Translation
Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.
May 14, 2025
Company name: | Kyosan Electric Manufacturing Co.,Ltd. (Securities code: 6742; Tokyo Market) |
Name of representative: | Ryoji Kunisawa Representative Director, President |
Inquiries: | Toshiyuki Kondo Strategy Planning Headquarters General Manager of Corporate planning & Investor Relations Dept. Telephone: +81-45-330-9712 |
Notice of Formulation of Medium-Term Management Plan "KYOSAN Next Step 2028"
Kyosan Electric Manufacturing Co.,Ltd. hereby announce that it has formulated the three-year Medium-Term Management Plan "KYOSAN Next Step 2028" from the fiscal year ending March 2026 to the fiscal year ending March 2028. For further details, please refer to the attached documents.
Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
Stock exchange listings : Tokyo Prime Securities code : 6742
May 14, 2025
-
Contents
Formulation of the Medium-Term Management Plan 2
Review of "Medium-Term Management Plan 2025" 7
Medium-Term Management Plan "KYOSAN Next Step 2028" 12
Positioning of the Medium-Term Management Plan 13
Basic Approach to the Medium-Term Management Plan 14
12 Basic Strategies 15
Efforts to Expand Business Domain 16
Human Resources Strategy 18
Achieving Management Aware of Cost of Capital and Stock Price 19
Financial Strategy 20
Shareholder Return Policy 21
Numerical Targets 22
Review of Corporate Philosophy, Corporate Vision, and Code of Conduct
Review of Corporate Philosophy, Corporate Vision, and Code of Conduct in conjunction with the formulation of the
Medium-Term Management Plan
Since the business environment surrounding our company has changed significantly since the previous formulation, we have decided that it is necessary to update the system in accordance with the times and environment.
Although our company's core values, including "safety and security," have not changed, we have revised them to enhance the interconnectedness of each item and make it easier for stakeholders to understand.
Corporate Philosophy
We create "New Value" while contributing to people's safe, secure, and comfortable lifestyles and the sustainable development of society.
Corporate Vision Corporate Vision: "KYOSAN, the top trustworthy company."
Code of Conduct Be professional: We are proud to be considered professionals.
Basic Sustainability Policy DE & I Approach, Human Rights Policy
Basic Business Portfolio Policy Review of Business Portfolio
Materiality (important management issues)
Contribution to decarbonized society, Development of innovative products Strengthen management base and governance, Enhance human capital
Medium-term management plan
Annual plan
Corporate Philosophy
We create "New Value" while contributing to people's safe, secure, and
comfortable lifestyles and the sustainable development of society.
[What's "New Value"] Customer and Social Value
Understanding customer needs and providing the services that customers desire. As a result, the value that can
be enjoyed by society as a whole or the value created by solving social issues
Corporate Value
Creating profit in core business
Building an optimal capital structure
Increasing the investment efficiency of business with less invested capital
Strive to balance customer value, social value, and corporate value by reviewing products and markets, examining responses to social issues, improving products, and launching services.
Value of human resources
Creating value that can contribute to customers, society, and the company by enhancing the skills and abilities of employees
Growing oneself by creating customer value
Relationship between our group's Vision in 10 Years and "New Value"
In the previous medium-term management plan, Medium-Term Management Plan 2025, we formulated a longterm vision of our group's Vision in 10 years.
[Our group's Vision] [New Value]
Through overseas expansion of the signal system business, expansion of the power electronics business, and new core businesses, we are achieving sustainable growth by contributing to safety and reliability, global environmental conservation, and social development and improvement of comfort.
Creating Value for Customers and Society
Adequate investment in technology development, human resources, and IT for business growth and global environmental conservation has enabled us to achieve profitability and financial structure that enables us to continue to provide appropriate returns (Dividends, salaries, community contributions ...) to our stakeholders.
Creating Corporate Value
Diverse employees with diverse characteristics are growing and working together with
diverse people in a wide world.
Creating Human Asset Value
Establishment of the KYOSAN brand and creation of many new values
Corporate Vision
Corporate Image: "KYOSAN, the top trustworthy company."
Creating customer value through innovative technologies and establishing the KYOSAN brand recognized worldwide
Providing products that contribute to global environmental conservation based on safety and reliability
Creating results through diverse values, a spirit of challenge, and teamwork
Code of Conduct
Be professional: We are proud to be considered professionals.
Constant Growth • Demonstrating • Corporate Activities
Pursuit of Safety and Organizational Power with Integrity Quality • Respect for Human • Contribution to
Rights Society
"Professional pride" is defined as the "ideal" and "important mindset" of all executives and employees
"Professional" refers to self-improvement, honing humanity, knowledge, and skills, and using their abilities to maximize customer and corporate value to achieve results
"Pride" means "pride in one's ability, experience, and achievements" based on firm confidence and dignity. It is more positive than "pride" or "pride" and reflects the strong will of all our group employees to "firmly establish their own axis"
Review of "Medium-Term Management Plan 2025"
Comparison of Achievements and Targets (for the 2025/3 fiscal year and for the entire
March 2025(Estimated value)
hted Average Cost of Capital (WACC) 3%
of Equity 6%
medium-term management plan)
(Millions of yen)
FY 2025/3
Actual
FY 2025/3
Target
Difference
Achievement rate
Orders received
81,951
85,000
( 3,049 )
96%
Signaling Solution Business
66,396
62,000
4,396
107%
Power Electronics Business
15,554
22,000
( 6,446 )
71%
New business
0
1,000
( 1,000 )
0%
Net sales
85,367
85,000
367
100%
Signaling Solution Business
71,128
62,500
8,628
114%
Power Electronics Business
14,239
22,000
( 7,761 )
65%
New business
0
500
( 500 )
0%
Operating profit
6,112
6,000
112
102%
Operating profit margin
7.2%
7.1%
0.1%
End of
・Weig
・Cost
ROIC
5.0%
5.0% or more
0.0%
ROE
9.4%
9.0% or more
0.4%
D/E ratio
0.64 ×
+0.08 times compared to FY 2022/3
3 years Actual
3 years Target
Difference
Achievement rate
232,973
229,000
3,973
102%
194,605
170,500
24,105
114%
38,367
57,500
( 19,133 )
67%
0
1,000
( 1,000 )
0%
228,219
238,000
( 9,781 )
96%
188,136
178,700
9,436
105%
40,083
58,800
( 18,717 )
68%
0
500
( 500 )
0%
10,810
14,600
( 3,790 )
74%
Based on the results of Medium-Term Management Plan 2025, this medium-term management plan will focus on the following
Expansion of Signal Systems and Power Electronics Improvement of Financial Position
Review of the Fiscal Year Ended March 2025
[Orders and Net Sales]
The Signal Systems Business achieved its target. The Power Electronics Business did not achieve its target due to a discrepancy between market forecasts and actual conditions. Although overall orders fell short of the target, the sales target was achieved.
[Profit]
Although there was a discrepancy between market forecasts and actual conditions in the Power Electronics Business, the Signal Systems Business covered the decline in the Power Electronics Business as a result of company-wide efforts to minimize the impact of external factors.
[ROIC and ROE]
In addition to an increase in profits, we achieved our target as a result of efforts such as reducing borrowings and selling cross-shareholdings.
Overview of the Medium-Term Management Plan Period by Segment
[Signaling Solutions Business]
In the domestic market, we maintained our business scale by focusing on orders for signal system upgrades and new home doors, and on sales.
In the overseas market, deliveries of electronic interlocking system to Indian Railways grew, contributing to the growth of our business. In addition, in 2024, we signed a contract for a pilot project to obtain certification for electronic interlocking system required for entry into the Polish market.
[Power Electronics Business]
Our company has been unable to ride the wave of recovery in the memory power supply market
We succeeded in entering the U.S. market on a full-scale with the adoption of a power supply for a U.S. semiconductor manufacturing equipment manufacturer, and started delivery in 2024, but we were unable to make up for the slump in the domestic market.
Evaluation of Growth Strategy
Expansion of Overseas Business in Signaling Solutions Business
Achieved orders for overseas projects through collaboration with engineering companies
Strengthened structure and continued efforts to develop new products for overseas markets
Implemented human resource education and resources to expand orders overseas
Power Electronics Business Expansion
year
Strengthened organization, structure, and quality to generate results from the next fiscal
Increase in inventories due to failure to achieve profit targets
Expanding efforts to improve parts distribution with logistics partners
Challenges to new businesses
Although the feasibility of the themes was evaluated, efforts to commercialize the selected themes continued
Improving profitability
As a result of improving production efficiency through production innovation, profitability of capital (ROIC, ROE) improved mainly due to higher profits.
IT security enhancement proceeded as scheduled, but ERP introduction was postponed by one year due to detailed examination of requirements definition.
Strengthening financial base
Debt increased and debt-to-equity ratio deteriorated mainly due to high inventory due to an increase in orders outstanding
Strategic shareholdings were gradually reduced in accordance with the reduction policy
Human resources development and
enhancement
Introduction of a new personnel system for managers
Challenges in measuring the effectiveness of recruitment, transfer, and training
Challenges in analyzing engagement survey scores and planning countermeasures
Evaluation of Sustainable Strategy
E (Environment): Contribution to a decarbonized society and appropriate responses to climate change risks
The use of renewable energy at the head office plant reached 100%
Energy-saving and long-life products, and product development
Disclosure of greenhouse gas emissions (Scope1-3) and quantification of reduction targets. Acquisition of third-party guarantees for greenhouse gas emissions
S (Society): Participation in sustainable growth of society
Participated in and worked on demonstration tests of automatic operation of railway and bus operations
G (Governance):
Strengthening of governance
Strengthening of group governance has been limited to support for specific projects.
Issues remain that specific KPIs have not been set.
Results of Medium-Term Management Plan 2025
Number of stations completed
The total number of stations
completed reached 1,000 in July 2024.
800
during the current fiscal year
600
400
200
0
Year 1
Year 2 Year 3382
656
Period 20/3 to 22/3 Period 23/3 to 25/3
[Electronic interlocking system for India] 656 stations were completed during the current fiscal year, and the total number of stations completed reached 1,000 in July 2024.
Approximately 200 stations are expected to be completed annually in the future.
[Self-driving bus demonstration test] Actively participate in demonstration tests by local governments for social implementation and gain results
Medium-Term Management Plan "KYOSAN Next Step 2028"-
Positioning of the Medium-Term Management Plan
Our group's vision in 10 years
The "KYOSAN Next Step 2028" medium-term management plan is the second step after the "Medium-Term Management Plan 2025," in which business foundations have been established in order to realize what we want to be in 2032, 10 years from April 2022.
2032/3
(See page 5)
Next medium-term management plan (FY 2029/3 to FY 2032/3)
2028
2025
Medium-Term Management Plan "KYOSAN Next Step 2028"
Creation of "New Value"
Target (FY 2028/3)
Orders received: 98 billion yen/Sales: 97 billion yen/Operating profit: 7 billion yen
2022/4
Previous Medium-Term Management Plan "Medium-Term Management Plan 2025"
Establishment of Business Foundation
Actual results (2025/3)
Orders received: 81.9 billion yen/Net sales: 85.3 billion yen/Operating profit: 6.1 billion yen
Basic Approach to the Medium-Term Management Plan
Creating "New Value" based on the basic views
The following issues will be taken as priority initiatives
① Expansion of Signal Systems Business and Power Electronics Business
② Promotion of DE & I and Improvement of Employee Engagement
③ Improvement of Financial Position
<< Basic Views > >
Establishing the KYOSAN brand recognized by the world and leading to the creation of "new value",
which is the essence of the new corporate philosophy.
New Value -> "Customer and Social Value", "Corporate Value", "Value of human resources"
The resolution of material issues, which are important management issues, will be broken down into 12 basic strategies, and the progress will be quantitatively managed by clearly indicating each of the initiatives, KPIs, and achievement periods for the next 3 years.
Our company's Material Issues
->"Contributing to Decarbonized Society", "Developing Innovative Products", "Strengthening Management Foundation and Governance", and "Enhancing Human Capital"
Materiality
12 Basic Strategies
Contributing to a
Decarbonized Society
Creating Social Value
① Reducing CO2 Emissions by Reducing Power Consumption, Reducing Size and Weight, Reducing Equipment, and Improving the Efficiency of Production Systems throughout our group
② Reducing Environmental Impact throughout the Product Life Cycle, from Development to Disposal
Developing Innovative Products
Creating Customer Value
③ Developing Products that Reduce the Burden of Customer Operations and Maintenance
④ Creating New Products and Services Using DX and Strengthening Intellectual Property Strategies
⑤ Creating New Businesses to Challenge New Global Markets
Strengthening Management Foundation and Governance
Creating Corporate Value
⑥ Improving productivity by transforming production processes and strengthening global supply chains
⑦ Forecasting potential needs and developing new markets through marketing activities
⑧ Strengthening group governance to maximize corporate value
⑨ Improving profitability of capital, investment for growth, and return to stakeholders
Enhancing Human Capital
Creating Human Value
⑩ Strengthening recruitment brands and securing human capital in line with business strategies
⑪ Developing human resources with a desire to grow and take on challenges, and strengthening organizational capabilities
⑫ Enhancing work environments and employee engagement by promoting DE & I
Signaling Solutions Business
Comparison of orders received overseas
Expansion of overseas markets, increasing customer value and acquiring new customers in japanese market
(Billions of yen)
67% increase
34
58
60
50
40
30
20
10
in the mid-term period (period-to-date)
[Expansion of Overseas Markets]
Orders for Electronic Interlocking System in India
Commercialization of New Products in India
Certification and Acquisition of Orders for Electronic Interlocking System in Europe (Poland)
[Increasing Customer Value and Acquiring New Customers]
GOA2.5 Commercialization of Automatic Driving and Wireless Train Control Systems
Commercialization of Products Utilizing CBM* to Reduce Customer
Maintenance Operations
Expansion of share of controllers and signal lights in the field of road traffic
*CBM (Condition Based Maintenance)
0
Period 22/3 to 25/3 Period 26/3 to 28/3
Electronic Interlocking System for
overseas markets(India)
GOA2.5 Automatic operation
Power Electronics Business
Power supplies for semiconductor manufacturing
Expanding Business Domain by Expanding Product Domain in the Semiconductor Market and Steadily
(Billions of yen)
45
61% increase
25
41
40
35
30
25
equipment in the mid-term period
Comparison of orders received (period-to-date)
Implementing Efforts to Acquire New Customers
[Expansion of Product Domain]
Expansion of Market Share in Power Supplies for Semiconductor Manufacturing Equipment
Expansion of Product Domain by Launching New Products
Reduction of Environmental Impact of Newly Developed Products
Development of High-Efficiency Power Supplies
[Acquisition of New Customers]
Expansion of Market Share in Power Supplies for Semiconductor Manufacturing Equipment
Continued efforts to deliver products to overseas customers
20
15
10
5
0
Period 22/3 to 25/3 Period 26/3 to 28/3
Example of power supplies for semiconductor manufacturing equipment
manufactured by KYOSAN (RF power supply)
KYOSAN's power supplies are incorporated into semiconductor manufacturing equipment and contribute to the manufacture of high-quality semiconductors.
Creating a Work Environment where Employees Feel Good
Promoting the expansion of the system so that employees and the company can grow together and become a company that is "easy to work for" and "challenges and growth are recognized".
[Important measures]
Measuring the results of system reform and implementing various measures based on the results of regular engagement surveys
Implementing diverse human resource development and support programs
Ensuring diversity in core human resources (Promotion of human resources regardless of age, gender, nationality, etc.)
Increasing the rate of male employees taking childcare leave
Increasing the percentage of female managers
Increase the employment rate of people with disabilities
Reform of the personnel system to encourage employees to take on challenges and encourage growth
Provide growth and career opportunities
(Billions of yen)
80
Amount invested in human resources
Overview of DE & I
62
74
Diversity
（多様性）
Belonging
（帰属性）
包摂性の
Equity Inclusion
（公平性） （包摂性）
60
40
20
0
Period 22/3 to 25/3 Period 26/3 to 28/3 (Actual) (Plan)
Toward realizing management that is conscious of cost of capital and stock price
Current Status and Future Policy
Our company's ROIC (5.0%) and ROE (9.4%) for the fiscal year ended March 2025 exceeded our company's estimates of WACC of about 3% and cost of equity of about 6% as of the end of March 2025, respectively. However, since the cost of capital has been below market expectations for a long time, PBR has remained below 1 times. Therefore, we recognize that the level of these indicators of return on capital is still insufficient.
Based on the medium-term management plan "KYOSAN Next Step 2028, " our company will focus on "Raising profit levels and improving ROE and ROIC itself" and aim to achieve the ROIC and ROE targets of 6% and 10% for the fiscal year ended March 2028, the final year of the medium-term management plan.
We believe that it is most important to increase corporate value and, in turn, share price by increasing profitability of capital itself, while continuing to close the gap with the level of expectations and requirements of investors through IR and other means, and aim to continuously improve corporate value by achieving the medium-term management plan and improving capital efficiency.
By achieving the medium-term management plan and improving capital efficiency Aiming to continuously improve corporate value
[Targets for the fiscal year ending March 2028]
ROIC 6%
ROE 10%
Improving Cash Flow and Improving Capital Efficiency by Balancing Growth and Financial Discipline
[Current Status]
While sales and profit increased during the previous medium-term management plan, B/S expanded due to an increase in working capital (especially inventories)
[Response Policy]
In order to improve cash flow and improve capital efficiency (ROIC, ROE), we aim to achieve both numerator measures (maximization of profit in P/L) and denominator measures (control of increase in invested capital in B/S, etc.)
In particular, for denominator measures, we will streamline company-wide B/S by clarifying financial discipline (KPI: D/E ratio: 0.5) and focusing on B/S control by business division by "reduction of inventories and cross-shareholdings → reduction of borrowings."
As of March 2022
Other assets 38
Other liabilities 42
Fixed assets 21
Net assets 44
Stocks 13
Inventories 39
Borrowings 25
ROIC
3.6% ROE
6.7%*
D/E ratio
0.56
March 2025 March 2028
Other assets 42
Other liabilities 41
Fixed assets 21
Net assets 51
Stocks 11
Inventories 50
Borrowings 33
ROIC
5.0% ROE
9.4%
D/E ratio
0.64
(Billions of yen)
ROIC
Other assets
Other liabilities
Net assets
Fixed assets
Stocks
Inventories
Borrowings
6% ROE
10%
D/E ratio
0.5
51
12
52
Profit
Operating
Net sales 85
Profit
Operating
Net sales 97
Sales 72
Total assets 112
Operrating Profit
2
*Insurance proceeds and fire losses
related to fire are excluded.
Total assets 126
6 8
Kyosan Electric Mfg. Co., Ltd. All rights reserved. 20
Shareholder Return Policy
Our group is engaged in businesses that have a high social and public nature, such as the Signaling Solutions Business, and we believe that we have a responsibility to provide a stable supply of high-quality products. Therefore, we will continue to strive to establish a solid management foundation over the long term and on an ongoing basis and to enhance our shareholders' equity.
Our group has formulated the "KYOSAN Next Step 2028, " a 3 year medium-term management plan that begins in April 2025, and will address the challenges of solving 4 materialities in order to establish the "KYOSAN brand recognized worldwide" and to create "New value".
Based on the principle of allocating a balance between necessary investments in each field to address issues and stable shareholder returns based on medium- to long-term profit levels, our company will pay dividends of surplus in the mid 2% range of DOE.
Dividends per share, dividend payout ratio and DOE * Forecast for fiscal year 26/3
(Yen)
25
20
88.0%
Interim Dividend
Year-end dividend
4.5%
5
18
15
10 4
100 year anniversary dividend Dividend ratio
2.7%
2.5%
2.7%
2.8%
2.7%
100.0%
80.0%
3.0%
2.6%
3
15 2.0%
5
5
10
DOE
1.9%
2.1%
2.3% 2.3%
4.0%
5
0.8%
12
10
13
13
60.0%
0.8%
4
18
1.2%40.0%
2.2%
1.8%
5
20.0%
1.4%
5
2
2.1%
8
6.5%
3
5
5
5
.5%
5 9
5
5
5
5
3
0
17/3 18/3 19/3 20/3 21/3 22/3 23/3 24/3 25/3 26/3
0.0%
1.0%
(Billions of yen)
2025/3 Results | 2026/3 Plan | 2027/3 Plan | 2028/3 Plan | |
R & D investment amount | 4 | 4 | 4 | 5 |
Capital investment amount | 1 | 2 | 2 | 2 |
Investment amount in HR | 21 | 24 | 24 | 25 |
*Investment in HR: Personnel, recruitment, and education
FY 2025/3 Results | FY 2026/3 Plan | FY 2027/3 Plan Plan | FY 2028/3 Plan | ||
Orders received | Signaling Solutions Business | 66 | 71 | 75 | 78 |
(Overseas) | 9 | 14 | 19 | 23 | |
Power Electronics Business | 15 | 15 | 17 | 20 | |
Total | 81 | 86 | 92 | 98 | |
Sales | Signaling Solutions Business | 71 | 71 | 74 | 77 |
(Overseas) | 10 | 12 | 15 | 18 | |
Power Electronics Business | 14 | 15 | 17 | 20 | |
Total | 85 | 86 | 91 | 97 | |
Operating income | 6 | 4 | 6 | 7 | |
Operating income margin | 7.2% | 5% | 7% | 8% | |
ROIC(%) | 5.0% | 4% | 5% | 6% | |
ROE(%) | 9.4% | 7% | 9% | 10% | |
D/E ratio | 0.64 × | 0.6 × | 0.6 × | 0.5 × | |
Notes
The forward-looking statements in this document are based on our company's judgment and assumptions based on information currently available to the company. Accordingly, due to uncertainties inherent in these judgments and assumptions, as well as changes in business operations and internal and external circumstances, actual results may differ materially from the forward-looking statements.
This material is for informational purposes only and is not intended to solicit any investment by our company.
Contact URL
https://www.kyosan.co.jp/inquiry/agreement.html