With the COVID epidemic largely under control the Japanese economy is gradually recovering. Simultaneously, however, the economy has been affected by heightened geopolitical risk from the Russian invasion of Ukraine, trends in the Chinese economy, surging material and commodity prices, and the prime rate increase in the United States, making it difficult to develop accurate forecasts. In response to this uncertainty, we are strengthening our foundation through the following initiatives.
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. We will continue these efforts, working to ensure that employees fully understand and help attain these goals, while further improving our internal systems.
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.
A job with 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 evaluate capability regardless of gender. The approach will nurture a new generation of leaders and increase the number of women in management positions. Other systems including preventing unduly long periods of work, ensuring similar pay for similar labor, and providing childcare support have also been further improved. The new corporate backbone, scheduled to enter service in July 2023, will provide additional labor productivity improvement and contribute to an even better workplace environment.
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 three 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.
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.
Shareholder incentives / Shareholder returns
Hereby, based on review our dividend policy in May 2019, we keep the payout ratio at around 30% of consolidated net profit and a dividend as JPY30 per stock( in case the consolidated net profit is lower than all amount of the dividend, given dividend to be range of the profit).
Also, we have practiced interim dividends and dividends of surplus twice a year to enhance passing on of profits to our shareholders since 2015. However, to reinforce further return to the shareholders, we finally introduced shareholder incentives plan and gifted JPY1,000 QUO card( more than 3 years tenure will give you JPY1,500 QUO card) to our shareholders who have more than 100 stocks in end of March. In addition, for the year ending March 2021, we plan to add a commemorative dividend of JPY7 to the ordinary dividend. NANYO will try to have active return to all shareholders as securing of safety and soundness in management continuously.
Construction of new system
We are working on the development of a new core system that will be operational in 2023.
The purpose of new system development is the following four points.
The first is to improve the efficiency of daily work. We aim to improve the work environment and improve profitability.
The second is the enhancement of internal control. We aim to control mistakes and fraud.
Third is the strengthening of system cooperation for the entire NANYO Group. We will share information within the organization and improve the speed of accounting. By unifying the databases in the NANYO Group, we will facilitate information sharing within the organization and at the same time increase the speed of accounting to improve the speed of decision-making and the speed of transmission of accounting information.
Fourth, we aim to improve safety by strengthening security.
As much as possible, we will shift to cloud services and build a system that can respond to attacks from the outside that frequently occur in companies.
Going forward, we will continue to strive to improve operations and productivity while incorporating advanced technologies, etc., in line with the times.
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.