Corporate Strategies
Supported by continuing inbound demand and wage increases that are expected to have a significant impact, consumer spending is expected to show a gradual improvement in Japan. Due to monetary tightening to control inflation, primarily in the US and Europe, however, the global economy is forecast to slow down. It is also likely that the slump in the Chinese economy will continue as the gap between supply and demand remains unresolved, making the economic outlook extremely difficult to predict. Within this environment, the firm is implementing the following initiatives to assure a solid base for future growth.
Management
Enhancement of Corporate Governance
We have been committed to improving corporate governance for many years under the conviction that it contributes to improving both the company and profitability. The internal governance system implemented in FY2024 will be continually improved and expanded, and supported by educational and training programs ensuring that employees fully understand and help attain these goals.
It is crucial that management always keep these goals in mind, and we are shaping training and policy toward that end.
To continue to respond adequately to changes both inside and outside the corporation we perform a comprehensive evaluation every few years. Recently we completed an in-depth review of our listing on the Tokyo Stock Exchange, and the proposed upgrade for our in-house IT systems to support full-scale adoption of digital technology. These and similar programs significantly enhance the corporation, earning and repaying the trust placed in us by our stakeholders.
Acquiring and Fostering of Human Resources
An important management resource for a trading company is “people. We will continue to focus on recruiting and training excellent human resources.
Recruitment activities in Japan are becoming more difficult due to the declining birthrate and aging population. However, thanks to our efforts, we have been able to recruit as planned. In the future, we will strive to improve our name recognition and create a rewarding workplace, regardless of gender or nationality, to acquire human resources who will become the core of NANYO Corporation in the future, as well as to improve the quality of our human resources through internal and external education.
Workplace satisfaction
Ensuring workplace satisfaction has been a key element in our corporate philosophy for over half a century. As part of our continuing effort to improve conditions and methods we revamped the personnel system in April 2023, switching to a combination of area work and “floating” work. While there are some differences depending on whether a person can be transferred or not, the system is designed to assess capability regardless of gender. The approach will nurture a new generation of leaders and increase the number of women in management positions.
In April 2024 wages were increased by 5.6% to boost motivation, attract new talent, and respond to social pressures. The company will continue to improve systems including preventing unduly long periods of work, ensuring similar pay for similar labor, and providing childcare support. We are utilizing the new core system, launched in July 2023, to further improve labor productivity and create an even better workplace environment.
Sustainability initiatives
We established our Sustainability Committee in March 2024, and are currently identifying and quantifying key issues (materiality).
As part of our corporate commitment to society we work to satisfy partners and all other stakeholders through our business activities, while also protecting the global environment as a good corporate citizen. I am confident the Sustainability Committee will further accelerate these programs, helping resolve outstanding issues and enhance corporate value. By contributing to the resolution of diverse social issues we will fulfill our corporate mission and further strengthen the foundation for long-term sustainable growth.
Marketing
In order to achieve the SDGs (Sustainable Development Goals) adopted at the United Nations Summit in September 2015, we will focus on the following social needs, and further contribute to society and business.
Efforts for new product development（SDGs：9.INDUSTRY, INNOVATION AND INFRASTRUCTURE）
As a trading company specializing in machinery, we have matched needs and technologies among our customers and suppliers.
In the industrial machinery business, in response to growing needs for labor saving in the industrial world, we are focusing on the inspection process of various products and discovering excellent venture manufacturers in Japan and overseas. Going forward, we will continue to accurately grasp the needs of our customers and strive to expand our products.
Efforts to National resilience（SDGs：11. SUSTAINABLE CITIES AND COMMUNITIES）
In developed countries, social infrastructure is aging. Conservation of social infrastructure has become a major issue. We sell robots (「NANYO Mall」”e-bi “) that are indispensable for repairing sewer pipes in cities. The domestic market share of robots is about 80%. In the future, the problem of aging sewer pipes is expected to spread not only to large cities but also to local cities. To that end, we will strengthen our organization and develop new products that meet the needs of our customers.
Environmental Initiatives（SDGs：13. CLIMATE ACTION）
In recent years, changes in the global environment have resulted in problems such as global warming and frequent natural disasters.
In order to protect the environment, our company acquired ISO 14001 certification in 2002, and has set environmental targets to expand sales of energy-saving, recycling, and other environment-related products. In addition, in the construction equipment business, we are systematically replacing machines for our rental business with vehicles that comply with exhaust gas regulations. Furthermore, in the Kyushu region, which is prone to natural disasters, we have a large number of machines for disaster recovery and national land fortification.
We will continue to focus on expanding sales of environmentally friendly products and disaster countermeasures.
Efforts to save labor（SDGs：8. DECENT WORK AND ECONOMIC GROWTH）
One of the social problems in Japan is the declining birthrate and aging population. Even though this problem is becoming more serious, labor productivity in Japan is still low compared to other countries. We are committed to solving this problem by contributing to labor saving.
In the industrial equipment business, we will provide products related to labor saving, such as inspection equipment, by utilizing the know-how we have cultivated over the years in the robot and factory automation markets and the technological development capabilities of our four manufacturing subsidiaries. In the construction machinery business, the use of ICT in construction machinery is expected to increase as the labor shortage at construction sites becomes more serious. We will form a project team and establish a system to aggressively promote sales.
Finance
Cash flow and business sustainability
We take advantage of our stable financial position to invest in the sustainability and development of our business.
For over 20 years, we have recorded positive operating cash flow and have maintained a healthy balance sheet. We will make capital investment and M & A utilizing this stable cash flow and financial strength to contribute to solving social issues such as changes in the global environment and the declining birthrate and aging population.
We will continue to fulfill our corporate mission by contributing to the resolution of important social issues, aiming for long-term sustainability and further development of our business.
Improving shareholder ROI
To continue to serve all of our stakeholders, the following policies have been implemented for our shareholders.
From fiscal 2024 the payout ratio will be maintained at 35% of consolidated net profit, with stability provided through annual dividend of 20 yen/share regardless of profitability (in the event consolidated net profit is insufficient, the payout will be adjusted downward). From 2015 the company has paid interim dividends and dividends from surplus twice annually to further repay shareholders. From fiscal 2016 we added an incentive for a JPY1000 QUO card to shareholders with 100 or more shares at the close of the fiscal year (JPY1500 if the shares are held for 3 or more years). A stock split was implemented in April 2024 along with other initiatives to improve share mobility and raise share prices in an investment-friendly environment. The coverage and content of the shareholder incentive plan has been continued after the split, representing an effective enhancement to the program.
The management is committed to continued business growth and high ROI.
Accounting
Utilization of new core system
The corporate core system in use for over 20 years has been completely rebuilt, and implemented from fiscal 2023. Designed to facilitate the digital transformation (DX), the new system fulfills customer needs faster than ever through sub-systems including support for transition to cloud service and a range of business intelligence tools. Advanced system functions deliver deeper information analysis, faster decision-making, and more effective business activity. The system is continually upgraded for the latest trends and technologies, providing steady improvement in operations and productivity.
Compliance with International Financial Reporting Standards (IFRS)
More and more businesses are globalized and stock markets are becoming borderless. Investors are now more eager to invest in foreign companies. Accordingly, over 100 countries are already or planning on using IFRS as their domestic accounting standards. In Japan, the government has postponed the start of the IFRS application due to the Great Eastern Japan Earthquake of March 2011. However, the adaptation of IFRS in the future is unavoidable to do business worldwide.
The IFRS is much different from the standards currently used by listed companies including NANYO. Therefore we believe it will take time and effort to comply. We will pay attention to the decisions made by the Financial Services Agency to prepare for IFRS application.
