Apr. 26, 2019
Starting in April this year, Komatsu Ltd. (President & CEO: Hiroyuki Ogawa) and its consolidated subsidiaries (together "Komatsu") have embarked on the new three-year mid-term management plan (FY2019-2021), "DANTOTSU Value -- FORWARD Together for Sustainable Growth" for its 100th anniversary in 2021 and beyond. Under the new mid-term management plan, we remain committed to Quality and Reliability, as the management principle, and maximized our corporate value, the total sum of trust from society and all our stakeholders. To this end, we work for sustainable growth through a positive cycle of improving earnings and solving ESG issues, which is driven by growth strategies.
Demand for construction and mining equipment had remained in an adjustment phase, as affected by sluggish prices of commodities and the economic slowdown of emerging countries since around 2013. However, it began recovery in 2017, earlier than our assumption, when we developed the previous mid-term management plan (FY2016-2018). Under such an environment, we steadily captured demand while working to strengthen our corporate muscle, and integrated Komatsu Mining Corp. (hereafter "KMC") to the Komatsu Group. As a result, we posted expanded sales and profits for the last two consecutive years of Fiscal 2017 and 2018. For FY2018, the final year of the previous mid-term management plan, we also achieved record-high sales and profits.
Today, protectionism is growing around the world, and multipolarity is becoming evident. We are also witnessing growing concerns over climate change. As the external environment is changing dynamically, in the construction, mining and utility equipment business, we assume gradual growth of the demand in the mid to long range, the volatility will remain high in the short range. In the industrial machinery and others business, we anticipate a structural change of demand in the automobile manufacturing industry, mainly resulting from ongoing advancement of electric Vehicles in production. Concerning demand in the semiconductor manufacturing industry, we expect it will certainly grow in the mid to long-range, while we anticipate it will experience some temporary adjustments.
In this new mid-term management plan, we uphold three new pillars of growth strategies of 1) value creation by means of innovation, 2) growth strategies based on business reforms, and 3) structural reforms for growth. By making priority investment in growth areas based on the three pillars of growth strategies, we will strive for sustainable growth through a positive cycle of improving earnings and solving ESG issues without being affected by changes in market demand.
To promote the three pillars of growth strategies, we need to advance and enhance the level of DANTOTSU products, DANTOTSU service, and DANTOTSU solutions, for which have continued to make efforts, at a faster speed, and realize safe, highly productive, smart and clean workplace of the future with customers by creating DANTOTSU value (ESG solutions through the creation of customer value and improvement of earnings). In this manner, we will help solve ESG issues through our core business by offering high-quality, high-performance products, service and solutions ensuring safety and reduction of environmental impact in response to climate change. We will strive for sustainable growth through linking every workplace and generate value through DANTOTSU with our global teams, customers, distributors, partners and communities.
【Management Targets】
In addition to continuing the targets of Growth, Profitability, Efficiency, and Financial Position, upheld in the previous mid-term management plan, we have newly set the management targets of ESG indexes. As we are going to place priority on focused investment in growth strategies, with respect to shareholder return, we will continue to work for stable dividends for shareholders and maintain the policy of keeping a consolidated payout ratio of 40% or higher.
