Long-term Management Goals, Medium-term Management Plan

The Stanley Group has established a 10-year scenario framework to realize the Stanley Group Vision. The scenario beginning in 2020 is defined under the Third Long-Term Management Objective, guided by the principle of “contributing to a society that has achieved a sense of safety and security.”

To achieve our vision for 2030 of becoming a globally competitive company, we launched the 9th Mid-Term Management Plan, covering the four-year period from FY2026.

In recent years, the market environment has undergone significant transformation due to changes in the competitive landscape and the accelerating pace of technological innovation. To respond to these changes, the Stanley Group will reform both its business structure and profitability structure, transforming itself into a company with a sustainable global competitive advantage.

During the first two years of the 9th Mid-Term Management Plan, we will accelerate initiatives in Expansion of Business Domains, Structural Reform of Profitability, and Maximization of Capabilities. Through these efforts and by enhancing capital efficiency, we aim to achieve an ROE of 10% in FY2029.

The 9th Mid-Term Management Plan Market Environment

1 Structural transformation of the competitive environment

  • Rising global competition
  • Shift from component to system competition, driven by software

2 Acceleration of technological innovation and mass production

  • Evolution from SDV to AIDV *1
  • The extraordinarily fast development speed of Chinese OEMs and suppliers is becoming the global standard
  • Increasing geopolitical risks are causing supply chain fragmentation and impacting stable supply
  • *1 AIDV (AI Defined Vehicle): Unlike conventional vehicles or SDVs, these are vehicles in which AI is not merely an added function but determines the vehicle’s overall value and characteristics.

3 Challenge of New Businesses and New Markets

  • To realize safe and secure next-generation systems, Stanley Mobility Electric was established.
    The company is expanding into the vehicle systems domain and making a full-scale entry into this field
  • Through collaboration with Iwasaki Electric, the company is acquiring expertise in the public and industrial sectors and entering new business domains.

The business environment surrounding the Company is changing more dramatically than ever before.
In addition to significant structural changes in the competitive landscape, including the rise of overseas competitors, the industry is experiencing rapid technological evolution toward AI-Defined Vehicles (AIDV). Furthermore, the exceptional development speed of Chinese suppliers is increasingly becoming the global standard.

At the same time, through Stanley Mobility Electric and Iwasaki Electric, we are challenging ourselves in new businesses and markets, further expanding our business domains.

Against this backdrop, the 9th Mid-Term Management Plan focuses on reforming both our business structure and earnings structure to transform Stanley into a company with a sustainable competitive global advantage.

Strategic Framework and KPI Targets

Strategic Framework

1

Expansion of Business Domains

Establishing a Position in Emerging Markets + Expansion into New Businesses Integrating Mobility and Social Infrastructure

2

Structural Reform of Profitability

Fundamental overhaul of components, structures, and the supply chain to achieve new cost levels at unprecedented speed

3

Maximization of Capabilities

Prioritizing capital efficiency, optimizing the allocation of capital and capabilities, and maximizing asset utilization

<Management KPIs>

  • Growth in Net Sales

    FY2025 518.4 billion yen FY2029 700 billion yen

  • Operating Margin

    FY2025 8.2% FY2029 10%

  • ROE

    FY2025 7.0% FY2029 10%

  • ROIC

    FY2025 5.8% FY2029 9%

During the first half of the 9th Mid-Term Management Plan, we will focus on the following three strategic pillars:

  • Expansion of Business Domains
  • Structural Reform of Profitability
  • Maximization of Capabilities

Through these initiatives, we aim to achieve the following targets in FY2029:

  • Net Sales: 700 billion yen
  • Operating Margin: 10%
  • ROE: 10%
  • ROIC: 9%

1 Expansion of Business Domains

Automotive equipment business

  • Expansion into South America, India, and China
  • Entry into ADAS (Advanced Driver-Assistance Systems) and interior applications

Electronics business

  • Globally competitive light source devices
  • Entry into infrastructure systems
  • Expansion of backlight products into the automotive market
  • *2 CAGR for FY2025-FY2029 (4 years)
  • *3 Automotive / Electronics business ratio

Under Expansion of Business Domains, we aim to grow both the Automotive Equipment Business and the Electronics Business, targeting net sales of 700 billion yen in FY2029.
In the Automotive Equipment Business, we will focus on South America, India, and China as priority markets while expanding into the Advanced Driver Assistance Systems (ADAS) and vehicle interior domains.
In the Electronics Business, we will focus on:

  • Developing light source devices selected by customers worldwide
  • Entering infrastructure-related system markets
  • Expanding backlight products into automotive applications

Through these initiatives, we plan to increase the Electronics Business to approximately 30% of our business portfolio.

2 Structural Reform of Profitability

  • 1 Review Everything.
    Components
  • 2 Review Everything.
    Structures
  • 3 Review Everything.
    Supply Chain
  • 4 Review Everything. SG&A

Under Structural Reform of Profitability, we will review all aspects of our operations to achieve a profitability structure that surpasses our competitors.

By fundamentally reassessing parts, product structures, supply chains, and SG&A expenses associated with existing products, we aim to establish true global competitiveness.

3 Maximization of Capabilities

  • 1 More than doubling productivity
  • 2 24-hour development operation
  • 3 Thorough optimization of global assets

Under Maximization of Capabilities, we will position capital efficiency as our most important management metric and pursue both organic and inorganic growth initiatives. To this end, we will focus on:

  • More than doubling productivity
  • 24-hour development operation
  • Thorough optimization of global assets

More than Doubling Productivity
We will drive manufacturing transformation by shifting to production systems that do not require additional assets and by establishing highly automated production lines with minimal human intervention.

24-hour development operation
We will significantly accelerate development speed by creating a global development framework based on the “Follow the Sun” concept, under which development activities are handed off across regions operating during daytime hours.

Thorough Optimization of Global Assets
We will improve capital efficiency by evaluating the asset productivity of all production sites and promoting the reorganization and optimization of our global manufacturing footprint.

Initiatives to Achieve the ROE Target

Under the 9th Mid-Term Management Plan, we aim to achieve an ROE of 10% in the fiscal year ending March 2030 by optimizing shareholders’ equity, enhancing growth potential and profitability, and generating sustainable earnings.

Capital Allocation (FY2026-FY2029)

  • *4 Operating Cash Flow (Before deduction of R&D expenses) 330~340 billion yen = Operating Cash Flow 400 billion yen + Research and Development Expenses 130~150 billion yen - Depreciation and amortization 200~210 billion yen

Under the 9th Mid-Term Management Plan, we will prioritize the allocation of capital to growth investments and research and development while maintaining sufficient liquidity. At the same time, we will pursue shareholder returns with strong emphasis on capital efficiency.
Shareholder Return Policy
Our dividend policy is based on the higher of:

  • DOE of 3.5%
  • Dividend payout ratio of 40%

We will also pursue the acquisition of treasury stocks in a flexible and timely manner. Total shareholder returns over the four-year period are planned at 150-170 billion yen.

A New Stanley Electric

By managing and mitigating risks that could affect business continuity while accelerating the realization of Expansion of Business Domains, Structural Reform of Profitability, and Maximization of Capabilities, we will establish a sustainable global competitive advantage and transform Stanley Electric into a new company characterized by superior capital efficiency and enhanced competitiveness.

To Management Information