Interview with President Yoshinari Kitajima
We will leverage the comprehensive strengths of “All DNP” to implement the Medium-term Management Plan and generate new value that meets people’s expectations while solving social issues.
Overcoming COVID-19 toward the Generation of New Value
I wish to express my deepest sympathies and condolences to the persons who lost their lives due to the global spread of the novel coronavirus (COVID-19) and to their families and friends. Let me also extend my heartfelt sympathies to persons who have been infected and those whose lives have been disrupted by the virus. At the same time, I would also like to convey my strongest and sincere gratitude to the many persons working to protect the lives and livelihoods of people, first and foremost the frontline healthcare professionals who are making all-out efforts to stop the further spread of the virus.
The DNP Group places top priority on assuring the health and safety of employees, their families, customers and business partners and is striving to curb the spread of the virus while promoting various measures. In January 2020, we set up the Central Novel Corona Virus Control Headquarters, of which I serve as the head, and quickly and appropriately implemented various measures. In our business activities, we are proactively implementing response measures in accordance with our Business Continuity Plan (BCP) in those businesses that are essential for maintaining everyday life. For example, this includes ensuring the stable provision of data center and payment services for electronic commerce as well as stable supplies of packaging for daily necessities such as food, beverages, goods and pharmaceuticals in addition to active pharmaceutical ingredients APIs (drug substances).
During this time, telecommuting has grown significantly and demand for educational ICT and online medical consultations have increased. Consumption styles have also evolved and new services are spreading through a fusion of online and real-world physical formats. DNP not only responds to these changes, but also strives to generate changes on its own by utilizing the strengths of its advanced information security infrastructure and the strengths related to its involvement with the entire range of business processes at companies throughout the value chain.
A transition to the “new normal” is proceeding amid the spread of COVID-19. Even after the coronavirus subsides, DNP will contribute to the formation of a better economy, society and environment without returning to its past approaches. I regard this time as an opportunity to promote needed changes in one stroke, and we will continuously develop and provide “essential value” in people’s lives and corporate activities to ensure DNP becomes a “company indispensable to society” over the medium to long term.
Implementing the Medium-term Management Plan for Raising Corporate Value and Realizing a Sustainable Society
What the DNP Group Aims to Be
As society and the environment are profoundly and dramatically reshaped and people’s values shift, the DNP Group will strive to provide new value that meets people’s expectations while solving social issues based on its Corporate Philosophy “The DNP Group connects individuals and society, and provides new value.” We will strive to ensure that DNP’s products and services provide indispensable value that exists in the daily life of each and every consumer as “basics.” Breathing this desire into the brand statement “Today’s Innovation is Tomorrow’s Basic,” DNP will continue to take on the challenge of promoting various innovations.
Currently, there are myriad variable factors (risks) in the world besides COVID-19. We will firmly identify these not just to curb their negative impacts but to also solve problems ahead of time to create a better society and better lives.
Medium-term Management Plan FY2020-2022 Action Program
DNP will strive to achieve its operating income target of 75 billion yen and secure stable ROE of 5.0% or higher in the fiscal year ending March 31, 2025. To attain these objectives, DNP is promoting its Medium-term Management Plan that focuses on the following two basic strategies.
【Basic Strategy 1】 Create value through P&I Innovations
１-① Create value primarily in growth areas
DNP identifies “key issues” based on an analysis of global social issues and megatrends, consideration of stakeholders’ interest and impact and DNP’s priorities. DNP implements its Business Vision of “P & I innovation” primarily around the four growth areas of Knowledge and Communication, Food and Healthcare, Lifestyle and Mobility, and Environment and Energy. This is an initiative to create innovative new value by synergizing our unique strengths in P&I (Printing and Information) and deepening cooperation with partners.
We will work to expand our business, with efforts especially focused on smart cards, which boast a top share in Japan; battery pouches for lithium-ion batteries, which hold the world’s top share; materials for manufacturing organic light-emitting diode (OLED) displays; dye-sublimation thermal transfer printing media for photo prints; and optical film for displays.
１-② Provide value optimized to each country and region
Value chains and information networks currently span the globe and are closely connected. Under such conditions, DNP will leverage the strengths of its products and services that hold the world’s largest market shares and respond closely to the characteristics and needs of each country and region by providing individually optimized value.
Approximately one out of every eight Group employees is working at overseas bases. In the fiscal year ended March 31, 2020 overseas sales accounted for approximately 18% of the Group’s total sales.
We further strengthened our structure, such as by newly establishing a global marketing office to explore overseas markets and acquire cutting-edge technology, and will make efforts to provide further value by deepening cooperation between Japan and overseas areas.
１-③ Increase value using all available restructuring approaches
DNP will promote various structural reforms to build a robust business portfolio and improve profitability with the value created by each business as one evaluation criterion.
We will pursue the selection and focus of resources and in doing so we will transform and strengthen our business structure and further expand value by allocating human capital, R&D investment, land and equipment to our “focus businesses.”
【Basic Strategy 2】 Strengthen business infrastructure to support growth
２-① Strengthen financial and non-financial capital
The DNP Group will strengthen its management foundation by utilizing financial capital and non-financial capital in an integrated manner toward medium- to long-term growth. In particular, we will strengthen “capital policy initiatives,” “environmental initiatives” and “human capital and human rights initiatives” and formulate and implement specific action plans. Through these measures, we will nurture an organizational culture of continuing to take on the challenge of innovations and build a foundation that supports the sustainable growth.
Regarding “capital policy initiatives,” in conjunction with Basic Strategy 1, we are promoting investment in focus businesses and we will continue making business investments of 100 billion yen per year in the fiscal years ending March 2021-2023, mainly in growth areas. 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 various capital policies such as improving capital efficiency, stabilizing our financial base and promoting shareholder returns.
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 various measures such as thoroughgoing employee training and education.
DNP is actively promoting environmental, social and governance (ESG) initiatives that encompass strengthening governance and these initiatives have earned high acclaim from outside the company. For example, DNP has been selected for many indices of global socially responsible investing (SRI), which include selection for the FTSE4Good Global Index for 20 consecutive years. Additionally, as of July 2020, DNP was the only company in the printing industry to be selected as a constituent of all four ESG indices adopted by Japan’s Government Pension Investment Fund (GPIF).
DNP aims to be a company that earns the trust of all stakeholders by contributing to the sustainable development of society and improving our own corporate value.
For example, even amid the COVID-19 pandemic, we are making our utmost efforts to fulfill the “DNP duty” of providing new value that solves social issues and meets the expectations of people. DNP will take on the challenge of promoting various innovations to continue providing value that further enhances people’s lives and society.
To do so, I would like to deepen TAIWA (dialogue) with numerous stakeholders. In the future, I ask for your further support as we work to achieve our objectives.