Medium-Term Management Plan
Ushio formulated "the 2nd Medium-Term Management Plan" as three-year management plan started in April 2023.
Ushio Today—Once-in-Three Decades Turning Point
Since the 1990s, Ushio has worked to improve its profit margin by practicing Rempo management designed to facilitate flexible and independent action by subsidiaries in a rapidly growing and changing market. However, the 2008 Global Financial Crisis transformed our operating environment, triggering a downward trend in profitability. Changing course, we defined a new mission and vision in July 2020 to guide us in developing Ushio into a constantly growing company as we move forward toward 2030. At the same time, we undertook a major shift in management policies, from management emphasizing independence to management focused on solidarity, based on which we are working to grow as a true “light” solutions company.
Positioned as a once-in-30-year major shift
Review of First Medium-Term Management Plan
The First Medium-Term Management Plan, drafted in July 2020, was a period of reattempt to have solid foundation to move toward Vision 2030. In response to these circumstances, we worked on three strategies, Defensive strategy, Offensive strategy and Unifying strategy. As financial results for FY2022, we achieved the targets set forth in the plan; Net Sales of JPY175 billion, Operating Profit of JPY15.8 billion and Operating Marge of 9.1%.
Reached all mandatory targets and largely transformed earnings structure and solidified foundations
|Comparison with required targets
|FY2022 targets (required - ambitious)
|175.0 billion yen
|5.0 billion yen
|170 ~ 190 billion yen
|15.8 billion yen
|1.8 billion yen
|14 ~ 19 billion yen
|More than 8% to more than 10%
Achieved objectives of 1st Medium-Term Management Plan and continued to bolster overall performance under new structure
Utilized financial reserves
Outline of New Medium-Term Management Plan
We made the roadmap with a backcasting mindset to become a light solutions company by 2030. We have positioned this Medium-Term Management Plan, as a period to cultivate growth. We still establish structure to provide light solutions, cultivate growth business, revitalize rebuilding businesses, and prepare new businesses to transform our business portfolio. To achieve these goals, we plan to strengthen and expand strategic investments. The Third Medium-Term Management Plan, which is the final stage of the Plan, is positioned as a period for delivering the results of the First and Second Plans.
Materialize Vision 2030 by pushing forward with the three consecutive Medium-Term Management Plans
The basic policy of the new Medium-Term Management Plan is to cultivate growth toward the realization of Vision 2030. To cultivate growth, Ushio recognizes the megatrends in Industrial Processes, Visual Imaging, Life Sciences as the target markets for Ushio’s value proposition. To build a structure to provide light solutions and accelerate growth based on market-centric approach through reorganization of business domains and rebuilding our strength. In order to achieve this, it is essential to establish management infrastructure that supports businesses. We will make strategic investment including M&A, enhance capital efficiency with a focus on growth investments and in-house stock investment, and pursue ESG management.
Rebuild business model while expanding existing businesses to boost net sales and operating profit
Making EBITDA key performance indicator in view of expended investments, including through acquisitions
|(Billions of yen)
|12% or more
|8% or more
|10% or more
|Cash conversion cycle
|60% or more
- Operating profit, operating margin, and ROE targets exclude new goodwill amortization.
- EBITDA = operating profit + depreciation and amortization and amortization of goodwill
FY2025 Key goals
Envisaged Business Expansion over Medium and Long Terms
Reorganize Business Domains
Until now, the business segments were structured based on the product-centric approach, but from this fiscal year, we have reorganized business domains based on the market-centric approach, Industrial Processes, Visual Imaging, Life Sciences Businesses. In addition, the Photonics area, which is expected to contribute to future growth in these three businesses, has been separated into a domain, to quickly establish competitive edge. We will accelerate the provision of light solutions in these four business segments and try to create social value in each of these value-proposition areas of the market.
Accelerate provision of light solutions by making business domains market-centric
The below shows our business portfolio image until 2030 through the market-centric approach. Industrial Processes will be positioned as a core business to promote stable earnings growth, while Visual Imaging will be positioned as a rebuilding business within the core business and will solidify a revenue making structure by establishing solution platform. In addition, although the scale and profitability of Life Sciences are still small at this moment, it is a market with high growth potential, and there are many areas in which light can be utilized. We will position it as a development business and prepare so that the business size will be compatible to IP and VI. In order to realize the portfolio for 2030, we will allocate management resources appropriately and accelerate growth, while also reviewing our business portfolio on an ongoing basis.
Reorganize and make business portfolio market-centric and pursue strategies
Please refer to page 31 and beyond of the Mid-term Management Plan slide for details on each business strategy.
Enhance Capital Efficiency (including Strategic Investments)
In 2025, the final year of this Medium-Term Management Plan, we aim to achieve a ROE of 8% or more. To do so, we will allocate a large portion of our cash flow from operations, sales of financial assets, and interest-bearing debt to equity investments and growth investments. Shareholder returns are expected to be in the range of JPY70 to JPY90 billion in three year period. In the first year, we will buy back JPY30 billion of our own shares. In addition, more than JPY40 billion will be allocated for strategic investments.
Endeavor to enhance capital efficiency through in-house stock investment and major growth investment allocations
- Operating cash flow under medium-term management plan: ¥60 billion over three years
- Asset sales: ¥15~¥20 billion
- Interest-bearing debt usages: ¥40 billion+ α (Lower cost of capital)
|Strategic investments: ¥40 billion+
|Growth investments (including M&A): ¥40 billion+
|Equity ratio: At least 60%
|In-house stock investment + dividends: Around ¥70-¥90 billion over three years
Target ROE of at least 8% by FY2025
During the First Medium-Term Management Plan, we establish five management focuses for Vision 2030 as materiality. In the Second Medium-Term Management Plan, we will clarify non-financial KPI targets and promote activities to achieve Vision 2030 on both business growth and ESG efforts.
Five Management Focuses (Materiality) and Vision 2030
|Key performance indices for FY2025
|Economic value connection
|Creating Businesses with Greater Social Value
|Expand revenues and earnings by creating new businesses
|Developing Our Diverse Talent to Get Closer to Our Vision
|Bolster talent to create new value that generates profits and accelerates growth strategies
|Creating Working Environments where It Is Easy to Produce Results
|Provide attractive workplaces and work practices for diverse people to boost engagement and productivity
|Sustainably Reducing Environmental Impact
|Business creation through environmentally friendly products Maintain and expand corporate value by fulfillment corporate social responsibilities
|Building a Robust Management Base
|Establish stable revenue base and safeguard corporate value
Human Capital Strategy
The direction of our human capital strategy is global-based human capital development, and cultivating human capital with a broad range of academic and technological backgrounds and literacy to promote new value creation. Our focus includes working environment that values diversity and increase employee engagement. As an example, we announced the launch of the employee stock compensation system.
We have been promoting the strengthening of our governance. And recently, we announced that three changes are planned at the start of the Second Medium-Term Management Plan; the revision of the remuneration for executive officer, the revision of the stock compensation system, and the appointment of an outside director as chairman of the board of directors. We will plan further initiatives to realize our Vision 2030.