Message from the President & COO
The Sumitomo Electric Group has assets that have been built up over the 120 years since our foundation, such as the diversity of our connectivity and transmission technologies and businesses, our manufacturing capabilities, our human resources based on the “Sumitomo Spirit” as our fundamental value axis, and our relationships of trust with various stakeholders. The Group will continue to enhance its resilience to changes in the social environment while utilizing these assets in the business segments of Mobility, Energy, and Communications and mobilizing the collective strength of the Group to provide social value and raise corporate value over the medium to long term toward the realization of a better future society.
Sumitomo Electric Industries, Ltd.
President & COO
Business Results for FY2020
Under the severe business environment, the Group made concerted efforts on a global basis to further enhance business performance.
First of all, I would like to express my deepest condolences to those who have lost their lives as a result of the COVID-19 pandemic, and my sympathy to those and their families who have been affected. I would also like to express my heartfelt gratitude to all the medical professionals for their dedication and hard work.
The fiscal year 2020 was a year in which the entire world was faced with a crisis the likes of which it has not experienced in recent years. The global outbreak of COVID-19 has placed severe restrictions on business activities as well as social activities, and this situation is expected to continue for a while.
The business environment surrounding the Group was harsh, in the first half of the fiscal year in particular, due to a decrease in automobile production and delays in telecommunications and electric power-related construction, as well as lower prices for optical fiber. Amid such an environment, for the fiscal year ending March 31, 2020, the Company recorded net sales of 2,918.6 billion yen and operating income of 113.9 billion yen, a drop in both sales and profits from the previous fiscal year.
As for the second half of the fiscal year, in addition to a resurgence in demands due to a rapid recovery in automobile production, the Group united its efforts globally to secure production and shipments and reduce costs in order to make up for the large deficit in the first quarter. This resulted in net sales of 1,679.3 billion yen and operating income of 125.3 billion yen for the second half, which were both record highs.
Diversity in our business portfolio engaging in social infrastructure-related businesses and automotive businesses contributed in easing the negative impact. The current mid-term management plan, VISION 2022, targets the achievement of net sales of 3,600 billion yen and operating income of 230 billion yen in the final year, FY2022, and net sales of 3,400 billion yen and operating income of 200 billion yen in the interim year, FY2020. In terms of the progress of VISION 2022, the interim targets were achieved.
Toward the achievement of VISION 2022
We continue to strive to achieve the final goal of ourmid-term management plan, VISION 2022.
We expect that the COVID-19 pandemic will soon be brought under control with the progress of vaccinations, but there are many uncertain factors such as the spread of variants, and I believe that the normalization of economic and social activities may be delayed longer than expected. There are also political and geopolitical concerns, such as the trade dispute between the U.S. and China, as well as semiconductor supply uncertainty.
While we adapt to this environment, in the current plan, we are endeavoring to capture demand in growing sectors and to thoroughly improve cost efficiency, and we are aiming for record-high sales of 3.35 trillion yen and an operating income of 175 billion yen for fiscal 2021.
In spite of all the difficulties, we will continue to strive to achieve the final goal of VISION 2022 by “never lowering the flag we have raised” based on the concept of “Contributing to a better society by leveraging our expertise in connectivity and transmission technologies through concerted efforts of the entire Group” with the aim of becoming a “Glorious Excellent Company.” I would like to introduce some of the specific efforts we are making to achieve the goals of VISION 2022 and beyond.
In the Mobility segment, we are working on programs such as high-voltage wiring harnesses for electric vehicles, reducing the weight of wire harnesses by using aluminum, increasing global production capacity of rectangular magnet wires for motors used in electric vehicles, expanding sales of lead wires used in lithium-ion batteries for vehicles, and creating new products related to the so-called CASE*1. We are also participating in autonomous driving verification tests utilizing the expertise we have gained in the traffic control system business.
In the Energy segment, we are working to address various issues associated with the promotion of renewable energy use, to ensuring the capture of the demand for high-voltage DC cables with low transmission loss and large storage batteries, and to expand technologies that can contribute to energy conservation and environmental protection, such as SiC power semiconductors to enable efficient use of electricity, based on recent trends.
In the Communications segment, we will continue to focus on ultra-high-density optical fiber cables and optical connectors for large-scale data centers, submarine cables using ultra-low-loss optical fibers, and transmission devices and optical devices products for 5G base stations. Others include expanding our water treatment business, which uses a membrane called Poreflon to filter sewage. Currently, the primary application is sewage treatment, but in the future, we hope to be able to desalinate seawater as well.
Additionally, from the perspective of fortifying our management infrastructure, we will continue to place the highest priority on the health and safety of employees and ensuring the maintenance of our supply chain while at the same time reviewing our work styles in the wake of the COVID-19 crisis. In addition, we will strive to improve SEQCDD*2, which is the foundation of the manufacturing industry, and strengthen our resilience by eliminating “waste” in our manufacturing and staffing departments.
*1 CASE: Connected, Autonomous, Shared, and Electric, the key trends in the automotive field.
*2 SEQCDD stands for the Sumitomo Electric Group's policy of considering and implementing the following elements: S (Safety), E (Environment), Q (Quality), C (Cost), D (Delivery), and D(Development).
Aiming to achieve carbon neutrality by 2050
We will enhance our initiatives to address issues related to the global environment with the aim of achieving carbon neutrality by 2050.
The Group has positioned issues related to the global environment, such as global warming and climate change, as one of our most important management issues, and has been working to solve these issues by reducing the impact on the environment through the promotion of the “Action ECO-22V” Campaign by providing environmentally-conscious products and services, based on the “Environmental Policy.”
Currently, we have established the goal of reducing greenhouse gas emissions to the level required by the Paris Climate Agreement*3 by 2030, and by accelerating these efforts, we intend to make further contribution to building a society that is sustainable and has less impact on the environment. This goal has received certification from the Science-Based Targets initiative (SBTi). The Group also expresses its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which recommends information disclosure on the risks and opportunities posed by climate change to businesses.
Taking advantage of these initiatives, the Group will continue to focus on the resolution of issues related to the global environment, including efforts to achieve carbon neutrality by 2050 and the promotion of information disclosure on climate change.
*3 Paris Climate Agreement: Aims to limit the rise in global average temperature to well below 2°C above pre-industrial levels, and to pursue efforts to limit the increase to 1.5°C
Growth Strategies of the Group
We will strive to offer social value and enhance corporate value over the medium and long term with Mobility, Energy, and Communications as our priority segments.
The business environment surrounding the Company is constantly changing, including the spreading of the COVID-19 infection. The digitalization of the economy and society, the response to issues related to the global environment, and the movement to strengthen efforts to enhance resilience are all rapidly accelerating. As part of our efforts to develop a system that can respond to these changes in the business environment, we established the DX Promotion Committee in April 2021 to further promote digital transformation (DX), which has so far been promoted mainly in manufacturing sites. From here on, I will take the lead in promoting DX for the evolution and development of SEQCDD, which is our strength.
On the other hand, we remain committed to consistently responding to the emergence of a new mobility society through the advancement of CASE, the smartening of energy networks through the spread of renewable energy, and the transformation of human communication through the advancement of digitalization, which we have traditionally envisioned.
In VISION 2022, we presented a picture of a society in which all people and things will be connected through infocommunications, electric power, transportation, and other types of network to optimize society as a whole, in other words, becoming a “smart society” around 2030. By delivering value that is environmentally friendly, safe, and secure, and that leads to comfort and social growth, the Group is committed to becoming an entity that supports industry and people’s lifestyles in a future society where the three business segments of Mobility, Energy, and Communications are fused together.
In order to realize our vision as a company, we would like to carefully assess what investments we should make and what types of business we should expand in order to improve not only the Company but also society in the future, in the process of efforts to achieve specific goals, while also discussing with our business units.
By Capitalizing on the current changes in the times, our Group, which focuses on Mobility, Energy, and Communications, will have a lot to look forward to. We are committed to making all our efforts to meet and exceed our stakeholders’ high expectations for the future of the Sumitomo Electric Group. Thank you for your continued support and cooperation.