■Medium- to long-term growth strategy

1. Transition to a corporate structure that can respond to changes

Fuji Dice ＜6167＞ formulated a “medium-term management plan 2026” under the new president, and based on the fact that the final year of the plan was not achieved due to high resources, stagnation in the Chinese market, delays in recovery in the auto parts industry, etc., the concept of “transformation to a corporate structure that can respond to changes” was set up as a new concept in the previous medium-term management plan. Specifically, the management base was strengthened, and in addition to aiming to improve productivity and work efficiency, leap forward in overseas business that did not necessarily produce expected results in the previous medium-term management plan, and establish new businesses, contributions to a decarbonized and circular society, which has recently been a theme, were defined as important measures.

Sales of 20 billion yen, operating income of 2 billion yen, ordinary profit margin of 10.5%, and ROE of 7.0% were set for the final year ending 2027/3 as specific consolidated numerical targets for the “Mid-Term Management Plan 2026.” The previous medium-term management plan aimed for sales of 20 billion yen, operating income of 2.5 billion yen, and operating profit margin of 12.5% for the fiscal year ending 2027/3 as phase 2, but operating income was reduced by 0.5 billion yen based on the financial results for the fiscal year ending 2024/3. In this way, profit assumptions were lowered against Phase 2 of the previous medium-term management plan, and it was stated that they would focus on achieving profit by increasing sales growth more than before.

Regarding the current medium-term management plan, based on the fact that earnings deteriorated in the 2024/3 fiscal year and ended unachieved in the final year of the previous medium-term management plan, the new president's cautious attitude can be seen, and it seems to be the minimum target value. In fact, in terms of profit, one-time expenses at the Kumamoto Plant in the previous fiscal year, and the occurrence of an unexpected situation with LIB molds, were factors in which profits were not achieved, and originally, we are developing a business with a high marginal profit margin, and it is an enterprise structure where profit margins can be raised rapidly once sales return. First, on the assumption that there is no irregular decline in sales in the 2025/3 fiscal year, the gross profit margin is thought to return to a profit margin of about the fiscal year ending 2023/3, and there is an expectation that profits will increase if sales are achieved. Furthermore, operating profit of 1,500 million yen was achieved in the fiscal year ending 2026/3, and the key point is whether the highest profit can be updated with operating income by surpassing 1,465 million yen for the fiscal year ending 2018/3, but it seems to be a figure that can be sufficiently cleared due to new product effects, etc.

Below, we will look at the future direction of the main items of the company's medium-term management plan, mainly in strategic fields.

2. Contributing to an oxygen-free and recycling-oriented society

(1) Next-generation automobile-related

The company's policy is to actively develop and market products that contribute to the formation of a decarbonized and recycling-oriented society as part of its important policies, but in particular, in business expansion, it is extremely important to respond to the automobile industry, which is the biggest demand destination. Therefore, it continues to focus on rechargeable batteries, motor cores, and magnet-related matters.

In rechargeable battery case molding dies, demand is recovering from bottoming out due to the recent strong performance of HEVs. The company has been promoting square support from the past, but the cylindrical type was hurt by the current US IRA law. Therefore, in the future, we will make full use of precision mold processing technology and work on square LIBs in earnest. The automotive square LIB market is expanding at Prime Planet Energy & Solutions Co., Ltd., which was established as a joint venture between Toyota Motor Corporation ＜7203＞ (51%) and Panasonic Holdings ＜6752＞ (49%), and it is expected that an increase in production of approximately 7 GWh/year will begin in 2024, and future expansion is expected once again.

Sales of die cutting dies for motor cores are expanding to Japanese motor core manufacturers. There are many domestic and international competitors in the same market. Currently, there are many applications for hybrids, but in anticipation of future expansion for EVs, a new material type VG48 was introduced. In EVs, thinning of electromagnetic steel sheets is necessary in order to expand the number of layers in response to requests for higher motor output, and the current 0.2 to 0.3 mm has been adopted, and the company is also developing new materials in anticipation of market trends. In manufacturers, there are movements where the lamination method is compatible with conventional dowel lamination using caulking to an adhesive method or exterior dowel method, etc. Also, it is necessary to be compatible with high-hardness electromagnetic steel sheets due to larger diameters, etc. In addition to requiring a mold material that is less likely to wear out for high-hardness electromagnetic steel sheets, it is easy to chip due to impact because of its high brittleness, high pitch resistance is required, and since it easily sticks to the mold, adhesion resistance is also required. VG48, which was included in the company's catalog in 2022/8, is a new material with excellent fracture toughness and abrasion resistance compared to conventional products, leading to longer life, and it has high material strength and excellent discharge processability even after processing by electric discharge processing in molds for complex products. Major expansion can be expected if manufacturer certification progresses in the future. The company aims to increase user options and expand market share by expanding its lineup of motor core mold materials. Also, recently, the manufacturing know-how of electromagnetic steel sheets from steel manufacturers other than Japanese companies has increased, and there are also movements where Toyota uses electromagnetic steel sheets such as the Baowu Steel Group, etc., and sales of mold materials will also be strengthened to local manufacturers in China.

Regarding magnets related to next-generation automobiles, demand for neodymium magnets is expected to continue to expand due to the full-scale expansion of EVs, mainly for automotive use, and the adoption of permanent magnet synchronous motors using neodymium magnets. The company supplies molds for powder molding, as well as molds and mold materials to overseas markets. Also, recently, integrated molding technology for motor cores and neodymium magnets has attracted attention, and adoption is increasing. This has various advantages, such as being able to minimize magnetic field line leakage by eliminating the gap between the motor core and neodymium, and can also drastically reduce vibration and noise. Therefore, demand is expected to expand along with the expansion of EVs. Overall, annual growth of 20% or more is expected, and sales expansion is expected to accelerate along with the acceleration of the spread of EVs.

For next-generation automobiles, we will work to expand sales of high thermal expansion/low specific gravity hard alloys (TR alloys) in the Chinese market in connection with autonomous driving. It is a product that was expected to be used as a mold base material for chalcogenide glass* as a material for far-infrared lenses, and there was a demand for a base material that has a higher thermal expansion coefficient than conventional glass and can be molded to materials that are sensitive to temperature changes. Specifically, it has 8MK-1, which is impossible with conventional binderless cemented carbides, and by making it close to the thermal expansion coefficient of glass, it is possible to suppress biting of glass material during mold release. In the future, it is expected that adoption for LiDAR will spread for ADAS (advanced driver assistance systems), which are frequently used in autonomous driving, etc. At BYD, which has the highest EV/PHEV sales volume in the world, the luxury EV car “HaneV” is equipped with a total of 6 LiDARs, 3 in the front and 3 in the rear. In China, service for level 4 fully autonomous taxis will also begin in 2023, and operation is about to begin for general vehicles. Demonstration tests are also being carried out one after another in other countries, and full-scale production expansion is expected. Furthermore, the same alloy is expected to be used not only in vehicles but also for ground side detection, and since it is also used for infrared lens mold applications for security surveillance cameras, etc., it has also been established that it is compatible with large diameter products. Sales will begin in 2024, and overall demand is expected to increase significantly.

* Glass containing sulfur, selenium, tellurium, etc. which are chalcogen elements instead of oxygen and is a glass material that transmits far-infrared rays and can capture objects as heat sources.

(Written by FISCO Guest Analyst Hiroshi Okamoto)