Top Message
To Our Shareholders
Resolve for a Renewed IBIDEN Group
In this rapidly changing era, we will take on the challenge of further transforming our corporate culture to create new value
It has been one year since I assumed the position of President & CEO, Representative Director, in June 2024. Our business environment is evolving rapidly, driven by such factors as the advancement of AI in the semiconductor market and the period of significant transformation underway in the automotive market. Amid these rapid changes, I believe that unless we transform into a company capable of anticipating market and customer needs and continuously proposing new value, it will be difficult for us to survive in the future. Since assuming the role of President, I have consistently conveyed this strong sense of urgency to all employees.
To achieve this transformation, it is essential to cultivate a corporate culture in which each employee acts with a sense of purpose independently and can take on challenges. I have first focused on reforming our corporate culture and begun building the foundation for a new era for the IBIDEN Group. Based on the belief that the answers are always found on worksites, over the past year, I have visited numerous worksites across the domestic and international Group companies and engaged in dialogue many times with employees. While sincerely listening to what the employees had to say on these visits, I reaffirmed their great potential, and at the same time, I keenly realized that there are still many systems and structures that we need to change in order to fully unleash that potential.
My first year served as a preparatory period, during which I shared the issues identified through these dialogues with relevant parties and established the direction for transformation. I have designated FY2025, my second year as President, as a year of practical action, in which I will apply what I have learned to the review of specific systems and structures. Although our initiatives to reform corporate culture have only just begun, I will further increase opportunities for discussion sessions where I can directly share ideas with employees, while also visiting more customers than I did last year. These activities are the only way in which we can build a foundation for generating innovation.
Reflecting on the Second Year of the Medium-Term Management Plan
Amid a severe business environment, growth areas related to generative AI have performed well, and we have been able to achieve results generally in line with those in the previous fiscal year
Before explaining the path to innovation, I'd like to first look back on the results for FY2024. In FY2024, while the global economy was generally on a recovery trend, instability persisted due to factors such as fluctuations in policy interest rates in Europe and the United States, significant volatility in foreign exchange and share markets, the economic slowdown in China, and the emerging impact of policy changes in the United States.
Regarding the semiconductor and electronic components market, inventory adjustments in the PC market, mainly caused by the recoil in demand following the special demand generated during the COVID-19 pandemic, have been completed. However, overall recovery remained weak, and price competition among suppliers intensified. In the server market, growth areas, particularly those related to generative AI, performed well. However, in the general-purpose server market, despite signs that investment by major users had bottomed out, competitive pressure among semiconductor manufacturers continued.
The market for exhaust system components in the automotive industry was affected by the economic slowdown in China, global economic stagnation, and engine certification issues among domestic automakers, resulting in a deceleration in global automobile production growth.
In response to these changes in the market environment, in the Electronics Operation, we pursued a profit-oriented order policy while also working to secure orders in growth areas, particularly for AI, by obtaining certification from new customers at existing plants and modifying production lines. Furthermore, as a step toward future growth, we moved forward with the construction and launch of the Ono Plant, while also recognizing impairment losses on fixed assets at IBIDEN Philippines and some domestic plants in order to align asset values with the current level of orders received. In the Ceramics Operation, with the launch of new products for new energy vehicles (NEV), operations have been transferred from the R&D Operation to the newly established NEV Unit in FY2025.
Despite this rapidly changing environment, we maximized our technological advantages in cutting-edge fields demanded by society, achieving FY2024 results of ¥369.4 billion in net sales, ¥47.6 billion in operating income, ¥47.8 billion in ordinary profit, and ¥33.7 billion in profit attributable to owners of parent. Although these results were generally in line with those in the previous fiscal year, we will continue to steadily deal with the changes in the business environment and, as a united Group, work together toward achieving stable growth.
Formulating the Brand Message
We will foster self-sustained human resources who act with a sense of purpose and embrace change without fear
We have reached the end of the second year of the medium-term management plan, "Moving on to our New Stage 115 Plan," which is our current guide. The plan aims at net sales of ¥600.0 billion in FY2027 and ¥750.0 billion in FY2030. The goal for FY2030 in particular is very challenging as it is almost double the net sales in FY2024.
In pursuing this goal, I believe it is necessary to further unify employee awareness and to articulate our values more clearly. I also believe it is important to convey our Group's history and values succinctly to external parties and to gain their understanding. As part of that effort, we have formulated a new brand message: "A century of innovation, partnering for the future." This message embodies IBIDEN's history of more than 100 years, beginning as a hydroelectric power generation company with the aim of revitalizing the local economy, and growing alongside the local community. It also reflects our determination as a technology-driven company that, having transformed from a power generation business into a manufacturing company leveraging electricity, has continued to create innovative products to resolve social issues by capturing the needs of the times, building on the technologies cultivated throughout our long history. Furthermore, it reflects our commitment to building strong partnerships with stakeholders, including local society, customers, employees, and suppliers, while pursuing original technological innovations and contributing to the realization of a sustainable society.
But it is not enough to simply formulate this kind of message; it is essential to firmly embed it within the Group. To that end, it is vital to transform the corporate culture into one in which each individual aligns with the Group's values and is able to put them into practice. In order to make FY2025 a year of putting the reformation of corporate culture into practice, I am asking for importance to be placed on the following three key points within the company: Employees, Customers, and Affiliated Companies.
When it comes to creating value, we aim to cultivate not just employees who simply work for us, but to nurture human resources who each act independently with a sense of purpose--so-called self-sustained human resources. From the perspective of diversity, equity, and inclusion, it is also important to create an environment in which people with diverse values can freely exchange opinions from their respective standpoints and thrive with vitality.
With respect to Customers, rather than simply responding to their expectations, I want to propose new values that are "One Generation Ahead." We aim to provide surprises and inspiration that make people say, "This is exactly what I was looking for."
In our relationships with Affiliated Companies, which are our partner firms and suppliers, the sharing of fair value is our fundamental principle. I believe that is an absolutely essential condition for conducting business. Our goal is to build relationships based on mutual trust and equality, where both parties can grow together.
In driving corporate cultural reform and asking employees to embrace change, I strongly feel that I must also evolve. There are two behaviors that I want to change in myself first. The first is to visit worksites more frequently than before, hold events such as discussion sessions, listen to each employee's perspective, and share my own thoughts. The second is to visit customers more often than I have so far. Although there are various negotiations and market changes, I aim to hear customers' opinions directly as much as possible and communicate the Company's perspectives to them.
Our vision is to be a company that supports all kinds of infrastructure worldwide and is truly needed, while also being a company that employees can take pride in working for. We have many objectives to achieve, such as meeting the targets of the medium-term management plan and embedding our brand message, but our ideal is for Employees, Customers, and Affiliated Companies alike to feel that IBIDEN is the right choice. I want everyone to think together about what we can do to build this ideal company and to take those actions together.
Launch of Operations at Ono Plant
While reliably responding to requests from customers, we will also focus on the development of IC package substrates, which are expected to evolve further
Corporate culture reform represents a challenge to the "Power to Change" and the "Power to Maintain," which are two of the five pillars of the medium-term management plan. Currently, we are putting our full efforts into setting up new factories and new products, which correspond to the "Power to Grow" and the "Power to Sustainability," two of the five pillars of our activities. The driver of the Company's growth is currently the Electronics Operation. As I mentioned earlier, over the past year, the Electronics Operation has experienced significant changes. While products for AI servers have performed well, recovery in products for general-purpose servers has been slower than expected due to inventory adjustments, and products for PCs have continued to face challenges amid intensified price competition. Strong growth in products for AI servers has compensated for the difficulties experienced in products for general-purpose servers and PCs. In particular, net sales of products for AI servers have grown significantly compared to the previous fiscal year, and the Company's production lines continue to operate at full capacity. Going forward, the Ono Plant, scheduled to commence full-scale mass production and shipments in the latter half of FY2025, is expected to further drive this growth. In cutting-edge IC package substrates, particularly for AI servers, we share roadmaps with our customers and have built strong relationships with them. Customer demand remains strong, and meeting these expectations continues to be our top priority. By responding to that demand, we aim for net sales in the Electronics Operation to increase to more than ¥380 billion in FY2027 and beyond, approximately double the level in FY2023. The Ono Plant, which will significantly contribute to future growth, operates as a model base for production technologies and systems, leveraging digital technologies under the "One Factory" concept. By standardizing management and systems across our domestic and international bases, and by consolidating, sharing, and utilizing the information obtained by doing so, we treat all bases as a single large factory. This approach allows us to flexibly leverage production capacity, including existing factories, to maximize orders for high-value-added products.
As products such as GPUs for AI servers undergo generational replacement, substrates are becoming larger and multi-layered, increasing the load on SAP* capacity. Furthermore, the evolution of IC package substrates in general, not just those for AI servers, shows no signs of slowing. In addition to addressing larger and multi-layered substrates, we are sequentially advancing the development of necessary core technologies. With an eye on entering the ASIC market (original chips for hyperscalers), we will continue to work on the evolution and development of IC package substrates.
Strengthening the Foundation as a Manufacturing Company
To strengthen our human resources, which form the source of our competitiveness, we are promoting the transfer of awareness, knowledge, insight and skills, and nurturing human resources for manufacturing
Looking back on IBIDEN's more than 110-year history, at its core has always been the spirit of people and manufacturing responding to social changes and creating new value. However advanced technology may become, its fundamental essence never changes. Now, and in the future, the source of our competitiveness lies completely in people. The future of the Company will be shaped by the various challenges, both great and small, taken on by each and every employee.
Guided by this conviction, in FY2025, we launched the "Manufacturing Dojo " to nurture human resources for manufacturing. Human resources for manufacturing refers to human resources who are well-versed in equipment and quality, and who are capable of improving and maintaining them. At the Manufacturing Dojo, we provide hands-on training in assembly, processing and other practical skills using the same equipment and parts employed at manufacturing sites, with the aim of passing down awareness, knowledge, insight, and skills. In addition, we have installed safety experience devices to help employees recognize hazards such as entanglement and electric shock, making the facility a place in which employees broadly gain safety and hazard awareness. In this way, we are building on IBIDEN's superior, unique on-site capabilities to establish a solid foundation that will support the next 100 years.
Leveraging Transformation for Further Growth
Wholly leveraging IBIDEN's DNA of transformation in line with changes in the business environment and fully striving to enhance corporate value
We expect the business environment from FY2025 onward to remain uncertain. Nevertheless, with a history spanning more than 110 years, we carry a DNA of transformation that has enabled us to overcome many difficulties and convert change into a source of growth. It is this DNA that is our greatest strength.
In progressing toward the latter phase of the "Moving on to our New Stage 115 Plan," we will intensify our efforts to drive growth. Taking a long-term perspective and anticipating an increasingly competitive AI market, we will finalize detailed plans for utilizing the Ono Plant with ample room for expansion as well as the subsequent Gama Plant. Naturally, there are uncertain factors, such as the timing of full-scale operations at the Gama Plant, which require careful monitoring of customer demand trends. However, we will not let temporary market fluctuations easily sway the core of our strategy; instead, we will steadily lay the groundwork for future business growth.
Regarding capital allocation, we will continue to maintain our commitment to financial targets, such as ROE and equity ratio, to enhance shareholder value, while pursuing an optimal balance between growth investments and shareholder returns to achieve these targets as soon as possible. In addition, regarding cross-shareholdings, we plan to reduce them by more than 50% based on their market value as of the end of FY2023, by the end of FY2027. We will primarily fund growth investments within the scope of operating cash flow, with the aim of enhancing and reinforcing our financial structure.
In order to further strengthen dialogue with investors, we newly established an IR Group within the Strategic Corporate Planning Division in FY2025. Strengthening IR activities, including meetings with executives in charge of IR and the top managers, will enable market feedback to certainly reach the directors and employees, and be reflected in management, thereby enhancing corporate value.
In closing, I sincerely extend my gratitude to everyone who consistently supports our business activities, including local communities, customers, suppliers, and shareholders. I would also like to express my deep gratitude to the employees of our sites around the world who strive every day, as well as to their families. I am committed to meeting your expectations and will spare no effort to further enhance corporate value, so that we remain a company that society can be proud of and rely on. I sincerely appreciate your ongoing support.
President & CEO
Koji Kawashima
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