[Feature] Towards completion of our new long-term vision "BULL55" -1
The Kanamoto Group formulated its new long-term vision “BULL55” with a target year of 2019, the Company’s 55th Business Period, and currently is implementing its Medium-term Management Plan aimed at achieving that vision.
This special feature takes a look at the results of the Medium-term Management Plan, together with the outlook, future issues, and Kanamoto’s growth strategy, through an interview with Tetsuo Kanamoto, who assumed the position of President and CEO in November 2016.
Can you take a brief look back on the past year for us?
Looking at trends worldwide, conditions that had to be monitored closely included events that signaled a major paradigm shift, including Great Britain's vote to withdraw from the EU and the election of a new president in the United States, as well as the large changes in economic trends that affected stocks and the exchange rate. Regarding domestic construction demand, Great East Japan Earthquake restoration efforts, as well as decontamination works, moved into their final phases. The demand trend overall, however, was comparatively steady, supported by Tokyo Olympics and Paralympic Games-related construction and private sector construction investment for large-scale redevelopment in the Tokyo metropolitan area, the start of construction on the Linear Chuo Shinkansen project, and execution of the public spending-based supplementary budget for local regions. Amidst these circumstances, in March we acquired NISHIKEN CO., LTD., the largest equipment rental company in the Kyushu Region, and made it a consolidated subsidiary, and during the year took steps to improve and expand our domestic base of operations. As a result, for the consolidated fiscal year ended in October 2016, Kanamoto reported net sales of 144.8 billion yen, operating income of 15.1 billion yen, ordinary income of 14.4 billion yen, and net income of 8.0 billion yen. Although our performance in terms of earnings compared with prior year was constrained by lower earnings as a result of the increase in depreciation that accompanied the growth in our asset portfolio, from a net sales perspective we were able to ensure and sustain our momentum and achieved our seventh consecutive year of sales growth.
How has Kanamoto responded to earthquakes such as the Great East Japan Earthquake and the Kumamoto Earthquake?
Overall, restoration following the Great East Japan Earthquake has entered its final phase. In some regions, however, such as Iwate Prefecture, for example, construction will reach its peak in the future. Similarly, if we look at the response to the crippled nuclear power plant in Fukushima Prefecture, decontamination works are nearly completed except for some sections along the coast, but in the future, large-scale processing facility construction work will continue over the medium-term, while efforts to decommission the Daiichi 1F reactor will continue for years to come. As a company, Kanamoto wants to fulfill its social responsibility and continue its restoration-related efforts until this work has been completed.
For the Kumamoto Earthquake, full-scale restoration is expected to begin shortly, and the Kanamoto Group has established a task force centered on NISHIKEN CO., LTD., and will respond with the Group's full capabilities.。
Photo Report
The Kanamoto Group has marshalled its full capabilities and will continue efforts to support the Kumamoto and Tohoku restoration and reconstruction works.
Riverbank restoration work in Kessanuma City, Miyagi Prefecture
Reconstruction road construction work in Kesennuma City, Miyagi Prefecture
Iwanuma beach green land park construction works in Iwanuma City, Miyagi Prefecture
Disaster prevention collective relocation works in Ishinomaki City, Miyagi Prefecture
New construction works on National Highway 398 in Onagawa Town, Oshika-gun, Miyagi Prefecture
Reconstruction works in Minami Sanriku Town, yoshi-gun, Miyagi Prefecture
Reconstruction Town Planning Project in Onagawa Town, Oshikawa-gun, Miyagi Prefecture
Morigawa Road Improvement works in Ofunato City, Iwate Prefecture
Coastal surge barrier construction works in Ofunato City, Iwate Prefecture
Kesen River flood gate construction works in Rikuzentakata city, Iwate Prefecture
Gokenbori River disaster restoration works in Iwanuma City, Miyagi Prefecture
This year is the final fiscal year of Kanamoto's Medium-term Management Plan "BULL53". What have been the results so far?
The Kanamoto Group enumerated "expansion of domestic base
of operations", "overseas development", and "optimization of internal operational processes" as three priority policies, and our development efforts are proceeding very closely to our initial scenario.
Expansion of domestic base of operations
Steps taken during the two years since the start of “BULL55” included the opening of 14 new branches and adding Nishiken Co., Ltd., the largest equipment rental company in the Kyushu Region, as our newest group subsidiary, and in the previous period we reported our seventh consecutive Business Period with record new sales on a consolidated basis and steadily improved and expanded our business domain. Our domestic consolidated companies also have maintained profitability over all three Business Periods, as we have moved forward with establishing a solid earnings structure.
Overseas development
In overseas development, we are working with local partner companies in Indonesia, Vietnam, and Thailand on new market development,
and have also launched a new joint venture in the Philippines.
Optimization of internal operational processes
As we construct a new online system that combines reliability, availability, serviceability, maintainability, and confidentiality against the expansion of operations as a backdrop, we are achieving business improvements and increasing the sophistication and efficiency of our internal controls.
New Long-term Vision “BULL55”
The Kanamoto Group has named its new long-term vision “BULL55” - Build Up a Legendary Leading company plan for the 55th -. This vision takes a future perspective, positioning the fiscal year ending October 2019 (Kanamoto’s 55th Business Period) as a target year to serve as a guidepost for establishing the Kanamoto brand.
For this new long-term vision, Kanamoto’s approach was to prepare a phased execution plan. To cover the first phase from the fiscal year ended October 2015 (51st Business Period) to the fiscal year ending October 2017 (53rd Business Period), the Company formulated its Medium-term Management Plan (BULL53). The Kanamoto Group will proactively expand its base of operations in the Kanto & Koshinetsu Region, where major projects including infrastructure construction and various redevelopment projects related to the Tokyo Olympics and Paralympic Games to be held in 2020 are planned, and work to establish an organization aimed at increasing sales and earnings in the Tokyo metropolitan area based on the medium to long-term demand outlook. As a long-term engine of growth, the Company also will strategically pursue the creation of overseas bases of operations, primarily in ASEAN countries where there is strong latent demand.
At the same time, to improve risk resilience and react quickly to changes in its operating environment, Kanamoto will work to enhance corporate performance management, strengthen its governance organization, and build the management systems that will enable it to grow continuously over the long-term.
■Expansion of domestic base of operations
In addition to focusing on the Tokyo metropolitan area where much of Japan’s public and private sector demand is concentrated, Kanamoto will undertake branch development, pursue M&A and remain on a growth track in areas west of the Kanto Region, while maintaining net sales in the Hokkaido and Tohoku regions.
■Overseas development
Kanamoto will maintain or expand its existing subsidiaries in Shanghai, Hong Kong, and Singapore, further expand overseas operations in the rapidly developing ASEAN countries and take steps to develop business operations in countries such as Indonesia, Vietnam, Thailand and the Philippines where demand is anticipated
for specialized equipment for engineering works such as ground improvement and the shield tunneling method, sectors in which the Kanamoto Group possesses unique expertise.
■Optimization of internal operational processes
Kanamoto considers its construction equipment management system and improvements in operating efficiency to be the wellspring of the Kanamoto Group’s earnings, and seeks to increase operating efficiency and reduce costs through stronger control over rental unit prices and the pursuit of operational process improvements.
Kanamoto will also further boost the efficiency of operations through the expansion of its business unit support functions and systems integration with related Group companies.
What is the status of Kanamoto's response to innovation sectors such as "i-Construction"?
Regarding "i-Construction", we are responding resolutely but proportionately, while closely monitoring changes and progress by gathering and exchanging information with other entities such as the Ministry of Land, Infrastructure and Transport, manufacturers, customers, and our industry peers.
In addition, we established a New Products Office with the mandate to develop or identify new commercial products, which is collecting information globally on a daily basis.
We also are undertaking the development of new building methods and new equipment models with affiliated companies.
The "Kanamoto alliance group" encompasses more than 25 companies. What is the group's strategy when approaching or studying potential group firms?
Kanamoto seeks to establish a "high-quality, high-power corporate group", and is pursuing maximization of the group's premium (synergy). In particular, we have organized cross-group working teams that are actively pursuing issues such as the optimal quantities and models of rental assets to hold among the group's construction equipment rental-related companies, with Kanamoto itself at the core. We are pursuing the mobility of all our management resources, including not just assets but our human resources as well.
One last question. Would you share with us your thoughts as Kanamoto's new president?
First of all, I want to conclusively achieve Kanamoto's new long-term vision "BULL55", which we currently are moving forward, and build a strong earnings base. Kanamoto currently is one of the so-called four leading companies that compose the construction equipment rental industry, which is said to comprise over 2,000 companies, and while we are regarded as having a comparatively dominant position, I am not satisfied with our present situation and want to aim for even greater heights.
Furthermore, I want to create a brand that makes people always view Kanamoto as the company that represents the construction equipment rental business that is now a critical social infrastructure, and always reminds them of our "BULL55" philosophy of being a "high-quality, high-power corporate group that considers its shareholders, business partners, and employees as the base for strong earnings and makes them always think "Kanamoto" when they think of construction equipment rentals.
In the future as well, I will work to increase Kanamoto's total corporate value, and strive to be an executive officer and employee who exceeds the expectations of all our stakeholders.
Information-aided construction using 3DMC and 3DMG（Photo by YAESU Publishing co. ltd.）
"i-Construction" promoted by the Ministry of Land, Infrastructure, Transport and Tourism begins
The ministry previously had promoted the introduction and the study of various ICT (information-communication technology)-related technologies such as information-aided construction, CIM (construction information modeling), and drones (unmanned aerial vehicles) that made good use of three-dimensional data, and "i-Construction" is the latest new approach that combines these to further improve construction site productivity.
Kanamoto has already established a special division for information-aided construction, and is introducing construction equipment for information-aided construction and implementing system operations support. Kanamoto will continue to support construction production systems utilizing ICT, which are expected to find even greater applications in the future.
Overview of i-Construction
