SGH

Medium-Term Management Plan

The SG Holdings Group has formulated Mid-Term Management Plan "Second Stage 2021" from the fiscal year ending March 2020 to the fiscal year ending March 2022."

1. Review of "First Stage 2018" – Achievements and Remaining Challenges

Achievements

  • Provided comprehensive logistics solutions
    • Rolled out the services by Advanced Logistics Project team "GOAL"
    • Expanded TMS offering
    • Integrated services of Delivery and Logistics in Kyoso Project with Hitachi Transport System
  • Enhancement of Resources - Workstyle Reforms and Delivery Network
    • Promoted workstyle reforms and delivery network enhancement while appropriate pricing in progress
    • Reduced overtime work, raised retention rate, hired new personnel and stabilized service quality

Remaining Challenges

  • To provide further advanced and integrated logistics solutions
  • To provide further advanced and integrated logistics solutions

2. "Second Stage 2021" – Understanding of Environment

Shortages of work force
Severely tight labor market due to continued shrinking working population.
EC Market Growth
Ongoing changes in local delivery market and supply chain brought by EC market growth
Asian Market Growth
More opportunities identified following the rapid growth in Asian developing countries and cross-border transactions
Higher Governance Standard
Higher corporate governance and compliance standard requested

Changing conditions in logistics including those in the domestic delivery market and supply chain brought about by the growth in the e-commerce market, and an increase in crossborder transactions due to rapid growth among emerging countries in Asia, are creating new business opportunities. At the same time, we need to address the challenge of a worsening labor shortage resulting from a continuing decline in the working population. We also need to continue working to develop more sophisticated corporate governance and compliance systems.

3. Positioning of "Second Stage 2021"

Positioning of "Second Stage 2021"
At "First Stage 2018", we focused on strengthening human resources and networks, and strengthened resources both domestic and overseas.

"Second Stage 2021" is positioned as three years for the "enhancement of management platform" by creating a system to utilize resources following the achievements from the First Stage. Looking towards medium to long term, we will invest for sustainable growth.

4. Mid-term Management Plan "Second Stage 2021" Management Strategies

Based on the achievements and issues of the First Stage and the current business environment, we have set six management strategies for the Second Stage 2021.

(1) Advanced logistic solutions provided through Group-wide collaboration

Priorities

  • Establishment of business model of Group-wide collaboration
  • Approach to wider target audience by deeper penetration and additional value creation
  • Increase in GOAL resources and further alliance with outside partners

(2) Establishment of platform for growth by optimal performance of each management resource

Priorities

  • Enhancement of organizational platform through optimal assignment and allocation of human resources
  • Improvement in employee treatment and cultivation of comfortable work environment
  • Extension of network including X-Frontier Project

(3) Promotion of digitalization and technologies to pursue operational efficiency as well as customer convenience

Priorities

  • Enhancement of organizational platform through optimal assignment and allocation of human resources
  • Improvement in employee treatment and cultivation of comfortable work environment
  • Extension of network including X-Frontier Project

(4) Expansion of customer base and increase of presence in global logistics business

Priorities

  • Expansion of global network around Expolanka
  • Penetration into growing market by capitalizing on GOAL offering
  • Expansion of revenue base with a focus in Asia

(5) Creation of competitive advantages by enhanced solution capabilities of the organization and individuals

Priorities

  • Facilitation of live communication through encouragement of inclusive corporate cultures of flat (non-hierarchical) organization
  • Nurture of talents that will create new value of competitive advantages
  • Creation of energetic organization where actions for improvement and challenges are always welcomed

(6) Further enhancement in management control to meet stakeholder expectation

Priorities

  • Further enhancement of corporate governance
  • Contribution to SDGs as a logistics company / corporate citizen
  • Management of both investments for sustainable growth and stable returns to shareholders

5. "Second Stage 2021" – Management Targets

(Units: billion yen) Fiscal year ended
March 31, 2020
results
Fiscal year ended
March 31, 2021
results
Fiscal year ending
March 31, 2022
earnings forecast
(As of April 30,2021)
YOY change
Operating revenue 1,173.4 1,312.0 1,325.0 101.0%
Operating income
[Operating margin]
75.4
[6.4%]
101.7
[7.8%]
107.0
[8.1%]
105.2%
Ordinary income 80.5 103.6 108.5 104.7%
Net income attributable to
owners of the parent
47.2 74.3 74.0 99.5%
EBITDA 96.8 128.1 137.0 106.9%

6. Dividend Policy

Basic Policy

Stable dividend payout while considering necessary reserves for future business as well as healthy financial conditions

Target

Consolidated Dividend Payout Ratio:30%

*1Amounts considering an implementation of 2-for-1 stock split of its common shares on

*2Including special dividend of 10 yen announced on September 25, 2020 (the figure in the graph reflects 5 yen after the stock split).

For details on the Mid-Term Management Plan "Second Stage 2021", please refer to "Mid-term Management Plan "Second Stage 2021"".

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