Announcement Regarding the 1st Medium-Term Management Plan

KOITO MANUFACTURING CO., LTD. ("KOITO") announces that KOITO resolved the 1st Medium-Term Management Plan for the three-year period from FY2025 to FY2027 at the Board of Directors held on March 28, 2024 as follows.
  Please refer to the attached document for details. 

1. Background the Formulation of the 1st Medium-Term Management Plan

In the automotive industry, there are concerns about a decline in the market share of Japanese OEMs in the global market, the increasing shift to EVs in China and elsewhere in the world, and the expected acceleration of the spread and advancement of ADAS (Advanced Driver Assistance Systems) and autonomous driving technologies.
  In addition, while population growth and rising income levels are expected in emerging countries, the external environment surrounding our company remains uncertain and is expected to become even more challenging in the future due to soaring labor costs and declining labor force participation in developed countries.
  Under these circumstances, as the first step toward achieving KOITO VISION "Lighting the Way for Our Sustainable Future" formulated in November 2022 and the "Management Plan 2030", we have formulated the "1st Medium-Term Management Plan" with the basic policy of laying the foundation for significant growth as a leading company of automotive lighting equipment by "strengthening profitability" through investments in automation of production lines and other investments for future growth and rationalization.

2. Basic Policies of the 1st Medium-Term Management Plan

Building a Strong Revenue Base

・In order to build a strong revenue base, we will promote rationalization activities appropriate to each plant, such as reviewing product design / structure and innovative manufacturing through make use of digital technology, such as automation of production lines, to further strengthen our competitiveness.

Expansion of Sales and Production System

・Achieve 5% CAGR growth on consolidated net sales through increasing sales to Japanese OEMs exceeding the automotive market growth, as well as doubled sales to non-Japanese OEMs.
・In line with expansion of sales, we will strengthen our production system at multiple sites around the world, including Mexico, Brazil, India, and Japan.

Investment in Growth to Create Products and Technologies Required by Society

・Under the basic theme of "light", we will invest for the future growth, mainly in mobility business.
・Investment decisions are made based on appropriate criteria and processes, withdrawal conditions are set for each investment, and monitoring is conducted regularly

3. Financial Strategy

We will make proactive investments while securing financial soundness

We will implement buybacks for optimizing capital structure and implement shareholder returns by stably increasing dividend level.

4. Management Indicators

 ・Toward FY2031, we set targets for FY2027: net sales of 1 trillion yen or more, operating profit margin of 8%, and ROIC and ROE of 9% or more. 

5. Shareholder Return Policy

We aim to achieve shareholder returns of 200 billion yen or more (cumulative total for the five-year period from FY2025 to FY2029).

Regarding dividends, based on the basic policy of stable and continuous dividend payments, we aim to maintain a consolidated dividend payout ratio of 40% or more.

In addition, as part of the above-mentioned shareholder return measures, the Board of Directors today approved a resolution on matters related to the acquisition of own shares.
  For details, please refer to the "Announcement Regarding Determination of Matters Related to Acquisition of Own Shares" announced today

(Reference)
In formulating the 1st Medium-Term Management Plan, we invited outside experts to the Capital Management Committee meeting (five times in total) to discuss medium- to long-term management strategies. 

Attendee of the Committee (3 external and 1 internal / Michiaki Kato, President and COO of KOITO)

Taneki Ono
New York State Attorney
Former Partner Managing Director of Goldman Sachs
Former Senior Managing Executive Officer of Japan Post Holdings Co., Ltd.
Outside Director of PCI Holdings, INC.
Outside Director of AVILEN, Inc.

Koji Nitto
Former Director, Senior Managing Executive Officer, Chief Financial Officer (CFO),
Global Strategy HQ of OMRON Corporation
External Director of Wacoal Holdings Corp.
Director of Japan Association for CFOs
Member of Corporate Restructuring Study Group, Ministry of Economy, Trade and Industry (FY2021)

Haruya Uehara
Outside Director of KOITO
Senior Advisor of Mitsubishi UFJ Trust and Banking Corporation 

Announcement Regarding the 1st Medium-Term Management Plan