Topcon Report 2023
A d i g i t a l t r a n s f o r m a t i o n
w i t h a h u m a n t o u c h
TOPCON CORPORATION
75-1,Hasunuma-cho,Itabashi-ku, Tokyo 174-8580, Japan
Corporate Communication Div.
TEL: +81-3-3558-2532 FAX: +81-3-3558-0705
URL: https://global.topcon.com
To Our Stakeholders
Takashi Eto
President and Chief Executive Officer
Topcon aims to become a company that customers need with our advanced DX solutions.
Our corporate philosophy is Topcon contributes to enrich human life by solving the societal challenges within healthcare, agriculture and infrastructure.
Since our founding, we have developed our business globally, focusing on surveying instruments and ophthalmic medical devices, leveraging our strengths in precision optics and optomechatronics technology.
In 1994, we came up with a new concept of "automating the construction process," which no one had thought of at that time, and created a new business market and potential demands.
A digital transformation with a human touch
Topcon perceives it as its purpose to leverage digital transformation (DX) to provide unique solutions to societal challenges in the areas of healthcare, agriculture and infrastructure, which are essential for people around the world to live better lives. Pivoting on "leading-edge hardware" that captures potential customer needs, it has promoted the use of software technologies acquired through overseas M&A (mergers and acquisitions) and other activities, as well as digitalization and automation.Through integration with IoT networking technologies where all things are connected to the network, it has created new DX solutions to transform customers' approach to work itself, across fields including construction, agriculture, and eye care.
Topcon's strength lies in its dual-pronged approach to business growth, driven by leading-edge hardware products as well as services in our solutions business. In addition to the core optical and sensing technologies developed since its founding, Topcon integrates applied technologies such as image processing, machine learning, automation, and remote operation to provide a diverse range of DX solutions in the areas of healthcare, agriculture and infrastructure.
In this Integrated Report, Topcon hopes to clarify its significance of existence and social mission, convey its vision for corporate value to achieve a sustainable society and sustainable growth for the Topcon Group, and communicate Topcon's "value creation process" with a sense of plot and in an accessible way to all stakeholders.
Creating a system for eye disease screening
H e a l t h c a r e | |
To Our | |
Stakeholders | |
A g r i c u l t u r e | I n f r a s t r u c t u r e |
Automation of | Automation of |
farm operations | construction process |
TOPCON selected for the fourth consecutive year as a DigitalTransformation Stock (DX stock), and first time chosen for the DX Grand Prix!
This was a turning point, and we promoted mergers and acquisitions of various overseas technology venture companies and distribution companies, integrating our unique technology and ideas and transforming into a solution provider for the "healthcare, agriculture, and construction industries."
Our customers are professionals with specialized knowledge. With a "Think Globally, Act Locally" mindset, we try to explore their needs, listen to their opinions, and propose new unique DX solutions they don't even think of to contribute to creating a prosperous society globally.
This is the "TOPCON WAY" that we aim for.
Going forward, with a customer-oriented,field-oriented approach and a spirit of challenge, we will continue to strive for "the company that is needed" by stakeholders and promote ESG (environmental, social, and governance) management through our business.
A digital transformation with a human touch.
Topcon Corporation (Headquarters: Itabashi,Tokyo; President and CEO:Takashi Eto) has been selected for the DX Grand Prix 2023 in the DigitalTransformation Stock (DX Stock) designated by the METI (Ministry of Economy, Trade, and Industry) and theTokyo Stock Exchange.
DX Stocks are selected for each industry category, targeting companies listed on the Tokyo Stock Exchange that have established internal systems to promote DX that contributes to improving corporate value. These companies fundamentally transform their business models based on digital technologies and aim to achieve new growth and enhance their competitiveness through digital transformation.
Topcon has been selected for four consecutive years since 2020, and this year was chosen as a "DX Grand Prix company," an award for being a leading company in the selected stocks.
DX Grand Prix
2023
01 TOPCON REPORT 2023 | TOPCON REPORT 2023 02 |
Philosophy System
Under current business situation such that it is always required to demonstrate its all-round ability, it redefined and clarified its common values transcending nationalities and individual companies in order to exert its strengths such as global scale and diversity, and to build a self- supporting organizational culture. Every employee conductsTOPCON WAY, andTopcon group will
Table of Contents
01 | Introduction | |
Message from the CEO | 01 | |
Philosophy System | 03 | |
Toble of Contents | 04 | |
Societal issues around the world | 05 | |
This is the future Topcon is aiming for | 06 | |
Topcon's digital transformation | 07 | |
Topcon's Overview | 09 |
step in brandnew direction for centennial through which it does not only conduct its strategies to strengthen the profitability by foreseeing changes of business environment, but also enhance its capability with the mindset of TOPCON WAY.
Corporate Identity
Topcon contributes to enrich
human life by solving the societal
challenges within healthcare, agriculture and infrastructure.
Management Policy
Topcon focuses on leading-edge
technology to provide new value through
innovation and manufacturing.
Topcon respects diversity and
acts as a global company.
Topcon places the utmost priority on compliance and continues to be a trustworthy partner to all stakeholders.
11
21
27
37
47
Topcon's Path Forward
Message from the CEO
Mid-term Business Plan 2025
Financial Strategy
Strategies by Business
Topcon's Value Creation
Value Creation Process
Topcon's Manufacturing Craftsmanship
Sustainability
Sustainability
Materiality
Environmental Initiatives
Societal Initiatives
Governance
Corporate Governance Initiatives
Compliance / Risk Management
Management Structure
Information
Financial Highlights
Discussion and Analysis of Financial Results
Topcon Group List
Corporate Profile and Stock Information
11
15
16
17
21 | Editorial Policy |
23 | As stated in our Corporate Identity, |
Topcon contributes to enrich human | |
life by solving the societal challenges | |
within healthcare, agriculture | |
and infrastructure. Based on this | |
identity, Topcon strives to contribute | |
to the development of society | |
and conservation of the global | |
environment, through its unique | |
27 | products and services. In FY2016, |
we began publishing the Integrated | |
30 | Report, "Topcon Report" in order |
to inform the public regarding our |
31 initiatives to continuously increase Topcon's corporate value over the
34 long term. The Topcon Report centers on information that has a significant
impact on our corporate value. It | |
uses as references the disclosure | |
framework of the International | |
Integrated Reporting Council (IIRC), | |
as well as the | |
37 | Guidance for |
Collaborative | |
41 | |
Value Creation | |
45 | of the Ministry |
of Economy, | |
Trade and | |
Industry. | |
Note on performance forecasts and | |
outlook statements | |
47 | All plans, strategies, future |
49 | performance forecasts, and outlooks |
presented in this report are based on | |
51 | information currently available to the |
Company. Our actual performance |
53 may deviate from these statements if conditions change in the future.
03 TOPCON REPORT 2023 | TOPCON REPORT 2023 04 |
Introduction
Societal issues | This is the future |
around | Topcon |
the world | is aiming for |
Introduction
If eye disease is found earlier, | A world where everyone can live |
people might not go blind. | a comfortable life with healthy eyes. |
If food production is more stable, | A world where everyone can benefit from |
people might not suffer from hunger. | robust and stable food production. |
H e a l t h c a r e
A g r i c u l t u r e
Topcon's Path Forward Topcon's Value Creation
Sustainability
If there are safer bridges, families might be
able to attend hospitals and schools.
At least 2.2 billion people have a vision impairment globally.
Over 800 million people are affected by hunger globally.
Globally, almost 1 billion people don't have safe access to health care or education.
Let's focus on what is happening in the world. Look around and imagine someone in trouble.
A world where everyone can live safely in
an environment with good infrastructure. I n f r a s t r u c t u r e
Look at what's going on in the world and
imagine everyone happy.
We can make that happen with our innovation
and technology.
Topcon has that in mind.
Governance
Information
05 TOPCON REPORT 2023 | TOPCON REPORT 2023 06 |
Introduction
Topcon's digital transformation
That's why Topcon continues to solve societal challenges in healthcare, agriculture, people around the world live better lives.
and infrastructure with our leading-edge digital transformation solutions to help
Introduction
Societal challenges
DX solution
Case Study Report of Issue Solving
Creating a system for eye disease screening
Aboriginal
Australia
H e a l t h c a r e
Increase in eye disease resulting from global population aging
Global shortage of ophthalmologists
Contribute to the early detection/early treatment of eye diseases and improvement of medical efficiency by making fundus photography available
in settings that people frequent, such a general practitioners and optical stores, thereby utilizing cloud-type IoT platforms to enable remote diagnosis by specialist physicians and AI diagnosis.
Remote Diagnosis | |||||||||||||||
地域医療連携 | |||||||||||||||
AI Diagnosis | |||||||||||||||
遠 隔 診断 | Referral Network | ||||||||||||||
A I 診断 | |||||||||||||||
Optical Store | 介Nursing護施設 | ||||||||||||||
Home | |||||||||||||||
Drug Store | General | ||||||||||||||
かかりつけ医 | |||||||||||||||
Practitioner | |||||||||||||||
Preventive (Screening) | Diagnosis Treatment | Prognostic (Follow-up) | |||||||||||||
Screening examination becomes available at the places other than ophthalmology
medical staff performing examination using a full-auto medical device
Mobile examination Vision Van
Route of the Vision Van crossing the vast land of Western Australia
Contributing to the prevention of blindness among the Aboriginal people;supporting remote eye care
The rate of blindness among Australia's Aboriginal people is about three times that of non- indigenous people. Of these cases, it is said that 90% could have been prevented*.
Topcon, assenting to an NGO that offer remote diagnosis services in Wester Australia to promote the early detection/early treatment of eye diseases and prevent blindness, provided fully-automatic medical devices and remote care platforms. By installing Topcon devices on the NGO's mobile vision van to support remote check-ups and having expert ophthalmologists perform remote diagnosis by reviewing data via the cloud, Topcon supported real-time remote eye care in remote indigenous communities. By supporting the remote medical system using Topcon's systems, we are contributing to the early detection/early treatment of serious eye diseases such as diabetic retinopathy.
*The Fred Hollows Foundation https://www.hollows.org/au/what-we-do/indigenous-australia/aboriginal-and-torres-strait-islander-eye-health
Topcon's Path Forward Topcon's Value
Automation of farm operations
Ireland
Creation
A g r i c u l t u r e
Food shortages resulting from
global population growth
Decreases in crop production and damage caused by global warming and extreme weather events
Unified management of all data of the agricultural management cycle (planning, seeding, growing and harvesting). Through performing agricultural tasks combining auto-steering systems and growth sensors based on those data, Topcon will contribute
to the improvement of productivity and quality of agriculture.
Planning | Seeding | Growing | Harvesting |
Auto steering and unif ication of data management
Fertilizer distributor mounted with laser-type sensors and auto-steering system
Laser-type growth sensor
Visualizing by color-coding the level of crop growth on the map
Contributing to "green" agriculture in harmony with the environment "Visualize" the level of growth to increase potato production
With the aim of environmentally friendly and sustainable agriculture, a large-scale potato farm in Ireland was searching for a method of farming that could reduce chemicals such as pesticides while maintaining productivity. They used Topcon's laser-type growth sensors to research the correlation of changes in soil caused by the amount of fertilizers and pesticides and the growth level of potatoes, and succeeded in eliminating excessive use of chemicals. In addition, their crop yield increased in areas that were considered to be difficult soil by enabling the optimization of fertilizer use. They also contributed to the reduction of CO2 by using Topcon's auto-steering system. With our systems, Topcon will contribute to a "green agriculture" that enables improved productivity and reduced environmental burden.
Sustainability
I n f r a s t r u c t u r e
Shortage of skilled engineers resulting
from globally rising infrastructure
demands
Intensifying and frequent disasters associated with climate change
Automation of the Construction Process
We are identifying work | ||||
progress, operation status | ||||
of construction machinery | ||||
and material control | ||||
on a real-time basis by | ||||
connecting data from the IT | ||||
construction system and 3D | ||||
measurement devices to the | ||||
office. Unifying management | ||||
of the construction workflow | ||||
of measurement, design, | ||||
construction and inspection | Survey | Design | Construction | Inspection |
contributes to improving | ||||
productivity and resolving | Unif ication of construction work flow | |||
labor shortages. |
Rwanda
Contributing to creating access to healthcare, education and employment by building bridges for communities that risk isolation
To improve the lives of people in areas where access to healthcare, education and employment is insufficient due to a lack of bridges, Topcon has provided measurement devices and software to a U.S.-based NPO with the aim of "eradicating poverty caused by isolation by connecting communities with bridges worldwide." By sharing on-site measurement data with the engineering team in a remote location, the construction process can be made more efficient, productivity and quality can be improved, and bridge construction in emerging countries can be supported. Topcon will continue to support this project and
contribute to the bridging of communities.
Completed Pedestrian bridge | 3D measurement equipment |
provided by Topcon |
Governance
Information
07 TOPCON REPORT 2023 | TOPCON REPORT 2023 08 |
Introduction
Topcon's Overview
Main Products and Solutions
Topcon's proprietary technlogies which realize to enhance the I n f r a s t r u c t u r e automation of construction process
IT Construction | 3D Measurement Equipment | Real-time Construction Management System |
Topcon's proprietary technlogies which realize to enhance the | ||
A g r i c u l t u r e | automation of farm operations | |
Auto Steering System for Agricultural Machines | Laser-type Crop Sensor | Agriculture Management System |
At a Glance
Net Sales
FY2022 ¥215.6billion
¥176.4billion | ||
FY2021 | ||
Net Sales
(Million yen) |
200,000 |
150,000 |
100,000 |
50,000 |
0 |
FY | FY | FY | FY | FY |
2018 | 2019 | 2020 | 2021 | 2022 |
Net sales in FY2022 reached a record high, driven by growth businesses such as IT Construction, IT Agriculture and Screening Business.
Operating Income
FY2022 ¥19.5billion
¥15.9billion | ||
FY2021 | ||
Operating Income
(Million yen) |
20,000 |
15,000 |
10,000 |
5,000 |
0 |
FY | FY | FY | FY | FY |
2018 | 2019 | 2020 | 2021 | 2022 |
Operating income for FY2022 was ¥19.5 billion, a record high, as Topcon's combined strength mitigated the impact of components shortages and higher component and logistics costs.
ROE
FY2022 13.2%
FY2021 14.0%
ROE
15
12
9
6
3
0
FY | FY | FY | FY | FY |
2018 | 2019 | 2020 | 2021 | 2022 |
ROE for FY2022 was 13.2%, achieving the range (13-15%) outlined in the Third Mid-term Business Plan.
Introduction
Topcon's Path Forward Topcon's Value Creation
Topcon's proprietary technlogies which realize to create a system | |||||
H e a l t h c a r e | for eye screening | ||||
Fully Automatic Screening Equipment | Tele-optometry System | Data Management System | |||
Gross Profit
FY2022 52.1%
FY2021 51.1%
Net Income Ratio
FY2022 5.5%
FY20216.1%
Operating Income Ratio
FY2022 9.1%
FY20219.0 %
Capital Expenditure
FY2022 | 8.6billion | |
5.3 billion | ||
FY2021 | ||
Net Income Attributable to | ||||||
Owners of the Parent | Sustainability | |||||
11.8 billion | ||||||
FY2022 | ||||||
10.7billion | ||||||
FY2021 | ||||||
Depreciation | Governance | |||||
10.4billion | ||||||
FY2022 | ||||||
7.8 billion | ||||||
FY2021 | ||||||
09 TOPCON REPORT 2023
Ratio of R&D Expenditure to Net Sales
FY2022
FY2021
Overseas Sales Ratio
FY2022 81.8%
FY2021 80.7%
Number of | Information | |
Group Employees | ||
FY2022 | 5,543 |
FY2021 | 5,248 |
TOPCON REPORT 2023 10 |
Topcon's Path Forward
Message from the CEO
Deepening Customer Orientation for a New Leap Forward
To Sustainable Corporate Growth
Takashi Eto, who was appointed President on April 1, 2023, talks about measures to achieve sustainable growth, the long-term vision and the Mid-term Business Plan 2025, announced in May, 2023.
Introduction
Topcon's Path
Q | Please tell us about your career so far and |
your aspirations for the future. |
My name is Takashi Eto, and it was my honor to be appointed the 17th President of Topcon Corporation on April 1, 2023. Topcon celebrated its 90th anniversary last year, and we will continue to strive with venture spirits to achieve a new leap forward as we approach our 100th anniversary. I look forward to your support in this endeavor.
I have previously worked as a site foreman for a construction company, where I was engaged in hands-on management. After joining Topcon in 1990, I gained experience mainly in the sales and business planning divisions of the positioning business, where I was involved in developing new businesses. I also worked on the reorganization of the sales network in the healthcare business, and until last year, I was engaged in quality reform in the quality division.
At Topcon, our Corporate Identity is to "contribute to enrich human life by solving the societal challenges within healthcare, agriculture and infrastructure," and we develop businesses globally in the areas of healthcare, agriculture (farming) and infrastructure (construction). The almost three decades since I joined have also been a period of transformation for Topcon, as it transitioned to a solution proposal-based company. I was involved in this process of growth from the front line of sales.
Our transformation into a solution provider was triggered by our M&A activities in the early 1990s, targeting overseas technological venture companies. Through approximately 40 acquisitions and alliances over the following years, we were able to integrate the precision optical technologies we had developed throughout our history with GNSS technology and hydraulic control technology to establish our machine control technology, creating the new concept of the automation of construction process. In the agricultural field, we created new solutions to achieve the automation of farm operations using auto-steering technology and optical growth sensors. In the healthcare field, we expanded from our examination and diagnostic instrument business targeting ophthalmology and hospitals to the global development of an eye disease screening system.
Today, we have grown into a global company, with 82% of our net sales overseas and Non-Japanese employees
11 TOPCON REPORT 2023
composing 72% of our workforce.
Over the last 30 years, we have grown our sales by approximately four times. A major driving force behind this growth has been the creation of DX solutions in the fields of healthcare, agriculture and infrastructure.
We have uncovered latent needs, which even our customers cannot imagine, created new markets and grown our businesses globally in the essential business fields of healthcare, agriculture and construction, vital for people to live better lives. From the front line of sales, I have been involved in the introduction of i-Construction in Japan and have participated in this initiative and Topcon's challenges.
Since my appointment as President, our Corporate Identity
-
to "contribute to enrich human life by solving the societal challenges within healthcare, agriculture and infrastructure" - remains unchanged under the Mid-term Business Plan announced in May this year, but I believe in the importance of more thoroughly pursuing a customer-centric,field-oriented approach to achieve the further promotion of DX solutions.
Our customers are professionals with specialized knowledge. For us to propose new solutions to our customers, and for them to accept these proposals, it is of the utmost importance that we understand their situation first-hand. Different customers face different challenges and demand different products. By continuing to propose solutions tailored to the region and the customer in the spirit of "Think Global, Act Local," I hope that we can grow into a company that is indispensable for our stakeholders.
Q | How do you view the business |
environment? |
An issue common to all our business areas of healthcare, agriculture and infrastructure is the increasing and aging of the global population (the proportion of people aged 65 and over). Climate change associated with global warming in recent years will also significantly affect our business environment.
We have organized the social issues and our initiatives in each business area as our value creation process. I believe that Topcon's significance of existence lies in creating livable environments where the world's population, anticipated to rise to 9.7 billion by 2050, can coexist, ensuring a safe and secure
Forward Topcon's Value Creation
Sustainability
Governance
Takashi Eto | Information |
President and Chief Executive Officer | |
TOPCON REPORT 2023 12
Topcon's Path Forward
Message from the CEO
food supply, and minimizing the risk of eye disease, an inevitable consequence of the aging population.
The reality is that despite the essential nature of the healthcare, agriculture and infrastructure markets, they lag behind other industries in terms of the shift to IT and automation. It is precisely because IT and automation have not yet taken hold that we hope to achieve a digital transformation in these markets through the introduction of our solutions, including digitalization, automation, and network technologies, to boost and accelerate the transformation of these industries.
The healthcare, agriculture and infrastructure markets where we operate our businesses are faced with various social issues, and there are ever-increasing demands related to digitalization, efficiency improvements, labor saving, and energy conservation to resolve these issues. The potential to expand our businesses is growing ever larger.
Q | Please tell us about the Mid-term Business |
Plan 2025 and the Long-term Goal. |
Mid-term Business Plan 2025 and Long-term Goal
Aim to achieve net sales of
¥400 billion on the 100 year Anniversary of the company in 2032.
Mid-term Business | 2X |
Plan 2025 |
¥250
¥215.6
billion
2X
¥97.3
billion
Challenge 2032
Net sales ¥400 billion
Introduction
Topcon's Path Forward |
Topcon's |
The Mid-term Business Plan 2025, announced in May this year, is a new three-year plan to succeed the Third Mid-term Business Plan covering the period from 2019 to 2022. Under the previous Mid-term Business Plan, we extended the initial plan by one year due to the impact of the COVID-19 pandemic.
FY2012 | FY2022 | FY2032 |
result | result | goal |
Value Creation |
Overall, the growth strategies we set forth at the inception of the plan successfully produced results. We exceeded our financial targets in terms of sales and were more-or-less right on target in terms of operating income.
Long-term Goal
Under the current Mid-term Business Plan 2025, we will not only accelerate the growth of businesses already on track under our previous Mid-term Business Plan but also focus on enhancing and maintaining profitability. In the Mid-term Business Plan 2025, we also establish the Long-term Goal of achieving net sales of ¥400 billion by 2032, the year of Topcon's 100th anniversary. Our net sales first reached approximately ¥100 billion in 2012, when we marked 80 years since our foundation. We went on to double this figure over the subsequent decade, growing our net sales to approximately ¥200 billion in 2022.
leading-edge products and combining hardware and software to provide unique solutions to our customers. All of our cus- tomers, whether in construction, agriculture, ophthalmology, hospitals, or optical stores, are engaged in their work in close association with their own national and local communities. We sell products to these customers, support them, and propose new solutions to them through our network of locations around the world.
I firmly believe that if we listen closely to the needs of each of our customers and provide them with solutions to meet their respective needs, this will lead to further growth. This is the "Think Global, Act Local" approach. I regard the deepening of customer orientation as the key point in future corporate growth.
lateral sales framework of U.S.-Europe-Asia. From the current fiscal year, we have restructured the business segments into the Positioning Business and the Eye Care Business. We will endeavor to provide more user-friendly disclosures and briefings for all our stakeholders.
We are also engaged in the important theme of boosting production capacity and improving production efficiency. We plan to boost production capacity at our core factories, aiming for further increasing our production capabilities to support sustainable business growth. Under the Mid-term Business Plan 2025, we plan to invest around ¥10 billion in initiatives such as the construction of an additional factory at Topcon Ya- magata, our mother factory for eye care and positioning prod- ucts, and the relocation and expansion of our German factory producing displays for agricultural and construction machinery.
duction at 16 locations, and sales at 66 locations around the | ||
world. It is crucial that we use IT to create systems to effi- | ||
ciently and effectively utilize these locations. In addition to de- | ||
veloping and expanding DX solutions for our customers, we | Sustainability | |
are also actively engaged in internal DX. | ||
Through the implementation of these measures, we hope | ||
to achieve net sales of ¥250 billion and operating income of | ||
¥28 billion in FY2025, the final year of the plan. | ||
(Please refer to "Strategies by Business" on pages 17 to 20 | ||
for details of initiatives in each business) | ||
Q | Lastly, please explain your views on | |
sustainability. | Governance | |
We recognize the fact that, in recent times, it is becoming dif- |
Over the coming decade, we aim to redouble this figure to achieve net sales of ¥400 billion by 2032.
Basic Policy
Under this Long-term Goal, we have established three pillars of our basic policy as we strive to be a sustainably growing 100-year venture: "deepening customer orientation," "reforming the foundation," and "DX acceleration."
1 Deepening Customer Orientation
In terms of deepening customer orientation, first of all, we have so far progressively expanded our businesses by leveraging our core "measurement" technologies to develop unique,
13 TOPCON REPORT 2023
2 Reforming the Foundation
In terms of reforming the foundation, we will focus on maximizing the efficiency of operations in our core Positioning Busi- ness. Until now, we divided the business into two segments, Smart Infrastructure Business and Positioning company, and going forward, however, we will integrate these into one segment as the Positioning Business to achieve greater business efficiency. We will fuse the respective product planning and development functions and engage in overall business optimization to maximize synergies while making the most of the technological strengths developed by each segment. In addi- tion, we aim to strengthen our sales and support capabilities to make it possible to flexibly provide solutions and support to meet the needs of customers in each country through our tri-
3 DX Acceleration
Next, regarding DX acceleration, we have expanded our businesses by building on our stable business base with the creation of growth businesses pivoting on DX solutions. So far, we have generated new DX solutions such as the automation of construction process, the automation of farm operations, and creating a system for eye disease screening. We hope to continue to create DX solutions with new concepts to further grow our businesses.
Development, production, and sales capabilities, as well as the capabilities of our staff, are vital to support DX accelera- tion. We pursue our business activities globally. We are currently engaged in product development at 30 locations, pro-
ficult for companies to achieve sustainable growth unless they | |
are able to contribute to all their stakeholders and especially to | |
society. In this environment, we will make even more exten- | |
sive use of our global coverage and diversity to practice ESG | |
management based on the TOPCON WAY, the Group's com- | |
mon values, which transcend nationalities. Through these ef- | |
forts, we aim to achieve a sustainable society, contributing to | |
enrich human life by solving the societal challenges within | Information |
healthcare, agriculture and infrastructure, which are also our | |
social challenges is directly linked to the expansion of our busi- |
business areas. We firmly believe that the resolution of these
nesses, and will enable our businesses to grow sustainably into the future.
TOPCON REPORT 2023 14
Topcon's Path Forward
Mid-term Business Plan 2025
Challenging to sustainably growing 100 year venture
Financial Strategy
Even as we actively invest, however, we are also main- | Introduction |
taining a balance with shareholder returns. We have estab- | |
lished a basic policy of continuing dividends with a payout | |
FY2025 Financial Targets
Net Sales
Operating
Income¥215.6billion
¥19.5billion
ROE
13.2% FY2022 Actual
Further growth by developing
solutions to meet various customer
needs
Mid-term Business Plan 2025
¥250billion | FY2022 | |
¥28billion | CAGR5% | FY2022 |
CAGR13% | ||
+2.1pt |
FY2022
ROE(0.2)~+1.8pt
FY2025Plan 13%~15%
Maximizing the Efficiency of | Continuing to invest focusing on |
Positioning Operations | growing areas (R&D, M&A) |
Haruhiko Akiyama
Director, Senior Managing
Executive Officer
General Manager of Accounting
& Finance Div.
General Manager of Custom
Products Business Promotion Div.
Review of the Previous Mid-term Business Plan
Under the Third Mid-term Business Plan (FY2019-2022), despite a massive business impact from the COVID-19 pandemic and geopolitical issues, our strategies aimed at promoting and accelerating growth business produced results, enabling us to achieve sales exceeding the plan and operating income roughly on par with the planned level. We were also able to substantially improve our financial KPIs and strengthen our financial base for future investment in growth.
ratio of at least 35%. |
R&D expenditures (billion yen) Dividends (yen) Dividend payout ratio
270.7% | 20.7 | |||
16.0 | 14.9 | 16.2 | 37.4% | |
35.4% | ||||
24 | 44.3% | 36 | 42 | Topcon's |
10 | ||||
FY2019 | FY2020 | FY2021 | FY2022 | |
Path | ||||
Fund Raising Capacity | ||||
Forward | ||||
We focus on the D / E ratio as an indicator of financial sound- | ||||
ness. Over the past four years, the D / E ratio has been gradu- | ||||
ally improving and stood at 0.6 times as of the end of the pre- | ||||
vious fiscal year. We regard a ratio of 1.0 or less as sufficient, | ||||
while maintaining a credit rating of "A-" from R&I, and we be- | ||||
lieve we have ample additional borrowing capacity. In addition, | ||||
we raised ¥20 billion through the issue of corporate bonds at |
Think Globally
Continue to create solutions by Leading- Edge Hardware based on core technology of "Measurement" + Software
Act Locally
Develope customized solutions closer to customers by leveraging our global sales network and Strengthen collaboration with local software companies
New Solution Proposals New Market Development
Integrate two segments, the Smart Infrastructure Business and the Positioning Company, into a single Positioning Business to promote efficiency.
Strengthening Improving Enhancing
development operational sales
capabilities efficiency capabilities
Increase production capacity
of TopconYamagata
Invest the worth of ¥10 billion in boosting production capacity to support business expansion and improving production efficiency through digitalization and automation.
Expand new factories for displays for construction and agricultural machinery
Continuing investment to create new DX solutions following IT Construction,IT Agriculture and Screening for accelerating business growth.
Enhancing organization and management foundation for HR and IT to accelerate development and deployment of DX
HR
Secure DX talent to drive software/ solutions by leveraging global locations Strengthen human resource development and training
Management Foundation
Strengthen management of solutions and service revenue
Strengthen quality management
EPS (yen) | Equity ratio | 45.8% | |
39.0% | 41.2% | 45.1% | |
112.2 | |||
101.7 | |||
8.9 | 22.6 | ||
FY2019 | FY2020 | FY2021 | FY2022 |
Mid-term Business Plan 2025
Under the Mid-term Business Plan 2025, launched in the current fiscal year, we have established management targets for FY2025 including net sales of ¥250 billion and operating income of ¥28 billion. At the same time, we have identified "improving and maintaining profitability" as a key issue. To achieve this, we will boost management efficiency by integrating the former Positioning Company and Smart Infrastructure Business into a single Positioning Business to further strengthen the business base. In the Eye Care Business, which suffered a slump in revenue due to the impact of COVID-19 and upfront investments in growth, we aim to im-
the start of the current fiscal year, and have also secured suffi- | Topcon's |
cient credit limits (commitment lines) for bank borrowings. | |
Value | |
We intend to fund individual M&A activities using funds | |
from operating cash flow, and we will select the optimal fi- | Creation |
nancing method each time, including borrowings if neces- | |
sary. We have also established structures to flexibly respond | |
to any dramatic changes in the environment, in addition to | |
securing the funds for growth investment. |
Interest-bearing liabilities (billion yen) D/E ratio (times)
57.4 | 53.0 | 43.4 | 53.5 | Sustainability |
0.9 | ||||
0.8 | ||||
0.6 | ||||
0.5 | ||||
FY2019 | FY2020 | FY2021 | FY2022 |
Cost of Capital |
We have established ROE of 13-15% as a KPI under the |
Mid-term Business Plan 2025. We are working to strength- |
en management with an awareness of the cost of capital, |
Increase production capacity | IT |
of Topcon Yamagata | |
Accelerating automation and operational | |
efficiency through digitalization and data |
Three pillars of sustainable growth | ||||||||||
Deepening Customer Orientation | Reforming the Foundation | DX Acceleration | ||||||||
to Remain a Company in Need | Establish an efficient | Continue to createthe next | ||||||||
organization | growth business | |||||||||
Basic Policy | ||||||||||
To achieve sustainable growth and our financial targets, we have established three basic policy pillars as a key | ||||||||||
point of our Mid-term Business Plan 2025: Deepening Customer Orientation, Reforming the Foundation, and | ||||||||||
DX Acceleration. | ||||||||||
15 TOPCON REPORT 2023 |
prove profitability through a combination of various measures. Our basic approach to financial measures under the Mid-
term Business Plan 2025 is shown below.
Capital Allocation
We operate growth businesses, and it is our policy to priori- tize the allocation of capital to investment in growth, aiming to accelerate our numerous growth themes to further strengthen these businesses. Specifically, we will continue to invest in research and development. In addition to accelerating growth in our core businesses of IT Construction, IT Agriculture and Screening, we plan to continue to allocate approximately 9-10% of net sales to R&D expenditures for the continued creation of new businesses that make maximum use of new ideas and DX.
In addition, under the Mid-term Business Plan 2025, we have established a budget of ¥40 billion for growth invest- ment, centered on M&A to enhance and expand new business fields.
while focusing not only on profitability but also on capital ef- | Governance |
ficiency and the optimal capital structure. When implement- | |
ing M&A and business investments, we will make invest- | |
ment decisions based on investment payback plans | |
incorporating individual risks and ample consideration to | |
avoid any damage to capital. We will also focus on engaging | |
in active dialogue with capital markets through IR activities | |
to achieve management with an awareness of both the cost | |
of capital and the share price. |
ROE PBR (times) Total assets turnover ratio (times / year)
14.0% | 13.2% | Information | ||
1.4% | 3.6% 2.0 | 2.0 | 2.0 | |
1.3 | 0.8 | 1.0 | 1.1 | |
0.9 | ||||
FY2019 | FY2020 | FY2021 | FY2022 | |
TOPCON REPORT 2023 16 |
Topcon's Path Forward
Strategies by Business
Until FY2022,Topcon engaged in businesses across three segments: Positioning Company, Smart
Infrastructure Business, and Eye Care Business. (From FY2023, these were reorganized into two segments: Positioning Business and Eye Care Business)
POSITIONING | SMART | EYE CARE | ||
COMPANY | INFRASTRUCTURE | BUSINESS |
POSITIONING | Introduction |
BUSINESS | |
BUSINESS |
FY2022 Financial Results
Positioning Company
Topcon's
Corresponding SDGs
Business domains | |||||
Surveying | Construction/ | ||||
Civil | Building | ||||
I n f r a s t r u c t u r e | A g r i c u l t u r e | ||||
Engineering | Agriculture | ||||
Major Sales Areas
Europe | China | Americas |
Oceania
Corresponding SDGs
Business domains | |||||
Surveying | Construction/ | ||||
Civil | Building | ||||
I n f r a s t r u c t u r e | A g r i c u l t u r e | ||||
Engineering | Agriculture | ||||
Major Sales Areas
Japan
Middle East/ Asia
Africa
Corresponding SDGs
Business domains
Examination/Diagnosis/
Treatment for
H e a l t h c a r eophthalmology
Screening (Preventive/Prognostic) Phoropter for Optical Stores
Major Sales Areas
Worldwide
In Positioning Company, net sales increased by 29.0% year on year to ¥124,731 million, as the Group captured non-housing-related robust demand, even as the effects of a slowdown in housing investment became apparent in North America, the main market for this segment, amid the continuing impact of shipping delays due to the shortage of parts and materials. Operating income increased by 33.6% year on year to ¥15,427 million, driven mainly by the rise in sales, although the business continued to be affected by soaring parts, materials, and logistics costs.
Smart Infrastructure Business
In Smart Infrastructure Business, net sales increased by 8.0% year on year to ¥42,163 million, driven by firm domestic sales and sales growth to countries in Asia and the Middle East, despite the impact of shipping delays due to the shortage of parts and materials. Operating income decreased by 13.5% year on year to ¥5,037 million due to the effect of upfront investments in new business fields, as well as the continued impact of a decline in production of surveying instruments associated with the shortage of parts and materials and elevated parts and materials costs.
Net Sales | Operating Income |
(Billion yen)
124.7 | ||||
77.7 | 74.0 | 96.7 | 15.4 | |
71.4 | 11.5 | |||
8.4 | 4.5 | 6.1 | ||
FY | FY | FY | FY | FY |
2018 | 2019 | 2020 | 2021 | 2022 |
Net Sales | Operating Income |
(Billion yen)
36.7 | 33.4 | 34.0 | 39.0 | 42.2 |
6.4 | 5.0 | 5.0 | 5.8 | 5.0 |
FY | FY | FY | FY | FY |
2018 | 2019 | 2020 | 2021 | 2022 |
Path Forward Topcon's Value Creation
Sustainability
Major Products Sold by the Segment
Total Station
3D Laser Scanner
IT Construction System
IT Agriculture System
GNSS Receiver for Surveying
Laser Instruments
3D Mobile Mapping System
Software
(Construction Site Management System, Surveying & Civil Engineering System, System for 3D Point Cloud Data Management and Modeling, etc.)
Major Products Manufactured by the Segment
Products and software based on core technology of GNSS receiver
IT Construction System
IT Agriculture System
GNSS Receiver for Surveying
Construction Site Management Software
Surveying & Civil Engineering Software
Major Products Sold by the Segment
Total Station
3D Laser Scanner
IT Construction System
IT Agriculture System
GNSS Receiver for Surveying
Laser Instruments
3D Mobile Mapping System
Software
(Construction Site Management System, Surveying & Civil Engineering System, System for 3D Point Cloud Data Management and Modeling, etc.)
Major Products Manufactured by the Segment
Optical products including surveying instruments and software
Total Station
3D Laser Scanner
Laser Instruments
3D Mobile Mapping System
Surveying & Civil Engineering Software
Software for 3D Point Cloud Data
Management/Modeling
Major Products Manufactured and Sold by the Segment
3D Optical Coherence Tomography
systems (3D OCT)
Fundus Camera
Auto Refractometer/
Auto Kerato-refractometer
Slit Lamp
Tonometer
Lens Meter
Ophthalmic Laser Photocoagulator
Software
(Image Filing, Data Management,
EMR, etc.)
Optometry Systems
Integrated into the Positioning Business in FY2023
Maximizing the Efficiency of Positioning Operations
precision GNSS and machine control | hardware and software | Governance | |
Positioning Company | Smart Infrastructure Business | ||
Development and manufacturing based on | Development of state-of-the-artoptics-based | ||
Maximizing business efficiency to enhance global competitive advantage
Positioning Business
Expected effects | Information |
Strengthening development capabilities | |
Speed up planning and development by optimization | |
Improving operational efficiency | |
Optimizing business functions within the organization | |
Enhancing sales capabilities | |
Providing solutions responding to the local needs by a global trilateral sales framework (US-Euro-Asia) | |
17 TOPCON REPORT 2023
TOPCON REPORT 2023 18 |
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Topcon Corporation published this content on 27 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 December 2023 03:24:34 UTC.