20130213citizen global plan global plan.pdf · • insales volume, it remains flat or declines...

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Citizen Global Plan 2018

February 13, 2013

Toshio Tokura, President and CEO

(Medium-Term Management Plan Briefing)

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� Market condition and our tasks

� Targets of the New Medium-Term Management Plan

� Address the tasks

� To achieve the corporate growth

Contents

(1) Watch and clock product business

(2) Machinery product business

(3) Precision component product business

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Current Medium-Term Plan

Mid-term Plan FY2010-2012

Target indicators

Operating

margin

8%

Operating

income

25 billion yen

Establish steady growth business corporations

through “strengthening corporate structure”

Operating Results

Medium-term operating income targets not

achieved

242

72

167 165

7.2%

0.5%

2.9%

5.9% 5.9%

4.0%

0%

2%

4%

6%

8%

0

70

140

210

280

FY07 FY08 FY09 FY10 FY11 FY12 (forecast)13

110

Operating income

Target: 25 billion yen

4

Operating income (100 million yen)

Operating margin (%)

Operating margin

Target: 8.0%

5




�To achieve the corporate growth




Market : Commoditization of product

(low-end consumers)

Change of needs from focusing on functionalitytoward brand value (watch and clock)

Competition: Price competition with Asian manufacturers

Increase growth through investment in

advertising/ expanding sales channels

Standardization (low price) ⇔ Differentiation (brand loyalty)

Business environment:

Economic stagnation in leading countries/

economic growth in emerging countries

Steep rise in labor costs/ raw material costs in

emerging countries 6

Changes in business environment and

Lack of Transparency

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Competitive environment

Only solid and stable business will

survive in global competition.

Get ahead of the global competition

= Generate profit

Standardization (low price) ⇔ Differentiation (brand loyalty)

“Value” we provide, to meet the conflicting market needs

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(1) Clarify the business portfolio

(2) Strengthen the production capability

(3) Enhancement of the human resources and

promote efficiency in productivity

(4) Strategic marketing to meet the Asian market

needs

Citizen Group’s tasks - Summary

The following to be achieved to

increase Citizen Group’s profit:

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�Market condition and our tasks

�Targets of the New Medium-Term Management Plan

�Address the tasks





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1. Focus on the business area using the strengths developed

and accumulated on years of experience of watch and clock

business and Aim to establish an industry leading business

group with global competitiveness

2. Considering China and other emerging countries as our

strategic marketplace, we accelerate growth in profit through

boosting sales concurrently with promotion of streamlining

Medium-Term Management Policy

Aiming to be a “Solid Global Company”- business group with speed and dynamics -

Solid Global Company

⇒ consistently provide “value” required in the global market

Overview of stages in New Medium-Term Management Plan

Overcome the unresolved

business tasks

Achieve FY2018

goals

Aim to become a “solid

global company ” so as to

survive against

international competition

Enhancement of business

performance with

aggressive investment

(FY2016 - FY2018)

Thorough structural reform and

improvement

(FY2013 - FY2015)

To achieve FY2018 goals, we will carry out thorough structural reform

for cost-effectiveness and growth investment

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Target Indicators of

Medium-Term Management Plan

Operating

income

FY2012 forecast FY2018 target

40 billion yen

FY2015 target

30 billion

yen

6.0%5.0%-

12 billion

yen

Target indicators: Operating income and

ROA

ROA

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� To achieve the corporate growth

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(3) Enhancement of the human resources

and promote efficiency in productivity

(4) Strategic marketing to meet the Asian

market needs

Address the tasks

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Increase profits and Achieve stable

management(1) Strengthen the business structure

(2) Focus on the competitive products

(3) Enhance business alliance with others

Device/Electronics

product business

To be developed as the second core

business to Watch and clock businessMachine tool business

Reaffirm our principle

our core business to develop the group’s growth

Watch and clock

business

Growing business with great

potentialPrecision component

business

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� Breakaway from the self-manufacture

� Identify our “strength”

� Domestic production ⇔⇔⇔⇔ Overseas

production

� Re-strengthen the capabilities of domestic

development and improvement ability

� Cost reduction by overseas production

� Risk-adverse by pulling out of excess

concentration of business in China


Citizen

Heiwa

Watch Co.,

Ltd

Citizen

Tohoku

Co., Ltd.

Citizen

Micro Co.,

Ltd.

Citizen

Watch

Miyota

Co., Ltd.

Citizen

Watch

Kawaguchiko

Co., Ltd.

Citizen Watch

manufacturing

functions

Citizen Watch Co.,Ltd.

Set up New company “Citizen Watch Manufacturing Co., Ltd.”

Our Aim To re-strengthen the domestic production

capability(creation of added value)by concentrating and combining the skills and craftsmanship held among

individual citizen group companies

� In Watch and clock business:

Restructure the domestic primary manufacturing functions

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� Improve the efficiency of

administrative division

� Flattening of corporate structure

� Streamlining the overlapping

services/business



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� Change the compensation structure to performance related/individual

assessment system

�Cultivate human resources those to be supporting our business for medium to

long term period

�Develop human resources those to be working in international fields



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*The figures are index numbers measured from the FY2001 figures set as 100.

GDP growth by country

(Source) International Monetary Fund, World Economic Outlook Database, September 2011

(Note) Calculated based on the purchasing power parity (PPP) evaluation of GDP by country

(4) Marketing strategy in Asia

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Restructuring

expense

Approx.

20 billion yen（arrocated in FY2012)

Expected

benefit(cost reducing)

Approx.

10 billion yen

(from FY2015)

� Reduction in workforce

(approx. 10% of domestic workforce)

� Restructure of domestic/overseas production systems

� Shifting production overseas

� Conduct a review of unprofitable business

� Other scheme including streamlining

administrative operations

Enhancement of the scheme of

business structure and expected benefit

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�Market condition and our tasks

�Targets of the New Medium-Term Management Plan

�Address the tasks


From “Product” to “Brand”

- Achieve to become a global company to survive against international competition

➢ Lead the Group’s growth by increasing sales and profit.

➢ Execute the growth strategy focusing on the CITIZEN

brand products.

➢ Implement structural reforms to improve efficiency and

pursue increase of profitability

Watch and Clock Business:

Basic outline

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➢ Establish a continuous investment cycle to achieve

business growth and improvement of efficiency


Forecast of Market size Transition

• World Assembled Watch Market Size in 2011 (estimated by Citizen): 2.9 trillion yen (wholesale basis)• The growth trend of the watch and clock market is linked to the world economic growth and estimated to

grow 3% - 7% annually mainly in Asia. • In sales volume, it remains flat or declines while the average unit price has risen together with the increase

in the rate of high added-value products. 24

Unit: 100 million yen Unit: Million yenQuantity

1,4001,325

1,268

1,374 1,3941,420

1,700

2,000

213

91 92

145

130120

200

300

0

50

100

150

200

250

300

0

1,000

2,000

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

(forecast)

FY2015

(target)

FY2018

(target)

Sales


Target

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[FY2018 Target]

Operating income: 30 billion yen

Operating margin: 15%

Operating income

FY2018 Operating income: 15 billion yen

Operating margin: 15%

➢ Strengthen the corporate brand marketing


CITIZEN brand product business

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➢ Create business structure capable of

generating high profit margins

➢ Strategic market for sales expansion :

China and other markets in Asia

[Business policy]

[Sales plan]

[Main scheme]



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➢ Product strategy‐Further improvement of Eco-Drive, the distinctive technology of Citizen ‐Enhancement of the brand image by promoting the global model products

➢ Price strategy‐Ensure reasonable profit margins by price controlling over international markets

‐Improve the brand image, and growth of ASP by increasing added-value products

➢ Distribution strategy‐Increase the impact of brand image through direct investment on distribution system

‐Consolidate the impact on distribution by multi-brand strategy

➢ Advertisement strategy‐Capture consumer attention by investment in effective advertisement

‐Enhance the consumer interface by expanding flagship/directly-owned stores

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“CITIZEN” brand watch and clock – Business in China

Significant increase in sales and

operating income

• Improvement of product mix effect

• Active advertisement

• Improvement of the distribution structure

➢ Continuous effort in improvement of the corporate brand value.

➢ Expand retail stores together with strategic investment in distribution.

➢ Launch and run our growth strategy succeed in China into other Asian markets.

Brand recognition

Consolidation of the business for growth

[Previous tasks (In FY2006-2011 plan ]

[New Medium-Term Plan FY2013-2018]

➢ Accelerate the growth and maximize brand presence in China and other markets in Asia



0.00

1.00

2.00

3.00

4.00

5.00

6.00

2006 2007 2008 2009 2010 2011

Operating income index Sales index

ASP index Quantity index

Advertising expenses index

➢ Improvement of product mix effect • Promote distinctive and high added-value products including “Eco-Drive”watch,

“Satellite Wave” watch, and mechanical watch technology

• Enhance the corporate brand image and grow ASP by streamlining low-end products




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➢ Active advertisement• continuous investment in advertisement in major cities focusing on city center, airport, subway

• Conduct various promotional activities




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➢Improvement of distribution structure• Improvement of the quality of the sales network by streamlining distributors

• PR activities on consistent corporate brand image among flagship/directly-owned stores




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➢ Forward the multi-brand strategy focusing on the CITIZEN brand

➢ Take a progressive approach to work on potential growing areas through M&A

activities including buying out new brands

➢ Maximize the impact on the distribution channels, and maintain and expand

the existing distribution territory

➢ Pursuing synergy effect through promoting sharing the functions of

development, manufacturing and procurement within Citizen Group

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➢ Increase profits by pursuing added value products from quantity output

- Re-strengthen productivity of added value products through structural reform

- Ensure appropriate profit margin by maintaining the largest share of the industry

➢ Consistent support to the basis for growth of the watch and clock business

- Contribute to maintaining and improving the value of watch and clock by leading the

supply of highly enhanced value products

- Assure consistent investment funds for growth



[Market overview and business policy]

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➢ The market trend of watch movement is shifting from mass

consumption of standard movements to brand-conscious/ brand

differentiation and added value products

■事業ドメイン

Machine Tool Business

Target:

60 billion yen in FY2018 (breakeven sales volume: 30 billion yen) 34

Bar material processor (automatic lathe), forging process machinery and peripheral equipment

“Solution providing ability” on the assets and skills cultivated in the automatic lathe business

Provision of products and services to meet polarized different needs in emerging countries and developed countries

Product

Technology

Market

Domain

Strength:

Miniaturization/high-rigidity technology developed in watch

and clock part business

A wide range of customers based in Japan, U.S. and

Europe.

*Our compact size NC automatic lathes have leading share

in the global market (presumably by Citizen)

Our aim:

To secure stable position with leading share in the automatic lathe market

and continuous growth by expansion of the domain

CMUK

CME

SIRMA

HESTIKA

CCMCMJ

CMA

CMAS

Tsutoku

Shanghai CMTW

CMP

MCC

MCCB

Europe

China / Taiwan

Asia

Japan / Korea

North America /

Latin America

Expand the region-specific models and Establish

solution business by adding solution service and

technical service to the “5-region controlling system”

CMK

Enhancement of the regional marketing (direct marketing system) network

Machine Tool Business

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Precision Component Business

Strength:

Integrated mass production ability for precision metal

processing, cultivated in watch and clock part business

(cutting, heat treatment, surface treatment)

Target:

Sales in FY2018 : 15 billion yen

(doubled compared to sales in FY2012)

<Tasks for growth>

(1) Expansion of existing products

and maintaining customers

(2) Development of new customer

(3) Development of new products and new technologies36

Our goal

Aim to be a

“ Global competitive Company”- business group with speed and dynamics -

We reward those who address the

tasks and achieve results(performance related/individual assessment compensation system)

Enhance corporate brand value → Achieve operating

income of 40 billion yen

20130213citizen global plan global plan.pdf · • insales volume, it remains flat or declines...

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