Our management policy is listed in the form of an interview. (Updated September 2021)
Q1：Can you please tell us about the progress in the Medium-Term Management Plan?
In FY2020, demand for air conditioners was generally firm, although there was a temporary drop under the pandemic of COVID-19. In addition, the Company made steady progress in the priority themes set forth in the Medium-term Management Policy, such as the creation of a foundation for growth in North America and India, resulting in sales and operating income increases for the second consecutive year.
In FY2021, we are facing a difficult environment in terms of production and costs due to the shortage of parts for semiconductors and other products that has continued from the previous fiscal year, tight shipping conditions, and soaring material prices. However, sales and profits are expected to increase due to solid demand mainly in Europe and the United States and the effect of improved selling prices in the second half of the year.
Despite the pandemic of COVID-19 and other tough business environments, our prior investments and various measures taken from a medium- to long-term perspective are steadily bearing fruit. We believe that our goals for FY2022 can be achieved if we implement the priority themes set forth in the Medium-Term Management Plan and respond to the new era.
|FY2019 Actual||FY2020 Actual||FY2021 Plan||FY2022 Plan|
|Net sales||2,621 Hundred Million Yen||2,655 Hundred Million Yen||3,000 Hundred Million Yen||3,300 Hundred Million Yen|
|Operating income||149 Hundred Million Yen||187 Hundred Million Yen||190 Hundred Million Yen||260 Hundred Million Yen|
|Operating income ratio||5.7%||7.1%||6.3%||7.9%|
- Increased revenue and profits by growing new businesses, under challenging business environment such as COVID-19
- Established a foundation for growth in our most important markets (North America, India)
- Domestic AC: Double-digit growth for five consecutive years in the housing industry channel
- Promotion of Sustainable Management (Newly established the position of CSO (Chief Sustainability Officer), Established a new basic policy on Sustainable Management)
- Create synergies in the cleanliness and sterilization field (making "Aeroshield" a subsidiary)
Q2: Could you be more specific about the progress made in North America and India that are the most important markets for air conditioners?
In North America, we have been steadily expanding our business by taking proactive measures such as introducing new products for cold regions where demand is expected to grow as an alternative to heating equipment, selling products jointly developed with Rheem, and developing multiple brands. In addition, we are taking steps to further expand our business by establishing a new R&D center on the West Coast and starting an experiment to demonstrate energy efficiency in New York.
In India, it took time for us to shift to a direct sales system, but we did well in the stagnant market due to the complete lockdown caused by COVID-19, and expanded the market share of our products. ABS, an air-conditioning engineering company that has become a subsidiary, has also seen a large increase in orders, and we have high expectations for future growth together.
Expansion of our product line-up
- Launch new products targeting colder climates
- Launch products jointly developed with Rheem
- Multi-brand development
Strengthening our development system
- Established a new R&D Center on the West Coast
- Plan to start demonstration projects in New York and Chicago to demonstrate energy efficiency
Launch our direct sales
- Strengthen our sales network and sales promotions
- Launch new products such as Tropical Cooling Only Inverter
- Double-digit growth under COVID-19 situation
Expansion of solution business
- Substantial growth at ABS due to sales channel expansion
Q3: What measures are taken to strengthen the business foundation for Information & Communication System and Electronic Devices?
In the Information & Communication System Business, we have adopted the policy of "Creating a secure and safe future together" in response to the growing social demand for enhanced disaster response capabilities. In addition to securing stable earnings from existing businesses, we will contribute to the safety and security of residents by creating new businesses utilizing approximately 5,000 outdoor disaster-prevention substations installed in local governments in Japan.
In the area of Electronic Devices, we are working to make next-generation power modules a pillar of our future business. These modules are expected to contribute to the miniaturization and higher efficiency of power electronics products, and we plan to begin shipping samples of our industry-leading small GaN modules in FY2021.
Q4: What are the risks and issues that need to be addressed in order to achieve the Medium-Term Management Plan?
Despite the impact of COVID-19 and other factors, we achieved an increase in both sales and profits in FY2020, but problems in procurement and production due to the recent shortage of semiconductors and electronic components have emerged. In addition, dealing with the rising cost of copper and other materials is also an issue.
As for measures in procurement and production, we will work to have multi-sourcing of parts and materials, review inventory holding, and level out production and shipments. We are also working on the introduction of a new production management system, which is scheduled to partially commence operation in FY2021. With regard to the soaring cost of materials, we are working on resource-saving designs in addition to reserving favorable positions, and are also examining alternative materials such as switching from copper to aluminum.
|Risks and challenges||policies to address them|
|Response to procurement and production||
・Engage in procurement from multiple sources
・Revise inventory holdings, and standardize production and shipments
・New production management system (scheduled to be partially operational from FY2021)
|Rising material costs||・Consider resource-efficient designs and use of alternative materials (change from copper to aluminum, etc.)|
|Response to climate change||・Introduce a carbon neutrality, Sustainable Product System|
Q5: Can you please tell us the background to the formulation of the basic policy on "Sustainable Management" in March 2021?
Fujitsu General formulated the basic policy on "Sustainable Management" in March 2021. The Sustainable Development Goals (SDGs) will drive future business creation, and their promise of “Leave no one behind” is synonymous with Our Mission “Living together for our future.” We believe that working for Sustainable Management is a way to promise the realization of a sustainable society to future children and society from a medium- to long-term perspective, and to pursue the growth of our business by accelerating the process.
The above figure shows a conceptual image of our current business with the focus on sustainability. It is no exaggeration to say that our Group's business is built on the concept of sustainability, and we will tackle it head on, not because it is a social demand, but because it is our purpose. We will continue to implement all our business activities with an awareness of sustainability and for all of our stakeholders, and implement each measure based on the three pillars: "Harmonious coexistence with our planet (Planet)," "Social contribution (Society)" and "Care for employees (Our People)."
Q6: While many other companies have set the target of achieving carbon neutrality by FY2050, how was your target set for FY2030?
Some people say that the goal of achieving carbon neutrality by 2030 is ambitious, but my own view is slightly different. At Fujitsu General, air conditioners account for about 90% of our sales. Environmental regulations on energy efficiency, refrigerants, etc. are advancing around the world, especially in Europe, and environmental responsiveness is essential to increase the competitiveness of our products.
We have a responsibility to provide a healthy life for our children, who will lead the next generation, and the generations to come. We must not deprive them of a future filled with hope. For this purpose, achieving carbon neutrality as soon as possible is essential.
In March 2021, we formulated a new basic policy on Sustainable Management and set a target of switching all electricity used by the Group to renewable energy sources by FY2025, which we expect to achieve ahead of schedule in FY2022.
We are making steady progress, as we plan to complete the installation of solar panels on the roofs of four of our eight production bases around the world by FY2022. We are also planning to further advance toward our goal of achieving carbon neutrality by 2030.
Medium-Term Environmental Targets and measures to reduce greenhouse gas emissions
Scope1, 2 (Our business activities)
・100% reduction by FY2030
- Shift to use of renewable energy at existing overseas plants
- Shift to use of renewable energy for all energy used by the Group (100% reuse)
- Shift to use of renewable energy for all other energy used
Scope3 (Our supply network, Products sold)
・Our supply network: Reduce 30% by FY2035 compared to FY2018
・Products sold: Reduce 30% by FY2030 compared to FY2013
Q7: How will the reduction of greenhouse gas emissions from the products sold be addressed?
The energy efficiency of Japan's air conditioning equipment is among the best in the world. We have set a target of a 30% reduction from the FY2013 level using the best technology available today, and we believe that it will be extremely difficult to reach a level higher than this. However, the first approach to achieve this is to take measures at the design stage. By developing new technologies such as refrigerant conversion, we will develop products that maximize energy efficiency.
The second is to switch from non-inverter to high-efficiency inverter air conditioners. Approximately 70% of our sales are overseas. Especially in Asian countries such as India, where demand is expected to increase in the future, many inefficient non-inverter air conditioners are still in use. We will promote the switchover to high-efficiency inverter air conditioners, and at the same time, strive to reduce greenhouse gas emissions in service maintenance through remote operation and fault diagnosis by utilizing AI and the IoT.
Lastly, we will develop air conditioners powered by renewable energy. For example, we are constantly working on research and development of products powered by natural energy and exhaust heat.
In fact, I personally believe that this reduction goal for product use is more ambitious than the goal of "achieving carbon neutrality in Scopes 1 and 2 by FY2030." It is an important environmental goal for our company.
Q8: Can you please tell us about the initiatives taken for "Social contribution"?
In the Information & Communication System, under the basic policy of "Creating a secure and safe future together," we are aiming to create businesses that contribute to society. These include the development of technologies that promote speedy and reliable evacuation of residents in a disaster, such as flood alert systems in the event of localized heavy rainfall, by utilizing approximately 5,000 outdoor disaster-prevention substations that Fujitsu General has installed in the municipalities of Japan.
In addition, in order to help resolve social issues at the entire Fujitsu General Group, we have established the Future of Innovation Challenge (FIC), a new business creation program in which all employees can participate, as well as the Being Innovative Group (BIG), an internal organization that developed Cómodo gear, a cooling device that can be worn on the body, and the "10% rule" that allows employees to spend 10% of their scheduled working hours freely. In addition, we are striving to solve social issues in a way that allows all employees to participate and submit ideas such as the "SDGs Proposal" program.
In July 2021, a final round of the FIC was held after many ideas were received. The speakers gave lively presentations, and a great idea that solves social issue won. We are now eagerly awaiting the commercialization of the winning idea.
Q9: Can you please tell us about the existing Health and Productivity Management initiatives at the center of "Care for employees"?
In order to create workplaces where employees can stay healthy and positive, and improve their productivity and motivation, we will strive to strengthen our existing Health and Productivity Management initiatives. We are promoting initiatives that contribute to the improvement of employee health, including the strengthening of our industrial medical system and the implementation of health promotion events.
In the future, we will not only promote the health of our employees, but also aim to pursue well-being by providing support to families who support the health of their employees, and to companies and organizations that aim to introduce Health and Productivity Management.
Certified by external organization for Health and Productivity Management
Q10: In addition to the GHG Protocol-based targets, can you please tell us about the background behind the launch of your own Sustainable Product System?
One of the reasons why we started this program is that in Japan, the U.S. and Europe, air conditioners are still mainly used as coolers. Heating, on the other hand, is mainly done by devices that use fossil fuels such as oil and gas, and they emit a lot of greenhouse gases. Even in Japan, the percentage of households using air conditioners as their main heating device is only about one-third, with the majority using fossil fuel devices and electric devices such as a kotatsu (table over an electric heater). People in the northern part of Japan who have to replenish kerosene for heating in the deep snow are having a very hard time. If we can replace the fossil fuel heating equipment of Japan, the U.S., and Europe with our air conditioners and heat pump heaters, it would lead to a significant reduction in CO2 emissions. There is no need for hard labor such as kerosene refilling, and no toxic gases are emitted.
Therefore, we believe that it is the mission of our company, mainly engaged in the air conditioner business, to promote the spread of heat pump equipment with a high heating performance and to "change the world's heating culture." According to our estimate, if the heat pump equipment sold between 2021 and 2030 is used for the next 10 years, it would lead to a reduction of 50 million tons of CO2 emissions. This is equivalent to the annual CO2 emissions of Peru or Portugal. In France and the U.S. in particular, we have formed comprehensive business alliances with local manufacturers to support them in changing their business models. We are working together to decarbonize our business by providing our resources such as heat pump technology.
Lastly, I will explain the system itself. Sustainable Product System is our own one. Products and services that solve social issues, are expected to contribute to a sustainable society, and help us achieve our Growth Strategies are given the title of "Sustainable Products," and products and services with a higher level of contribution are given the title of "Sustainable Products Gold." In FY2020, sales of Sustainable Products were around 300 hundred million yen, but we will expand sales through intensive investment in the future, aiming to have them account for 30% or more of total sales by 2030.
Introduction of the "Sustainable Product" System
Products and services that are expected to solve social issues and contribute to a sustainable society and that meet any of the following conditions are certified as "Sustainable Products."
- Strategic products and services that have been recognized by a third party as contributing to a sustainable society through an award, etc.
- Strategic products and services that contribute to a sustainable society by solving social issues through development and marketing.
Sustainable Product Gold
"Sustainable" products and services certified by our company and recognized as contributing to sustainable development to a certain degree (products and services that meet any of the following requirements) are recognized as "Sustainable Products Gold.”
- Industry's first technology that contributes to the reducing greenhouse gas emissions
- Industry's leading energy-saving performance
- Products and services that reduced greenhouse gas emissions by 30% or more compared to our conventional products
- Products and services that reduced greenhouse gas emissions by 30% or more due to the effect of replacing existing products and services
- Other criteria will be added in a timely manner.