Results of "Organizational Innovation"
Sales are growing and net income is at an all-time high
In the 2nd quarter of the term ending March 2017, there were strong sales of new products with a high unit price and high added value. Sales grew and net income reached an all-time high, up 156% year-on-year.
Generating profits from premium products
Currently, the "premium market" and "low-price market" are emerging as two distinct divergences in consumer behavior. Amidst such trends, we have devised an "Upgrade Strategy" and has focused on premium products in all categories. Led by "Shaldan Suteki Plus" and "Shoshu-Riki Premium Aroma," and augmented by the September release of "Shoshu-Riki Citric Acid Plus for Toilets" and "Shoshu-Riki Disinfectant Spray Plus for Toilets," this strategy was successful in significantly improving profits in the first half. In October, we released "Shaldan Fragrance," which features a high-quality aroma and design similar to perfume.
Becoming an organization with clearly-defined responsibility and authority
18 months have passed since we transitioned to the first independent business division system in the history of our company. The greatest merit has been clarification for the locus of responsibility and authority. Each business division takes responsibility for profit management items including cuttings costs, reducing product returns, and constructing an optimal product composition. This has resulted in a 2.4 percentage points improvement (year-on-year) in our cost-to-sales ratio.
Toward sustainable growth
Now that a high-revenue system is taking shape at our company, the next step is to enter new markets and new business fields. The first stage is overseas markets. Although inbound consumption by foreign tourists to Japan from Asian countries has subsided, the level of trust and purchase intention for daily goods made in Japan remains at a high level. We established the Overseas Business Division in October and have strengthened marketing activities. Conversely, domestic areas where growth is expected are the business-use market and internet sales. For our company, the business-use market is a new field in which we lack in-depth experience, and we responded by establishing the Business Development Division within our group company ST Trading Corporation. Within our Sales Division, we have strengthened internet sales with a focus on e-commerce. Moreover, our R&D Division is currently developing innovate new products which will be in high demand these new channels. By creating new core products and developing sales channels with a focus on fields that will experience future growth as a result of changes to social structure, we are preparing for the future.
Commemorating the 70th anniversary of our founding
Even as we celebrated our 70th anniversary in August, we embarked in measures to keep our organization modern and vibrant. Such measures include reforming and abolishing products, reducing the number of products, and reducing inventory. We are working to maintain a robust spirit of curiosity and challenge, and a streamlined organization that functions efficiently. By doing so, we seek to become a company which is loved throughout Japan and the entire world. Regarding the mid-term divided for the current term, we have decided on an increase of 1 yen per share for a dividend of 12 yen per share (scheduled annual dividend of 24 yen). We will continue to make every possible effort to implement profit-oriented management and to return those profits to our shareholders. We look forward to your continued support.
President and Chief Operating Officer