Message for Shareholders

Message for Shareholders

“CROSSING = cross-functional management that responds flexibly to change, while using it to drive sustainable growth”

In the previous fiscal year, Yamazen began its “CROSSING YAMAZEN 2021” medium-term management plan, the stage for the implementation of which are the two markets of “production equipment” that supports manufacturing, and “consumer goods” that we use to create proposals for more comfortable living spaces. During the fiscal year ended March 31, 2020 (the 74 fiscal year), results undershot the published plans due, in part, to the prolonged trade friction between the United States and China, and the impact of novel coronavirus disease (COVID-19).
This fiscal year, which is the second year of the CROSSING YAMAZEN 2021 medium-term management plan, the difficult business environment is expected to continue, but we will respond with flexibility, move forward with our new businesses and with the opening of new markets, and use this to drive sustainable growth. On April 1, 2020, a new “General Sales Headquarters” was established with the aim of achieving freer interchange of the know-how, experience and value contained within the division headquarters and the various departments. We will strive for further added value within the business, as well as improved productivity.


I would like to take this opportunity to offer my sincere thanks to each and every shareholder for their continued patronage and assistance.

Yamazen’s strength lies in our comprehensive ability to flexibly provide the value required by our customers, which I am proud to say has led to customers trusting Yamazen to come up with a thorough proposal once they leave it to us. Going forward, we will continue to take a customer-oriented and market-orientated approach, and devote ourselves to our role as a “useful” trading company. In order to build even more robust relationships of trust with our business partners, we will further strengthen our “sales capability,” “proposal capability” as well as the “human power” of our employees, collecting genuine information from the front line of business, and using it to open up new businesses and new markets.

Looking Back at the 74th Fiscal Year

The business environment in the fiscal year ended March 31, 2020 (the 74th fiscal year) was extraordinarily difficult. In the Production Equipment-related Business, there was a prolongation of the trade friction between the United States and China, while sluggishness in industries related to automobiles and semiconductors led to noticeable postponements in capital investments around the globe. Moreover, since the start of 2020, the impact of COVID-19 has resulted in a further cooling of interest in capital investment. The situation in the Consumer Goods-related Business was similarly challenging, with a decline in the number of housing starts, a slump in demand following the last-minute rush in purchases ahead of the increase in the consumption tax, abnormal weather during the summer, and a winter of record-breaking warmth. However, we succeeded in posting year-on-year growth in sales and operating profit, by focusing in the Building Materials Business on the house remodeling area and on expanding sales of air-conditioning equipment, while strengthening the energy solution business, which is a non-housing initiative. In the Home Products Business, strength in electric generators and disaster prevention bags, etc., which come under the category of products for disaster prevention/disaster countermeasures, led to higher sales year on year. Nevertheless, the Consumer Goods-related Business were unable to completely offset the difficulties of the Production Equipment-related Business, leading to a decline in overall sales and profits.

Currently, the negative impact of COVID-19 has spread around the world, and has had a significant effect on capital investment and consumer sentiment. Accordingly, as it is difficult to calculate reasonable earnings forecasts at this point in time, consolidated earnings forecasts for the fiscal year ending March 31, 2021 (the 75th fiscal year) have not yet been finalized. As soon as it becomes possible to disclose reasonable forecasts going forward, we will make an announcement. We will consider the quantitative aspects of the CROSSING YAMAZEN 2021 three-year medium-term management plan with a view to establishing whether changes are necessary.

Looking Ahead to the 75th Fiscal Year

There have been no changes to the five major policies and themed initiatives of the CROSSING YAMAZEN 2021 medium-term management plan. We will actively move forward with these, drawing up a variety of measures, and working to execute them.

In the Production Equipment-related Business, as a functional trading company, we will raise the level of the engineering functions, deepen our interactions with system integrators, and strengthen our ability to respond to demand related to the shift to automation in the domestic market. In addition, at a variety of production sites and factories in the manufacturing industry, as part of the “3Cs” (avoid Closed spaces, Crowded places, and Close-contact settings) initiatives being implemented with a view to preventing the spread of COVID-19, we anticipate rising demand for use of collaborative robots and alterations to air-conditioning and ventilation systems. Focusing on the trends at each individual production site, we will put our efforts into proposing customer-oriented solutions. By further deepening cooperation between the Factory Automation and Engineering Division Headquarters, the Smart Factory Solutions Division Headquarters, and each of the other division headquarters, we will promote the opening up of new markets such as those related to 5G, Three Products Market (food, cosmetics and pharmaceuticals), construction, agriculture and electric vehicles. We also expect fully fledged capital investment in automation overseas that uses the latest technologies, such as IoT and AI. We will take advantage of this major trend by deploying our antenna to pick up the information we need to capitalize on this business opportunity, and by promoting marketing activities.

In the Consumer Goods-related Business, we will first work on proposals for zero-energy houses in the Building Materials Business, promoting the energy solutions business as a one-stop service for everything from energy-saving diagnoses for buildings, etc., to refurbishment work. In the Home Products Business, we will move forward with the further development of private-brand goods, and seek to push the Yamazen brand deeper into the marketplace. In addition, we will implement measures in response to changes in the market, such as making the EC site more substantial, working to make B2C logistics more efficient, and so driving growth over the medium to long term.

In terms of organizational management, we carried out structural reforms on April 1, 2020, establishing the new “General Sales Headquarters.” The aim of establishing the General Sales Headquarters is to further facilitate the Group in exercising its comprehensive ability to provide the value required by customers, both flexibly and swiftly. Specifically, we will build an information network that transcends the barriers between the production equipment and consumer goods businesses, implement measures such as rationalizing and making the divisional and regional headquarters more efficient, take a birds eye view of said headquarters in order to optimize the overall sales organization, and make them become more agile while promoting efficiencies in the management of the business.

Going “Proactive” with Investments for Sustainable Growth

In the CROSSING YAMAZEN 2021 medium-term management plan, a total of ¥60.0 billion has been earmarked as a framework for investment up to FY2023. This fiscal year, we will continue to implement investments for sustainable growth, supported by Yamazen’s sound financial position and healthy cash flow.

Specifically, we have first put aside ¥20.0 billion as a framework for investments in new businesses, including M&A. In October 2019, we inherited the business of Ishihara Giken Co., Ltd, simultaneously acquiring its engineering functions, such as conveyor technology. We will also focus on M&A aimed at further strengthening such functions.

Next we have set a budget of ¥10.0 billion for the initial phase of building a core management system. When deployed, this system will allow us to conduct overall optimizations of management, and to push forward with operational reforms.

Furthermore, we have designated ¥30.0 billion for use in capital investments, such as logistics facilities. In addition to promoting improvement of domestic distribution centers, automation facilities and inventory optimization, etc., in August 2020, the new headquarters building for the North America Regional Headquarters is scheduled for completion in the form of a strategic development base in Chicago, which will enable sophisticated turnkey supply.

Returns to Shareholders

Precisely because business conditions are difficult, the company is working to establish a more stable financial position and to improve profitability further, and makes it a basic policy, grounded in the continuation of a stable dividend to shareholders, to return profits to shareholders taking into account the level of profits. In accordance with this policy, the CROSSING YAMAZEN 2021 medium-term management plan aims for a consolidated dividend payout ratio of 30%, with the dividend amount calculated after comprehensive consideration of factors like the consolidated results for the fiscal year in question, and the financial position.

Based on this approach, for the 74th fiscal year, as announced in February 2020, the year-end dividend was set at ¥14 per share which, combined with the interim dividend of ¥16 per share, yields an annual dividend of ¥30 per share. With regard to dividends for the 75th fiscal year, as it is difficult to reasonably calculate earnings forecasts at this stage, the dividend forecasts have not yet been determined. As in the case of consolidated earnings forecasts, we will make an announcement as soon as it becomes possible to do so. We thank you for your understanding in this matter.

Our Message to Shareholders

Going forward the company will continue to actively develop new measures to increase corporate value. We will prioritize the building of the corporate brand, and ESG/SDG initiatives, while welcoming a newly appointed female outside director, and promoting management that leverages a wide range of knowledge from outside the company. We ask shareholders for their continued and unwavering understanding and support as we move into the future.

President CEO
株式会社山善 代表取締役 社長執行役員 長尾 雄次

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