The Medium-Term Management Plan
"Building on value creation from a long-range perspective"
The DNP Group is currently implementing its Medium-term Management Plan, which describes the company's goals up to fiscal 2024, as part of its activities conducted with a long-term perspective. First, we must ascertain and analyze major economic, social, and environmental trends (megatrends) while concentrating our management resources on focused businesses that offer value unique to DNP, including data distribution, IoT and next-generation communications, mobility, and the environment. For example, we are focusing on the development of antibacterial and antiviral products in response to the growing need for strict hygiene management. In addition, we are expanding our range of communication services that link real and remote environments, driven by the spread of digital transformation (DX). We are working to expand several of our businesses, including educational ICT (information and communication technology) that provides optimal teaching materials for individual children and students, an image correction service that supports online medical examinations, VR/AR for virtual showrooms and personal data trust banks that promote the distribution of personal data with the consent of individuals.
Medical
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Virtual experience VR interior simulator
In March 2020, DNP formulated the DNP Group Environmental Vision 2050 as a declaration of our intention to create new value aimed at realizing a society that is decarbonized, recycling-oriented and in harmony with nature. Our battery pouches for lithium-ion batteries are of an environmentally related business. Our product in this category commands the world’s largest market share and is enjoying significant growth in demand for use in both mobile devices and electric vehicles. In addition, we offer eco-friendly packaging including the plant-based packaging materials series and mono-material packaging suitable for recycling. By offering these products and services, DNP will reduce GHG emissions, improve energy efficiency and realize sustainable raw material procurement.
DNP's environmental initiatives
Key points of the Medium-term Management Plan
Basic strategy 1: Create value through “P&I Innovations”
1-1: Create value primarily in growth areas
DNP has established four growth areas—Knowledge and Communication, Food and Healthcare, Lifestyle and Mobility, and Environment and Energy—in which it leverages its unique "P&I" strengths to provide value in response to rapid global changes. In addition, we have identified key issues by taking into account megatrends, stakeholder interests and influences, and their level of importance to DNP. We have reconsidered the value generated by DNPʼs businesses in terms of both profitability and market growth potential and have identified “focus businesses.” We aim to build a strong business portfolio by optimally allocating management resources to these focus businesses.
Focus businesses in four growth areas
1-2: Provide value optimized to each country and region
Closely connected value chains and information networks currently span the globe. Under these conditions, DNP will leverage the strengths of its products and services that have captured world-leading market shares, responding carefully to the characteristics and needs of each country and region by providing individually optimized value. Approximately one out of every eight DNP Group employees works at an overseas site, and we are promoting our overseas businesses centering on those shown in the chart below. In the fiscal year ended March 2021, overseas sales accounted for 18.4% of the Group’s total sales. We will make further efforts to strengthen our structure, including our global marketing department exploring overseas markets and acquiring cutting-edge technologies, and will make every effort to provide further value by enhancing synergy in Japan and overseas.
Main businesses undertaken in the global market
1-3: Increase value using all available restructuring approaches
DNP will promote a number of Group-wide structural reforms to build a robust business portfolio and increase profitability, with the value created by each business as one evaluation criterion. We will strive to transform and strengthen our business structure and further increase value by downsizing and restructuring businesses that cannot avoid a decline in demand. We will also intensively allocate human capital, R&D investment and management resources, such as land and equipment, to our “focus businesses” that show high market growth potential and profitability.
Examples of principal structural reforms in each business segment
Basic strategy 2: Strengthen business infrastructure to support growth
2-1: Strengthen financial and non-financial capital
DNP will strengthen its management foundations that support medium- to long-term growth by utilizing financial and non-financial capital (human capital, intellectual capital, manufactured capital, natural capital and social/relationship capital) in an integrated manner. In particular, we will strengthen capital policy and initiatives regarding environmental, human capital, human rights, and DX promotion, while formulating and executing concrete action plans. In addition, as a part of capital policy initiatives, we will pursue investment in our “focus businesses,” and plan to make annual investments on the scale of 100 billion yen during the three-year Medium-term Management Plan leading up to FY2022. As sources of capital for these business investments, DNP will use both its own funds and third-party capital to fund growth investments and will also reduce idle assets. Furthermore, we will comprehensively consider different capital policies including improving capital efficiency, stabilizing our financial foundation, and promoting shareholder returns. Through these measures, we will nurture an organizational culture of continuing to take on the challenge of innovations toward the creation of value and build a foundation that supports the sustainable growth of the DNP Group.
2-2: Strengthen corporate governance
DNP works to strengthen corporate governance as one of its crucial management issues. DNP has built and operated a strong structure for quick and accurate management decision-making and business execution, and for auditing and monitoring these functions. At the same time, DNP is accelerating initiatives in conjunction with measures including thoroughgoing employee training and education. At the General Meeting of Shareholders in June 2021, a resolution was approved for the election of 12 Directors, including one female Director and four Outside Directors (one third of the board). An analysis and evaluation of the effectiveness of the Board of Directors is implemented once a year, and the analysis results are discussed by Outside Directors and shared with the Board of Directors. DNP also actively promotes environmental, social and governance (ESG) initiatives and these efforts have earned high acclaim from outside the company. For example, DNP has been selected for 21 consecutive years for the FTSE4Good Global Index, a global socially responsible investing (SRI) index, and has also been selected as a constituent of the ESG indices adopted by Japan’s Government Pension Investment Fund (GPIF) (as of July 2021).
DNP contributes to the sustainable development of society, aiming to both enhance our corporate value and earn the trust of our stakeholders. To this end, we plan to deepen dialogue with our many stakeholders, and we look forward to their continued guidance and support.