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Strategy

Medium-term Management Plan

Overview of New Medium-term Plan

Graph: Overview of New Medium-term Plan

Net Sales and Operating Income in New Medium-term Plan (FY17-FY19)

Graph: Net Sales and Operating Income in New Medium-term Plan (FY17-FY19)

Final year of New Medium-term Management Plan (FY19) Business Growth Image (Operating Income)

Graph: Final year of New Medium-term Management Plan (FY19) Business Growth Image (Operating Income)

Expand M&A investment focused on synergies

Consider and execute M&A targeting 4 priority areas below as
Light Sources BusinessA. Lamp (Development of new markets)
B. Solid state light sources
Equipment BusinessC. Optical equipment (Medical)
D. Imaging equipment (Total solution)
Past M&A deals (FY14~FY16)
Name of acquisition target companyAreaBusiness outline or purpose of M&A
May 2014Arsenal MediaD. Imaging total solutionDigital content production
Oct. 2014Oclaro Japan, Inc. (demerger of business)B. Solid state light sourcesAcquisition of semiconductor device technology
Dec. 2014BG RadiaD. Imaging total solutionAudio system
Jan. 2015Coolux GmbHD. Imaging total solutionImaging processor
Apr. 2015MAXRAY INC.B. Solid state light sourcesLED illumination
Nov. 2015Allure Global Solutions, Inc.D. Imaging total solutionDigital signage-related
Jan. 2016American Green Technology, Inc.A. Lamp(Development of new markets)Lamps for space hygiene and sales channel
Feb. 2016PD-LD, Inc.B. Solid state light sourcesLaser light source for imaging-related
Apr. 2016sunsorit Co., LtdC. MedicalSkin care

Capital Policy, Cash Allocation, etc. in New Medium-term Plan (FY17-FY19)

Graph: Capital Policy, Cash Allocation, etc. in New Medium-term Plan (FY17-FY19)

Key Measures by Business in New Medium-term Plan (FY17~FY19)

Graph: Key Measures by Business in New Medium-term Plan (FY17~FY19)

Q&A for Medium-term Management Plan

Q1

Does your operating income target of \15.0 billion for the plan’s final fiscal year (FY19) include profit from M&A investments focused on synergies?

No. Basically, that profit is not included in the target. The \15.0 billion target represents the profit target that we must achieve by executing various initiatives other than M&As.

Q2

What specific types of investments are planned for M&A investments focused on synergies? Also, how are you identifying investment projects?

We are mainly targeting the following four areas, which are positioned as growth fields:

  1. Lamps (new applications in new markets for existing lamps)
  2. Solid state light sources (LEDs, LDs)
  3. Medical (skin care business, etc.)
  4. Imaging equipment (total solution businesses, centered on stationary projection mapping, etc.)

We are actively undertaking research to identify investment projects by utilizing information from the Marketing & Innovation Division within USHIO INC. and Group companies, in addition to referrals from outside the Company.

Q3

Looking ahead, what sort of timing will you use to conduct M&A investments focused on synergies? Moreover, how and when will these investments be recouped?

M&As are premised on carefully deliberated negotiations with counterpart companies. Therefore, we do not have any information we can announce at this time regarding the implementation schedule for individual projects or the timing of recouping investments in those projects. However, based on the judgment that M&As are essential to driving further growth in the USHIO Group, we are actively researching and reviewing prospective projects at all times.

Q4

What is your highest priority for the use of the operating cash flow that will be generated during the period covered by the new Medium-term Management Plan? You noted that cash flow will be allocated to fund dividends, capital investment, and M&As. What are your perspectives on balancing those priorities?

We are giving the highest priority to the allocation of funds to M&A projects. We envision a roughly equal balance of allocations to dividends, capital investment and M&As.

Q5

The USHIO Group holds a large amount of financial assets. Could you please share your perspectives on improving ROE and buying back shares?

We recognize that improving ROE is one of our highest priorities. We seek to improve ROE by steadily achieving expansion in operating income by implementing M&As using our abundant financial assets. We will also flexibly buy back shares by constantly gauging the best timing for stock buybacks.