Identification of Major Issues Toward 2030
In April 2018, we have started a new medium-term management plan under which we are pursuing targets of net sales of ¥295.0 billion, operating profit of ¥11.8 billion, and ROE of 7.0%. In our formulation of the new medium-term management plan, we have stated the 2030 vision for sustainable growth of the KONOIKE Group. We identify one of our major management issues as we move toward 2030 is how we address two environmental changes: the “progress of technological innovation,” as typified by utilization of AI, IoT, big data, and robots; and the “rising labour shortage” which is the result of the ongoing decline of the working-age population.
So that we can achieve sustainable growth going forward, our approach to these changes will be to treat them as opportunities rather than threats and introduce new contracting and logistics concepts to our customers. To do this, it will be necessary to change our business and management practices at the fundamental level and carry out significant transformation. It is with this long-term perspective of the issues we have to address, that we have newly formulated our vision for 2030.
I will explain the “Targets for the Year 2030” First, in order to achieve sustainable growth, we must concentrate on developing new businesses that can provide staple earnings in the future. Accordingly, we aim to operate at least 10 divisions across a diversified business portfolio by 2030. As part of this drive, we will gradually lower our level of dependence on existing core businesses as we take measures to address the environmental changes occurring in specific business areas.
Next, we will aim to achieve our target of net sales of ¥350 billion to ¥500 billion. Although we have maintained a broad target considering the uncertainty involved when developing new businesses to become the core of net sales growth, we at the least aim to achieve growth not only from existing businesses but also through a “diversified business portfolio” that will include new business development.
While advancing this diversity of portfolio, our focus will be on the businesses that make use of the KONOIKE Group’s strengths.
One of the KONOIKE Group’s strengths is while building trusting relationships with specific customers while working out in the various field, we conduct our business in a way that helps the process of value creation in a broad range of areas including on-site activities in logistics centers or production plants. As a result, we provide our customers a combination of various services, such as contracting, that are not specifically related to logistics. On our journey toward 2030, we will be expanding the share of service-related operations by focusing on operations that combine services with logistics, which shall be one of the KONOIKE Group’s strengths. By following this policy, we expect that the share of service-based operations among total net sales will expand from the current 50% to 60% in the future. We also plan to take the expertise we have been acquiring from conducting this mix of operations in Japan and apply it to our overseas operations to expand the share of service-based operations among total net sales of overseas subsidiaries from roughly 5% to 20%.
However, in the type of work where emphasis is on providing manpower, we are unable to effectively respond to the technological revolution and accordingly, we will not be able to effectively utilize our strengths. It is imperative that we combine our in-depth knowledge and expertise relating to field experience with new technology to offer proposals that have higher added value for our customers. As we proceed with the necessary transformations that I mentioned up until now, we must do so using limited management resources. In other words, we will be working to take our business to a more advanced level by incorporating new technologies, focusing on our strengths and making full utilization of our management resources. As part of these endeavors, it is essential that we generate higher added value while improving our capital efficiency. It is our aim to achieve an operating income margin of at least 5% and an ROE of at least 10% as our targets for 2030.