New Year Message for 2024
Happy New Year to all of you.
I would like to take this opportunity to express my sincere gratitude for your support and patronage during the past year.
Year in review 2023
In 2023, the Japanese economy witnessed a gradual recovery trend as shown in the increase in inbound demand on the back of the reclassification of COVID-19 under the Infectious Diseases Control Act to Category V in May 2023. Moreover, our consolidated quarterly results for the first quarter of this fiscal year ending May 31, 2024 have exceeded the pre-pandemic level, thanks to a recovery in automobile production volume by Japanese car manufacturers from the end of the supply shortage of semiconductors and components, and we are making steady progress toward our plans.
The SUMINOE GROUP celebrated the 140th anniversary of its founding last year. On that occasion, we once again identified the Group’s values and formulated the Group Philosophy, which serves as the emotional support of employees, by reviewing how to achieve sustainable corporate growth and employee happiness. While strengthening inner branding in line with the Philosophy, we also turned over a new leaf and started as the “SUMINOE GROUP,” aiming to be an enterprise with which all stakeholders, including customers and investors, can empathize more than ever.
Progress of medium- to long-term management targets “SUMINOE GROUP WAY 2022-2024-2027”
The SUMINOE GROUP has been significantly affected by external factors such as prolongation of the spread of COVID-19, decline of automobile production and soaring in raw material prices. However, in order to achieve the final target of ¥100 billion in net sales and at least 5% operating margin of our medium- to long-term management targets “SUMINOE GROUP WAY 2022–2024–2027 (SGW),” which began in the fiscal year ended May 2022, we have been steadily paving the way for future growth.
The ongoing fiscal year ending May 31, 2024 is the final year of the Three-year Consolidated Income and Expenditure Plan we announced in the SGW. To maximize corporate value, needless to say, we must strengthen existing businesses. We are also aware that this will not be possible if individual employees do not actively think about how to enhance corporate value and take action accordingly. With this awareness in mind, we have thus far strived to establish a system that helps create a greater synergy by enhancing the sense of oneness across the Group, to reform personnel systems, and to strengthen our management base.
As part of our efforts for strategic structural reform, we reviewed and improved production and logistics sites in Japan by such means as selling our real estate and acquiring factories. In overseas countries, we completed the restructuring of the North and Central American business and made preparations for the next business expansion. In the Functional Materials segment, we transferred production from the factory in China to the factory in Vietnam. These efforts enabled us to promote the reestablishment of profitable supply chains at both domestic and overseas operation sites. Such structural reforms have also proved effective for strengthening our financial structure. To direct the resulting management resources to growth strategies, we have developed a business strategy, which is currently being implemented.
One of our future growth strategies is to invest in the business of synthetic leather for automotive textiles. The synthetic leather market has been continuously expanding. To further strengthen our synthetic leather business in response to the market expansion and in preparation for demand diversification in the future, we are in the process of establishing a new synthetic leather factory at Mexico, Suminoe Textile de Mexico, S.A. de C.V. (STM), our subsidiary in Mexico. On Monday, December 11 last year, STM held an opening ceremony of its new factory, inviting Mexican government officials. The factory is due to start mass production in June 2024. Aiming at achieving sales of 10 billion yen or more in the synthetic leather business by the fiscal year ending May 2027, we will redouble our efforts to improve productivity and increase order receipts. In Mexico, the Group has secured land where another factory having the same scale as the aforementioned synthetic leather factory can be established. We are therefore going to consider the next investment to be made. Furthermore, as a total supplier of automotive textiles, the Group aims to newly generate sales of 10 billion yen by 2023 by winning new orders for products geared to foreign-affiliated automakers and increasing sales of products featuring the decorative fabric technologies that we have cultivated in Japan.
Meanwhile, focusing on the “ideal corporate image” for the SUMINOE GROUP in 2050, we will discuss future strategies, including the conversion of our business portfolio, while forecasting the future society and business environment and in view of the directions taken by our existing businesses.
New Year’s resolutions for 2024
In 2024, the SUMINOE GROUP will embark on the first year of its Three-year Consolidated Income and Expenditure Plan for 2024-2027, which is the latter half of the SGW. We will develop business strategies from medium- to long-term perspectives. The Group intends to actively promote overseas business development in alignment with the respective regional strategies. By expanding the scope of non-textile businesses, we will increase sales of products for foreign-affiliated car manufacturers to a level equivalent to that of one business segment. We will also reliably respond to the SDGs and other challenges we must address to fulfill our corporate responsibilities, leveraging the knowledge and expertise that the SUMINOE GROUP can contribute.
Without being self-complacent about our history of 140 years, we will always maintain a pioneering spirit and aim to further enhance our corporate value. This year again, the SUMINOE GROUP will strive to bring innovation to all kinds of spaces. We thank you for your continued support.
Suminoe Textile Co., Ltd.