DN Holdings
Medium-Term Business Plan 2026
Aiming to reinforce a business foundation that leads to a growth phase in which we resolve social issues of our own accord
In the environment surrounding public projects in Japan, the amended Basic Act for National Resilience was established in June 2023. In July, a new Fundamental Plan for National Resilience was approved by the Cabinet. That environment is likely to remain steady even after the conclusion of the "Five-Year Acceleration Plan for Disaster Prevention, Disaster Mitigation, and Building National Resilience," whose final year is 2025. We conclude that we will be able to continue securing a certain level of orders received and net sales going forward.
Under such an environment, two years have passed since the Medium-Term Business Plan that we previously announced, with one year currently remaining out of the plan’s three-year period. Based on our intra-group organizational realignment in July 2023 (a merger between our main subsidiary Nippon Engineering Consultants Co., Ltd. and DIA Consultants Company Limited), we formulated a Medium-Term Business Plan for the three-year period between July 2023 and June 2026.
We formulated our Medium-Term Business Plan 2026 following the merger between our main subsidiary Nippon Engineering Consultants Co., Ltd. and DIA Consultants Company Limited. Based on our Corporate Philosophy and the basic policy under that Medium-Term Business Plan, we will endeavor to reinforce a business foundation that leads to a new growth phase by making leading investments aimed at the further integration of our management resources and the creation of a new portfolio for growth.
Under our Medium-Term Business Plan, we are targeting net sales of 34.5 billion yen in the first year, 35.5 billion yen in the second year and 36.5 billion yen in the third year. While we anticipate a temporary impact from allocating human resources to new competitive fields such as decarbonization businesses and the implementation of construction DX, AI and drones, which constitute products of our R&D efforts, in various technological fields, we are planning these as investment activities that target the expansion of our competitive domains and value-added with a view to five to six years in the future.
Medium-Term Business Plan: Basic Policy
- Taking action aimed at realizing a sustainable society and promoting DX
- Reinforcing our status as a market leader and creating new market leaders
- Realizing diverse workstyles and maximizing the value of human resources
- Strengthening a group governance structure that realizes sustainable growth
Medium-Term Business Plan: Numerical Targets
Positioning of Medium-Term Business Plan
- Fiscal year ending June 30, 2022 – Fiscal year ending June 30, 2023
- Sharing of management resources through management integration
- Fiscal year ending June 30, 2024 – Fiscal year ending June 30, 2026
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Integration of management resources through the merger of business companies
Leading investments aimed at the further integration of our management resources and the creation of a new portfolio for growth
→Reinforcement of business foundation that leads to the next growth phase - Fiscal year ending June 30, 2027– Fiscal year ending June 30, 2029
- Acceleration of business expansion (Building of new business portfolio)
Medium-Term Business Plan: Business Strategies
As the environment surrounding public projects in Japan is likely to remain steady going forward, we are anticipating high profitability and stable growth backed by considerable industry share in the core businesses of the Group, namely the structural preservation field, the social creation field, the national land conservation field and the energy facility field.
Additionally, having positioned geological and ground surveys for nuclear power stations and nuclear fuel cycle-related facilities aligned with the “Direction of Future Nuclear Power Policy and Action Guidelines” determined by the Cabinet in April 2023 and planning and design for the likes of earthquake-resistance measures and dilapidation countermeasures for Japan Self-Defense Force (JSDF) facilities (buildings, etc.) in line with the “Defense Buildup Plan” determined by the Cabinet in December 2022 as growth areas, we aim to maximize orders received and net sales through the priority allocation of management resources.
In addition, we will grow our energy-related businesses aimed at the realization of a decarbonized society and infrastructure management businesses such as comprehensive management as we endeavor to expand on our business scale while broadening the business domains of the Group. Simultaneously, we will pursue investment activities that target the expansion of our competitive domains and value-added with a view to five to six years in the future, with these to include promoting the utilization of AI in the maintenance and management of infrastructure and technological innovations such as DX in geological surveys.
Based on the above business strategies, we will continue to do our part for the realization of a sustainable society while simultaneously striving to improve the corporate value of the Group.
Cost of Capital and Profit Distribution Policy
- Cost of capital
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Shareholders’ equity cost 5.0%
Weighted Average Cost of Capital (WACC) 3.6% - Profitability of capital (06/23 results)
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Return on Equity (ROE) 16.1%
Return on Investment Capital (ROIC) 9.8%
※Under our Medium-Term Business Plan, we formulated our profit plan with an established target of ROE of 10% or higher based on our cost of capital. - Profit Distribution Policy
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Shareholder returns: 30% to 35%
- Dividend payout ratio: 30% or more
Salary returns and human resource development: 35%
- Employee wage increases and increase in employees in line with the growth of existing businesses
- Enhancement of employee education and training
New employee training and hierarchy-specific training New employee training and hierarchy-specific training DX promotion training and recurrent training Re-skilling training, compliance training, etc.
Investment in business expansion: 30% to 35%
- Conducting of R&D activities and implementation of R&D results in business activities
- Expansion of business areas and domains and setting of strategy promotion personnel quotas
- Sophistication of IT and implementation of IP and intangible asset strategies