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Message for Shareholders


CROSSING=Shifting to sustainable growth through crossing management

Yamazen is starting to restructure the organization, newly establish specialized division, and implement other measures in both the production equipment market, which supports manufacturing, and the consumer goods market, which provides comfortable living spaces, to shift toward the execution of a growth strategy. The effects of these measures have been emerging as the results for the fiscal year ended March 31, 2019 (73rd period), surpassed the business plan which was upwardly revised during the period with net sales and all profit categories posting record-high results.

Taking these results as the initial outcome of the reforms, starting from the current period we will literally “cross” the know-how, experience, and values of the departments and divisions under the “CROSSING YAMAZEN 2021” medium-term management plan to seek higher added value and further productivity improvements in the business. At the same time, we will create a solid management foundation to support the business by undertaking specific major policies which include “strengthening the domestic business,” “accelerating global expansion,” “strengthening profitability as a functional trading company,” and “enhancing e-commerce.”

President and CEO Yuji Nagao will review the 73rd period and discuss the management policies for the current 74th period.


Representative Director, President


Closing the 73rd period

I would like to express my heartfelt gratitude to every single one of you for your ongoing cooperation and support.

Since assuming office as President in April 2017, I have been thoroughly promoting within the Company the phrase, “we are a change-readiness business” and carrying out concrete measures to respond to our dramatically changing markets. That proactive attitude has brought us success, and the results have almost reached the numerical targets of the previous medium-term management plan set during the fiscal year ended March 31, 2018 (72nd period), one period ahead of schedule. In addition, net sales and all profit categories exceeded the targets announced in the business plan and posted record-high results for the fiscal year ended March 31, 2019 (73rd period).

Understandably, the overseas business has been a tough battle due to the impact of the trade friction between the U.S. and China since the fourth quarter of the fiscal year ended March 31, 2019. However, as we look back on the year, we can see that the production equipment business was blessed by a favorable business environment which included the continuing boom in the Japanese machine tool industry. Meanwhile, the consumer goods business faced the headwinds of increasing distribution and transportation costs while personal consumption gradually recovered, but focusing our sights on areas of strength and continuing to offer high value added proposals to the market produced positive results. I would also like to add that I believe that the positive earnings are due to all of the employees working together to improve productivity behind the scenes.

As a result, we were able to increase both revenue and profits in the all business divisions, Machine Tools Division Headquarters, Industrial Tools & Equipment Division Headquarters, Building Materials Division Headquarters, and Home Products Division Headquarters. As the entire company devotes itself to future business innovation, I feel that we are standing at a new starting point. With the fiscal year ended March 31, 2019 as a waypoint, a new medium-term management plan is starting from the current period. We will devote all of our energies to reach the targeted net sales of ¥610 billion and operating profit of ¥22 billion in three years (76th period).

Quantitative Targets of『CROSSING YAMAZEN 2021』

(¥ millions)

Fiscal 2019

(Term 74)

Fiscal 2020

(Term 75)

Fiscal 2021

(Term 76)

Net sales 530,000 563,500 610,000
Operating income 16,000 17,500 22,000
Ordinary Income 16,000 17,500 22,000
Profit attributable to owners of parent 11,000 12,000 15,000

Creating new value propositions

I would like to take a moment to briefly explain the new “CROSSING YAMAZEN 2021” medium-term management plan. The keyword “crossing” means to combine the various value propositions which have been cultivated in each division and department until now, create new forms of value propositions, and associate the “collective strength” to demonstrate those synergies with a high “scalability,” and it is quite simply the management policy of the new medium-term management plan. It calls for overcoming barriers regardless of whether they are in production equipment or consumer goods, combining each business domain to cross “people, things, ideas, and information” to create new forms of value from the user’s perspective, undertaking various kinds of innovation, and making the organization operate in a horizontal manner. Yamazen trades the merchandise and systems of companies ranging from large corporations to high-tech startups, and there are many people in the industry who say, “Entrust it to Yamazen, because they can propose a total solution.” This is a management strategy to differentiate ourselves from other companies by “crossing and creating” the collective strength which is our value proposition as well as to extend this advantage both in Japan and overseas.

In order to execute this management strategy, we restructured the organization on April 1, 2019. The Factory Automation and Engineering Sales Department was changed to the “Factory Automation and Engineering Division Headquarters,” Machine Tools Division Headquarters and Industrial Tools & Equipment Division Headquarters are coordinating as the “Actual Sales Unit” equipped with engineering functions of automation and robotization to cultivate new customers. Moreover, the “Construction and Equipment Department” was newly established within the Smart Factory Solutions Division Headquarters. The purpose of doing so is to expand our business to the energy solutions market for non-residential buildings, namely plants and offices. We expect that additional forms of added value will be created by “crossing” the Smart Factory Solutions Division Headquarters, which has channels with production plants, with Building Materials Division Headquarters, which possesses know-how including energy conservation, equipment design, and contract work. We are approaching innovation by inducing this chemical reaction which is amplified by the crossing effects in various areas to enhance our collective strength in this manner.

Executing investments for continuous growth

Under the new medium-term management plan, we have established an investment framework with a total of ¥60 billion over five years. Specifically, we will proactively execute investments for continuous growth by establishing an investment framework of ¥20 billion for “new business investment” including M&A, ¥10 billion for “initial construction costs of core management systems,” and ¥30 billion for “distribution improvements and other capital investments.”

First, I would like to explain the “new business investment.” At this time, we have established an investment framework of ¥10 billion for corporate business succession support. As you know, the problem concerning the shortage of business successors is becoming increasingly severe. It is said that if this situation continues, and we do not take on the problem of business succession, roughly 6.5 million employments and about ¥22 trillion GDP may be lost in total by 2025. I fear that precious industrial assets built over many generations may be lost. In order to assist in solving this social issue, the target companies will be indirectly managed and operated so that the businesses will continue through a special purpose corporation (SPC) jointly funded by Yamazen and a specific independent investment fund operating company. Specifically, Yamazen will contribute to solving this social issue through the training of business successors, improving corporate structures, and supporting the continuation of equity and business assets in business areas where the Yamazen Group is developing its business while simultaneously making agile investments, including the acquisition of management resources, in the Yamazen Group’s continuous growth. Furthermore, we will also proactively engage in strategic M&A for the purpose of functional expansion. The next investment is for the “initial construction costs of core management systems.” In order to consistently execute the four major policies of the new medium-term management plan described above, we will invest in the core management systems required to strengthen the solid management foundation which is able to adapt to any changes and simultaneously promote “overall management optimization” and “operation improvements.”

The final investment covers “distribution improvements and other capital investments.” Due to the expansion of markets and changes in the style of selling which span categories and industries in recent years, it is essential to respond to diverse user needs, and global initiatives focusing on the entire supply chain have become important. We will reduce the supply chain management cost and increase management efficiency by proactively investing in enhancing distribution from a company-wide perspective which crosses divisions to be able to demonstrate the Company’s “collective strength.” This proactive investment will occur on a scale which is unprecedented within the Company, but it is an important initiative for continuous growth.

Investment Budget for Next Five Years(¥ millions)

Business investment budget

 (including alliances)

20,000 Business succession, M&A, new business, etc.
Initial system investment budget 10,000 Cost of initial architecture of new systems
Facilities investment budget 30,000 Establishment of logistics capabilities, etc.
Total 60,000  

Return of profits to shareholders

Regarding dividends, the Company strives to establish a stable financial foundation and enhance its revenue earning capabilities. We therefore uphold a policy of continuing to provide stable dividends to shareholders while considering the level of profit earned by the Company. The annual dividend for the 73rd period came to ¥36 per share, which is comprised of ¥32.50 for the ordinary dividend and ¥3.50 for a special dividend. As a result, the consolidated payout ratio for the three-year medium-term management plan which ended with the 73rd period was 30.1% on average over the three years as publicly promised. In addition, the ordinary dividend for the 74th period is scheduled to add ¥1 to the ordinary dividend of ¥32.50 for the previous period, with an annual dividend of ¥33.50 as the Company aims to provide a stable dividend to shareholders in the future.

In closing, we sincerely ask for your further cooperation and support.

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