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Message from the President

On the path to a sustainable future, we will contribute to solutions for social issues through our businesses, centering on Environmental Creation Technology

Aiming to be an essential company for global cutting-edge technologies

ESPEC hopes to contribute to the sustained development of society through businesses driven by Environmental Creation Technology, which is capable of recreating various weather environments found around the globe. This approach is rooted in our corporate philosophy (THE ESPEC MIND) and our mission therein to “provide more dependable living environments through our business activities, centering on Environmental Creation Technology.” It could also be called the purpose of the company itself.
This year once again saw concentrated heavy rains causing damage throughout Japan. Global warming is becoming more severe every year.
Meanwhile, we also face a global economy full of uncertainty with elevated geopolitical risks, exchange rate fluctuations, and soaring raw material prices. On top of that is the rapid spread of generative AI and digitalization, both bringing tremendous change to the nature of our lives and business activities.
In this era of great change, we are re-energizing our development of cutting-edge technologies throughout the world in order to achieve a richer, safer, and more secure society. ESPEC provides practical applications of these advanced technologies and products and services that are essential to ensuring their reliability and safety. Moving forward, ESPEC will heighten our presence to the point where we are considered an essential company to the world’s cutting-edge technologies, while also contributing to resolving social issues.

Steady progress towards achieving “Progressive Plan 2025” - the medium-term management plan

ESPEC is in the process of implementing its medium-term management plans (Stages I to III), each covering a four-year period, that aim to achieve its long-term vision, ESPEC Vision 2025. Since FY 2022, we have been implementing the final stage and medium-term management plan: Progressive Plan 2025. In this plan, the consolidated performance targets for FY 2025 were set at net sales of 55 billion yen, operating profit of 7 billion yen, an operating profit ratio of 12.7%, and ROE of 10%. However, these targets were revised up in May 2024. ESPEC aims to achieve net sales of 65 billion yen, operating profit of 7.5 billion yen, an operating profit ratio of 11.5%, and ROE of 10% or more.
It has been two years since we launched Progressive Plan 2025. In FY 2023, we made strong investment in EVs and battery-related fields especially, set records for both net sales and operating profit, and achieved ROE of 10%, meaning we have achieved solid progress at this halfway point in our plan. On the road to achieving our future targets, we will collaborate with our group companies overseas in an effort to bolster our global competitive strength and develop global markets. In the Equipment Business, we will work to strengthen our domestic manufacturing capabilities while also striving to expand our product lineup to meet evolving testing needs in advanced technology fields and strengthening our marketing. In the Service Business, we will open a new laboratory testing service site focused on automotive batteries and work to satisfy rising demand for testing.
We also believe it is important to maintain ROE at a stable level of 10% or more as stated in the Progressive Plan 2025, in the interest of achieving management that is mindful of the cost of capital and our stock price. Moving forward, we will focus on generating cash by curbing increases in total assets and enhancing the efficiency of invested capital, then direct that cash towards growth investments and shareholder returns to enhance our corporate value. We will also strive to improve our dialogues with shareholders and investors through ongoing IR activities.
Moreover, in pursuit of further growth, we have begun working on a new long-term vision that will extend through fiscal year 2035.

Creating Individual Growth and Job Satisfaction

“People” are the driving force of a company’s development. One of ESPEC’s materialities (important issues) is “securing and cultivating diverse human resources.” Every year, we conduct our annual engagement survey of all employees, and the FY 2023 survey found that employees had low emotional attachment (employee engagement) to their company and organization. As discussed, business performance reached record high levels last fiscal year, but we believe the primary causes for low engagement were deficiencies in management style and communication. Currently, executive officers and chief officers are formulating action plans to resolve these issues at workplaces and promptly putting those plans into action. Progress on action plans is regularly checked by the Executive Officers’ Meeting, and also posted to the company’s intranet so other employees can see it.
In order to get the most out of our human capital, ESPEC is working to (1) improve the quality of corporate culture and achieve better organizational management, (2) support individual growth, (3) cultivate human resources in a way linked to management strategy, (4) promote diversity and inclusion, and securing personnel health and safety.

Initiatives to Maximize Human Resources

● Improving the quality of corporate culture and organizational management

The Round-up Training Course is continuously conducted to help each employee deepen their understanding of and put into practice our corporate philosophy. We also hold Direct Communication sessions in which executives visit offices around Japan and engage employees in dialogue. Such discussions involved a total of roughly 900 employees over the last two years. We believe it is important for executives to take the opinions and requests collected from employees at these venues seriously and to take measures to address them one by one. In FY 2023, we started holding regular 1on1 meetings for managers and their subordinates throughout the whole company.

Round-up Training Course

● Management strategy-linked human resources development

In training the next generation of executives, we will allocate personnel and conduct training based on long-term planning. In FY 2023, we launched a “Junior Board” consisting of employees in their 30s and early 40s. Board members gain the knowledge necessary for management, discuss how ESPEC should be in 2035, and put forward suggestions to executives.
The Founder heads the board, and the President and Directors participate as observers in discussions with board members. The discussions become more high-level with every session, giving a real feel for the growth among the Junior Board members.

Junior Board, “YUME TEAM”

● Diversity and inclusion

In terms of initiatives promoting women’s success at the workplace, the last five years have seen a steady increase in the percentage of female managers from 4.7% to 9.5%. The parental leave usage rate is also up significantly from last fiscal year. We believe we have gradually managed to establish a workplace environment in which it is possible to balance work and childcare. Moving forward, we will continue to aim to be a vigorous organization where a variety of people can thrive.

Promoting Sustainability Management in Pursuit of Sustainable Growth

Tree-planting festival in the ESPEC 50 Year Forest (Sanda, Hyogo Prefecture)

As a step to bolstering group governance, we revised the ESPEC Code of Conduct and Behavior Guidelines to be better suited to the era and conducted personnel training on this topic, including at overseas group companies. We also newly established the ESPEC Sustainable Procurement Guidelines with the aim of promoting and thoroughly enforcing sustainable procurement, and we held briefings for our suppliers on this topic. Using these guidelines, we will work to achieve procurement throughout the entire supply chain that is mindful of human rights, labor rights, safety, health, and the environment.
We will make increased efforts with respect to the environment, particularly in combating global warming and conserving biodiversity as key themes, based on the 8th Medium-Term Plan on the Environment (FY 2022-2025). We held the 3rd ESPEC 50 Year Forest tree-planting festival as part of events to commemorate the 75th anniversary of our founding. In the three such events held between 2022 and 2024, we planted approximately 12,000 trees. We will nurture biodiverse forests, looking ahead to 50 years from now, in order to contribute to carbon sequestration.
ESPEC is committed to reducing greenhouse gas emissions and is currently working toward a 60% reduction in SCOPE 1 and 2 (in-house) emissions and a 30% reduction in SCOPE 3 (indirect) emissions by FY 2030 compared to FY 2019. To achieve these goals, we will promote the development of environmentally friendly products that use less energy or refrigerants with a low global warming potential, promote cooperative activities with business partners, and work to implement renewable energy at various offices.
Moving forward, ESPEC will carry out sustainability management to create and improve economic value and social value as we aim for sustainable growth.