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Management Plan

To realize its long-term vision, "ESPEC Vision 2025," ESPEC CORP. has implemented a medium-term management plan (Stages I to III) every four years, and has promoted the medium-term management plan, "Progressive Plan 2025," which is Stage III. However, due to the prospect of achieving the medium-term management targets in FY 2024 one year ahead of schedule, the Company has been considering a medium-term management plan starting in FY 2025. The Company hereby announces the outline of the mediumterm management plan "Progressive Plus 2027" (FY 2025 to FY 2027).

Stage Ⅲ PROGRESSIVE PLAN 2025 * FY2018 was an irregular 15-month fiscal period for overseas consolidated subsidiaries. '()' figures showing values based on a 12-month accounting period

Medium-term management plan "PROGRESSIVE PLUS 2027" (FY2025~FY2027)

Basic Policy and Targets

The Company has long held the top share ( 30% worldwide or more, 60% in Japan or more) in the field of environmental test chambers, which is essential for the development and commercialization of cutting-edge technologies, and has continued to grow in step with global technological innovation. Since FY 2021, the Company has achieved record results by implementing strategic inventory, raising prices for products and services, and increasing production capacity, despite difficulties such as parts shortages and rising prices for parts and materials, as test demand in the EV and battery fields has expanded against the backdrop of the digitalization and decarbonization of society. Looking ahead to the next 10 years, testing to ensure reliability and safety in cuttingedge technology fields such as generative AI and automated driving will remain a necessity, and we believe that global technological innovation will continue to be a business opportunity for the Company.
Based on this recognition, we have formulated the medium-term management plan Progressive Plus 2027, which begins in FY 2025. Over the next three years, in order for the Company to achieve sustainable growth, we will shift our focus to "quality improvement" and transform our corporate structure into a more leaner one. Our medium-term management targets prioritize achieving an operating profit ratio of 15.0% and ROE of 12.0% or more. By taking on higher goals than we have achieved in the past, we will make the next three years a springboard for growth and aim for sustainable corporate value enhancement.

Establishing a lean, sustainable, and highly profitable earnings model

Target Markets

The EV and battery-related investments that have driven our business until now are expected to level off and decelerate. To offset this, we will target the AI semiconductors, autonomous driving, and satellite communications markets. These markets are expected to see growing demand for testing as advanced technologies move toward practical application. Moreover, these electronics markets, where we already have a strong delivery record, represent a significant market for us, on par with the automotive sector. In these advanced technology fields, the value ESPEC offers lies in “ensuring quality such as high reliability and durability for the practical application of advanced technologies.” In the AI semiconductors and autonomous driving fields, we will contribute to solving technical challenges associated with higher integration of semiconductors and performance improvements in sensors used in autonomous driving. In the satellite communications field, we will support development efforts for commercial satellite communications in the U.S. and small satellite communications by private companies in Japan.

Management strategy

To enhance corporate value, we will promote three strategies: business strategy, financial capital strategy, and non-financial strategies (ESG).

Increase Corporate Value

1.Business strategy

We will respond to the testing needs of our target markets in the fields of AI semiconductors, autonomous driving, and satellite communications by developing diverse product lines, customizable capabilities, and new products development. In addition, we will prioritize Japan, the United States, and China as key regions, and aim to establish a competitive advantage in the global market by leveraging the collective strengths of the Group. Furthermore, we will make full use of IT and digital technologies to promote labor-saving and automation of manufacturing to improve profitability.
In the Service Business, we aim to expand earnings mainly through the Aichi Next Generation Mobility Test Lab in the laboratory testing services business. In the after-sales service business, we will utilize IT and digital technologies to provide services that solve customer issues such as remote monitoring of equipment. At the same time, we will work to expand our thermal solutionsservices related to CAE (Computer Aided Engineering) and food machinery businesses with the aim of creating new businesses that will serve as pillars of future earnings.

Target Markets by Region

2.Financial Capital Strategy

Aiming for "management conscious of cost of capital and share price," we will work to improve the efficiency of total assets, return to shareholders based on cash allocation for three years, and strengthen IR activities.
During the period of this medium-term management plan, our cash allocation policy is to generate cash through improved profit ratio and more efficient use of total assets, and proactively allocate cash generated over three years to growth investments and shareholder returns. We plan to invest ¥9.5 billion for growth, the same level as the previous medium-term management plan. As the main investment to improve production efficiency, we will reform production facilities at the Fukuchiyama Plant and carry out renovations. For shareholder returns, we plan to return more than 50% of total return ratio cumulatively over the three years.

Cash Allocation Policy Proactively allocate cash generated over three years to growth investments and shareholder returns Implement shareholder returns with a total return ratio of 50% (cumulative over 3 years) or more through dividends and share purchases by the Company

3.Non-financial Strategies(ESG)

We plan to formulate the 8th Medium-Term Plan on the Environment Plus II, as part of our environmental initiatives. For human capital, we will enhance the capabilities of people and organizations, which form the foundation of our management. We will work on both talent acquisition and development while promoting open communication to create employee job satisfaction and improve engagement. We are also promoting diversity and inclusion. As of the latest update, the percentage of female managers has reached 9.8%, nearly achieving the 10% target set in the previous medium-term management plan. In the new medium-term management plan, we have set a new target of 20% and will continue our efforts. In terms of governance, we will strengthen group governance and risk management. We will also implement initiatives such as formulating a human rights policy and preventing harassment.

Main Initiatives Medium-Term Management Plan Targets

Results briefing movie and presentation materials

The medium-term management plan "PROGRESSIVE PLUS 2027" was explained at the financial results briefing for FY2024.

ESPEC CORP. Results Briefing FY2024 (Fiscal Year Ended March 31, 2025)