[Dexerials Co., Ltd.] Regarding medium-term management plan 2028 “Achieving evolution” and establishing purpose
*View in browser* *Dexerials Co., Ltd.*
Press release: May 13, 2024
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Regarding medium-term management plan 2028 “Achieving evolution” and establishing purpose
Dexerials Co., Ltd. (Head office: Shimono City, Tochigi Prefecture, President and CEO: Shinke
Yuku (hereinafter referred to as the “Company”) has announced that Purpose and its new “Medium-term Management Plan 2028 ‘Realization of Evolution’ (hereinafter referred to as the ‘Plan’)” will cover a five-year period starting from fiscal 2024. We would like to inform you that we have formulated the following.
In April 2019, our company planned a medium-term management plan called “Challenge to Evolution,” in which we focused on growing the automobile business, a new field, and launched the photonics business as a pillar of our business next to automobiles. Even in existing areas, we achieved business growth at a pace that exceeded the growth of the smartphone market by expanding the range of high value-added products developed and provided in advance of technological trends, and achieved record operating income for four consecutive years. , we were able to lay the foundation for sustainable growth and increased corporate value.
In addition, as we are experiencing global supply chain disruption due to the outbreak of the new coronavirus infection, the invasion of Ukraine, and natural disasters, we are taking measures to strengthen our management base by relocating our headquarters to Tochigi Prefecture and We implemented reforms such as providing company stock to employees, and introducing remote work and job-based personnel systems.
On the other hand, as the external environment changes rapidly and becomes more complex, society is demanding that companies take steps to grow their businesses by solving social issues. In an uncertain business environment, our company has established a new purpose, “Empower
Evolution.
Let’s connect and advance technology. We have formulated a five-year plan as the first step toward realizing the company’s vision by continuing to embody our purpose.
In this plan, which is positioned as a phase to realize further evolution and growth as a company, we will continue to expand our business portfolio while keeping an eye on trends such as geopolitical risks and social demands for ESG, while flexibly adapting to changes in the business environment. In order to achieve growth, we will work on three basic policies: “expand business in growth areas,” “qualitative reinforcement of business in existing areas,” and “evolution of management base.”
Dexerials will continue to adhere to its management philosophy of “Integrity” in the ever-changing society and environment.
Contribute to the realization of a sustainable society by providing high value-added products, technologies, and solutions that are essential to the evolution of digital technology that supports the resolution of social issues, while maintaining the attitude of “Be sincere and sincere.” We aim to achieve sustainable growth and increase corporate value.
*1: Dexerials has formulated a new purpose statement “Empower Evolution. Let’s connect and advance technology. ”｜Dexerials Co., Ltd. (
that’s all
* Overview of Medium-Term Management Plan 2028 “Achieving Evolution” *
* 1. Planning period*
This is a five-year plan from fiscal year 2024 to fiscal year 2028 (from the fiscal year ending March 2025 to the fiscal year ending March 2029).
* 2. Positioning of this plan*
We believe that we were able to lay the foundation for sustainable growth through our previous medium-term management plan, “Challenging Evolution,” but on the other hand, we are still in the process of expanding our business portfolio, which was addressed in that plan, and we are still facing geopolitical risks. In an increasingly complex business environment, we recognize the need to continue evolving at a speed that stays ahead of change.
In light of these circumstances, we will position this plan as a stage to realize our evolution as a company, further expand our business portfolio, and move forward with initiatives to build a management foundation that is resilient to change.
* 3. Target management figures and indicators*
Note) From the first quarter of the fiscal year ending March 2025 (FY2024) International Financial Reporting Standards (IFRS)
It has been applied. At our company, business profit is defined as profit generated from our core business, and we set it as profit equivalent to operating profit under Japanese standards.
*2: Net income will be replaced with net income attributable to owners of the parent company (FY2023) and net income attributable to owners of the parent company (FY2024 onwards).
*3: Profit before interest, taxes, and depreciation are deducted, and is used as an indicator of a company’s earning power. For FY2023, operating income + depreciation expense + goodwill amortization expense recorded as operating expenses. From FY2024 onwards, depreciation will be recorded as business profit + operating expenses. *4: Return on equity. An indicator that measures capital efficiency, the ratio of profits to shareholders’ equity. For fiscal 2023, net income attributable to owners of the parent company ÷ shareholders’ equity x 100. From fiscal 2024 onward, net income attributable to owners of the parent company ÷ shareholders’ equity x 100.
※Five:
Return on invested capital. An indicator that measures investment efficiency, the percentage of profits obtained from invested capital. In FY2023, (Operating income x (1-effective tax rate)) ÷ (Equity equity + Interest-bearing debt)
×100. From FY2024 onward, (business profit × (1-effective tax rate)) ÷ (equity capital + interest-bearing debt) × 100
* 4. Strategy of this plan*
In order to achieve the goals of this plan, we will take on the challenge of creating new value by leveraging the strengths we have cultivated in the “automobile” and “photonics” fields, which are expected to grow in the future. 1 billion yen (average annual growth rate of 16.5%), and photonics business sales to 15 billion yen (average annual growth rate of 16.5%). We will more than double the sales of all growth areas to 45 billion yen, and increase the sales composition from 20% to 30% in fiscal 2023.
Additionally, in order to further strengthen our core earnings drivers, we will deepen our existing businesses and qualitatively strengthen them by expanding our high value-added products. We plan to increase sales of high value-added products, centered on anisotropic conductive films (ACF) and surface mount fuses, by approximately 1.2 times over the period of this plan, to 105 billion yen. Furthermore, we believe that the business environment will continue to be subject to rapid changes and the future is difficult to predict, and we will continue to work to evolve into a company with a solid management foundation that supports sustainable growth unaffected by change. Through the above, we aim to achieve sales of 150 billion yen, business profit of 50 billion yen, and ROE of approximately 25% in fiscal 2028.
* 5. Three basic policies and major measures*
* 1.Basic policy 1: Challenge to create new value through business expansion in growth areas*
■Main measures
-Automobile business-
Further growth of anti-reflection films for automotive displays
Expansion of business for sensor modules
・With the global automobile production volume not increasing significantly, “CASE*6”, which represents the transformation of the automobile industry, is progressing. Due to the need to communicate the vehicle’s behavior to the driver, the number and area of in-vehicle displays is expected to increase as display functions become more digital. Seizing this movement as a business opportunity for anti-reflection films, the company will begin operating a new production line in April to steadily capture the ever-expanding demand.
・With the advancement of IoT in automobiles, the need for
high-performance sensor devices is increasing in order for automobiles to acquire information and data with high precision. The company aims to expand its business in precision bonding resins for sensor modules and anisotropic conductive films by leveraging the technologies and solutions cultivated in the existing electronics field, as well as collaboration with the customer base and partners it has built with anti-reflection films for automotive applications.
-Photonics business-
Responding to increased production of high-speed photodiodes (PD) for optical transceivers and accelerating next-generation technology development
・With the increase in communication volume due to the penetration of generated AI and the increase in the number of data centers, demand for high-speed photodiodes (PD) for optical transceivers is rapidly expanding, and next-generation high-speed communication technology is also required.
・Dexerials Photonics, the core of the photonics business
Solutions Co., Ltd.*7 will be launched on April 1, 2024. The company aims to grow its business by expanding its production capacity in response to strong demand for high-speed PD from major customers. In addition to accelerating the development of high-speed PDs for next-generation optical transceivers, the company will take a step ahead of advances in high-speed communication technology and begin a concept to develop composite semiconductor devices by combining technologies.
*6: A word that symbolizes the transformation of the automobile industry that is said to occur once every 100 years. A coined word that expresses advanced technology and services in the automobile industry, consisting of the initial letters of the English words meaning IoT, autonomous driving, sharing, and electrification of automobiles.
*7: An integrated company consisting of Dexerials Precision Components Co., Ltd., which was a domestic consolidated subsidiary, and Kyoto Semiconductor Co., Ltd.
Announcement of the start of operations of “Dexerials Photonics Solutions Co., Ltd.”, an integrated company leading the growth of the photonics field | Dexerials Co., Ltd.
(dexerials.jp)
* 2.Basic policy 2: Deepening and qualitatively strengthening businesses in existing areas*
Demand for anisotropic conductive film (ACF) and organic EL (OLED) displays continues to expand as their use continues to expand in smartphones and is also being used in applications.
・Demand for particle-aligned ACF, which has become the de facto packaging material for flexible OLED displays, is also increasing, and the company will invest in increased production and start operating a new line in 2026, aiming for medium- to long-term business growth. ・In addition to accelerating development for adoption in micro LED displays as a new application, we will provide shape-processed ACFs with a high degree of design freedom for sensor modules, aiming for growth that will outpace the growth of applications.
surface mount fuse
・As the number of applications equipped with lithium-ion batteries increases against the backdrop of growing awareness of carbon neutrality, it is expected that there will be a worldwide trend toward installing secondary protection circuits in these applications for safety reasons.
・With these tailwinds as a backdrop, we aim to grow our business by expanding our customer base globally in surface-mounted fuses for high-value-added, high-current products for power tools and electric motorcycles.
* 3.Basic policy 3: Evolve into a company with a solid management foundation that is unaffected by environmental changes*
■Strengthening sales functions
・In order to further strengthen our business model, we will strengthen design-in and spec-in*8 activities overseas, including in Asia. ・Through strategic partnerships, we will strengthen our distribution capabilities, improve our ability to respond to exchange rate fluctuations, and reduce working capital.
*8: Design-in is an approach to the customer who handles the final product. Spec-in is our approach to customers who use our products.
■Strengthening technology and human resources
・We will continue to strive to evolve into a company that can differentiate itself through technology by strengthening our technology and human resources, which is the most important management issue (materiality) for our company.
・In addition to accelerating research and development activities centered on the photonics field, we will aim to improve our ability to attract and retain technical and global human resources by deploying a job-based personnel system*9 within the Group.
*9: A human resources system that assigns people with the necessary skills and experience to job descriptions (=jobs) prepared by the company and determines roles and job contents in order to make the most of employees’ abilities. .
Notice regarding the introduction of a job-based personnel system to the entire group | Dexerials Co., Ltd. (dexerials.jp)
■Strengthening manufacturing functions
・Considering that Japan’s working-age population will decrease in the future, we will build a new building adjacent to the Kanuma 2nd Factory to promote the construction of a smart factory through digital transformation (DX) and increase human resources. We drive strategies that maximize the value of capital.
・Strengthen BCP functions at each location.
6. * Capital allocation, financial strategy/capital policy, and management concept with an awareness of capital cost *
We strive to maximize corporate value by achieving both sustainable growth and shareholder returns. Specifically, in capital allocation during the period of this plan, we will achieve both growth investment for sustainable growth and a high level of shareholder returns, and implement capital cost management (FY2028) in accordance with the nature of the investment.
Net D/E
0.45, aiming for an equity ratio of 50%) to achieve an optimal capital structure. Furthermore, in our shareholder return policy, we have introduced DOE (dividend on equity) with stable dividends and capital efficiency in mind.
Furthermore, we position ROE as an indicator related to sustainable improvement of corporate value, and will strive to maintain a high level of ROE through business growth and capital efficiency. At the same time, we aim to maintain and expand a positive equity spread over the medium to long term by reducing the cost of shareholders’ equity by both achieving sustainable growth by expanding our business portfolio and reducing volatility in business results by reducing exchange sensitivity. Masu.
■About capital allocation policy
・Under this plan, we will generate operating cash flow of
approximately 170 billion yen over five years, approximately double the amount compared to the previous medium-term management plan, and carry out growth investments of approximately 130 billion yen, more than three times the amount compared to the previous medium-term management plan. .
・In addition to the above, we have secured an investment frame of approximately 50 billion yen for growth measures such as increasing production capacity and forming alliances, aiming for sustainable growth from FY2029 onwards. Going forward, we will gradually move forward with implementation once the investment certainty has increased.
・With regard to shareholder returns, we reviewed our return policy based on improved earning power, and returned approximately 80 billion yen over five years, more than double the amount in the previous medium-term management plan.
■New shareholder return policy and capital policy
・Improve the total return ratio (previously 40%): Aim to return 60% of net profits as a cumulative total return ratio of 5 years.
・Cash dividends: Based on long-term stable dividends, we aim for a consolidated dividend payout ratio of 40%, and set a DOE of 7% or more*10 as the lower limit.
– Acquisition of treasury stock: Acquired treasury stock flexibly, taking into consideration financial conditions, stock price levels, cash position, etc.
・As a capital policy, we aim to improve the liquidity of our shares and expand our investor base by lowering the amount per investment unit, with a 1:3 ratio effective October 1, 2024. resolved to implement a stock split on May 13, 2024. *11.
*10: 7% of net assets at the end of the previous period
*11: Timely disclosure dated May 13, 2024 “Notice regarding stock split and partial changes to the articles of incorporation in connection with the stock split”
-About Dexerials Co., Ltd.- https://www.dexerials.jp/
Dexerials Co., Ltd.’s corporate vision is “Value Matters.” Something that never existed before. Something that will be of value to the world. We are a manufacturer that provides functional materials for smartphones, automobiles, etc. Manufacture and sale of electronic components such as anisotropic conductive films (ACF), optical elastic resins (SVR), anti-reflection films, surface mount fuses, industrial adhesives, double-sided and single-sided tapes, bonding materials, optical materials, etc. We are expanding globally.
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