Message from the CFO
Improving Capital Efficiency and Increasing Financial Soundness to Enhance our Corporate Value
Director, Senior Executive Officer
Chief Financial Officer (CFO)
Head of Finance and Accounting Headquarters
Human Resources & Administration Headquarters
Legal / Information Disclosure
Enhancing corporate value is a key priority for the Fuji Oil Group. Since 2021, price-to-book ratio (PBR) has trended around roughly 1.0x. To increase our valuation in the eyes of capital markets, it is essential that we improve our capital efficiency and establish a consistent track record. PBR is influenced by return on equity (ROE) and price-earnings ratio (PER). It is clear that one factor that drives down PBR is a decline in ROE. As CFO, I will work to increase our capital efficiency and promote financial stability.
In the new Mid-Term Management Plan for FY2025 to FY2027, we outline financial targets as business profit of 45.0 billion yen, an ROE of 10.0% or higher, and a FUJI ROIC of 6.0% or higher. This represents a significant gap compared to our results for FY2024 (IFRS-based), an ROE of 1.8% and a FUJI ROIC of 2.1%. However, I believe that through a cycle of business profit growth and the cash generated from that growth, we are more than capable of achieving these targets during the three-year period of the new Mid-Term Management Plan.
Positioning improvements to capital efficiency as one of our highest priority issues, during the new Mid-Term Management Plan we will promote the following three core policies. (1) Reevaluate our product portfolio and improve our inventory turnover rate to reduce working capital and improve cash flow. (2) Increase capital efficiency by strengthening efforts aimed at improving the FUJI ROIC for each business headquarters and Group company. Through these initiatives, we will aim to reduce CCC, which was 123 days (IFRS-based) at the end of FY2024, to 95 days or shorter by FY2027. (3) Use the investment management review system, which we restructured in FY2025 in response to the launch of the new corporate structure, to reinforce the approach of investment and withdrawal decisions based on capital costs and achieve the early discovery and resolution of problems.
I am certain that a critical initiative for FY2027, the final year of the Mid-Term Management Plan, will be to improve our currently high financial leverage to appropriate levels and establish a foundation for making sustainable enhancements to our corporate value.
Also, increasing PER will be essential to improving PBR. We will achieve this by diligently communicating with capital markets to foster understanding of and expectations for our growth strategy. We will enhance our information disclosure related to matters such as growth strategy, intangible assets, and sustainability. At the same time, we will improve the reliability of our business management and enhance our governance system. Through these efforts, we will reduce business and financial risks while improving our growth prospects.
I recognize that enhancing corporate value is achieved by not only improving financial metrics, but also by building a foundation of trust and confidence in our business. I will contribute to enhancing our corporate value by ensuring that the Fuji Oil Group’s financial strategy and growth potential are conveyed to capital markets.
