CSR

[ISO 26000 Core Subject] Organizational Governance

The Fujikura Group dispatches and discloses its corporate information through various media on a range of occasions as part of its effort to fulfill its social responsibility. In December 2013, the International Integrated Reporting Council (IIRC) published the first version of the International Integrated Reporting Framework after making necessary deliberations. The Framework was established for reasons including the following: (1) conventional annual reports on short-term financial information do not provide investors making long-term investments in pension funds and others with necessary information about the long-term sustainability of investee companies; and (2) for investors to predict the future of companies, nonfinancial information on CSR activities conducted by the companies is important. The essential part of CSR is to meet the expectations of society by promptly identifying social changes and social needs through communication with stakeholders. In consideration of this fact, we thought it necessary to implement measures in line with this Framework, which indeed shows what stakeholders strongly want companies to do, although it needs to be improved by the addition of more specific details to the reporting standards and it does not provide the assurance standards for integrated reports. We therefore discussed how to deal with the new information disclosure guidelines on integrated reporting. As a result, we decided to create a “CSR Integrated Report” in fiscal 2014 instead of the conventional “CSR Report” and to structure it by taking necessary steps to ensure clear accountability in line with the Framework.

In fiscal 2005, the Company celebrated the 120th anniversary of its foundation, positioning that year as the inaugural year of its “Third 60 Years of Leadership.” The Company adopted a new “Mission, Vision, Core Values” statement, which details its commitment to actively expand the corporate activities that “create value for customers” through “Tsunagu” (connection) technologies and contribute to the betterment of society by proactive, rapid-response management, while maintaining an emphasis on profitability.

The Company considers the continuous improvement of profitability as one of its top priority management goals, and aims to maintain an operating margin of at least 6.3% in fiscal 2015 as a medium-term management target.

As for the economic conditions, since more competitors in emerging countries will get into our playing fields and Japanese market will be shrinking due to low birthrate and longevity and others, competitions will be intensified. We expect increase of overseas market size.
The Company has formulated the 2015 Mid-Term Business Plan, which commences in fiscal 2011 and terminates in fiscal 2015.
The basic policies are as follows:
・By spreading our strength of “Tsunagu” technologies globally, we aim to become a Group that “creates value for customers,” who will be thankful to our products and services.
・Accelerate the “metabolism” of the business structure to become the Group that creates value for customers.
・Aggressively promote differentiation and “metabolism” while putting the utmost importance on profitability to become a Group achieving high returns.
・With the above-mentioned basic management policies, we pursue consolidated net sales of 650.0 billion yen, an operating margin of at least 6.3% and a percentage of overseas sales of 60% or more.
Please note that the operating income margin is changed from 6.5% to 6.3% due to the impact of damage from the flood in Thailand.
Our growth strategies include:
(i) Consistently creating, and commercializing as quickly as possible, new technologies and products in areas with growth potential such as the environment and energy, cloud communication, and medical, nursing and healthcare towards our future growth and new market development. Thus, the “metabolism” as source of corporate existence and growth must be accelerated.
(ii) Expanding businesses in the rapidly growing overseas markets to accelerate our global development, and establish a business promotion system to achieve such a goal and increase revenues.
(iii) Proceeding with selection and concentration of management resources under a business restructuring program in response to the changing business environment such as growing overseas markets and a shrinking domestic market, etc.
Besides, we reformed organization and business structures to change ourselves to “successful business unit/group company which continue to win,” which are additional countermeasures against the environmental changes. This is to reach the mid-term goal, and we continue reforms of operational formations and sizes. For example, we enhance in-house company system that was introduced to clarify business responsibility of each organization, change in business schemes and segments, optimize headcounts in the entire group, eliminate and consolidate business sites.

In fiscal 2013, Japan’s economy showed recovery, albeit moderate, with capital investment and personal consumption showing a recovery on the back of the government’s economic and financial measures. For economic trends outside Japan, the economic situation in the United States has been quite favorable, and also China is continuing its economic expansion though the growth rate is declining.

Under these circumstances, the Fujikura Group’s in-house companies achieved the following business results. The Power & Telecommunication Systems Company increased both sales and profit thanks to changes in the foreign exchange market, although competition intensified due to shrinkage of the domestic market. The Electronics Business Company achieved a substantial increase in sales, being driven by a recovery in the sales of flexible printed circuits (FPCs) and other products, thereby diminishing operating loss. The Automotive Products Company also achieved increases in both sales and profit due to increased demand outside Japan, mainly in Europe and the United States, and to recovery in demand in the Chinese market.

The Fujikura Group’s net sales came to 590.9 billion yen, up 20.3% year on year and operating income also increased by 213.0% to 20.3 billion yen. Ordinary income totaled 13.8 billion yen, up as much as 981.5%. There were, however, losses including the extraordinary loss caused by the reform of the business structure, and as a result the Group’s net income for the term was 3.3 billion yen, up 9.2% year on year.

In fiscal 2013, the Fujikura Group (Fujikura Ltd. and its consolidated subsidiaries) made a capital investment of 25.4 billion yen (on a basis of tangible and intangible assets received) under its basic strategies of “concentrating managerial resources in growth fields” and “enhancing craftsmanship in monozukuri (manufacturing).”

Fiscal Year Ended March 31, 2014 (April 1, 2013 - March 31, 2014)

Fujikura Ltd. is committed to the stable payment of dividends and aims to return profit to shareholders at a total return ratio of about 30% in consideration of business performance, the dividend payout ratio, and the necessary reserve for future business development. The Company aims to pay dividends twice a year as its basic policy, and decisions on year-end dividends and interim dividends are made at the annual general meeting of shareholders and at a meeting of the Board of Directors, respectively.

As for internal reserves, Fujikura Ltd. effectively uses them as a managerial resource for future growth businesses and for the rationalization of the existing businesses in principle.

Fujikura Ltd. provides that the Board of Directors can make a decision to pay interim dividends with September 30 as the record date in its articles of incorporation.

The following shows the dividends for the current fiscal year:

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