Medium- to Long-term Management Targets

Medium- to Long-term
Management Targets

1. SUMINOE GROUP WAY POLICY

Focusing on our medium- and long-term “ideal corporate image,” we have established our policy through the fiscal year ending May 2027.


2. Financial targets

Three-year Consolidated Income and Expenditure Plan

(Million yen)
Actual results
Three-year Consolidated Income and Expenditure Plan (Fiscal years ending May 2022 to 2024)
FY ended May 2021 FY ending May 2022 FY ending May 2023 FY ending May 2024 Comparison with FY ended May 2021
Net sales 79,702 86,480 90,360 93,490 +13,787 +17.3%
Operating income 1,049 1,160 2,520 3,300 +2,251 +214.5%
(Operating margin) (1.3%) (1.3%) (2.8%) (3.5%)
Ordinary income 1,211 1,350 2,730 3,530 +2,318 +191.3%
Profit attributable to owners of parent 409 620 1,280 1,960 +1,551 +378.7%
ROE(%) 1.5 2.2 4.5 6.6
D/E ratio (times) 0.67 0.58 0.64 0.56

* Assumed foreign exchange rate: 105.95 yen for FY2021    Target exchange rate for three years: 103.00 yen

Growth Strategy by Business Segment:

Interior Fittings

Products: Curtains, carpets, rugs and mats, wallpaper, etc.


Advantages

  • Capability for development and sales planning of high-level and environmentally conscious products cultivated over the years
  • Proposals for planning, designing and coordination of the entire room space

External environment

  • Increased demand for environmentally conscious products
  • Decreased number of new housing starts
  • Profit deterioration risk due to higher materials costs
(Million yen) Actual results
Three-year Consolidated Income and Expenditure Plan (Fiscal years ending May 2022 to 2024)
FY ended May 2021 FY ending May 2022 FY ending May 2023 FY ending May 2024 Comparison with FY ended May 2021
Net sales 31,024 33,750 34,430 35,120 +4,095 +13.2%
Operating income 579 400 450 520 (60) (10.3%)
(Operating margin) 1.9% 1.2% 1.3% 1.5%

(Commercial carpets)

  • Increase product lineups and sales of ECOS® carpet tiles.
  • Shift from piece-dyed yarn to solution-dyed yarn.

(Household carpets)

  • Launch a new line of business to sell custom-made rugs.
  • Increase lineups of folding rugs.

(Curtains)

  • Strengthen strategy by sales channel of SUMINOE branded curtains.
  • Develop new products for housing.
  • Increase lineups of contract curtains, focusing on functionality mainly with anti-virus processing.

(Wallpaper)

  • Launch anti-virus wallpaper.

(Space design business)

  • Increase new customers.
  • Expand business to offices, hotels, etc.

(Others)

  • Enhance transmission and penetration of our brand image.
  • Strengthen directly operated EC business.

Automotive Textiles and Traffic Facilities

Products: Seat covering materials, floor carpets, ceiling materials, etc.


Advantages

  • A total range of automotive interior textile products, from ceiling materials to carpets and car mats, are provided.
  • A high level of technology and proposal capabilities cultivated over the years
  • Cooperation with the interior business division in development and design
  • A large market share in the Traffic Facilities business
  • Antibacterial and anti-virus treatments on the interior materials
Newly built railroad vehicles of 1000 series of Keikyu Corporation
Articulated bus “Port Loop” of Shinki Bus Co., Ltd.

External environment

  • Initiatives for decarbonized society have been enhanced.
  • The number of domestically produced automobiles has been decreasing.
  • CASE and MaaS
  • Rise of new EV manufacturers
  • Intensified price competition
  • Decrease in commuting and business trips due to penetration of teleworking
  • Decrease in the number of trains/buses owned
  • Increase in travelers in the post-pandemic era
(Million yen) Actual results
Three-year Consolidated Income and Expenditure Plan (Fiscal years ending May 2022 to 2024)
FY ended May 2021 FY ending May 2022 FY ending May 2023 FY ending May 2024 Comparison with FY ended May 2021
Net sales 45,102 48,980 51,910 54,170 +9,068 +20.1%
Operating income 2,102 2,800 3,590 4,170 +2,067 +98.3%
(Operating margin) 4.7% 5.7% 6.9% 7.7%

Automotive Textiles

(Japan)

  • Differentiation by designing synthetic leather sheets
  • Development of interiors for next-generation vehicles
  • Cost reduction through the optimization of material procurement
  • Development of products with higher profitability, those for new parts, those produced with less man-hours, and environmentally conscious products.
  • Development of fabric materials using new production methods
  • Horizontal development to overseas markets

(Overseas)

  • Optimization of balance of production by each company [North and Central America]
  • Enhance capability of decorating fabric materials. [China]
  • New order receipts for vehicles at which we have not targeted yet. [Thailand]
  • Local procurement and local production in response to safeguard measures [Indonesia]

Traffic Facilities

  • Increase sales of moquette and curtains with anti-virus treatment, and develop synthetic leather sheets.
  • Develop environmentally friendly fabrics.

(Railway vehicles)

  • Increase order receipts for renovation and replacement works.
  • Develop and distribute flame-retardant and light-weight carpets.
  • Propose and receive orders for SUMICUBE® with a new tactile impression.
  • Develop and increase sales of high-performance, low-price floor signage films.
  • Increase sales of safety measure products.

(Buses)

  • Increase sales of moquette and curtains with anti-virus treatment.
  • Increase market shares.

Functional Materials

Electric carpets

Deodorization and air-filter-related products

Advantages

  • Effective use of functional processing, such as deodorization and anti-virus
  • Expansion of business domains regardless of conventional fields and industries
  • Systems to promote development of diversified usages
  • Promotion of delicate product development to meet customer needs

“Kakidanomi,” Persimmon polyphenol supplements

Floor material for bathrooms

Interior materials for aircraft

“SUMITRON®,” continuous fiber made from recycled polyester

Smart textiles, etc.

External environment

  • Rise of hygiene awareness and health-consciousness
  • Increase in at-home time length and private-minded
  • Contribution to the reduction of environmental load
  • Response to aging society
(Million yen) Actual results
Three-year Consolidated Income and Expenditure Plan (Fiscal years ending May 2022 to 2024)
FY ended May 2021 FY ending May 2022 FY ending May 2023 FY ending May 2024 Comparison with FY ended May 2021
Net sales 3,130 3,410 3,680 3,840 +710 +22.7%
Operating income (△87) (△140) 150 190 +277
(Operating margin) 4.1% 4.9%

Improve business and product value; Strengthen capability of development and sales.

  • Optimize the production and supply systems of textile-based electric heating appliances.
  • Promote development of new applications of functional materials by using processing technologies.
  • Increase sales of products made by functionally processing technologies, such as deodorant treatment and anti-virus treatment.
  • Promote thorough quality management and supply of products by obtaining JISQ9100 certification, a quality management system standard for the aerospace industry.
  • Promote development of new health supplements following “Kakidanomi.”
  • Promote commercialization of smart textiles.
  • Cooperate with the development section to strengthen the capability of development and sales.

Growth Strategy: “Antibacterial and Anti-virus” (All Domains)

Interiors Fittings

  • Expand product lineups of commercial carpets and curtains.
  • Expand product lineups of household carpets, and strengthen the combination with other functions.
  • Develop wallpapers with anti-virus treatment

Automotive Textiles and Traffic Facilities (Automotive Textiles)

  • Standardize antibacterial and anti-virus treatments.
  • Realize low prices by securing a large volume of materials.

Automotive Textiles and Traffic Facilities (Traffic Facilities)

  • Expand sales of anti-virus processed moquette, curtains and carpets.

Functional Materials

  • Develop and distribute products in each field.
  • Increase sales of the antibacterial and anti-virus processed SUMINOE FRESH FILTER.

Technical and Production Engineering

  • Develop space-related functional products (deodorant, antibacterial, anti-virus, etc.).

Research and Technology

External environment

  • Rise in awareness of safety and security
  • Transformation of the nursing care industry and labor shortage due to aging
  • Increase in demand for products made of bioplastics and biomass plastics, and risks arising from developing conventional petroleum-derived products
  • Risk of conflict of intellectual properties concerning patents owned by us
  • Develop and receive orders of successor models to bathroom flooring materials.
  • Improve floor signage films.
  • Develop and commercialize chemicals for multifunctional processing.
  • Develop new deodorizing filters.
  • Develop space-related functional products (deodorizing, antibacterial, anti-virus, etc.).
  • Smart textiles: Efforts for commercialization of water-wetting detection systems and power generating fibers
  • Develop new products using persimmon tannin of Nara method.
  • Basic research using bioplastics
  • Basic research for extracting beneficial substances from woody biomass
Proposal for smart textiles

Investments and Capital Policy

  • We will aggressively implement capital expenditure and M&A with the aim of strengthening the existing businesses and the expanding business scale.
  • We will endeavor to realize the optimum capital structure.

Initiatives to Remain in Prime Market

Effective April 2022, the Tokyo Stock Exchange will reorganize into new market segments.
Suminoe Textile Group will take every possible measure to meet the new listing criteria for Prime Market.


  • Strengthen the existing businesses, and increase corporate value through aggressive capital expenditure and M&A.
  • Enhance communication with investors and improve our name recognition by implementing proactive IR activities.
  • Place more emphasis on profit return to shareholders.
  • Initiatives for increasing the number of free-floating shares, etc.
Criteria of listing shares on Prime Market The Company’s situation
Number of shareholders 800 or more
Number of free-floating shares 20,000 trading units or more
Free-float market capitalization 10 billion yen or more Unachieved
Trading value Average trading value per day must be 20 million yen or more Unachieved
Ratio of free-float shares 35% or more

Plan to Improve D/E ratio

Corporate value will be improved by reducing interest-bearing debt for improvement of D/E ratio.

*D/E ratio…
Interest-bearing debt (excluding lease obligations)Net assets (excluding non-controlling interest)

Profit Return to Shareholders

With stable dividend payment to shareholders as a precondition, we will appropriately distribute returns, taking into consideration the trend of business performance and future investments for business expansion.

The dividend will be paid twice a year as an interim dividend and a year-end dividend.


We will enhance communication with shareholders through proactive IR activities.

3. Non-financial targets

Initiatives for Reduction of CO2 Emissions

We have focused on the initiatives for the reduction of CO2 emissions through products manufactured by the Group since we developed “SUMITRON®” in 1990.
In June 2021, we established the “Visualization Committee on the Reduction of CO2 Emissions” to further enhance the reduction of CO2 emissions and the lowering of environmental load.


Volume of contribution to the reduction of CO2 emissions through products

  • Circulation-type recycling of carpet tiles
  • Increase the use of recycled fibers, such as “SUMITRON®.”
  • Increase the use of yarn recycled from PET and recycled resin materials.

Reduction of CO2 emissions in the business activities

  • Improve logistics systems and unify the production bases.
  • Improve energy efficiency and change fuels used.
  • Working style reforms

Development of Eco-friendly Products

We will contribute to a decarbonized society by accelerating research and development under the development philosophy of “K (Kenko meaning Health in Japanese), K (Kankyo meaning Environment), Recycle, plus A (Amenity).”


(Examples of eco-friendly products that contribute to the reduction of CO2 emissions)


  • ECOS®, carpet tiles under the horizontal recycling system

    • Launched in 2011
    • Achieved 84% at the maximum, which is the highest level of recycled materials used in the industry, and 43% at the maximum in the reduction rate of CO2 emissions.
    • Approximately 90,000 tons of CO2 was reduced over the past decade.
    • Approximately 220,000 tons of CO2 are to be reduced over the next decade.
    “ECOS®”: the solution-dyed yarn is applied to the pile yarn for the surface.
  • SUMITRON®

    • Polyester chips recycled from PET bottles are used as material by 50% or more.
    • Useable for a long period of time due to excellent weather- and heat-resistance properties.
    • Solution-dyed yarn is used for reducing environmental load.

    Transition to solution-dyed yarn

    Traditionally, the piece-dyeing method, which required large amounts of water and electricity as well as dyeing effluent treatment, had been applied to dye pile yarn used for the surface of carpets. We have now shifted to using solution-dyed yarn (pigmented at the spinning stage), which reduces CO2 emissions, requiring less water and energy and with no effluent problem in the production process.

Initiatives for G (Governance)

We aim to be a company trusted in society by further promoting our initiatives and by complying with laws and regulations and corporate ethics.


  • Restructure the core systems.
  • Strengthen the managerial decision making by outside directors.
  • Promote interactive in-house communication through top management’s frequent visits to workplaces.
  • Continue to conduct compliance training.
  • Further disseminate “Corporate ethics hotline.”
  • Strengthen global risk management.
  • BCP action plan

4. Initiatives to Be Enhanced during the Target Period

Reorganization of Nara Factory

New R&D Building under construction

We will realize the business bases that meet the needs of the times.

  • mprove productivity
    Sell off unnecessary production facilities.
    Improve productivity by concentrating the production facilities.
  • Improve efficiency of supply chains
    Increase logistics warehouses, reduce the cost paid to external warehouses and improve work efficiency by concentrating logistics centers.
  • Enhance research and development
    Establish a new R&D building as a shared base for technological development, demonstrate synergy effects by enhancing cooperation between the business divisions, and accelerate the development of new products.
  • Reduce environmental load
    Reduce environmental load by removing dyeing facilities and a wastewater treatment plant.

Strengthen the space design business

We will materialize our customer’s requests at a higher level by expanding the business domain to the planning and design of the whole “space,” not limiting it to production, sale and proposition of products that color the “surface.”

Synergy effects have gradually become apparent since CPO Co., Ltd, which has in-depth expertise and excellent know-how concerning store design, joined the Group in 2020. Going forward, we will expand our business domains to not only stores in which CPO has strength but also nurseries, schools and medical facilities.

Intelligent Interior 2.0

The Interior Fittings business in charge of interiors of hotels and the Automotive Textiles and the Traffic Facilities business have united their strengths to jointly promote “Intelligent Interior 2.0,” a cross-sectoral project to create next-generation automobile interiors. The new car interior in the age of CASE and MaaS will be pursued by “ONE SUMINOE.”


Corporate branding

Enhance IR and PR activities for stakeholders of the Group for their better understanding of, and empathy with, our philosophy and businesses.


Initiatives for the reduction of CO2 emissions

Reduce CO2 emissions in the business operations and product life cycles.


Working style reform

Create environment for healthy working, cultivate human resources, and promote participation of diversified human resources.


Reorganization of the core systems

Improve efficiency in clerical work, unify inventory and other data, and enhance IT human resources.


Improvement of financial structure

・Improve D/E ratio (by reducing interest-bearing debt).
・Increase inventory turnover ratio.
・Implement effective use of treasury stock