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Grand Design 100 Medium-Term Management Plan: Phase II
Achieving Quality Growth
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| We are focusing in Phase II of Grand Design 100 on quality growth, and we will reinforce our corporate foundation to foster growth amid the vagaries of the global economic downturn. Our chief financial targets in Phase II are to |
- raise net sales to ¥550 billion, a 6.3% increase over the fiscal year ended March 31, 2009;
- raise operating return on sales to 7.0%, compared with 2.5% in the fiscal year ended March 31, 2009, by increasing operating income to ¥38.5 billion; and
- lay a groundwork for growth by increasing aggregate free cash flow (operating cash flow minus capital spending) over the three years to more than ¥30 billion, compared with negative cash flow of ¥19.3 billion in the fiscal year ended March 31, 2009.
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Phase II Financial Targets
| ¥ billion, percent; years ended March 31 |
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2010
(projected) |
2012
(target) |
| Net sales |
¥490 |
¥550 |
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Tire Group |
¥380 |
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Multiple Business Group |
¥110 |
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| Operating income |
¥17 |
¥38.5 |
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Tire Group |
¥13 |
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Multiple Business Group |
¥4 |
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| Operating return on net sales |
3.5% |
7% |
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Mixed results in Phase I
Phase I of Grand Design 100 covered the three years to March 31, 2009. It focused on profitable growth, and its main financial targets were net sales of ¥560 billion and operating income of ¥35 billion. Our fiscal performance in the past fiscal year left us 7.6% shy of the Phase I sales target, at ¥517.3 billion, and 63.4% short of the target for operating income, at ¥12.8 billion. That shortfall reflected the sharp appreciation of the yen, the continuing rise in raw material prices through most of the year, and the global economic slowdown that began in the second half of the fiscal year. The business reverses of the past fiscal year undermined the business momentum we had built in the first two years of Phase I. That momentum had carried us to net sales of ¥551.4 billion and operating income of ¥33.1 billion—both record high figures—in the fiscal year ended March 31, 2008.
Despite our shortfall in regard to the financial goals of Phase I, tackling those goals occasioned valuable growth initiatives. We marked progress in our operations. We expanded our production capacity for tires about 20%, mainly outside Japan. And we established marketing platforms in Brazil,India, and Russia. Together with our marketing operations in China, that gives us a sales presence in all four of the large and hugely promising markets of the so-called BRICs. We also marked important progress in asserting distinctive technological strengths in new products. That included augmenting our portfolio of fuel-saving tires with the launch of the DNA dB super E-spec. The DNA dB super E-spec combines superior fuel economy with a quiet ride, and we use nonpetroleum materials for fully 80% of the raw materials in the tire.
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