To guide us as we grow steadily over a medium to long term and raise its corporate value under our new Corporate Philosophy while contributing to the realization of a sustainable society, the Morinaga Group has formulated the 2030 Business Plan for the long term up to 2030. In this plan, we will integrate vitally important management issues both financial and non-financial and practice sustainable management.
To express the state that we intend to reach in 2030, we have formulated our 2030 Vision, which reads: “The Morinaga Group will change into a wellness company in 2030.” Defining wellness as a state where, based on a healthy mind, body and environment, one pursues and achieves a truly fulfilling, rich life, we will endeavor to become a company that will continue providing our customers, employees, and society with the three values of the health of the mind, the body, and the environment. We will further evolve reliability and technology built on in its 120-year history to support people’s wellness lifestyles in all generations.
Morinaga’s Concept of “Health of Mind”
We have formulated three basic policies and business plan based on the backcasting approach
Policy 1
Improve profitability via business portfolio optimization and structural reforms
We have chosen “in-,” that is centered on in-Jelly and other “in-” brands, Direct marketing, the U.S. businesses and Frozen desserts and designated them the focused domains. This concentration will drive the group’s growth.
We have designated businesses such as the confectionery and foodstuffs businesses that are expected to report steady sales increases and higher earning power as the basic domains. They are expected to generate stably investment resources in the focused domains.
We refer to the creation of new business models, the development of wellness products for the global markets, and other new initiatives collectively as the exploration and research domain. We will develop new businesses to shoulder our next-generation growth.
In order to generate investment resources in the focused domains, as well as to prepare for various management risks, we will execute structural reforms group-wide but particularly on functional sectors such as procurement, manufacturing, logistics, and sales & marketing, thereby supporting the increase in the group’s earning power.
Policy 2
Build business foundation linked with business strategies
In linkage with the business strategies aimed at achieving the 2030 Business Plan, we will maximize the resources indispensable for management, i.e., human resources, technology, cash, and digitalization, to strengthen the business foundation even further. At the same time, we will continue to reform our corporate governance and increase the transparency of management.
Policy 3
Promote diversity
With the underlying belief in “leveraging each personʼs individuality,” we will strongly promote personnel diversity and inclusion, thereby putting in place the environment and corporate culture that will help create new values, or innovations, which in turn will lead to the resolution of social issues.
The 2021 Medium-Term Business Plan, whose initial year will be the year ending in March 2022, calls for business activities on the theme of a new foundation building for dramatic growth and as the first stage of efforts to achieve the 2030 Business Plan. Although raw materials price hikes, personnel cost rises, and other challenges in the management environment are expected to continue over a long term, we will make proactive investments for the focused domains’ growth and the further bolstering of the business foundation. Meanwhile, through structural reforms mostly on the basic domains and the functional sectors, we will aim for a further improvement of our earning power.
We will invest our management resources intensively in the focused domains. Specifically, the investment purposes will include the expansion of the “in-” business centered on in Jelly and the direct marketing business including Morinaga Collagen Drink, the building of a high profitability structure for the frozen desserts business’s growth, and the enhancement of the HI-CHEW brand in the U.S. business.
Where the confectionery and foodstuffs businesses are concerned, we will concentrate our efforts on such mainstay brands as HI-CHEW, Morinaga Biscuits, and Morinaga Amazake to increase their sales and improve their efficiency and profitability, thereby establishing high revenue bases for these businesses in turn. Accordingly, we will stably generate investment resources in the focused domains.
By turning the manufacturing sector’s existing factories into smart factories, as well as optimizing the sales sector’s organizations, we will improve these sectors’ productivity, we will also apply digital technology group-wide to improve efficiency to raise the Morinaga Group’s earning power.
During the fiscal year ending in March 2022, we will launch a new research center, which will create new values and support business strategies in a cross-sectoral manner. We will also digitalize many business activities and exert efforts to raise the entire group’s productivity. Moreover, to build a truly solid business foundation, we will explore our next core network system.
The Morinaga Group’s basic policy is to increase corporate value sustainably and achieve stable and continuous shareholder returns using proactive investments in growth and by maintaining our stable financial base.
Aimed at achieving the 2030 Business Plan, we will contribute to all stakeholders by implementing “capital cost management” and maximizing corporate value.
Toward this end, we will enhance our financial management following the three main financial strategies outlined below.
The Morinaga Group is strengthening its system of implementing ROIC management according to the three perspectives of (1) corporate, (2) business operations, and (3) management of individual investments.
The commonality of these three perspectives is whether we can generate returns in excess of capital cost.
We will make management-level decisions based on financial assessments, as well as non-financial elements, and implement the PDCA cycle to increase growth potential and capital efficiency.
The Morinaga Group’s basic policy is to ensure a certain level of financial security in preparation for changes in the macroeconomic environment, uncertainty in the business environment, and management risks increase.
Furthermore, our basic rule is to maintain a Japan Credit Rating Agency, Ltd. (JCR) credit rating of A or above as a benchmark for financial security.
On top of this, referencing financial guidance for funding to satisfy demand, we will aim for the optimal capital structure holistically taking into account appropriate levels of cash on hand, capital cost and funding conditions.
The Morinaga Group’s basic policy is to offer stable and consistent shareholder returns backed by a solidified business foundation.
As for shareholder returns, we will seek to raise dividend on equity (DOE), an indicator of capital policy, over the medium- to long-term while considering dividend payout ratio level and free cash flow and ensuring a sound balance sheet.
In addition, we will also consider prompt approaches to share buybacks as needed with an eye toward the total shareholder return ratio.
