■New Mid-Term Management Plan
2. New Mid-Term Management Plan “Phase 2”
In addition to internal and external environmental changes, a new four-year medium-term management plan, which is the “second phase,” was formulated in response to the fact that the “first phase” ended well, the business environment for urban redevelopment was better than expected, such as the peak falling behind 2027, and the fact that countermeasures have been steadily taken ahead of the 2024 issue, etc., and it started in 2024/4. In the “second phase,” NEC ＜1723＞ plans to actively invest in DX promotion aimed at improving productivity, strengthening human capital such as securing, developing, and utilizing strategic human resources and strengthening the system of partner companies in order to expand the growth base and improve productivity. In particular, the policy is to proactively address labor shortages, which are medium- to long-term issues. In response to the start of applying overtime upper limit regulations in 2024/4, it is a policy to continue selective order acceptance activities that take into account construction capacity, profitability, and whether or not maintenance contracts are possible after completion, and to promote productivity improvements through human resource securing, human resource development, and DX promotion. For human resource development, the specialized department “Electric Technology Academy” for human resource education was established in 2024/4. New graduate employees are originally required to do on-site OJT after 1 month of training, but since the site is extremely busy, the policy is to efficiently raise the construction quality of new graduate employees, and by extension young people, by concentrating on training for 1 year at the “Electric Technology Academy” at the head office, and further lead to early workforce development and prevention of turnover. Furthermore, they are considering expanding the “Electric Technology Academy” to human resource development and infrastructure strengthening for partner companies to support the company's medium- to long-term growth.
As financial targets, we aim for ROE of 10% or more, sales of 42 billion yen (air conditioning instrumentation-related business 36 billion yen, industrial systems-related business 6 billion yen), and operating profit of 6.5 billion yen for the fiscal year ending 2028/3. The scenario is that the air conditioning instrumentation-related business will drive business results, and the industrial system related business will also establish a profit increase system, but profits are not expected to grow significantly. This is due to the fact that profits are already at a very high level, such as clearing the initial target value of “ND For The Next 2030” in the “first phase” stage (it is also in the midst of high raw materials and depreciation of the yen, and maintaining such a high profit level itself seems to have a high level of difficulty), and the fact that funds are proactively invested to strengthen human capital. The idea is that this will lead to a leap forward in the “3rd phase” and the achievement of the long-term management guideline “ND For The Next 2030.”
As a non-financial target, the plan is to continue aiming for sustainable corporate management and accelerate ESG management. E (Environment) aims to accelerate efforts to respond to climate change, disclose information based on TCFD*1, and set SBT*2 targets consistent with the standards required by the Paris Agreement. Therefore, a climate change response project team will be established in 2023/10 for the purpose of contributing to the realization of a decarbonized society, calculation of the group's greenhouse gas (GHG) emissions (Scope 1 to 3) will begin, and SBT targets will be set to obtain SBT certification. In S (society), enhancement of human capital and maximization of human resources are set as medium- to long-term strategies, an internal environment is prepared with the aim of creating workplaces where diverse human resources can play an active role, expand recruitment and reduce turnover rates, and target a 1,100 person system by 2030. Therefore, we will proceed with the use of the “Denki Academy”, revisions of wages such as starting salary and base annual income, etc., and a review of the personnel system, etc., and also aim to raise awareness and motivation through an official partner agreement with the men's professional basketball team “Chiba Jets.” G (governance) aims for an effective governance system that complies with the Corporate Governance Code for sustainable growth and medium- to long-term corporate value improvement. Therefore, in addition to enhancing English disclosure and coverage support, and enhancing the IR*3 system centered around the Corporate Communications Division, we will promote management that is conscious of capital costs and stock prices.
*1 TCFD: A climate-related financial information disclosure task force established by the Financial Stability Board (FSB), which recommends that each company specifically disclose plans and current status of climate change initiatives.
*2 SBT (Science Based Targets) certification: An international certification indicating that GHG emission reduction targets consistent with the Paris Agreement have been set.
*3 Investor Relations (IR): An activity where companies provide shareholders and investors with information necessary for investment decisions, such as financial status.
(Written by FISCO Visiting Analyst Miyata Hitomitsu)