2nd Quarter/FY2016 ending in March 2017 Consolidated Financial Results
16/20 Increasing Profitability of Existing Businesses
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00:28:14.0
First is increasing the profitability of existing businesses. In brief, we aim to increase the current gross profit ratio by 2%, and reduce the SG&A ratio by 2%. While I cannot go into detailed individual explanations today on what needs to be done, we will increase our value, produce results in the digital manufacturing on which we are currently focusing, and reduce production costs in a dynamic manner. Combined with these efforts, we will also ensure reductions in costs in the equipment service business using technologies that are already available, such as remote services and predictive systems. Based on the three focus points, we will improve the gross profit ratio by 2%. In order to reduce SG&A expenses, we are currently conducting fundamental reviews of the business administration and indirect operations for all Group functions.We will work to shorten the actual distance and time between customers and headquarters, and simplify the Group management structure. Measures to accomplish this include drastic improvements in productivity through the utilization of ICT & AI in business administration and indirect operations. Ceilings will be established on direct sales personnel as a whole, and there will be a major qualitative shift for the majority of these personnel. In addition, changes will be made to development personnel based on ceilings established, and this will lead to strengthened development capabilities. In terms of human resource allocation, we will make significant reductions in development resources in Japan, particularly for software, and increase software application development overseas to achieve a total SG&A ratio reduction of 2%. In order to improve forex sensitivity, we will implement separate measures to improve sensitivity to USD, EUR, and other currencies regarding forex impact on BPO, in addition to the scope of production and procurement. Of course, ROIC is being instilled in each production site and business unit in order to produce visible results through ROIC management.Meanwhile, we have focused on concentrating resources to area of interest with low levels of profitability among existing businesses in our current portfolio. Such efforts will not wait for the new Medium Term Business Plan for FY2017, as we will instead start from the second half of FY2016 to firmly shift toward a stance of prioritized resource allocation, rather than the Company holding 100% of resources in components businesses or other fields.
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