■ Long-term Growth Strategy

Secondly, initiatives for developing a general-purpose robot framework are worth mentioning. This is a robot development solution called the "GEBOTS framework" which stands for "labor-saving, personnel-reducing", "unmanned", "IoT" and "efficient development support" and provides these concepts. As a specific practical example, it is possible to automate inventory management operations in warehouses by combining the "GEBOTS framework" with "MCSL(Multi-Code Scan Library)", which can quickly and accurately read multiple barcodes/QR codes at the same time. It is a "software framework" that solves issues faced by customers in other industries such as agricultural and livestock industry, shipping industry, railway industry, etc., using the technical expertise gained from the NSW<9739>'s development experience in the automotive industry. Its features include a control software framework that adds necessary functions for self-driving cars and ADAS to the existing driving devices, the realization of self-positioning estimation and peripheral information detection by using RTK-GNSS/LiDAR/cameras/various sensors, connection with various equipment by customizing interface SW modules of various sensors and driving devices, integration by modularizing unique functions such as image recognition/AI/IoT, and collaboration with dynamic management systems and provision of collaboration APIs for customer applications.

In addition, as other activity achievements, there is an initiative to use satellite data to analyze topography, aiming to utilize data for disaster prevention and civil engineering work, realizing short-term, uniform, and accurate analysis by satellite data+AI analysis compared to empirical knowledge and implicit judgment by conventional civil engineers. Additionally, as a contribution to the IOWN (Innovative Optical and Wireless Network), they are promoting a plan to optimize the integration of multiple resources with different layers as a hub by utilizing network design construction, communication protocol, monitoring control, virtualization technology, and automation technology. In the modernization effort, they are promoting joint verification and research with Scalar Co., Ltd. as a COBOL modernization solution, and in the effort to utilize RealWear×Generative AI, it is now possible to accurately question AI even in noisy environments by inputting voice questions from RealWear, an industrial smart glass, and answering with documents and diagrams from learned procedures and data by Generative AI. They are also considering utilizing Generative AI securely in their business/development in the future.

3. Performance Targets and Segment Plans

By promoting these key strategies, the sales target for the final year of the plan in the March 2025 period is set to be ¥500,000 million(revenue 15.1% higher than in the March 2022 period, average annual growth rate of 4.8%) and operating margin of 11% as the performance target. It is planned to achieve an increase in revenue and profit through the four-segment system, which started in the March 2023 period, and maintaining an overall operating margin similar to that of the March 2022 period. This is a conservative plan that shows the minimum goal that the company aims to achieve in three years. In fact, sales and operating margins exceeded the targets in the second year of the 2024 period, and it is expected to exceed the targets in the final year of the March 2025 period. We should pay attention to the progress of the current period.

The business policies and progress of each segment towards achieving the medium-term management plan are as follows:

(1) Enterprise solutions

We will promote DX offerings that utilize expertise from various industries. For the distribution industry, we will promote ESL/shortage detection/customer service/delivery/EC integration, for the manufacturing industry, we will promote ERP* /digital production support/logistics reform/AI diagrams, for the logistics industry, we will promote AI delivery/image recognition/robotics/scm for wholesalers, for the finance industry, we will promote cloud shift/modernization, for the public sector, we will respond to digital government policies, etc. By implementing these measures, we plan to achieve sales of 170 billion yen (a 14.1% increase from the previous fiscal year) and an operating margin of 13% (compared to 13.2% in the previous fiscal year) by March 2025. In the second year of the medium-term management plan, which is the fiscal year ending March 2024, we have secured sales and profit margins significantly exceeding our plan, and we also expect to achieve our plan in March 2025.

* Enterprise Resource Planning is a system that enables companies to centrally manage their management resources and utilize them for real-time management decision-making.

(2) Services and Solutions

We will enhance our approach to customers' DX divisions to promote DX, and expand the areas of business model transformation and cloud-native, as well as expand data management. By implementing these measures, we plan to achieve sales of 140 billion yen (an 18.1% increase from the previous fiscal year) and an operating margin of 7% (compared to 4.4% in the previous fiscal year) by March 2025. There is a prospect of profit improvement as costs for strengthening the organization and unprofitable projects disappear. Accordingly, we plan an increase in the operating margin. While we achieved an increase in profits in the fiscal year ending March 2024, the profit margin was lower than planned. We need to eliminate low-profit projects to improve profits, which is a challenge. In the expected fiscal year ending March 2025, we expect to achieve sales but the operating margin is expected to be challenging.

(3) Embedded Solutions

We will promote the creation of services using existing embedded technology areas, promote the field of edge computing, and strengthen and expand businesses targeting growth areas such as self-driving cars, 5G/6G, etc. By implementing these measures, we plan to achieve sales of 100 billion yen (a 13.5% increase from the previous fiscal year) and an operating margin of 13.5% (compared to 13.8% in the previous fiscal year) by March 2025. We achieved sales and profit margins exceeding our plan in the fiscal year ending March 2024, and we also expect to achieve our plan in March 2025.

(4) Device Solutions

We will expand design services based on LSI development technology, expand to cloud design services, promote business initiatives centered on Deep Learning, etc. By implementing these measures, we plan to achieve sales of 90 billion yen (a 14.0% increase from the previous fiscal year) and an operating margin of 14.5% (compared to 15.3% in the previous fiscal year). Although we expect a decrease in operating margin, we are still expecting a high level of profit margin. We achieved higher profit margins than planned in the fiscal year ending March 2024. We expect to achieve sales in the fiscal year ending March 2025, but the profit margin is expected to be challenging.

(Written by FISCO guest analyst Nozomi Kokushige).