In order to implement the measures we have discussed and continue expanding globally, Furukawa Electric must build a corporate structure that can stand up to various management risks.
Our initiatives thus far, such as our extensive cost-cutting efforts implemented to weather the global financial crisis over the past two years, have enabled us to steadily reduce interest-bearing debt and improve asset efficiency. We will continue to improve financial strength further to attain our fiscal 2013 targets of ¥1 trillion in net sales, ¥50 billion in operating income (5% operating margin), and ¥25 billion in net income.
Furukawa Electric will rein in asset risk by maintaining total assets around the current ¥900 billion level and expanding sales by developing new business segments and strengthening existing businesses. Furthermore, we will seek to increase profitability by continually working to reduce inventory, receivables, and fixed costs.
With our emphasis on asset efficiency, ROA (return on assets) on an operating income basis will be a key financial indicator. Our target of 5.6% exceeds our previous record of 4.8%, achieved in fiscal 2008. By using profits to pay off interest-bearing debt and build up shareholders' equity, we plan to reduce interest-bearing debt to ¥320 billion, a 12% decline from fiscal 2010, and achieve a debt-to-equity ratio of 1.5 by fiscal 2013.
Furukawa Electric plans to reduce capital expenditures by 15% from ¥115.8 billion during the 2007--2010 medium-term plan (¥38.5 billion annual average) to ¥100 billion during the 2011--2013 medium-term plan (¥33 billion annual average).
Capital expenditures during the first half of the 2007-2010 plan focused on the light metals segment, such as rolled metals and wrought copper. Going forward, however, there will be less need for investments to increase production in Japan, as the focus of capital expenditures will be on generating new businesses and developing new technologies. The key focus will include investments aimed at the overseas expansion of copper foils used in lithium-ion vehicle batteries, automotive parts and optical fiber cables.
Furukawa Electric established the Business Viability Assessment Committee in April 2010 as an organization to improve asset efficiency and accelerate the restructuring of its operating portfolio. The Committee has been given the mission to review less profitable business and formulate restructuring strategies, and is responsible for evaluating the feasibility and relevance of restructuring plans devised by operating divisions as well as the authority to make changes where necessary.
In August 2009, Furukawa Electric established the Investment Committee as a deliberative organ to reduce potential risks and to bolster the prior review of decision-making relating to financing and investments, such as capital expenditures and M&A.
