Redefining the Future

67 Pages·2015·4.52 MB·English

Redefining the Future
LIXIL Group Corporation
Mid Term Strategy
September 15th, 2015
Copyright © LIXIL Group Corporation, All rights reserved. 0
Introduction of New Mid Term Strategy and Mid Term Plan Based on the
New Business Model
Our Commitment
Transparency

Timely dialogue with shareholders and analysts

Accountability performance with new

leadership team for the first time
Our Agenda
 Overview and introduction - Yoshiaki Fujimori
 LIXIL Water Technology - David Haines
 LIXIL Housing Technology - Toshimasa Iue
 LIXIL Building Technology - Nicola Greco
 LIXIL Kitchen Technology - Francois-Xavier Lienhart
 Wrap up - Yoshiaki Fujimori
1
Transformation to One LIXIL - A Truly Global Company
Our Vision
To be the World’s
Most Valued,
Innovative and
Trusted Living
Become a Technology
Truly Global Company by 2020
Company
Value Establishing
Platforms for
Global Growth
Five Company
Integration & LIXIL
Foundation
Today 36 months+
2
Driving Innovation and Technology Leadership
LIXIL Water Technology LIXIL Housing Technology
#2 Japan Sanitary Ware #1 Japan Window Sashes
#1 Japan Unit Bathroom #1Japan Exteriors
#1Japan Entrance Doors
#1 Global Water Faucets
#1 North America
Sanitary Ware
LIXIL Building Technology LIXIL Kitchen Technology
#1 Global Curtain Wall #1 Japan Kitchen
3
Offering Growth Opportunities for LIXIL Globally
Construction spending by region
(USDbn)
Eastern
Western Europe
Europe
49.8% 186 50.2%
68.6% North
1.2% America
1,277
31.4%
25.6%
Mideast
& Africa(1) 74.4% 56.8% 700 43.2%
2.5%
59.3% 245
40.7%
3.8%
4.3%
South
4.2% America
73.2% 26.8%
288
2.5%
Residential Office + Commercial + Institutional CAGR 2015-18
Source: Global Insight as of July 2015; Construction spending defined as investments into residential, office, commercial andinstitutional buildings in 2010 USDterms 4
(1) Includes Turkey
LIXIL as the Largest Player has Significant Upside Potential from Scale
Benefits While also Driving Footprint Rationalization
Global Sales (USDm) Global Number of Sales Offices
15,235 150+
123
8,521 8,289
Saleser 6,564 4,957 4,014 1,530 1,261 934 45(1) 26 24(1) 23(1) n/a n/a n/a
al ow
bP
o
Gl
Countries with Manufacturing Footprint Global Number of Plants
g 16
n
ri 98
ctu 10 9 63
nufawer 6 5 4 3 2 1 36 27 24 23 19 8 4
ao
MP
al
b
o
Gl
Source: Based on internal estimates and publicly available disclosed material from peers
Note: Exchange rates based on 1-year-average 5
(1) Sales offices with same address counted as one
Global Platform to Support New Group Structure
Domain Expertise
Globally Unified
Leading market positions in Water, Corporate Excellence
Housing, Building and Kitchen
Technologies Driving best practice and
corporate governance across
Industry innovator connecting
all technology businesses by
technology, design and quality
dedicated HR, CCC, Legal,
Portfolio of leading brands Public Affairs, IT, Corporate
Audit Staff, Corporate Initiative
Work Out and Six Sigma
functions
Global Management
Team
Globally experienced management
team aligned with shareholders
Strong management platform based
on diversity and meritocracy
6
Maximizing Domain Expertise; Leveraging the Power of Global Scale
LIXIL Group Key Benefits
 Strong domain expertise with global focus
L L L L D H  Maximizing growth and cost synergies
IX IX IX IX is o
IL W IL H IL B IL K trib usin  Strong intellectual global capital
ater Techno ousing Tech uilding Tech itchen Techn ution and Re g Services B  BmDeeatlnteeagrga getiomovnee norntf aanuctheo /r aityc ctoou enatcahb iblituys /i nriessks
logy (LWT) nology (LHT) nology (LBT) ology (LKT) tail Business (D usiness (H&S)  -ImSfpurcroathvleee rmm loeewnritet G iranirnn pogdrw ocotfopihtsea tDrbairltiiitvoyenrasl flexibility
Sales and Marketing Partner &  Innovation in new products for growth
R
)
 Higher capital efficiency
LIXIL Japan Company (LJC)
 Faster decision-making
HQ Corporate Functions - Shorter time-to-market
7
Japan Growth Strategy
Local detached homes
New Housing Condominiums and rental homes
JPY15tr

g
n
di Growth outlook dependent
Builet on goveprnromgeranmt stimulus
k
&ar Remodeling

gM
n JPY8tr
si SShhiifftt
u rreessoouurrcceess
o
H Non-Residential ttoo ggrroowwiinngg
Market mmaarrkkeettss
GROWTH
JPY8tr
CCrreeaattiinngg VVaalluuee
Total Sales L-One Six Creating Leverage Ageing
Solutions Efficiency Model Sigma New Markets Population
8
Global Industry Leaders Accountable to Deliver Growth
David J. LIXIL Water Technology LIXIL Housing Technology Toshimasa
Haines Iue
Nicola Katsuhiro
LIXIL Building Technology Distribution and Retail Business
Greco Mamenari
Francois-Xavier Harumi
Lienhart LIXIL Kitchen Technology Housing Services Business Matsumura
9
Global People Development
Pursuing Meritocracy Global Leadership Training
POD - People & Organization Development
Local Global
People and organization strategy
Talent assessment (9-block)
Talent development
GELT
Promotion s
n (Executive) Lead the Company
o
Succession, retention ati GELT
r
e basic
en (Senior) Lead the Team
G
All
(Junior)
Lead Oneself
(Freshman)
Find Oneself
Performance LIXIL Values
Strong Leader Core Leader Development Needed
10
New LIXIL Mid Term Plan
Copyright © LIXIL Group Corporation, All rights reserved. 11
Business Portfolio Management Drives MTP
Portfolio Development FYE2015 –2018(1) Goals Focus
JPYbn
800 LWT
Growth
• Aim to grow into a high
+
margin global business
700 LWT • Sales JPY703bn; Margin10% Return
600 LHT LHT LHT
• Improve operational
Return
efficiency in a down market
500
• Sales: JPY591bn; Margin 8%
400 LWT
LBT LBT
LBT Growth
• Prioritize higher profit
+
300 markets
Return
• Sales JPY374bn; Margin: 6%
200
LKT
LKT LKT • Shift to upper mid products
100 and reform Return
• Sales JPY123bn; Margin: 6%
0
-1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11%
CE Margin
Implementing ROIC management
(1) Based on IFRS 12
Aiming for Group Sales of JPY 2tr by 2018
FYE2015 FYE2016 FYE2018 FYE2015-18
JPYbn Actual Budget MTP CAGR Driver
LWT 396 640 703 +21.1% M&A
LHT 611 608 591 (1.1%) Japan New
Homes
T LBT 356 377 374 +1.7% Selective
N
E
M
P LKT 114 118 123 +2.7% Reform
O
L
E
V
E D&R(1) 168 172 200 +6.0% Share Gain
D
S
E
AL H&S 62 62 73 +5.7% New
S Services
Adjustment(2) 2 (47) (64)
LIXIL Total 1,710 1,930 2,000 +5.4%
FX Assumptions: Business Unit-Actual: USD105/EUR145; Plan: USD125/EUR140, LIXIL Total: Actual: USD110/EUR141; Plan: USD120/EUR130
(1) Exclude Ken Depot 13
(2) Adjusted for intercompany sales, corporate sales eliminations, FX risk adjustments as well as D&R Ken Depot adjustments
Core Earnings target of >JPY100bn by FYE2018
FYE2015 FYE2016 FYE2018 FYE2015-18
JPYbn Actual Budget MTP CAGR
LWT 28 59 70 +35.1%
LHT 36 41 48 +10.5%
T
N LBT 9 14 22 +36.7%
E
M
P LKT (1) 3 8 n.m.
O
L
E D&R 10 10 13 +10.3%
V
E
D H&S 5 4 7 +15.1%
S
G
N Corporate Cost (31) (37) (34)
NI s
R nt
A IT Investment 0 (1) (7) e
m
E
E PPA & Consolidation (4) (14) (10) ust
OR Adj
C
FX & VAT Contingency 0 (4) (17)
LIXIL Total 52 75 >100 +23.5%
FX Assumptions: Business Unit-Actual: USD105/EUR145; Plan: USD125/EUR140, LIXIL Total: Actual: USD110/EUR141; Plan: USD120/EUR130
14
Reconciliation of New ｍｔｐ Versus Previously Announced Plan(1)
SALES CORE EARNINGS
FYE2016 FYE2017 FYE2018 FYE2016 FYE2017 FYE2018
JPYbn Budget MTP MTP Budget MTP MTP
Old Plan 1,770 2,110 n.a. 100 170 n.a.
New Plan 1,930 1,960 2,000 75 90 >100
Difference +160 (150) n.a. (25) (80) n.a.
Reduced sales plan for FYE2017 Reduced Core Earnings plan for
driven by: FYE2017 driven by:
 Lower domestic sales forecast of  Impact from lower sales forecast
JPY55bn JPY17bn and JOYOU adjustment of
JPY11bn
 JOYOU sales adjustment of
Comments JPY80bn  Revised FX assumption of
105JPY/USD to 125JPY/USD
 Ken Depot carve out of JPY30bn
resulting in JPY16bn impact
 ASB better performance of
 Raw material price inflation of
+JPY15bn
JPY20bn
 SG&A cost inflation of JPY16bn
(1) Announced on May 2014 15
Continued Efforts on CCC Including Global Operations
 Expand Cash Conversion Cycle “CCC” improvement activities from Japan focus to global
operations for realizing further improvement
FYE2017 JPY100bn(1) FYE2018 JPY120bn(2)
 From Mar-15 Q1 Presentation  New benchmark and outlook through FYE2018
Days Days
90.3
90.0
90.3 85.0
90.0 85.0
-6.6days 83.7
80.0
Impact of JPY22.9bn
75.0
85.0
70.0
FYE2018 63 days
83.7
65.0 -22 days
Impact of JPY120bn
80.0 60.0
13/3 13/6 13/9 13/12 14/3 14/6 14/9 14/12 15/3 13/313/914/314/915/315/916/316/917/317/918/3
(1) Cash generation from CCC improvement assuming reduction of working capital days from 90.3 to 55 days for domestic business onJGAAP basis 16
(2) Cash generation from CCC improvement assuming reduction of working capital days from 85 to 63 days including ASB and Grohe onIFRS basis
Japan Initiative: Drive Six Sigma to Drive Further Margin Improvement and
Develop Talent
Achievements and Plan of GB and BB Training(1) Comments
900 799  Plan to continue training 150GBs and 18 BBs a
of 800 year reaching ~800 people trained as GB or BB
er 700 631 150 by FYE2018
bs
mB 600
uG 463 132
e nnd 500  Company-wide 469 Six Sigma Projects were
umulativBBs a 234000000 113 310020 131449 499 649 c-arriDeeds oigunt & Development Process: 80 themes
C 100 21 57 202 - Distribution & Inventory: 34 themes
0 21 56 - Admin. in HQ, HR, Accounting etc.: 44
FYE2013FYE2014FYE2015FYE2016FYE2017FYE2018
themes
B0B GB
25 23 - Customers & Sales Process: 211 themes
n) 20 18 - Manufacturing & Quality: 100 themes
b
Y 11
JP 15 13
ct ( 8  Cumulative improving effect of JPY9bn was
effe 10 9 6 secured by FYE2015,and is expecting to reach
proving 5 01 52 54 7 10 12  JCPuYm2u3labtniv bey n FuYmEb2e0r 1o8f projects approx. 1,500 by
m 1 3 FYE2018
I 0
FYE2013FYE2014FYE2015FYE2016FYE2017FYE2018
Economic Effect(2) Financial Effect(3)
*Six Sigma is a set of techniques and tools for process improvement
(1) BB: Black Belt; Team leader who is only responsible for Six Sigma
GB: Green Belt; Team leader who has both responsibility in Six Sigma and normal operations
(2) Amount ensured by KAIZEN activity, while not directly indicated in financial statements 17
(3) Achievement amount clearly indicated in accounting of financial statements, which is generated by KAIZEN activity
Japan Initiative: Invest into IT Infrastructure to Yield Strong Returns
Cost and Effectiveness for L-One Project
We estimate cumulative effectiveness will exceed cumulative cost from FYE2016
Total
(0.5) +1.4 +1.2 +3.6 +9.7 +10.5 +11.2 +37.0
30 40
n) C
b u
Y 25 m
P u
ness (J 20 30 lative C
ve 15 20 os
ecti t-E
Eff 10 19.9 20.8 20.8 ffe
ost, 5 14.0 10 ctive
C 7.3 n
g 0.3 3.3 es
Runnin -50 ((00..71)) ((10..19)) ((33..01)) (7.1) (7.0) (7.0) (6.3) 0 s (JPY
st, (3.3) (3.3) (3.3) (3.3) -10 bn)
o -10
C
-15 -20
FYE2015 FYE2016 FYE2017 FYE2018 FYE2019 FYE2020 FYE2021
Effectiveness Running Cost Amortization Cumulative Cost-Effectiveness
18
In Summary: LIXIL Group in FYE2018
 To be the World’s Most Valued, Innovative and Trusted Living Technology
OBJECTIVE
Company
FYE 2018 Goals Key Strategies Key Metrics (Measurement)
Sales  Outgrowing market
 Total: JPY2tr  Global No.1 or 2 Housing & building market growth 3~4%
→Sales growth 5.4%
 Japan: JPY1,384bn  New business model
 Global reach (channel)  Overseas sales ratio 24%→38%
 Non-JPN: JPY750bn
 Targeted M&A  Maintain Japan sales
 Cons. Adj.(1):
(JPY134bn)  Renovation sales ratio +2ppt or higher
Core Earnings
 Continuous cost improvement
 Total: >JPY100bn
 Supply chain management  Core earnings margin >5%
 Japan: JPY113bn
on global basis  Overall cost reduction >JPY40bn
 Non-JPN: JPY61bn
 SKU reduction  Pricing mix >JPY10bn
 Cons. Adj.(2):
 Pricing initiatives
(JPY74bn)
EPS  CCC improving from 84 days to 63 days
 Improve Total Asset Turnover
 Targeting 200Yen (IFRS basis)
 Optimize non-operating cash
 Net Debt / EBITDA <4 times
ROE
 Business Portfolio Mgt.
 More than 8%  ROIC 4% or higher
(1) Adjusted for intercompany sales, corporate sales eliminations as well as FX risk adjustments 19
(2) Adjusted for intercompany transactions, corporate eliminations, IFRS adjustment, PPA adjustment and FX risk adjustment