Mid-Term Business Plan 2012 (FY2010 to FY2012)
| Date : | May 28, 2010 |
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| Presenter : | President Takashi Yokokura |
Ⅳ Growth Strategies by Segment
Summary of the Presentation
| 1. | Mid-Term Business Plan (Background) | |
| TOPCON had been growing by supplying TM-1 products mostly manufactured in Japan and by conducting mainly our existing business with the focus on developed countries. After the Lehman shock, however, problems of our business model have been exposed. The effect of Lehman shock caused a contraction of our existing business because of economic stagnation in developed countries, and yen strength brought a huge impact on our exporting activities. Key tasks ahead for us are to focus on emerging countries not being too inclined to developed countries, shift our business to new fields with high growth potential, and change our business structure which enables us to manufacture TM-1 products where we can reduces the production cost and diversify forex risks. For realizing these aims, we have established new mid-term business plan policies and goals. |
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| 2. | Mid-Term Business Plan (Group Organization) | |
| We have set our policy for the mid-term business plan 2012, “renewed challenge toward profitable and sustainable growth,” along with strategies for “sales growth,” “cost reduction” and “promotion of CSR activities.” Reformation of corporate culture and structure” is the base of strategies above. Supplemental explanations will be shown in following sections “mid-term action plan” and “growth strategies” by segment. |
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| Performance Targets (Consolidated) | |
| (Million yen) |  |
| [Consolidated] | 2008 | 2009 | 2010 | 2011 | 2012 |
| Net Sales | 112,666 | 94,862 | 104,000 | 117,000 | 133,000 |
| Operating Income(loss) (OP Ratio) |
(6,944) (-%) |
1,405 (1.5%) |
2,700 (2.6%) |
6,500 (5.6%) |
12,000 (9.0%) |
| Ordinary Income(loss) | (9,326) | 545 | 1,400 | 5,200 | 10,700 |
| Net Income(loss) | (9,992) | 133 | 200 | 2,700 | 6,400 |
| ROE | -% | 0.3% | 0.5% | 6.6% | 14.4% |
| Total Asset Turnover Ratio (times/year) |
0.87 | 0.77 | 0.86 | 1.00 | 1.10 |
| D/E Ratio | 124.9% | 127.2% | 117.7% | 112.8% | 97.8% |
| Earning per Share (yen) | 10 yen | 4 yen | 4 yen | 6 yen | 14 yen |
| Dividend Payout | -% | 277.0% | 185.2% | 20.6% | 20.3% |
*Our earnings forecasts during FY2010 to FY2012 assume exchange rates of ¥90/US$ and ¥120/EURO.
| Performance Targets (Consolidated) | |
| (Million yen) | |
| [Consolidated] | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Net Sales | Positioning | 58,031 | 49,350 | 52,000 | 60,000 | 70,000 |
| Eye Care | 33,503 | 31,561 | 34,000 | 37,000 | 40,000 | |
| Finetech | 21,131 | 13,950 | 18,000 | 20,000 | 23,000 | |
| Total | 112,666 | 94,862 | 104,000 | 117,000 | 133,000 | |
| Operating Income (loss) |
Positioning | (5,275) | 6 | 500 | 3,000 | 7,000 |
| Eye Care | 1,620 | 1,963 | 2,000 | 3,000 | 4,000 | |
| Finetech | (3,288) | (564) | 200 | 500 | 1,000 | |
| Total | (6,944) | 1,405 | 2,700 | 6,500 | 12,000 | |
| 3: | Mid-Term Action Plan | |
| １:Sales growth strategies | ||
| ① | TM-1 products (Time to Market No1) - All three business units will launch TM-1 products and ensure profitability and sustainable growth. |
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| ② | New fields of business - All three units will enter new business fields and cultivate growing businesses. (Positioning: Agriculture, Mobile Mapping, 3D Measurement/ Eye Care: OCT, IT Solutions/ Finetech: LED, Substrate, high revenue devices) - Seeking M&A opportunities and alliance partners. |
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| ③ | Emerging counties and low-price markets - Positioning and Eye Care business will reinforce sales structure based on China and India, expand production capacity in China, and increase variation of low-price products. - Finetech business will focus on Asia where its clients exist. |
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| 2: Total cost reduction strategy | ||
| ① | Creating optimized production system as a global company All three units will integrate and optimize development/production sites and accelerate overseas procurement. |
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| ② | Restructuring the operation process All three units will focus on improvement of product quality and development efficiency. Pursue every avenue to find the suitable model for SCM. |
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| 4: | Growth Strategies by Segment | ||
| ① Positioning In terms of the construction market, our basic business, we will drive IT adoption and focus on the growing fields such as “precision agriculture,” “mobile mapping” and “3D measurement.” As an emerging countries strategy, we will also expand production capacity in China, reinforce our sales companies in India, found new sales companies in Middle East and develop sales in Africa from base in Spain. |
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| ② Eye Care As we stay focused on retinal camera which is our basic business, we will focus on growing fields such as “3D OCT,” “IT solutions” and “surgical equipment” as well. In addition, to cultivate emerging countries, we will launch low-end products called “e-line” and expand production capacity in China. |
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| ③ Finetech Our focus is shifting to produce profitable products along with the change in our product portfolio. In order to realize it, we have entered the substrate business and will launch “3D Inspection System” and ”Projection Steppers”. We will also focus on “LED Visual Inspection System” and “FPD backlight measurement” as well. In addition, in the field of devise, we will focus on profitable products such as pico-projectors, optical engines for super-wide angle projector and automotive devices. |
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Q&A
| Q. | Can you tell us about the growth potential projected by FY2012 in start-up business area of Positioning Business? |
| A. | We expect to double our net sales and increase 10% of our market share in precision agriculture market compared to the results in 2009. Net sales of mobile measurement and 3D measurement are expected to be quadrupled compared to the results in 2009. |
| Q. | How much will it cost for keeping up sales structure and infrastructures in each emerging country for Eye Care’s emerging countries strategy? |
| A. | It won’t be much expense. Since we will utilize what we already have, there are no major changes in sales structures or infrastructures. |
| Q. | Regarding the revision of Finetech’s portfolio, how much are you planning to shuffle? |
| A. | In a broad meaning, more than 30% of it will be shuffled including our targeting markets and the change of clients. |
-Cautionary Note regarding Forward-Looking Statements-
These materials contain forward-looking statements, including assumptions and projections based on the information available at the time these statements are made. However, please be aware that actual performance may differ from projected figures owing to unexpected changes in the economic environment in which we operate, as well as to market fluctuations.
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