establishment and taking hold of “profit-focused management,” shall form “Japan’s No. 1 corporate group in the industry,” and furthermore, has adopted a medium to long term management vision of aiming to become “World Class Company.”
Towards the realization of this vision, in the “Medium Term Management Plan 2021 (2019-2021),” we shall aim to expand our size through the conversion of Fujitsu Electronics to a subsidiary, and shall consolidate our business base as “Japan’s No. 1 corporate group in the industry,” with sales in the region of 500.0 billion yen.
Using this as a springboard, on a medium to long term time frame, we shall further expand the EMS business, shall strengthen and expand overseas business, and in addition, shall aim to expand our size by challenging towards further M&A and industry reorganization, and through this we shall compete with overseas competitors with sales in the order of trillions of yen, and shall aim to become a “World Class Company” that will survive even in global competition.
4.Concepts on Return to Shareholders
The Company has positioned the return of profits to shareholders as one of the most important management policies, and in addition to endeavoring to strengthen its financial position and management foundation with a long term perspective, has the basic policy of maintaining stable and ongoing dividends to all shareholders in conjunction with the consolidated results.
Based on this policy, in the “Medium Term Management Plan 2021 (2019-2022) ” we have stated the target of stably providing dividends while securing a consolidated dividend ratio of 25 to 35%. In addition, we shall actively use business investment, capital investment, and M&A, etc. to contribute to the future growth of the Group. It should be noted regarding the acquisition of treasury shares, that decisions on this shall be made appropriately, in consideration of capital efficiency and the share price, etc.

*1) EMS business: Electronic equipment manufacture contracting services. The Company utilizes its strengths as an independent electronics trading company to become a leader in the installation of electronic boards.

*2) Management targets of the current “Medium Term Management Plan 2018 (2015-2018)”
Sales
Operating Income
ROE
290.0 billion yen
10.0 billion yen
8% or higher
 

Medium Term Management Plan 2018

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