Issues to Be Addressed
Our awareness of the current situation as a whole group
With regard to the business environment surrounding our group, the risk of an economic slowdown is projected to remain due to developments such as the suppression of inflation caused by the tightening of monetary policy worldwide. However, it is also predicted that there will be an economic recovery following the end of the COVID-19 crisis and the relaxation of restrictions on social activities, as well as strong economic growth centered on the emerging economies.
In the automotive industry, it is thought that the limitations in the supply of semiconductors for automotive applications will ease, and it is expected that each automobile manufacturer will begin working to increase production in earnest against a backdrop of strong market demand. In addition, Japanese automobile manufacturers are continuing to review their global strategies in response to the fact that the shift to electric vehicles (EVs) is progressing faster than anticipated, particularly in China, Europe and the United States, and in response to a sense of crisis over the rise of emerging EV manufacturers.
We are in a period of great change in the industry, including with the rapid progress in electrification based on the strengthening of environmental regulations, the expansion of CASE (Connectivity, Autonomous driving, Sharing and Electric drive systems) and MaaS (Mobility as a Service: The next generation of transportation services, where various forms of transportation are integrated into one service based on demand), and also the accompanying entry into the business of companies from other industries. In this situation, the expectations for our group include not only the existing product needs such as vehicle weight reduction to improve fuel efficiency and the improvement of collision safety performance, but also new customer needs that are emerging. These new needs include participation in the upstream stages of new vehicle development, such as in the vehicle body design, analysis and simulation, participation in the development of products that make a contribution for the environment, and the evolution to manufacturing that incorporates LCA (Life Cycle Assessment: Assessing the environmental impact of the range of processes from the raw material extraction to the production, use, and disposal of a product).
In this environment, the strengths of our group include its development capabilities and production capacity (Automotive frame performance analysis, mold technology, and press and welding technology for high tensile steel), which are realized in an integrated development system from research to mass production, and also in the efficient supply network the group has built through global expansion. It is expected that these strengths will create expanding opportunities for our group to secure new customers both in Japan and overseas, and also lead to the creation of new growth drivers. At the same time, the changes in the parts procurement strategies of automobile manufacturers are making the competition for orders increasingly more severe.
Seventh Midterm Business Policy
Achieve solid growth based on a value-creation mindset by restructuring the business foundation.
Seventh Midterm Priority Measures
| Strengthen Sustainability | Enhance corporate value by strengthening sustainable management foundation and creating value shared with society. |
|---|---|
| Stabilize & Maintain High Quality | Achieve and stabilize quality standard that exceeds customers’ expectations. Create characteristics that will not move backward. |
| Improve Profitability | All business bases to work with self-reliance and promote sustainable profitability and sound operations. |
| Enhance Competitive Edge in Development/Production Technology | Aiming to become the industry’s TOP by combining our development and production capabilities and contributing to the development, technological progress and evolution of products with superior technologies and ideas that make dreams come true. |
| Increase Business Segments | With our structural frame technological knowledge base, we will provide new values and contribute to more customers. |
| Strengthen HR Development | Become a group with aspiration, respect and trust for one another willing to challenge oneself to create new values. |
Management indicators
The management indicators (KPI) are revenue, profit before tax/rate, and ROE (return on equity attributable to owners of the parent), and the target values are as follows.
Last fiscal year for the Seventh Mid-term (Fiscal year ending March 31,2026)
| Revenue | Profit before tax | Profit before tax margin | ROE |
|---|---|---|---|
| 300 billion yen | 15 billion yen | 5.0％ | 10.0％ |
Priority business and financial matters to be addressed
Enhancement of profitability
In addition to a focus on improving profitability in the North American segment, the Group’s largest, we will promote various measures to minimize the impact of production fluctuations in Japan. In the Asia and Oceania segment, we will continue to strengthen our earnings base by way of both sales revenue expansion and cost reduction.
Initiatives to secure sales to main customers and expand sales
In addition to promoting sales activities by offering technical proposals from the early stage of development of new car models for our main customers, we aim to win orders for new parts and seek to continue to receive orders for parts already in production. In expanding sales, along with technical proposal sales, we will actively promote ordering activities in Japan and overseas utilizing the Group’s supply system. In addition, we will expand orders for molds and castings and leverage our track record to win orders for automobile frame parts.
Promotion of new technology and new product development
We will create new value and increase sales and earnings through the development of new technologies and products to meet the diverse needs of our customers.
Strengthening sustainability
With the aim of realizing a decarbonized society, we will contribute to global environmental conservation by actively engaging in environment- and LCA-friendly production activities and environment-friendly activities.
We will also strengthen sustainability by promoting measures in all areas of ESG. This includes by promoting diversity and inclusion, such as by increasing the proportion of women in new employee recruitment and the promotion of female employees to managerial positions. It also includes measures for work-life balance to encourage men to take parental leave, the creation of safe and comfortable work environments, health management, human rights initiatives, and the strengthening of governance.
Human resource development
In addition to promoting a variety of measures in Japan and overseas to develop human resources capable of performing globally, we will also promote work style reforms and diversity and inclusion initiatives in Japan to respond to an increasingly diverse society.
Highly stabilized quality
We will continue to strengthen our process capabilities to consistently satisfy our customers with QCD.
Strengthening the accounting system at KTH
We will work on the preparation and operation of the organization and system environment for appropriate account settlement work at KTH, a consolidated subsidiary in the United States.