fy2014 2017 mid-term management plan - toto ltd. · pdf filemid-term management plan...
TRANSCRIPT
2014. 5. 23
FY2014–2017 Mid-term Management Plan Securities Identification Code: 5332
Table of
Contents 1. Introduction
2. TOTO V-Plan 2017
2
3. Looking Back on FY2009–2013 (Results)
4. FY2014–2017 Medium-term Management Plan
5. Advancing to the Next Stage of Growth
Introduction: Our General Principles
Kazuchika Okura, first president
Saburo Momoki, second president
Kindness is more important
than anything else.
Perform your work in a spirit of
service.
Supplying quality products and
satisfying users are the real
goals of business.
If you achieve these goals, you
will be rewarded with profits
and remuneration.
In the world, there are many
people who pursue only profits.
They will end their lives without
knowing the real goals of
business.
The predecessor’s remarks
Company mottos
“Supplying quality products and satisfying users are the real goals of business.”
Taking on our founder’s idea as our company motto and moving forward to realize it
Celebrating the 100th anniversary of TOTO’s foundation and advancing to the next century of rapid progress
Toyo Toki Co., Ltd.
Founded in 1917
3
Take pride in your work,
and strive to do your best.
“Quality and Uniformity,”
“Service and Trust,”
“Cooperation and Prosperity”
Has developed highly valued technologies for sanitary ceramics
worldwide, thanks to nearly a century of experience built up since
the launch of the first such product in Japan
Left: Japan’s first ceramic seated
flush toilet was produced in 1914
The Ceramic Sanitary Ware Laboratory was established in 1912 to develop ceramic
sanitary ware. After much trial and error that involved preparing as many as 17,280
different glaze-ceramic compounds, the laboratory finally produced the first ceramic toilet.
The prefabricated bathroom module is the result of TOTO’s
unremitting efforts. In the 50 years that have passed since its
development, the module has become widely used in ordinary
households.
Right: The latest Sazana model:
A new production method has been
adopted, using a common platform
In order to respond to shorter construction periods, box unit construction (a leading-edge
technology in which the unit is delivered by truck and installed using a crane after being
completely assembled at a factory) has been adopted.
4
Right: The latest NEOREST series
boasts an antibacterial function and
3.8 liters per flush
Left: Prefabricated bathroom
installed at Hotel New Otani, a hotel
that was constructed prior to the
Tokyo 1964 Olympic Games
Introduction: Our General Principles
TOTO takes on the challenge of manufacturing, which began with our founder’s desire
to offer people a clean, comfortable life.
These technological, development and
production-technology capabilities
have been developed over the past century.
5
Manufacturing Marketings
Supply chain
Providing new value in the lives
of customers worldwide
Introduction: Our General Principles
The TOTO Group will provide customers worldwide with a new “everyday lifestyle”
and continue to be indispensable to society.
TOTO V-Plan 2017 ( the Long-term Management Plan )
Be a truly global company by 2017 Provide customers over the world with a new ”every day” and continue to be indispensable to society.
FY2017:Achieve net of ¥650.0 billion, operating income of ¥61.0 billion and ROA・ROE of 10%
Realizing ‘TOTO Global Environmental Vision’
Strengthening corporate structure to ensure profit generation
V-Plan 2017 Plan
Net sales: ¥455 billion
Operating income: ¥ 37 billion
Cultivating new markets
to drive growth
Net sales: ¥158 billion
Operating income: ¥22 billion
Business expansion, based
on a global perspective
Net sales: ¥37 billion
Operating income: ¥3 billion
Marketing innovations
Supply chain innovations
Manufacturing innovations
Management resource Innovations
Strengthening corporate governance
V-Plan 2017 Plan V-Plan 2017 Plan
6
The Management Plan FY2012–
2014 was announced in May 2012.
TOTO continued and accelerated
innovation to set itself on its way to
growth. As a result, we have
achieved our goals 1 year earlier
than initially planned.
Announcing the Medium-term Management Plan FY2014–2017
as the final step of the TOTO V-Plan 2017, which we have implemented since FY2010
In 2009, TOTO announced its
Long-term Management Plan
for the period up to 2017.
In 2010 and 2011, the company
laid the foundations to realizing
the plan.
Medium-term Management Plan
FY2012–2014
Positioning of the Medium-term Management Plan
TOTO V-Plan 2017: Our Progress So Far
TOTO V-Plan 2017
Medium-term Management Plan
FY2014–2017
This is the final step in achieving
the V-Plan, and a preparatory period
for the next century of rapid progress.
TOTO aims to attain both growth
and efficiency by overcoming
discontinuity and uncertainties and
establishing our position as the
world’s No. 1 company in the industry.
7
0
100
200
300
400
500
600
700
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
’08
■Net Sales ■ Operating Income ■ Operating Margin
(億円)
8
1.4%
3.2%
4.1%
1.6%
4.9%
8.5%
6.8%
7.9% 9.4% 8.7%
(億円)
TOTO V-Plan 2017: Financial Summary and Plans
(In 100 millions of yen) (In 100 millions of yen)
Since the TOTO V-Plan 2017 was formulated, TOTO has seen its business performance recover
steadily due to the effects of various innovative activities. We expect to make even further progress.
’09 ’10 ’11 ’12 ’13 ’14 (plan) ’15 (plan) ’16 (plan) ’17 (plan) (FY)
0
100
200
300
400
500
0
500
1000
1500
2000
2500
3000
3500
09 10 11 12 13
-43
57
157
257
-500
0
500
1000
1500
2000
2500
3000
3500
Results for FY2009–2013: Domestic Housing Equipment Business
Net sales, operating income and operating margin for new housing and remodeling segments
In its V-Plan 2017, TOTO actively pushed innovation on a company-wide scale.
The operating margin grew substantially in both the new housing and remodeling segments.
Past results
Platforms
[New housing] [Remodeling]
Net sales Operating income Operating margin
(In 100 millions of yen) (In 100 millions of yen)
1. Sanitary ware 2. Integrated bath system 3. Washlet
Innovation in supply chain Reduction in logistic lead time
(3.9 to 2 days at all bases)
Innovation in purchasing
Cost reduction became an integral
part of daily operations.
9
’09 ’10 ’11 ’12 ’13
0
100
200
50
150
-1.7%
-0.4%
2.3% 2.6%
4.4%
(FY)
’09 ’10 ’11 ’12 ’13
2.8%
4.6%
5.7%
7.1%
10.2%
(FY)
(In 100 millions of yen) (In 100 millions of yen)
Results for FY2009–2013: Overseas Housing Equipment Business
Overseas housing equipment business (FY2009–2013)
In all markets, TOTO increased its net sales and operating income
from FY2009 to FY2013.
(FY)
0
200
400
600
800
1000
1200
-20
0
20
40
60
80
100
120
140
160
180
(In 100 millions of yen)
(In 100 millions of yen)
(FY)
Net Sales
Operating Income
In all regions, both net sales
and profits grew compared to
FY2009.
In particular, China saw both
its net sales and profits rise
significantly, driving the
overall overseas business.
Asia and the Americas
continued to perform well as
their economies recovered.
In Europe, where we started
business in FY2008, TOTO
increased sales and continued
to reduce operating losses as
our sales network expanded.
Americas China Asia & Oceania Europe
Applying TOTO’s water-management
capabilities to our overseas operations
’09 ’10 ’11 ’12 ’13
’09 ’10 ’11 ’12 ’13
10
(In 100 millions of yen)
-20
0
20
40
60
80
100
-20
0
20
40
60
80
100
120
11
88 89
▲9 ▲15
95.2
55.2
▲6 ▲17
90
52
77.1
▲6.4 ▲20
88.7 91.3
▲10 ▲15.2 ▲15.5
53.3
▲13.9
Net sales
■ Operating income
(In 100 millions of yen)
Net sales
■ Operating income
’12 ’13 ’11 ’10 ’09
We are aiming to develop fuel cells into a viable business at an early stage by promoting the manufacture and
development of solid oxide fuel cells (SOFCs), which uses “Only One” TOTO technology, and power generation
modules, which are the core component of fuel cells.
Fuel cells
Ceramic business Green building materials business TOTO has built a business system adaptive to environmental
change and established the foundations for making a profit.
• The company has moved forward to solve customers’ problems in a timely manner by
offering solutions with the aim of maintaining the ratio of new products at 30% or
higher.
• The company has also been working on synchronizing production between customers,
TOTO, and suppliers, setting up a production system firmly linked to demand.
• The company maintained and increased its overall operational efficiency by reviewing
its production system.
(FY)
TOTO has improved its profit structure by reorganizing its
product lineups and plants.
• The company has reorganized its product lineups through selection and
concentration. We have thoroughly reviewed our sales strategy for each product.
• The company has established an efficient production system through reorganization
of its production bases.
• The company has bolstered its licensing business, including overseas. Up to now,
we have made licensing agreements with about 100 companies (as of FY2013).
’12 ’13 ’11 ’10 ’09 (FY)
TOTO has worked to improve its profit structure by focusing on its “Only One”
technology and narrowing down the number of products it offers.
Results for FY2009–2013: New Domain Business
12
ROA= Operating income basis, ROE= Net income basis
企業価値の持続的向上を追求していく
FY ’12 FY ’13
Net Sales 476.2 billion
yen
553.4 billion
yen
Operating
Income 23.3 billion
yen
47.1 billion
yen
ROA 6.0% 10.7%
ROE 8.8% 19.4%
FY ’14 FY ’15 FY ’16 FY ’17
544 billion
yen
580 billion
yen
610 billion
yen
650 billion
yen
37.2 billion
yen
46 billion
yen
53 billion
yen
61 billion
yen
Over 10%
Over 10%
Working proactively to enhance corporate value continuously
FY2014–2017 Medium-term Management Plan
100 128 148
262
0
100
200
300
13
0%
5%
10%
95
100
105
110
115
120
0
0%
5%
10%
15%
20%
50
100
150
200
100
112
106
118
100
135 149
210
■Operating Margin
FY2014–2017 Medium-term Management Plan: Overview
Domestic housing equipment business
[Vision] Continue growth and establish a high-profit business structure
FY2017 goal: 455 billion yen in net sales and 37 billion yen in operating income
FY2017 goal: 323 billion yen in net sales for remodeling and 132 billion yen in net sales
for new housing
In the future, the main pillar of growth will continue to be remodeling business. In order to
continue to win in the remodeling market, TOTO will reinforce its remodeling business
strategy and work proactively to maintain and increase its competitive superiority in the
segment.
Overseas housing equipment business
[Vision] Establish and maintain our position as the No. 1 manufacturer in each region
FY2017 goal: 158 billion yen in net sales and 22 billion yen in operating income
The overseas housing equipment business is the engine of growth. TOTO will establish
and maintain its position as a high-grade brand in each region. Also, we will work
proactively to increase net sales and operating income by pushing three initiatives:
implementing sales strategies that meet local needs, establishing sales foundations in
emerging economies, and increasing sales of Washlet models.
New business domains
[Vision] Bring the three businesses into the black and pursue growth for the next generation
FY2017 goal: 37 billion yen in net sales and 3 billion yen in operating income
TOTO will make the most of its “Only One” technology to ensure growth of its new
businesses, so that they promise to develop even further in the future. The company aims
to bring the three new businesses, including fuel cells, into the black during the period of
the Medium-term Management Plan.
■Changes in Net Sales and Sales Plans
(with FY2012 as 100)
’12 ’13 ’14 ’15 ’16 ’17 (FY)
’12 ’13 ’14 ’15 ’16 ’17 (FY)
’12 ’13 ’14 ’15 ’16 ’17 (FY)
14
FY2014–2017 Medium-term Management Plan: Domestic Housing Equipment Business
Plans for net sales and operating income (consolidated)
While demand for new housing is expected to
fall, demand for remodeling should continue
to grow steadily in the future—at an annual
rate of around 3%. TOTO will reinforce its
strategy, focusing on the segments where
demand is expected to grow. In this way, we
will maintain and increase our competitive
superiority in the remodeling segment.
(In 100 millions of yen)
FY2014
Plan PlanCompared to the
FY2014 level
Net sales 2,750 3,230 +17%Operating income 199 337 +138Net sales 1,360 1,320 ▲3%Operating income 34 33 ▲1Net sales 4,110 4,550 +11%Operating income 233 370 +137Operating margin 5.7% 8.1% +2.5P
Remodeling
New housing
Total
FY2017
Housing starts
Down by about 20%
Remodeling index
Growing at an annual rate of 3%
Retirement of baby boomers
Growth in the number of people likely
to remodel their houses
Number of visitors to Japan
from overseas
FY2020: about 180 billion persons
Assumptions for change in the macroeconomic environment from FY2013 to FY2017
Growing demand
Growth in the number of baby boomers
who are likely to remodel their houses
Increase in the number of used houses
on the market
House remodeling Public remodeling Shift to UD and more attention
to aged persons
UD: Universal Design
Net sales: 455 billion yen, operating income: 37 billion yen, operating margin: 8%
Maintaining and increasing competitive superiority in the remodeling segment
Reference:Ministry of Land, Infrastructure,
Transport and Tourism
15
※TDY=TOTO・DAIKEN・YKK AP
FY2014–2017 Medium-term Management Plan: Domestic Housing Equipment Business; Remodeling
Meeting the needs of baby boomers
likely to remodel their houses
Since September 2012, TOTO has offered “remodeling for your second
life,” a plan developed for customers aged 50–69 who are likely to
remodel their houses. This plan, which boasts high design quality,
responds to needs arising from the ageing process.
Stepping up efforts to propose “remodeling
for your second life”
Remodeling
while living at
home
About 70% of people who
remodel their houses are in
their 50s and 60s.
Source: Cabinet Office’s “Annual Report
on the Japanese Economy and
Public Finance”
Market scale:
About 2.8 trillion yen
* TOTO estimate
People in
their thirties
In their
forties
In their fifties
In their sixties
In their
seventies
[Three stages of housing offered by TOTO]
Preparation Support Caregiving
To enjoy a healthy,
comfortable life
If the resident needs a stick or a
helping hand to walk, stand up,
or sit down
If it becomes difficult for the
resident to walk
TOTO will continue to plan and develop new products and step up
its efforts to sell them through showrooms, fairs, events, etc.
TDY will also provide houses in which people can live into old age
with a sense of security.
Meeting the need to get used housing
onto the market
Stepping up efforts to meet demand for remodeling arising from
the sale of used housing
• Stepping up efforts to meet demand for used condominiums; this is continuing
to grow, mainly in the Tokyo metropolitan area
• Referring customers who sell or buy used houses to TOTO’s remodeling club
stores, mainly through the Internet and showrooms
• Working with real estate agencies to uncover demand for remodeling with high
value added
Moving house
Bolster strategy for public remodeling
Expanding demand for remodeling at facilities for aged persons
and medical institutions
TOTO will continue to introduce its Smile Partner products. We will work with
the Hospital Restroom Society of Healing to identify user needs. We will also
approach business operators and other organizations to stimulate demand for
remodeling.
Stepping up “in-town toilet” activities
Positioning toilets in restaurants, stores, tourist facilities, guesthouses, and so
forth as an infrastructure to be improved as Japan aims to become a tourist
country; stimulating and meeting demand for remodeling of toilets in order to
offer UD-based comfortable spaces
TOTO will continue to introduce suitable products that meet the needs of growing markets. It will also
precisely meet demand for remodeling, which is expected to grow in a stable manner in the future.
FY ’17 FY ’13
16
Net sales: 158 billion yen, operating income: 22 billion yen, operating margin: 14% Ensure continuous growth by bolstering the global business foundation
TOTO to become a truely global company by 2017 The overseas housing equipment business is a driver to realize this vision and achieve growth in the future
FY ’09
■Increase the percentage
of overseas sales to 24%
in FY2017
12% 18% 24%
4%
84%
3%
79%
6%
70%
■ Overseas Housing Equipment Business
■ Domestic Housing Equipment Business
■ New Domain Business
■Product development centered on water-saving toilets
• Increase the percentage of 4.8-liter toilets shipped to 80% in FY2017
• Introducing 1-gallon* toilets into the market as a pioneer among water-saving toilets
■Expand and strengthen the sales network
• Increase the number of flagship showrooms and enhance their appeal through renewal
• Establish sales foundations in emerging markets and develop new sales channels
■ Increase sales of Washlet models
■ Increase the visibility of TOTO as a high-grade brand
• Step up efforts to increase sales of toilets with a built-in Washlet
• Increase the visibility of Washlet, mainly by introducing new models and encouraging high-grade construction sites to use Washlet models
FY2014–2017 Medium-term Management Plan: Overseas Housing Equipment Business
Implement sales strategies that meet the needs of
target markets in each region
Establish sales foundations in emerging markets
Increase sales of Washlet, the top-priority product
Common
strategy Build an optimal production system globally
* 1 gallon = 3.8 liters
0
50
100
150
0
50
100
150
200
0
200
400
600
800
0
50
100
150
200
0
200
400
600
800
0
20
40
60
0
200
400
600
800
17
Enhance brand appeal by emphasizing product appeal
Enhance competitiveness in the North American market
Strengthen production systems in the Americas
Maintain TOTO’s position as the highest-grade brand
Step up sales in the Chinese interior (continued)
Increase the visibility and sales of Washlet models
Improve the sales and supply systems
Enhance the brand appeal by mounting aggressive sales to high-grade construction sites
Establish sales foundations in emerging economies
Increase the visibility and sales of Washlet models
Reinforce the supply system
Enhance the market presence of TOTO as a high-grade brand
Increase the visibility and sales of Washlet models through a business alliance with Germany’s Villeroy & Boch AG
Emphasize our technological prowess and product appeal by exhibiting at ISH*
’14 ’17 (FY) ’14
■Net sales ■Operating income
’17 ’14
’17
’14 ’17
400
274
360
212
710
585
110
47
25
12
140 132
50
29
’13
37
544
124
’13
’13
244
12
’13
184
28
FY2014–2017 Medium-term Management Plan: Overseas Housing Equipment Business
* International Sanitary and Heating: One of the world’s largest
exhibitions of sanitary equipment and instruments, which is held
in Frankfurt, Germany every 2 years.
Europe
China Americas
Asia & Oceania
(In 100 millions of yen)
■Net sales ■Operating income (In 100 millions of yen)
■Net sales ■Operating income ■Net sales
(FY)
(FY) (FY)
(In 100 millions of yen) (In 100 millions of yen)
(In 100 millions of yen) (In 100 millions of yen) (In 100 millions of yen)
18
Net sales: 13 billion,
Operating income: 1.3 billion
※SOFC:Solid Oxide Fuel Cell
FY2014–2017 Medium-term Management Plan: New Domain Business
Ceramics business
Step up efforts to offer solutions to establish a
stable profit structure
AD (Aerosol Deposition)
coating materials using new
technology
Super-large alumina materials
Next-generation receptacles
Net sales: 37 billion yen, operating income: 3 billion yen, operating income ratio: 8% TOTO aims at business growth in new growing markets, making the most of its “Only One” technology.
Net sales: 15.5billion,
Operating income: 1.7 billion
Net sales: 8.5 billion,
Operating income: profitable
Environmental construction materials
business
Continue to focus on
priority areas to set
the business on its
way to growth
Fuel cell business Aim to launch SOFC
modules and build a mass-
production system as fuel
cells are expected to come
into wider use (around
FY2018)
Power generation units
FY’10~FY’13 FY’14~FY’17
Domestic Housing
Equipment Business
62 billion yen
Costs for restructuring of sanitary-ware production
Costs for restructuring in the Tokyo metropolitan area
Showroom-related costs
60 billion yen~
Production-restructuring costs Showroom-related costs
Overseas Housing
Equipment Business
32 billion yen
Costs for building new production bases and reinforcing existing ones (East China No. 2 Plant, Fujian Plant, and plants in Thailand and India)
40 billion yen~
Costs for building new production bases and reinforcing existing ones
Others
35 billion yen
Investment for computerization Research and development
equipment costs
40 billion yen
Investment for computerization Research and development
equipment costs
Total 129 billion yen 140 billion yen~
Expand investments related to production restructuring Continue active investments in the future with expansion of production,
reinforcement of infrastructure, and other future goals in mind
19
FY2014–2017 Medium-term Management Plan
20
Maintain stable dividend payment with a payout ratio
of 30% as the target
1. Investment for future growth
2. Stable and continuous payment of dividends
3. Acquisition of treasury stock and repayment of interest-bearing debts
such as borrowings
TOTO’s capital-policy priorities
[Topics in FY2013]
In order to return profits on equity and real estate
sold to shareholders, TOTO acquired and wrote off
treasury stock worth 10 billion yen.
The acquisition of treasury stock was completed on October 7, 2013.
The treasury stock was written off on August 9, 2013.
In the future, in light of
capital investment projects
and cash flows, TOTO may
further acquire and write
off treasury stock in
accordance with its capital-
policy priorities.
Returning Profits to Shareholders
TOTO Global Environmental Vision
21
Water, Earth & A Better Tomorrow Since its founding, the TOTO Group has recognized
the tremendous value of water. Today, with ever-increasing
water shortages and the rise of global warming,
we are redefining our relationship with this essential resource
and are even more dedicated to sustaining the environment
through the development of high-quality,
water-efficient products.
Turning on a faucet and taking a shower are
ordinary activities, but now they are opportunities
to save water and reduce CO2 emissions.
Adding “protection of water resources” to our list of
Global Environment Goals highlights our efforts
to produce products that facilitate environmental sustainability.
The TOTO group will work as one and meet these crucial
objectives, and we sincerely hope that our involvement in local
communities leads to better living, and a better tomorrow.
Formulating the environmental vision shared by all TOTO Group companies
All Group companies will make concerted efforts to address social challenges
through their business activities.
Medium-term
Management
Plan FY2012–
2014
[2010–12] [2012–13]
Medium-term Management Plan FY2014–2017
Final step to achieve the goals of V-Plan
Run-up to the next century of rapid progress
[2014–17]
…For the Next 100th
Laying the
foundation
[2018 and
thereafter]
Next step to
achieve
continuous
growth
The 100th anniversary in itself is only one point in time.
In order to achieve continuous growth, TOTO aims to constantly increase
its corporate value and develop its business from a long-term perspective.
Aim to achieve the goals of V-Plan 2017 for the next century of rapid progress
TOTO V-Plan 2017
[2017] Celebrating the 100th
anniversary of
TOTO’s foundation
Advancing to the Next Stage of Growth
22
0
10
20
30
40
50
2009 2013 2017 (FY)
(In tens of thousands of units)
’09 ’13 ’17
Position the period up to 2017 as the run-up to the next century of rapid progress and lay the foundations for continuous future global growth
23
Global marketing Develop the most suitable products and build sales promotion systems for each region, with the aim of establishing TOTO as the region’s No. 1 brand
Basic platform
• Popularize Washlet models in earnest
All TOTO Group companies, positioning Washlet as a global product, will take concerted action to popularize it in various parts of the world in earnest.
• Restructure the global planning and development system
Plant in India (scheduled to start operation in July 2014)
• Investments in production equipment linked to supply strategy
Plan for investment in production equipment in India, and then Asia & Oceania
Global supply chain
Japan
China
Europe Americas
Asia & Oceania
Growth goals for FY2018 and after <Net sales> Americas: Around 10% China: Comparable to GDP growth Asia & Oceania: Around 20% Europe: Base for popularizing the TOTO
brand across the entire world
Change in the number of Washlet models sold (overseas markets)
Local consumption of locally produced
products
Establishing a supply system from a global perspective
Plan a global planning and development system, including domestic and overseas bases
Supplying to each region’s unique preferences
Advancing to the Next Stage of Growth
This presentation material contains forward-looking statements based on
assumptions, estimates and plans as of May 23, 2014.
Actual performance may differ materially from these forward-looking statements
due to risks and undermined factors arising from changes in the world economy,
competition and foreign currency exchange rates.