Dainichiseika

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Management Policy and Indicators

The Company and its affiliates have established the following policy with respect to management as the basis of our business activities. In addition, we have set a common goal for management indicators and are working toward its achievement. Through these efforts, we strive to grow even further in our global business activities.

1. Management Policy

To ensure sustainable growth and create medium- to long-term corporate value, the Group has established the following five measures and is prioritizing their implementation as a foundation for its business activities.

  1. Achievement of a 50% overseas sales ratio
  2. Expansion of domestic manufacturing system
  3. Focus on R&D in developing fields
  4. Application of new systems
  5. Appropriate response to contingencies
  1. Achievement of a 50% overseas sales ratio
    The Group secures earnings and growth from sources in Japan and overseas and understands that it must conduct business development from the standpoint of risk dispersion. Based on this understanding, we continue to reinforce the importance of our goal to raise our current overseas sales ratio from its current level of 29% (as of March 31, 2020) to 50% and are maintaining our focus on this target as we consider other factors such as domestic and international market environments and Group earnings, on an ongoing basis.
    While enhancing our production capacity, we will aim to centralize our selection of target markets and strategic products in overseas regions where we are already conducting vigorous business activities by routinely monitoring our earnings environments. At the same time, we will convert our production bases into facilities that are more globally appropriate in terms of both capacity and location through efforts such as reconstruction. Particularly in developing Asian countries and regions, we will conduct operations based on the slogan "local production for local consumption," which means selling products in the countries in which they were produced.
  2. Expansion of domestic manufacturing system
    Maintaining and expanding our domestic production bases is becoming difficult due to changes in society and economic environment, including the designation of surrounding land as residential and adjustments to legal regulations. Additionally, we have encountered cases in which we were unable to maintain efficient production due to aging production equipment.
    We will respond to these issues by maintaining production at existing bases with equipment and systems that are considerate of surrounding environments while moving production bases to industrial complexes located in suburban areas. Furthermore, we will establish a production framework based on due consideration of disaster prevention and safety.
  3. Focus on R&D in developing fields
    While providing products that meet customer needs on a timely basis, we will introduce new technologies into previous fields of involvement and accelerate technological development through management methods that effectively link technical achievements with business in pursuit of corporate value generation. With the additional goal of promoting lasting growth, we will invest capital and human resources into the following four fields, which we consider developing fields, from a long-term perspective:
    ・Environment field
    ・Energy field
    ・Personal care field
    ・IT and electronics field
  4. Application of new core system
    In October 2018, we implemented a new core system at our head office. We introduced the same system at our bases in Shanghai, China and Thailand, and these systems are now become involved in generating about 80% of our consolidated net sales.
    We will gradually implement core systems at remaining overseas subsidiaries while ensuring that these systems are an appropriate match by considering the business conditions and operational burdens that affect these local subsidiaries.
    While introducing new core systems, we converted to 3PL (third-party logistics, or the comprehensive outsourcing of logistical operations) and implemented a warehouse management system in Japan, enabling comprehension of companywide logistical costs. Based on data analyses, we will launch initiatives aimed at controlling logistics costs and construct a logistical framework involving calculated increases in shipment size and stock point consolidation.
  5. Appropriate response to contingencies
    With the goal of ensuring employee safety and stable product supply, we responded to the novel coronavirus disease, which that began its spread in December 2019 with the following business continuity measures:
    ・Employee infection prevention measures
    ・Post-infection measures
    ・Measures aimed at ensuring that we fulfill our supply responsibilities
    ・Measures to be implemented in case of deterioration in the economic climate

2.Management Indicators

A consolidated return on assets (ROA) (ratio of ordinary income to total assets) of 5% or higher is targeted as the group's main management objective. The Company aims to achieve this goal through implementation of the measures above, as well as by efficient investment of assets, increased profitability, and improvement and strengthening of our financial position.