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Investor RelationsManagement's Message

Isami Wada Chairman & CEO / Toshinori Abe President & COO

 

 

 

 

 

 

 

 

 

  

 

 

For the final year under the Medium-Term Management Plan, we aim to steadily expand our business on the basis of profit growth and shareholder returns.

Three business models for well-balanced support for profit growth

After making healthy progress with our financial results and business strategies, we are now in the final fiscal year under the FY2014 Medium-Term Management Plan, which defines the residential-related business as apriority challenge. We hereby promise to share holders that we will aim to constantly achieve continued profit growth through business management that is ahead of the times while accelerating progress.

The healthy results were backed by the establishment of our revenue bases in three business models – the Built-to-Order Business, the Supplied Housing Business and the Development Business – attained through our structural reform since the Lehman crisis and intra-group collaboration that has been strengthened since our 50th anniversary. At present, the Built-to-Order Business earns around 50% of our revenue, while the Supplied Housing Business and the Development Business cover approximately 25% each. Sekisui House’s growth has been supported by the Built-to-Order Business centered on custom detached houses. It now has three pillars. This adds greater stability to its future potential. To take a closer look at this Built-to-Order Business, more than half of its revenue comes from the Rental Housing Business.

With the efforts for personnel reassignment and massive cost cuts, the operating profit margin in the three business models has improved, and their break-even points have reduced significantly. They have also steadily increased their synergy. A strong, lean corporate structure is being constructed in which the individual segments complement one another in terms of performance, even amid economic fluctuations and changes in social circumstances. For the fiscal year ended January 2016, new highs were reached in operating income and ordinary income for the third straight year, despite a valuation loss in the China business in view of the local business conditions in the future. In the future, Sekisui House will continue to develop its growth strategies with stability while making the most of its overall strength.

The resolution of social issues is a challenge that is significant for growth. Housing is at the heart of this resolution. Sekisui House believes that the path to its evolution to a new stage will be opened by supplying different houses that are in demand at different times in answer to needs for the resolution of social issues on the basis of its brand vision, represented by the brand vision SLOW & SMART.

Attaining growth by serving to resolve social issues concerning the environment, energy and the aging of society

At the COP21 meeting at the end of last year, Japan pledged to reduce greenhouse gas emissions by 26% from the 2013 level by 2030. To meet this commitment, it is necessary to achieve a massive 39.3% reduction in the household sector. The Japanese government set a target of increasing Zero Energy Houses, in which the energy balance is zero for living, to at least half of all newly built houses by 2020. Meanwhile, Sekisui House has set a yet higher goal of 80% as the percentage of Zero Energy Houses among newly built houses in a bid to lead the governmental policy, which may be seen as a national project.

At the COP21 meeting at the end of last year, Japan pledged to reduce greenhouse gas emissions by 26% from the 2013 level by 2030. To meet this commitment, it is necessary to achieve a massive 39.3% reduction in the household sector. The Japanese government set a target of increasing Zero Energy Houses, in which the energy balance is zero for living, to at least half of all newly built houses by 2020. Meanwhile, Sekisui House has set a yet higher goal of 80% as the percentage of Zero Energy Houses among newly built houses in a bid to lead the governmental policy, which may be seen as a national project.

For existing houses, which far exceed newly built houses in terms of quantity, Sekisui House is working to introduce state-of-the-art environmental technologies that it has nurtured. It proposes renovations for energy conservation that achieves both comfort and environmentally-friendly lifestyles as well as the Green First Renovation, which is a larger-scale renovation that achieves economic efficiency and environmental friendliness. The Green First Renovation is an initiative that suits the times and is of high urgency.

 On the occasion of the Public-Private Dialogue toward Investment for the Future in November 2015, Sekisui House stressed the current circumstances as described above and requested specific policies. The government side suggested encouraging the shift to Zero Energy Houses and a policy of supporting remodeling and renovation for energy conservation. Sekisui House presented the importance of the roles of housing in environmental and energy issues as well as in welfare for the elderly from a new perspective to successfully gain the assent of the prime minister and other governmental officials. This was quite significant from the comprehensive viewpoint of improving Japan’s housing environment.

Three- or four-story residential houses are also important for responding to social demand. They are in growing demand as buildings for the cohabitation of three generations and as partly leased houses for reducing inheritance tax. In response to this trend, Sekisui House has obtained approval for the performance of the housing model, which leads to efficiency in the operation to apply for confirmation of design and buildings, with regard to the its original ß system construction method for four-story heavy steel frame structures. Sekisui House will fully stress its capability to design houses to make good use of small spaces or houses that are matched with diverse lifestyles to step up its sales activities. Sekisui House’s rental housing is gaining in popularity due to the sophisticated look of its exterior and the common spaces, functionality, security and other overall qualities. Providing greater satisfaction for tenants, it is accepted despite its rent being set at high levels to earn good revenue in the Real Estate Management Fees Business. As a result, it achieves a virtuous cycle.

In terms of production, the DYNE CONCRETE exterior wall that is unique to the highly competitive steel-framed IS SERIES lines and the BELLBURN original earthenware exterior wall that is unique to the wood-framed SHAWOOD-HOME products are being shifted to internal production. In addition to the Shizuoka Factory, an automated line in the Kanto Factory will be coming into operation. Sekisui House will continue its comprehensive reform of all processes including production, design and construction, and will work to improve product appeal.

Sekisui House makes powerful progress by developing human resources who support mixed development and the integration of management resources.

The Development Business aims to boost its income by increasing the asset turnover. In the Overseas Business, operations in Australia and the United States are reaching the phase of attaining profitability. In November 2015, Sekisui House announced a business alliance with Konoike Construction Co., Ltd. The efficient integration between management resources related to housing and those related to construction and civil engineering is a combination with a high level of affinity from the perspective of corporate culture. Sekisui House is convinced that it is an efficient preparatory step with potential for a range of expansion.

With respect to the development of human resources that will implement these businesses, the development of female personnel and their performance of significantroles have produced positive results in different forms. Among others, the staff of a housing manufacturer think about the different lifestyles of customers and continue to serve them attentively in day-to-day operations. Sekisui House believes that its growth and innovations would definitely not be possible without creating workplaces that allow not only women but also many different human resources to work actively.

In a bid to respond to social demand, Sekisui House will steadily take root in customers’ lives and in social activities and take strong steps forward in a bid to meet social expectations.