Mid-term business plan
Business Environment and Challenges Our Company is Currently Facing
Aging facilities, declining revenue, a shortage of technical staff, and the need to respond to frequent natural disasters have become pressing issues in Japan's water supply, wastewater, and environmental resource sectors.
With Japan's population projected to fall below 100 million by 2056, the maintenance of water supply, wastewater, and environmental infrastructure is expected to become increasingly challenging.
Meanwhile, overseas, countries are not only facing environmental problems like climate change, global warming, and ocean pollution, but they are also struggling to cope with major disasters and growing shortages of water and rare resources.
Against this backdrop, our Group has developed the Mid-Term Business Plan 2027, covering the four-year period from the fiscal year ending March 2025 (FY2024) to the fiscal year ending March 31, 2028 (FY2027). Our Group aims to achieve sales of 200 billion yen by FY2027 (the fiscal year ending March, 2028), which marks our 20th anniversary, doubling our sales from the time of our founding.
Under the Mid-Term Business Plan 2027 Three strategic pillars: (1) Business-specific growth strategies, (2) Investment and financing strategies to increase corporate value, and (3) Sustainability initiatives.
By promoting these three strategic pillars, we will strengthen our ability to respond to the Water PPPs, and at the same time, we will work to expand our business and strengthen our foundation with a view to the Next Stage, which will be the 30th anniversary of our founding in 2037.
Business environment and challenges our company is currently facing
- Accelerating challenges in Japan (Declining population, aging facilities, financial constraints, and engineer shortages.)
- Environmental issues (Climate change, major disasters, loss of biodiversity, and resource scarcity.)
- Strengthening our ability to respond to the introduction of Water PPPs through business resource allocation.
- Enhancement of employee compensation to address increased competition for human resources (Inflationary measures through base pay increases)
- Investment in Digital Transformation (DX) to boost productivity and competitiveness.
Strong Orders Propel Sales to 200 Billion Yen
Given the strong volumes being seen in terms of orders and our current backlog, we are finally on track to achieve our long-held goal of 200 billion yen in sales. In addition to steadily expanding sales for orders received, we will implement growth strategies in each business field by launching products and systems that contribute to the reduction of greenhouse gas emissions.
Alongside these efforts, we will strengthen our business foundation by investing in human resources, updating core systems, and advancing digital transformation (DX) and engineering reforms. These initiatives will help us achieve our goals for FYE March 2028, the final year of Mid-Term Business Plan 2027, which includes receiving orders of 200 billion yen or more, achieving sales of 200 billion yen, reaching an operating profit of 13 billion yen (with a 6.5% operating margin), securing a current net profit of 8.5 billion yen, and attaining a return on equity (ROE) of 10% or more.
* Reference: Orders received in FY2025/3: 222.7 billion yen(+10.8 billion yen YoY), Order backlog at FY2025/3-end: 318.7 billion yen (+43.6 billion yen YoY)
| First fiscal year FY2025/3 result |
Final fiscal year FY2028/3 target | ||
|---|---|---|---|
| Orders received |
222.7billion yen |
At least200billion yen | |
| Net Sales | 179.1billion yen |
200billion yen | |
| Operating profit （% of Sales） |
10.6billion yen (5.9%) |
13billion yen (6.5%) |
|
| Net Income |
6.9billion yen |
8.5billion yen | |
| ROE | 8.9% | At least10% |
Three strategic pillars
1. Business-specific growth strategies
Environmental Engineering Business (EE Business)
Water Environmental Business
- Market launch of new products and technologies that contribute to the reduction of greenhouse gas emissions..
- Proposals based on operations and management, and the pursuit of optimal Life Cycle Cost (LCC).
Resources & Environmental Business
- Strengthen our ability to respond to the growing demand for Design, Build, and Operate (DBO) projects due to increased renewal needs and enhance collaboration with partner companies.
System Solution Business (SS Business)
System Engineering Business
- Addressing the demand for renewal of monitoring and control systems, and reforming engineering methodologies to improve operational efficiency.
- Improve quality, increase operational efficiency, and reduce costs through data linkage.
Customer Engineering Business
- Enhance proposal capabilities by leveraging our expertise and track record in maintenance, inspection, and repair services.
- Acquire new customers and businesses by expanding sales and leveraging WBC (Water Business Cloud).
Operation Business
- Strengthen our response to Water PPPs and create and ensure the materialization of new business models.
- Enhance competitiveness by utilizing the Operation Support Center (OSC), including including improvement of operations and streamlining processes at company-operated facilities.
International Business
- Respond to the water reuse market and advanced wastewater treatment processes for micropollutants.
- Create synergies by strengthening collaboration among group companies and building ties with local partners.
2. Investment and Financing Strategy to Increase Corporate Value
- Investment and financing for business expansion (R&D, M&A, and Water PPPs.)
- Digital transformation investments, including infrastructure investments (in human capital, AI ICT, etc.) to ensure stable future growth.
3. Sustainability Initiatives
- Initiatives to address six key materiality issues. (Water environment, recycling-oriented society, reduction of greenhouse gas emissions, local communities, human resources, and governance.)
Realize LCCs which are best suited to customer needs through the development of Electromechanical Fusion
Since its establishment in 2008, our Group has aimed to become a leader in business operations within PPPs, leveraging our strengths in electromechanical fusion--the integration of mechanical technology from NGK INSULATORS, LTD. and electrical technology from Fuji Electric Co., Ltd.--along with our unique ICT expertise.
As a result of advancements in electromechanical fusion over the past 16 years since our establishment, the group has successfully participated in approximately 30% of PPP projects in water supply and sewerage works.
In contrast, the demand for water supply and sewerage installations, which had been growing through facility renewals and new constructions during the high-growth period, began to plateau in the late 1990s due to a higher percentage of the population being served by waterworks and wastewater collection, as well as the anticipated population decline.
Additionally, with municipal finances becoming increasingly constrained due to declining income from water revenues, investment in water and sewerage infrastructure has shifted from a build-and-replace model to one focused on renewal and improvement, resulting in a gradual increase in spending.
Under these circumstances, our Group will implement various measures to achieve optimal LCCs for customers, with a focus on extending the service life of facilities and maximizing their useful life.
The organizational changes effective April 1, 2024, are primarily aimed at enhancing decision-making and business efficiency in the allocation of management resources from a management perspective. Another aim is to pursue optimal EPC (engineering, procurement, and construction) by focusing on long-term business operations, inspection, point repair, and operation and maintenance.
Under the new organization, the Environmental Engineering Business (EE Business) is responsible for the design, construction, and maintenance of mechanical facilities, while the System Solution Business (SS Business) handles the same functions for electrical equipment.
This integration of EPC and maintenance functions allows us to promote our business in a unified and streamlined manner. In addition, we have separated the responsibilities as follows: the Operation Business manages domestic water and sewage treatment plants, as well as resource recycling facilities, while the International Business handles the design, construction, and maintenance of facilities and equipment for overseas water and sewage treatment plants, as well as the industrial market. By linking these business divisions in this way, we have adopted a structure that promotes the growth of the entire company.
Strengthening Our Ability to Respond to Water PPPs
Our Group was established in April 2008, anticipating the emergence of full-fledged PPPs. Since then, we have been involved in numerous water and wastewater projects, including concessions in Miyagi and Kumamoto Prefectures, as well as the operation and management of commissioned sites nationwide.
In June 2023, the Japanese government announced the Water PPPs initiative. This Water PPPs initiative targets 100 projects in water supply, 100 projects in wastewater, and 25 projects in industrial water, totaling 225 projects by 2031.
Our Group views this as a significant opportunity. Leveraging our extensive track record and expertise from past projects, we will allocate management resources to the second phase of existing projects and actively pursue new opportunities through a unified, company-wide effort.
Human Resource Investment
(Acquisition and Training of Human Resources)
The Water PPPs necessitate a transition from "specification orders," where municipalities outline requirements for construction blueprints and cost estimates, to "performance orders," which prioritize meeting municipality-defined benchmarks for quality, cost, and duration.
In order for the private sector to take on responsibilities previously managed by municipalities--such as management planning, fee collection, and dealing with complaints--it requires acquiring and training new human resources to strengthen the structure in the design department, on-site teams, and across existing operations in design, construction, maintenance, and inspections.
Under the Mid-Term Business Plan 2027, in order to prepare for the full-scale implementation of Water PPPs in the future, we will invest in our people to build a strong foundation, enhance productivity and competitiveness through digital transformation, and maintain and improve profitability by reforming our engineering practices.
Engineering Reforms
As outlined in the Mid-Term Business Plan 2027, another pivotal aspect involves advancing engineering reforms.
The primary goal is to achieve optimal LCC and engineering methodologies by linking and utilizing data from each business process - from design and construction to maintenance and management.
For example, in Basic Engineering, the scope of data utilization spanning from basic design to detailed design has been dramatically expanded by using object-oriented equipment and parts. In Digital Engineering, the next step, construction design can be performed in a virtual space using equipment and piping data created during the previous process.
As a result, this approach facilitates the reduction of man-hours for field surveys, mitigates rework and risks such as interference between equipment and piping at the construction site, shortens construction time, and improves quality.
Furthermore, centralizing data is expected to enhance various operations and maintenance tasks, such as optimizing periodic repairs, speeding up fault recovery, setting optimal inspection routes, and conducting BCP training for plant operation and management.
By constructing a cohesive platform that integrates data and utilizes assets throughout the entire process, and by implementing iterative improvement cycles, our goal is to provide optimal LCCs for our clients while achieving higher productivity within our own operations.
