Message from Finance & Accounting Department

Engaging in Capital Cost-focusedManagement to Improve GVA andGenerate Free Cash Flow

Under the Medium-term Management Plan VISION 2030 stage1, the GunzeGroup’s financial strategy is to improve GVA by balancing investments ingrowth businesses and sustainable investments in such areas as the environment with reductions in capital costs, while maintaining a solid financial foundation. I strongly believe that business divisions must strengthen the profitability management of invested capital and promote measures aimed at reducing unprofitable capital.As stock markets become even more discerning toward companies with low stock prices, and the need to improve return on capital, I also recognize that efforts to promote the certainty of earnings growth potential will become even more important.

GVA / ROE Results and Forecasts(Unit: Billions of yen)
(fiscal year ended March 2019)
(fiscal year ended March 2020)
(fiscal year ended March 2021)
(fiscal year ended March 2022)
(fiscal year ended March 2023)
FY2023 Forecast
(fiscal year ending March 2024)
FY2024 Target
(fiscal year ending March 2025)
Operating Income 66 67 46 48 58 75 100
Invested Capital 1,373 1,342 1,327 1,258 1,331 1,291 1,350
GVA※ -19 -16 -31 -26 -23 -11 Companywide returned to profitability
ROE 3.7% 4.0% 1.9% 2.6% 3.9% 4.15% 6.32% or higher
  • Gunze Value Added (GVA) = (NOPAT + dividends) - (period-end invested capital (total assets - non-interest-bearing debt)) x WACC
Internal Corporate Communications Efforts to Instill GreaterAwareness Toward Cost of Capital-based Management

capital_cost_management_bookletBooklet published to instill greater awareness toward cost of capital-based management
In order for employees to better understand the concept and details of the Group’s cost of capital-based management, we have taken steps to explain and promote the importance ofGVA, a management indicator, a total of 10 times using the intranet and internal newsletters since fiscal 2020. In doing so, we have worked to instill greater awareness toward cost of capital-based management and to unify all employees behind the Group’s endeavors.
Furthermore, we took steps to issue a series of easy-to-understand booklets to help employees better comprehend the connection between daily operations and cost of capital-based management and the individual tasks to be undertaken to improve GVA. This initiative was made in response to calls to document the Group’s management policies in paper form. After completing this series, we conducted a survey and posted feedback, including details of the level of understanding, on the intranet. We will continue to make cost of capital-based management more familiar to employees. By deepening their understanding, we would expect employees will increasingly put cost of capital-based management into practice in their work.