■Mid-term Management Plan

1. The long-term vision 'Century 2025'

Mitsumikiko <1961> announced its long-term vision 'Century 2025' in March 2016 as a 10-year target toward its 100th anniversary. The first three years of this plan (from FY2017 to FY2019) are referred to as Phase 1, the next three years (from FY2020 to FY2022) as Phase 2, and the final four years (from FY2023 to FY2026) as Phase 3, with various 'qualitative objectives' and 'quantitative objectives' set for each Phase. As of the FY2023, the plan has entered Phase 3, the final stage of 'Century 2025', and the ultimate goal of this plan is expected to be achieved ahead of schedule in FY2025, one year before the final fiscal year of FY2026, leading the company to declare the 'completion of Century 2025'.

2. Basic Policy of Phase 3

Phase 3 serves as the mid-term management plan that finalizes the long-term vision 'Century 2025', further maturing and evolving the initiatives that have enhanced 'quality' and 'trust' while aiming to become a company that is more 'chosen' by stakeholders through three new initiatives: 'contribution to the sustainability of society', 'acceleration of work style reform', and 'investment towards the next generation'.

3. Performance Targets and Management Objectives of Phase 3

● Performance targets and actual values for the final year

The quantitative targets for the final year, FY2026, aim for revenue of 220 billion yen, a gross profit margin of 16.5%, an ordinary profit of 12 billion yen, a dividend payout ratio of over 50%, and an ROE of over 8.0%, but as shown in the table below, these targets are expected to be achieved during FY2025.

4. Progress of the Mid-term Management Plan

(1) Strengthening Core Business

1) Construction Equipment Business

・A new design department has been established, enhancing the ability to respond to large and special projects focused on industrial air conditioning, with a significant increase in the order volume of large-scale construction related to Semiconductors and EV Battery. Collaborating with the design departments of each location, strengthened design reviews from the initial estimation stage. This aims to reduce rework and further improve quality.

・In collaboration with a startup company, an application is being developed to streamline office design operations through facility systems.

2) Machinery Systems Business

・To strengthen the ability to respond to automotive-related projects, the number of sales personnel in the Chubu region has been increased.

・The automatic sorting system "Meris Bianka (R)" received the Good Design Award for the 2024 fiscal year.

3) Environmental System Business

・Received an order for the largest water reclamation center in Japan, "Morigasaki Water Reclamation Center Digestion Gas Power Generation Project" (DBO method※). Strengthening the system to develop a stable long-term Business.

※ DBO (Design Build Operate): A PPP (Public-Private Partnership) method where design, construction, and operation and maintenance are contracted to private operators in one package. In this project, the company will construct the facility by March 2027 and will maintain and operate it for 20 years.

(2) Promotion of Growth Strategy

Promotion of the "Earth MIRAI Project"

・An internal project that pursues new technologies and business areas for the next 100 years. It solicits ideas under the theme "Unique and New Comfort for the Future" from all group employees and aims for their concretization. It explores the enhancement and feasibility of projects selected in the first and second phases.

(3) Enhancement of the Mitsubishi Brand

Certified as an "Environmentally Sustainable Company" by the Ministry of the Environment.

Continued contribution to the Antarctic Region observation project has led to recognition as a "National Institute of Polar Research Antarctic Observation Partner Company."

In the Ministry of the Environment's "ESG Finance Award Japan," companies that incorporate "significant environmental opportunities and risks" into their management strategies, balancing corporate value enhancement and environmental initiatives, are certified.

(4) Disclosure of financial and capital policies.

Disclosure of the policy on the reduction of policy-held Stocks.

By the end of March 2028, the goal is to reduce policy-held Stocks to less than 20% of consolidated net assets, with a target of reducing the number of listed stock brands and amounts by more than 50% from the end of March 2024.

Cash obtained from the sale of policy-held Stocks will be utilized for investments aimed at enhancing corporate value for the next generation.

(5) Enhancement of information dissemination capabilities.

Participation in the elementary school event "Environment One-Day School."

Participated as a special sponsor in the "Environmental One-Day School" event for elementary school students organized by Asahi Shimbun, holding lessons on global environmental issues for approximately 120 elementary school students. As part of this event, off-site classes will also be conducted at elementary schools nationwide.

Strengthening the brand communication of the three-machine brand through Broadcasting outlets such as Television and newspapers.

Advertised in the July 21st broadcast of the TV Tokyo series "I Got to Ride on the Antarctic Research Vessel 'Shirase'!" (company employees appeared as part of the 64th and 65th Antarctic Regional Observation Teams).

The company appeared in the September 15th broadcast of the TV Tokyo series "Why Don't You Quit Your Job?" and has made the archived video available on the company's YouTube channel.

(6) Contribution to societal sustainability.

Participated as a special partner in the "Coral Project" at Okinawa Institute of Science and Technology Graduate University (OIST).

In addition to supporting forest creation through tree planting and nurturing activities previously carried out, the company supports conservation activities for coral reefs, also referred to as "marine forests," expanding its environmental conservation activities more comprehensively.

Miki Environmental Garden*1 was certified by the Ministry of the Environment as a "Reiwa 6th Year First Half Natural Coexistence Site"*2.

Obtained SBT (Science Based Targets) certification for greenhouse gas reduction targets.

The validity of the targets for achieving net-zero greenhouse gas emissions by 2050 and the 1.5°C level greenhouse gas reduction target for 2030 has been recognized, and SBT certification has been obtained from the international initiative 'SBTi' which promotes the establishment of medium- to long-term greenhouse gas reduction targets based on scientific evidence for companies.

※1 A green space of about 0.23 hectares within the Sangki Techno Center (Yamato City, Kanagawa Prefecture), based on the concept of coexistence between humans and the natural environment.

※2 An area recognized by the government as 'regions where biodiversity is preserved through private initiatives,' aimed at achieving the international goal '30by30' which aims to protect and conserve more than 30% of global land and ocean by 2030.

(7) Accelerate work style reform.

Promote the in-house project 'Smile Project' launched in FY2015 to create a more conducive working environment across the company.

Enhance monitoring of working hours and computer usage time, and improve business processes.

(8) Investment for the next generation.

Accelerating the DX of architectural equipment construction (beginning the deployment of multi-purpose applications utilizing robotic technology).

Addressing the industry challenges of labor shortages and long working hours by enhancing construction productivity and quality through the use of robotic technology.

Applying the technical know-how obtained from site introduction of a self-developed automatic air volume measurement robot in 2020 to traditional measurement tasks such as noise and illuminance, aiming to reduce labor hours by having robots replace these tasks.

Developed the "BB Sorter TM" (sorting device) which is an evolution of the "Branch Ball" (three-way branching device) and exhibited it at the "International Logistics Comprehensive Exhibition 2024" held at Tokyo Big Sight. It can gently convey and sort not only cardboard boxes but also thin items such as envelopes and bags of clothing, accommodating mixed items of different conditions during transportation.

To expand the production of Aero Wing (energy-saving air dispersion device), enhancing production capabilities at overseas factories in addition to strengthening production facilities domestically.

(Written by FISCO guest analyst Noboru Terashima)