The Third Mid-term Business Plan - Topcon · 2019-05-28 · The Third Mid-term Business Plan Strengthen profitability of Core Business ©2019 Topcon Corporation 29 Early detection

©2019 Topcon Corporation 15

Ⅲ. The Third Mid-termBusiness Plan


The Third Mid-term Business Plan

Acceleration of business development in the growing market

Strengthenprofitability of Core Business

Creation of new potential market

Acceleration of Growing Business


Aim for ROE15%

Long-term Goal FY2025 Sales ¥250B, ROE over 15%

(FY2019 - FY2021)

Strategy 3Strategy 2Strategy 1


① IT Construction technology⇒Machine Control System utilizing precision GNSS technology

② 3D Measurement technology⇒Sensor digitization which realize unification of work flow

Topcon’s unique technology

Excavator system

3D MeasurementIT Construction Machinery

3D printer robot

PrecisionGNSS

Terrestrial Surveying

Instruments

Aerial photogrammetry

Survey Design Inspection

Construction work flow

Societal Challenge Solution

Infrastructure demandIn the world

Construction

Realization

Dozer system

PositioningSmart Infrastructure

The Third Mid-term Business Plan Growth Scenario

Shortage of skilled workers

世界のインフラ需要

Shortage of skilled worker in construction

Increasing demand for Infrastructure

UAV

- Productivity improvement

- Elimination oflabor shortage

Automation of constructionby robotization of construction machinery

and unification of work flow


FY2018 FY2025

3D Measuring instrumentsPenetration ratio

Market size estimation

Installation ratio

Installation ratio

Excavator system

IT Construction machineryDozer system

- Annual Production volume：approx. 25K units per year

- Applicable model：upper 20%- Expected product lifetime : 8 years (after market)

Market size¥200B

Global addressable number

40K units


200K units

The Third Mid-term Business Plan Growth Scenario Positioning

Smart Infrastructure

- Annual Production volume：approx. 300K units per year


*

*

*

*Estimated by Topcon


Improvement of productivity and quality

IT Agriculture system

① IT Agriculture machinery⇒Auto-steering system utilizing precision GNSS technology

② Optical Sensor technology⇒Digitization by crop monitoring sensor and yield sensor

Auto-Steering system for farm machinery

AgriculturePlatform

Laser-type crop sensor


Topcon’s unique technologyRealization

Optical sensor technology

PositioningSmart Infrastructure


- Food Shortage- Shortage of skilled workers

Population aging /Decreasing of skilled workerFood shortage

- Global population increase- Decreasing size of farmland

per person

Automation of Agricultureby automation of steering and unification of

data management


IT Agriculture machinery

Auto-steering systems for tractor

FY2018 FY2025

Market size estimation

Installation ratio


600K units

The Third Mid-term Business Plan Growth Scenario Positioning


- Annual Production volume：approx. 1.5M units per year


*



Source: Market ScopeGlobal Prevalence and Major Risk Factors of Diabetic Retinopathy (2012)

74 75 80

127 131161

87 90

110

0

100

200

300

2012 2013 2020

Diabetic retinopathy AMD Glaucoma

(million people)

- Increase of eye diseases- Rising medical cost

Increasing diabetes population

Complicatingdisease

Naturalincrease

Eye care market environment

in 2017425M people

in 2045629M people

Societal ChallengeGlobal aging population


351

Eye Care

Source：IDF Diabetes Atlas Eighth Edition 2017


Screening(Prognostic Domain)

Shortage of ophthalmologists to correspond to rapidly increasing eye diseases(351 million people)

Ophthalmologist

Eyeglasses store,Drug store, Health check up facility

Primary care physician

The world's number of Primary care physician,

Ophthalmologist and Eyeglasses store, etc.

Full automatic Screening equipment :Easy operation with less expertise

Early detection Early treatment

Medical efficiency improvement

3D OCT Maestro- fully automatic OCT and color fundus photography- Reporting function indicating possibility of 3 major eye disease

TRC-NW400- fully automatic color fundus photography- Early detection of 3 major eye diseases

Exam/Diagnosis/Treatment domains

Screening(Preventive domain)

Ophthalmologist

Creation of Eye disease screeningby Primary care physicians, Eyeglasses stores,

Drug stores, etc.

Primary carephysician

Screeningfacility

Optical Store

Drug Store

Drug StoreOptical Store

Nursing Home

The Third Mid-term Business Plan Growth Scenario Eye Care

Topcon’s unique technologyRealization


Primary carephysician

200

1,000

2,000

0 1,000 2,000(Thousand）


Major optical chain store, Specsavers, deployed250 units of 3D OCT Maestro

* Optical chain store with 1,600 stores in 10 countries

Specsavers’ case :Early detection

Glaucoma Detection Rate：8%Approximately 10,000 people were detected as suspicious patient of Glaucoma out from 125,000 people screening (yearly)

Effect

Case example of Eye diseases’ screening

Easy operation with less espertise

*

Expectations of early treatment,improvement of medical efficiency andmedical quality

Fully automatic



FY2018 FY2025

Fully automatic Screeningequipment newly deployed number

-Number of major global optical chain store：40,000

-Number of Primary care physicians (global) :2M 3% are addressable

Fully automatic Screeningequipment newly deployed number

Number of Facilities 100,000

- Number of Optical/Drug store：1M (global)20% of the stores are addressable

- Number of Primary care physicians (global) 2M20% of them are addressable

市場規模予測

Number of Facilities 600,000

Primary care physicians/Optical chain stores/

Drug stores

Market size prediction (Screening Business)


*


*


Core Business

Growing Business

IT Construction- Development of untapped market- Market expansion by launching new strategic

products- Expand Road maintenance solution business- Advancing subscription business in work

progress managementIT Agriculture- Further strengthening of OEM business- Initiation of IoT platform business

Enhancement of sales network - M&ALaunching the differentiated products- Strengthening of competitiveness

Positioning IT Construction：Acceleration of business growthIT Agriculture：New customer development

Advancing IoT business

(unit:billion yen)

*For details, see "IV. Growth strategy by Business"

77.7

93.0

79.0

Actual Plan Plan

CAGR 9%

FY2018 FY2019 FY2021

55%

45% 45％

55％

The Third Mid-term Business PlanGrowing business / Core business


Launching the differentiated products- Improvement of business efficiency

IT Construction / 3D Measurement - Advancement of i-Construction related

business

BIM market development- Promoting combined solutions of 3D

measuring devices and software

Expansion of sales network in Asia and India


IT Agriculture- Business expansion in Japan and Asian

market development

Creation of IoT business- Utilization of high market share products

Smart Infrastructure Creation of new Growing BusinessStrengthening of Core Business

Core Business

Growing Business

(unit:billion yen)43.0

38.536.7

CAGR 12%

84％

16％

FY2018 FY2019 FY2021

12%

88%


Actual Plan Plan*”i-Construction” is a registered trademark of National Institute for Land and Infrastructure Management, MLIT, Japan.


Reinforcement of competitiveness by cost reduction

Business expansion in China- Creation of Screening Business in the

world's largest diabetes market

Expansion of Screening Business - Utilization of Software Development

Subsidiary in the US- Sales expansion of fully automatic screening

equipments- Utilization of subscription model

Improvement of business efficiency- Reorganization of sales structure

Eye Care Expansion of the Screening Business

Core Business

Growing Business


CAGR25%

29%

71% 55％

45％47.7

62.0

51.0

FY2018 FY2019 FY2021

(unit:billion yen)


Actual Plan Plan


Operating Cash Flow ¥50.0B

FY19-21 total

Effect of improving Operating Income ¥7.0B

- Improvement of profitability- Reduction of inventory

- Consolidation of operating base- Further efforts in cost reduction

by improving the productivity- Reduction of the procurement

cost

FY16-18 total

¥5.5B

¥47.2BGeneration of Cash Flow

Management efficiency

The Second Mid-term Business Plan


The Third Mid-term Business PlanStrengthen profitability of Core Business


Early detection of the diseases other thaneye diseases through the retina examination

Further utilization of 3D Measuring technology

Explore new potential market by new innovative solutionsContribute to achieve

digital design drawing current state of construction

Expand Screening Business

DiabetesDementiaHeart disease

etc…

Healthcare through the Eye

Long-term Target

The Third Mid-term Business PlanCreation of new potential market

Positioning

Eye Care


Expand BIM BusinessMediate between the current state of constructionand digital design drawings in real time

Create infrastructure Screening BusinessEarly diagnosis of infrastructure maintenance

Further utilization of 3D OCT

-Real time progress management-Reduce administrative overhead-Data correction according to the current situation


Net Sales 148,688 154,000 180,000Operating Income (Operating Income Ratio)

13,596(9.1%)

14,500(9.4%)

20,000(11.1%)

Ordinary Income 11,497 12,500 -

Net Income 6,548 8,000 -

ROE 9.8% 11% 13-15%

Dividends ¥24 ¥28 -

Payout Ratio 39% 37% Over 35%Exchange

Rate(Average)

USD ¥110.69 ¥110 ¥110

EUR ¥128.43 ¥125 ¥125

FY2018 FY2019 FY2021


(unit:million yen)


Financial Targets [Consolidated]


Net Sales

Positioning 77,722 79,000 93,000Smart Infrastructure 36,744 38,500 43,000Eye Care 47,713 51,000 62,000Others 1,698 1,500 1,000Elimination -15,190 -16,000 -19,000Total 148,688 154,000 180,000

Operating Income

(Operating Income Ratio)

Positioning 8,358(10.8%)

8,500(10.8%) -


6,393(17.4%)

6,600(17.1%) -

Eye Care 2,896(6.1%)

3,400(6.7%) -

Others -65(-3.8%)

0(0.0%) -

Elimination -3,986 -4,000 -Total 13,596

(9.1%)14,500

(9.4%)20,000(11.1%)

FY2018 FY2019 FY2021

The Third Mid-term Business Plan(unit:million yen)


Financial Targets by Business [Consolidated]


FY19-21totalFY16-18 total

Shareholder return

Payout ratio over 35%39%

FY19-21 PlanFY18 Actual

R&D ¥50B

Growth Investments(M&A, etc.） ¥40B

CAPEX ¥20B

¥37.4B

¥6.3B

¥15.9B

Investment plan


The Second Mid-termBusiness Plan

The Third Mid-termBusiness Plan

Documents

The Third Mid-term Business Plan - Topcon · 2019-05-28 · The Third Mid-term Business Plan Strengthen profitability of Core Business ©2019 Topcon Corporation 29 Early detection