By enhancing our asset efficiency and cash generation capabilities and carrying out proactive investments in the fields of “Alcoholic Beverages,” “Food,” and “Soft Drinks,” we will realize sustainable profit growth and shareholder returns.
Generating Cash, Allocating Resources, and Strengthening the Financial Base
To increase our shareholder value over the medium to long term, there is a need for us to carry out proactive investments in growth fields. To this end, it is essential that we establish a robust financial base that allows for such investments.
Under the Sapporo Group Long-Term Management Vision “SPEED150,” we have designed a road map that splits the 10-year period from 2016 to 2026 into three terms. For the First Medium-Term Management Plan 2020, we are working to establish a robust financial base that will enable us to respond to changes in the business environment and capitalize on investment opportunities.
In doing so, we will proceed with preparations for reaching the next growth stage. In 2017, we generated ¥8.2 billion through the sale of cross-shareholdings in an effort to enhance our asset efficiency. Over the four-year period from 2017 through 2020, we will provide our customers with even higher levels of value through our products and services, thereby generating ¥180.0 billion in cash flows from operating activities. Of this amount of generated cash, we intend to allocate ¥130.0 billion to active investments in the growth fields of “Alcoholic Beverages,” “Food,” and “Soft Drinks,” which represent our core business areas. The remaining amount will be used to reinforce the stability of our financial base through the reduction of interest-bearing debt with the aim of reaching a debt-to-equity ratio of around 1.0 times. At the same time, we will meet the expectations of our shareholders and other investors by steadily carrying out shareholder returns in line with profit growth, keeping our sights set on maintaining a dividend payout ratio of around 30%. Also, we examine investment decisions from a broad range of perspectives, including how an investment aligns with our Management Philosophy and vision as well as the business environment, the conditions at our competitors, and the potential for growth and sustainability. We also give comprehensive consideration to the various kinds of risks that could occur in the future before making our final decision.
After executing an investment, we take steps to bolster our monitoring functions with an awareness of capital cost. Going forward, we will transition to a management structure that enables us to realize prompt returns on our investments.
Enhancing Awareness of Management Risks, Developing Response Measures, and Placing Importance on Financial Human Resources
We have assembled a portfolio of numerous businesses with differing business cycles and terms and are making diligent efforts to reduce management risks and curtail volatility. Furthermore, as a food manufacturer that positions “Alcoholic Beverages,” “Food,” and “Soft Drinks” as its core business areas, we are promoting business expansion not only in Japan but also overseas. We therefore maintain a sharp focus on risks related to raw material procurement and fluctuations in foreign currency translations while establishing methods to hedge these risks appropriately. In terms of procuring funds, we are working to lengthen and solidify procurement terms, diversify procurement methods, and standardize repayment schedules while taking into account such future risks as a rise in interest rates. As for taxes, we are developing measures to respond to the potential risk of tax system revisions in the countries where we operate. We are also promoting tax planning through the effective use of deferred tax assets and other means. In this manner, we are steadily creating measures to respond to foreseeable management risks. With that said, I feel that in recent years human resource-related risks have started to impact more significantly on financial performance.
Accordingly, I believe that there will be a greater need going forward for investments to secure outstanding human resources and for efforts to improve the productivity of each employee. I also believe that the relationship between employee satisfaction and the added value and cash flows we generate as a company will become even more important. Furthermore, as the Company’s financial divisions play a major role in improving corporate value, the human resources within these divisions need to have comprehensive strengths, such as an abundance of experience and a high level of skills and ethics. In the past, we emphasized enhancing the expertise of our employees in the financial divisions. However, we are now placing more importance on actively rotating personnel within these divisions on a Groupwide basis. Going forward, by having these employees experience working in different companies and offices and acquire skills related to finance, accounting, tax management, and globalization, we will develop financial human resources who have a high level of both expertise and flexibility.
Promoting Stakeholder Dialogues
It is essential for the financial divisions to be able to envision how the events that occur on the front lines of the Company’s business operations will eventually impact our financial statements. To this end, we place importance on adopting an “analog” approach, even in the digital era, that puts particular emphasis on face-to-face communication. We adopt the same kind of approach when dealing with our shareholders and other investors as well as with financial institutions, promoting engagement that focuses on identifying common ground with these parties while keeping in mind the points that interest them most. From the first quarter of fiscal 2018, we have voluntarily transitioned from the Japanese generally accepted accounting principles (JGAAP) to International Financial Reporting Standards (IFRS). As we are diversifying our businesses and moving forward with globalization, this transition will help us reach appropriate management decisions by establishing uniform accounting standards across the Group. In addition, this transition will stimulate dialogues with our stakeholders by allowing them to better compare our financial information with that of our competitors.
To improve our corporate values, it is crucial that we receive the blunt but fair opinions of our shareholders and other investors and engage in meaningful dialogues with them. As the director of corporate finance, I will make sure that the Company puts forth the utmost effort to realize increases in corporate value so that we can meet the expectations of our shareholders and other investors. I therefore ask for your continued support and understanding as we work to do so.