Action to Implement Management that is Conscious of Cost of Capital and Stock Price

Analysis of Current Situation

  • We analyze that as long as our ROE achieves 12 to 15%, our profitability exceeds the cost of capital, and therefore Economic Value Added (EVA) is generated, while there are various methods for calculating the cost of capital.
  • Our ROE did exceed 16% and our annual profit reached a record high for two fiscal years in 2021 and 2022, driven by structural reforms as well as favorable external conditions. Our PBR that had been below 1x since around 2008, has been on an upward trend since the announcement of our fiscal year 2022 results, and now reached around 1x in June 2023.
  • In order for our PBR to continue to be improved, we believe it is essential that we steadily achieve those measures and actions set under current medium-term management plan “SHIFT 2023” to continuously demonstrate better financial performance so that our medium to long-term earnings stability and growth potential are adequately evaluated by the capital market. We will further strengthen and accelerate the above measures and actions.



  • We are steadily and promptly progressing with Business Portfolio SHIFT, Framework SHIFT, and Management Base SHIFT set in "SHIFT 2023", aiming to enhance earnings stability, achieve medium to long-term profit growth, and establish a framework that can maintain a stable ROE of 12 to15%, regardless of external conditions.
  • Enhancing earnings stability will be achieved by the following: Further strengthening of resilience, such as steady turnaround of challenging businesses, withdrawal from low-profitability businesses, and strategic asset replacement. Building a business portfolio that is less vulnerable to the external environment by optimizing the allocation of management resources.
  • Medium to long-term profit growth will be achieved by the following: Ensuring ROIC*2 exceeds WACC*3 within each Strategic Business Unit (SBU) and increasing its spread. Allocating management resources to fields where sustainable growth can be expected and next-generation businesses (Steady Business Growth and Seeding).
  • We aim to increase shareholder returns through medium to long-term profit growth under our basic policy that ensures we will provide stable returns to shareholders over the long term. In fiscal year 2022, we newly introduced the DOE*4 range method and repurchased our shares. We have endeavored to maximize profits for our shareholders in accordance with the growth stage of the company. Going forward, we will strive to further enhance shareholder returns while achieving medium to long-term profit growth.
  • We will enhance disclosure and engage in constructive dialogue with market participants so that you can fully understand the results and details of these initiatives.

*1 Source: Japan Exchange Group. Data before the fiscal year 2021 are of the Tokyo Stock Exchange First Section.
*2 Return On Invested Capital
*3 Weighted Average Capital Cost
*4 Dividend On Equity ratio