Top Message

In the Three-year Business plan, BEACON 2030 Phase I, covering FY2021 to FY2023, we promoted key strategies from the perspectives of management, business, and organization, aiming to strengthen foundation. We worked to transform our operations into a highly profitable structure that can regularly secure a gross profit margin of 50% or more and an operating income margin of 10% or more.
In the promotion of sustainability, Nihon Kohden identified material issues and KPIs for the first time and worked on addressing these issues. We have also established the Advisory Board consisting of external experts to incorporate outside perspectives on sustainability activities. Additionally, to foster a corporate culture in which sustainability is the core of its business activities, we held the Sustainability Discussions for all employees (total 31 sessions with over 4,000 participants in Japan and internationally). In a social aspect, we have identified key human rights issues through human rights due diligence based on the Nihon Koden Group Human Rights Policy, and have promoted risk reduction efforts. We have developed and published a Multi-stakeholder Policy. In an environmental aspect, we have disclosed information in line with the TCFD recommendations, promoted measures for water resource protection, and started the “Green Product Label” certification structure, which strengthens efforts towards environmentally friendly products.
From a management perspective, we have focused on strict compliance as our top priority. With a firm commitment to never repeat incidents like those in 2021, we have implemented and executed all recurrence prevention measures and continue to monitor their effectiveness.
From a business perspective, we launched a series of the Company's first new high-value-added products such as a fully automatic AED, syringe pump control software for assisting with total intravenous anesthesia and a mid-range ventilator. Additionally, we acquired AMP3D, LLC in the U.S. and Software Team Srl in Italy, further accelerating our Digital Health Solutions (DHS) initiatives.
From an organizational perspective, we started to introduce PLM/MES^*1 systems and promoted the establishment of a global Supply Chain Management (SCM) framework. Additionally, we introduced a new role-based (job-based) personnel system for both management positions and general employees.
As an action on cost of capital-conscious management, we adopted NPV and IRR^*2 as investment decision criteria to achieve ROE target of 10%, and started evaluating new investment projects.
Regarding our management targets, in addition to actual sales in North America and China falling short of its target, the gross profit margin declined due to an increase in devaluation of inventories, as well as increased SG&A expenses due to the strengthening of human resources, wage increase, and inflation. Thus, unfortunately, operating income and operating income margin for the final year did not achieve the targets, and improvement of profitability remains an issue. Furthermore, the increase in inventories to respond to the tight supply of semiconductors has led to a longer cash conversion cycle (CCC). Under the new Three-year Business Plan, BEACON 2030 Phase II, we will steadily implement the reform of the profit structure and work on improving capital efficiency.