FUJITEC, Japan’s leading specialist manufacturer of escalators and elevators, forecasts net sales to increase by 6.9% to 200 billion yen (USD1.5 billion) and operating income to rise by 6.7% to 14.7 billion yen (USD112 million) this fiscal year. Both figures are record highs for a company about to celebrate its 75th year in business.
FUJITEC is doubling down on its efforts to grow its aftersales business and investing in IT and robotics to drive productivity at its state-of-the-art manufacturing facilities in Japan, China and India. After achieving record-high sales and profits in fiscal 2021 despite worldwide supply chain disruptions during the COVID-19 pandemic, FUJITEC aims to counter headwinds from soaring raw materials prices to lift profit and sales further.
“Like the passengers on our elevators and escalators, FUJITEC is never static and always moving towards new goals,” says President & CEO Takakazu Uchiyama. “As our ‘Vision 24’ Medium-term plan demonstrates, we at FUJITEC are not content to rest on our laurels.”
FUJITEC’s share price has doubled over the last five years and grown fivefold in a decade. The company is also committed to delivering strong returns to shareholders and maintaining a dividend pay-out ratio of at least 50%.
A clear path to ambitious growth
‘Vision 24’ sets ambitious financial targets, including raising sales, operating income, margins and ROE by 2024, combined with a clear vision of how to achieve these goals. Investment in R&D of 33 billion yen (USD 250 million) over three years and cost reductions through deployment of AI, robotics and digital transformation, alongside 35 billion yen (USD 265 million) on hand to take advantage of attractive M&A opportunities, will be central drivers of value creation. FUJITEC has also set a target of returning 50% of operating cash flow to its shareholders.
FUJITEC has carried out the majority of its manufacturing in-house for most of its history. But going forward, increased strategic sourcing of components and utilisation of open platforms will raise efficiency and profitability. This will be done while maintaining the exemplary standards of technological excellence and reliability that FUJITEC has built over the decades through its global manufacturing base and installation operations.
“Our strength is that we are a specialized elevator and escalator manufacturer that provides an integrated system from research and development to production, installation, maintenance, and servicing. We are also a global company, with overseas sales accounting for approximately two-thirds of our total sales,” explains Uchiyama.
Uchiyama believes that the increased R&D spending will only deliver more innovation. He cites “AirTap”, FUJITEC’s touchless button for elevators, as an example of the company’s unique dedicated integrated operating ecosystem in action. It enables FUJITEC to develop industry-first technologies tailored to customer needs.
“In terms of new product development, we have already introduced industry-first technologies such as ‘AirTap,’ touchless button system for elevators, delivered as a result of our integrated business operations from R&D to installation,” explains Uchiyama, who notes that the technology is now being installed in around 90% of its new elevators in Japan.
New challenges, fresh frontiers
Meanwhile, by leveraging its price-competitive offerings, FUJITEC has set its sights on raising sales in high-growth emerging economies. While in more mature markets, it will expand into a new business field by offering after-service for its peers’ products.
FUJITEC is also making strides to ensure its products are more energy efficient and to reduce carbon emissions. The new generation of its XIOR model elevator can contribute to saving energy by reusing power generated during operations that can be redirected elsewhere, resulting in power consumption up to 50% lower than its predecessors. FUJITEC has also introduced new renewal packages for elevators and escalators that can significantly reduce environmental impact as well as LED lighting to cut CO2 emissions.
This concern for sustainability is aligned with the traditional Japanese merchant principle of sanpo-yoshi, which means “good for the seller, good for the buyer, and good for society.” Sanpo-yoshi is central to FUJITEC’s mission statement, explains Uchiyama, who emphasises that “pursuing sustainability is not a special separate activity, but an integral part of our corporate operations.”
To maintain growth over the long term, FUJITEC believes it is essential to implement effective corporate governance and realise diversity and inclusion. FUJITEC’s Board of Directors will increase the number of outside directors to a majority to ensure accountability for the goals of ‘Vision 24,’ improve transparency, and proactively maximize corporate value enhancement. In addition, the diversity of the board of directors will be improved, including through the appointment of more women. And to strengthen oversight, the chair of the board will be chosen from among the independent external directors.
‘Vision 24’ lays out a roadmap for FUJITEC in the medium-term, but the company is already looking further ahead, into the future.
FUJITEC’s overarching goal is to create a society in which everyone, regardless of age, can enjoy a comfortable life with ‘safety and reliability.’ Moving forward, FUJITEC management will work to achieve its financial targets over the medium to long-term, and meet its ambitious management targets.
“Working closely with our diverse new Board, FUJITEC’s management team is focused on executing its investment strategy, promoting stronger shareholder returns, and strengthening governance.” added Uchiyama.