Medium-Term Business Plan Outline "FY2019 MTBP" (FY2019 - FY2021)
May 20, 2019
Kawasaki Heavy Industries, Ltd.
Yoshinori Kanehana, President and Chief Executive Officer
Table of Contents
1.FY2016 MTBP(Medium Term Business Plan) Review
2.FY2019 MTBP Positioning
3.FY2019 MTBP Policies
4.FY2019 MTBP Quantitative Goals
5.Long-TermDirection Until FY2030
6.Future Reports on the Progress of FY2019 MTBP
P3-7
P8
P9-16
P17-19
P20-28
P29
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1. FY2016 MTBP review
FY2016 MTBP: Evaluation of Major Measures
(Summary of Actions to Promote ROIC Operation)
① Profitability significantly decreased in several businesses. It is urgently required to strengthen financial bases
② Harvest times are arriving, after continuous investments in growing businesses
Plan/implement growth Action 1 strategies through enforcement
of core competence per BU
Set appropriate financial Action 2 indicators (primarily with ROIC)
while developing achievement scenarios
【Results】
Action 1:
Harvest times are arriving after continuously devoting resources to growing fields
Completed a new plant for 777X / Started shipment
Made one round for new product development of aircraft engine
Medical robots are being developed (currently in the final phase)
Action 2:
Marked deficits from big projects with several businesses. Also due to other factors, most quantitative goals (including ROIC) were not achieved
Pursue synergy effects through Action 3 integrated operation to create
new value
Clear reduction/withdrawal Action 4 strategies with detailed
breakdowns per Sub-BU/product
Build business portfolios placing Action 5 importance on profitability,
stability, and growth potential
Action 3:
"Contrivances" for the synergy effects of growing businesses goes smoothly in part. However, need to unlock its potential throughout the organization
The CO2-free hydrogen supply chain is moving towards demonstration tests in FY2020
Organizations were integrated to create synergies in aerospace-related businesses
Action 4:
Insufficient priority criteria/speed to "select and concentrate" on certain businesses
Already withdrew from offshore vessels
Action 5:
Insufficient organizational functions/systems to implement " total optimization"
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1. FY2016 MTBP review
Achievement Status: Quantitative Goals
The primary cause of failure to achieve pre-tax ROIC targets: decline in profitability
Goal in | Result in | |
FY2018 | FY2018 | |
Pre-Tax ROIC | 11.0% | 4.5% |
Operating Profit | 1,000 | 640 |
(100 million yen) | ||
Cash flow from operation | 1,400 | 1,097 |
(100 million yen) | ||
Net D/E Ratio | 70~80% | 76.6% |
Pre-Tax ROIC(%)
During FY2013 | During FY2016 | ||||
MTBP | MTBP | ||||
10.4% | 9.4% | Plan: 11% | |||
8.1% | (8.0%)** | ||||
5.0% | 3.9% | 4.5% | |||
2013 | 14 | 15 | 16 | 17 | 2018 |
*EBIT (earnings before interest and taxes) = Pre-Tax Interest Income + Interest Expenses **When there were no losses in big projects (FY2018 shown as an example)
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EBIT* Margin (%) | |
During FY2013 | During FY2016 |
MTBP | MTBP |
5.9% | Plan: 5.8% | ||||
4.7% | 5.1% | (4.6%)** | |||
2.6% | |||||
2.7% | 2.3% | ||||
2013 | 14 | 15 | 16 | 17 | 2018 |
Invested Capital Turnover
During FY2013 | During FY2016 | ||||
MTBP | MTBP | ||||
1.76x | 1.86x | 1.81x | Plan: 1.89x | ||
1.72x | 1.72x | 1.74x | |||
2013 | 14 | 15 | 16 | 17 | 2018 |
4 |
1. FY2016 MTBP review
Primary Causes of Low Profitability
We must resolve the following issues. Business growth scenarios towards FY2030 have been kept almost unchanged from the FY2016 MTBP.
Loss from
big projects
Unclear
positioning of
business portfolios
Insufficient
development/ growth of new businesses
▪Marked deficits in the offshore vessel business, the rolling stock business in North America, overseas plant contracts, and commercial aircraft engine
▪Insufficient risk control on risk asset
▪Due to limited understanding on individual businesses from the view point of mega-trends, most of business conducted investment for expansion
▪Management resources could not be shifted efficiently/speedily due to partial organization restructure, resulting in limited synergy effects
▪Insufficient set up for cross organizational functions such as organization structure, management system and mindset to achieve total optimization
▪Could not escape from a low-profitable business domain (sales of goods) / Insufficient business model innovations
▪Slow development of new businesses due to sticking to in-house development and production
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Kawasaki Heavy Industries Ltd. published this content on 20 May 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 20 May 2019 04:37:07 UTC