1. Background to the formulation of Medium-Term Management Plan 2027
The Company formulated Medium-Term Management Plan 2024, which covers the period from the fiscal year ended March 2023 to the fiscal year ending March 2025, and has been working to implement the various measures set out in the plan. In terms of the plan’s progress, in the fiscal year ended March 2023, the first year of the plan, we achieved the management targets for the final year of the plan for net sales, operating income, and ROE two years ahead of schedule, excluding new M&As. On the other hand, based on the results of this first year, the current performance forecast continues to diverge from the latest outlook for the final year's earnings performance announced in May 2023 due to factors that could not be foreseen at the time, such as prolonged inventory adjustments and the impact of wage increases.
Given this situation, we have formulated the Medium-Term Management Plan 2027 to lay out the path for the Group’s growth over the next three years, with the aim of becoming a company with net sales of 1 trillion yen by the 60th anniversary of our founding. We have announced an outline of the plan today in order to share it with our stakeholders as soon as possible.
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Medium Term Management Plan
Medium-Term Management Plan 2027
2. Outline of Medium-Term Management Plan 2027
(1) Plan duration
From the fiscal year ending March 2026 to the fiscal year ending March 2028 (three years)
(2) Basic policy
Enhance corporate value through management that emphasizes profitability and capital efficiency
(3) Priority measures
(i) Further improvements to profitability
We will continue to work on new M&As and create new businesses, aiming for net sales of 1 trillion yen in the fiscal year ending March 2029, which will be the 60th anniversary of our founding, while aiming to expand our core businesses by reinforcing business portfolio management.
(ii) Reinforcement of management base
We will implement a strategic cash allocation that focuses on growth investments and returning profits to shareholders. We will also maintain and strengthen investment in human capital through measures such as reforms to the personnel system.
(iii) Promotion of SDGs management
We will accelerate our response to the management issues of environmental, social, and governance, and aim for sustainable growth by achieving a balance between corporate value improvement and social value.
3. Management Target
Final year of current medium-term plan （FY2024） |
Final year of next medium-term plan （FY2027） |
CAGR |
||
Management targets aiming for JPY 1 tn in final year |
Net Sales Operating Income |
－ － |
JPY 800 bn or higher JPY 36 bn or higher |
－ － |
Increase in revenue through organic growth |
Net Sales Operating Income （Profit Margin） |
JPY 555 bn JPY 26 bn (4.7%) |
JPY 700 bn or higher JPY 35 bn or higher (5.0%) |
8.0％ 10.4％ |
Index in capital efficiency |
ROE [Ref. Equity Cost] |
11.5％ [around 10%] |
12.0% or higher [around 10％] |
－ |
(Reference) Breakdown of organic growth by business segment
Final year of current medium-term plan （FY2024） |
Final year of next medium-term plan （FY2027） |
CAGR |
||
Electronic Component |
Net Sales Segment income |
JPY 368 bn JPY 13.8 bn |
JPY 400 bn JPY 16.5 bn |
2.8% 6.1% |
EMS |
Net Sales Segment income |
JPY 125 bn JPY 8 bn |
JPY 230 bn JPY 13.5 bn |
22.5% 19.1% |
CSI |
Net Sales Segment income |
JPY 45 bn JPY 3 bn |
JPY 55 bn JPY 4 bn |
6.9% 10.1% |
Others |
Net Sales Segment income |
JPY 17 bn JPY 1.2 bn |
JPY 15 bn JPY 1 bn |
－ － |
Total |
Net Sales Segment income |
JPY 555 bn JPY 26 bn |
JPY 700 bn JPY 35 bn |
8.0% 10.4% |
4. Policy on Shareholder Returns
● With the aim of more actively paying dividends to shareholders, we will increase the consolidated dividend payout ratio to 30–40% and strive for dividend growth through medium- to long-term profit growth.
● For the ordinary dividend, “DOE of 4.0%” will be used as the new target for stable and continuous ordinary dividend payments.
● Additional measures aligned with profit levels and capital efficiency will be flexibly implemented through special dividends and acquisition of treasury shares.
Medium-Term Management Plan 2024
1. About the formulation of Medium-Term Management Plan 2024
In September 2018, the 50th anniversary of our founding, Kaga Electronics Co., Ltd. formulated its Medium-Term Management Plan 2021, covering the fiscal year ended March 2020 to the fiscal year ending March 2022. Viewing this three-year plan as a growth scenario aimed at the next 50 years, we have worked to carry out the plan's measures. In the plan's final fiscal year ending March 2022, we looked back on the midpoint and affirmed generally favorable progress, including a forecast for exceeding operating income and ROE management targets. To share the Group's path to growth over the next three years with our shareholders, investors, and other parties in our market, we have formulated Medium-Term Management Plan 2024.
(1) Philosophy
① Corporate Philosophy
"Everything we do is for our customers"
② Vision
"Aim to be Japan’s No.1 corporate group in the industry"
"Aim to become a competitive World Class Company"
③ Action Guidelines
"F.Y.T." ("Flexibility," "Young," and "Try": "Agility to respond to change; Always take a fresh approach to creating new ideas or taking action; Never forget your commitment to take on daring challenges")
"3G" ("General," "Global," and "Group": "No matter what the product, we will look around the world, and leverage group strengths to give customers what they need")
"KAGA-ism" (Management mindset, sales mindset, readiness as members of society)
(2) Basic policy
Our medium- to long-term vision is to be "Japan’s No. 1 corporate group in the industry" and "Aim to become a competitive World Class Company" while thoroughly engaging in profit-focused management. To make this vision a reality, in our next Medium-Term Management Plan we will develop measures in line with the following basic policy.
①Further strengthening of profitability
We will predict the movements of the times and focus on markets with high potential for growth and profitability.
②Strengthening of our management foundation
Pursuing further efficiency and soundness, we will effect a shift to a Group management foundation appropriate to "Japan’s No. 1 corporate group in the industry."
③Creation of new businesses
We will make active use of venture investments and M&A to create new businesses and strengthen our resistance to changes in the external environment.
④ Promotion of SDGs management
We will engage in management that seeks to achieve solutions to social issues and sustainable growth as a company.
(3) Key management targets
Items |
Forecasts for FY2022/3 (Announced on Nov. 25, 2021) |
Management Targets for FY2025/3 Initial announcement （Announced on Nov. 25, 2021） |
Management Targets for FY2025/3※ Latest outlook （Announced on May 11, 2023） |
Net sales |
470 billion yen |
750 billion yen |
[No change] |
| Operating income | 15.0 billion yen |
20 billion yen |
30 billion yen or higher |
| ROE | 9.7% |
8.5％ or higher |
stable 10% or higher |
As stated in the “Summary of Consolidated Financial Results for the Year Ended March 2023” disclosed today, in the fiscal year ended March 2023, the first year of the plan, the Company achieved all KPI targets for net sales, operating income, and ROE two years ahead of schedule for the final year of the plan, excluding new M&A targets, as a result of demonstrating the Group's procurement advantages to the fullest extent amid the continuing global shortage of semiconductors and electronic components.
Looking at the future prospects, the Company is expecting a scenario of a pick-up and return to a growth phase in the fiscal year ending March 2025, while incorporating the effects such as recession risk and temporary inventory adjustments by customers in the fiscal year ending March 2024.
As such, the Company has updated its earnings forecast for the final year of the plan, taking into account the rapid changes in the electronics industry to which the Group belongs and the accompanying changes in current earnings, which were unforeseen at the time the plan was formulated.
The Company will continue to develop various measures under its medium-term management plan with no changes to its basic policies, growth strategies, or other elements of the plan.
(4) Business portfolio plan (net sales)
Business segment |
FY2022/3 Forecast |
Management Targets FY2025/3 |
3-year growth rate |
| Electronic components | 313 billion yen |
380 billion yen |
21.4％ |
| EMS※1 | 110 billion yen |
150 billion yen |
36.4％ |
| CSI※2 | 40 billion yen |
54 billion yen |
35.0％ |
| Others | 12 billion yen |
16 billion yen |
33.3％ |
| New M&A, etc. | ― |
150 billion yen |
― |
| Total | 475 billion yen |
750 billion yen |
57.9％ |
2. Consumer & System Integrator
(5) Basic policy concerning shareholder returns
Our company views the return of profits to shareholders as a key measure in management. Comprehensively taking into consideration investments that contribute to future growth, the maintenance of a sound financial foundation over the medium to long term, and the progress of our consolidated business results, we have set a 25–35% guideline for the consolidated dividend payout ratio, and the stable and continuous enhancement of dividend per share, as our basic policy.
Medium-Term Management Plan 2021
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 |
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.
Medium-Term Management Plan 2018
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