Mid-term strategic target, Vision2020
Based on the mid-term strategic target we announced in April 2015, with organic growth and M&A, we aim to achieve two trillion yen in sales, 15% or higher in operating profit ratio, and 18% or higher in return on equity (ROE) by FY2020 (the fiscal year ending March 31, 2021). Additionally, to further strengthen our business management system, we will establish a a five regional headquarters management, by operating a regional management company in China, Asia, Americas, and Europe (including the Middle East and Africa) in addition to Japan. We will further strengthen our management base and stride forward to achieve the new mid-term strategic target by improving management quality and efficiency, and actively providing PMI (post-merger integration) support.
Small Precision Motors
We will aim to increase the sales of small precision motors to a 400-600 billion yen range by FY 2020 by focusing on creating new demands based on our technical advantages and improving profitability based on our competitive advantages.
Nidec’s primary focus in the HDD motor business is on stable profitability. Global demand for electronic data storage is expected to maintain sustainable growth at a slower pace, reflecting continued proliferation of personal and enterprise digital content that is stored, shared, protected and distributed in increasingly high volume. Handheld communication/computing devices (smart-phones, tablets, etc.) operating in the cloud storage environment are one of the largest contributors to the expansion in digital content, generating new demand for HDD-reliant, high-capacity data center servers. Although these handheld communication/computing devices may remain a constraint on the PC market to a certain extent, the accompanying downward pressure on the HDD market is expected to ebb away as HDD-reliant, cloud-oriented network servers come to take hold in the mainstream data processing platform geared towards the coming age of data explosion.
Other Small Precision Motors
This product category consists of a broad array of small electric motors developed by combining Nidec group’s drive and motion control technologies and matching them to changing market opportunities under our new market exploration initiative. Types of these electric motors include brushless DC motors, fan motors and stepping motors, with applications ranging from home appliances (room fans, dryers, blenders, cleaning robots, etc.), information and communications (mobile phone base stations), green energy generation (wind turbines), security (surveillance cameras) to safety (electric bike pedal-assist systems) and entertainment (golf cart traction systems). Among other things, beneficial properties of brushless DC motors, characterized by high energy efficiency, increased controllability, extra operating life and quietness, are finding new applications in diverse fields beyond market boundaries.
We target to increase the sales of our automotive product business, one of our strategic focuses, to a 700-1000 billion yen range by FY 2020.
Nidec group offers automotive motors such as electric power steering motors (which enjoy the world’s largest market share), automotive cameras, control valves, electric oil pumps and other automotive components. Combining these products with Nidec Elesys’s electronic control units (ECUs) make individual components function as sub-systems. Integrating motors with ECUs and sensors, and thereby controlling electronically various functions of automobiles enables us to offer enhanced vehicle safety features such as collision mitigation system and autonomous driving, etc. Replacing engines with motors contributes to improving automobile’s fuel efficiency and reducing CO2 emissions.
Going forward, we aim to supply automobile industry with an automotive electronic component and sub-systems built upon our proven motors, ECUs and advanced sensors and to contribute to making safer, more environmentally conscious and comfortable automobiles.
Appliance, Commercial and Industrial Products
In the Appliance, Commercial and Industrial Products businesses, another strategic focus for Nidec group along with the Automotive Products business, we prioritize the enhancement of operating synergies conducive to improved sales and cost efficiency and, in turn, increased profitability. In this business category, we target 400-600 billion yen range in sales by FY2020. Products spearheading the growth initiative include motors for washing machines, dehydrators, dishwashers, air conditioners, agricultural equipment, oil/gas refining, mining, water treatment, steel production, marine transportation and power generation. The rising awareness of energy conservation and accompanying regulatory developments are expected to provide a constant tailwind to these businesses.
M&A is an essential part of our growth strategy. We seek business acquisitions that allow us to gain access to prospective technologies, new customer groups and untapped geographic markets. This is particularly the case when addressing the markets for automotive systems, home appliances and industrial equipment, which are vastly diversified and prone to exhibit distinct regional variations in customer preferences. In other words, business acquisitions will help swiftly globalize our motor production and supply networks in a manner that matches each regional need. Also, we will pursue business acquisitions that effectively diversify our business risks. Through a phased implementation of well-planned acquisition schemes, we seek to optimize our product portfolio, and reduce our dependence on the IT market, which is characterized by volatile demand and short product life cycles.