We are dedicated to being a dependable end-of-life partner by moving even closer to the senior generation and their family members. By providing Japan's best services that achieve outstanding customer satisfaction, we are determined to continue growing as we play a role in a society where people live to age 100.
We plan to use the following activities in order to accomplish these goals.
We want to use our position as the leader in Japan’s funeral industry to provide services that can meet the expectations of an even broader range of customers. We will expand the opening of new funeral halls to all areas of Japan with the goal of 210 funeral halls in the SAN HOLDINGS Group by the end of March 2032, compared with 76 at the end of March 2022.
Our goal is to help improve the quality of life of many seniors and their family members. We will further enlarge the end-of-life support business in order to use the final stage of life of seniors for the provision of many types of value. Our goal is to increase end-of-life support business sales from the current ¥1.5 billion to ¥10 billion by the end of March 2032, which will make this another core business of the SAN HOLDINGS Group.
* This business contributes to society as a source of services and products needed for people to enjoy a fulfilling life style with confidence during the final stage of life. Activities include support for daily activities, preparations for this final stage and a variety of other support.
Accomplishing the SAN HOLDINGS Group’s new 10-year vision will require progress using a strategy that incorporates signs of upcoming changes in the business climate. As a result, we expect to establish a three-year medium-term management plan three times. The current medium-term management plan is the first stage. Guided by the themes of speed and challenges, this plan aims for even further growth by making large investments to open more funeral halls and expand the end-of-life support business.
While continuing to use existing funeral brands, we will start a new funeral brand for high-quality services for small family funerals at reasonable prices. We will open funeral halls nationwide that use a small-investment, low-cost business model, primarily by using the new brand. The goal of these activities is providing services to an even larger number of customers. We plan to add funeral halls even faster for the new brand as well as existing brands. Plans also include the use of M&A for adding funeral halls. The goal is 31 new locations during the next three years.
We will enlarge the end-of-life support business domain. These activities encompass services involving funerals currently provided by group funeral companies as well as the end-of-life platform business of subsidiary Life Forward and other services and support for the final stage of life. We want to be a source of long-term support for customers and their families. Our goal is to increase end-of-life support sales to ¥3 billion over the next three years, which will make this a second core business of the SAN HOLDINGS Group.
Further differentiate our services from those of competitors for more growth of the funeral business. One step is building a framework for the provision of services with even higher efficiency and quality by centralizing funeral hall operations and other functions that were handled by individual group companies. Examples include call center and funeral-related operations (provision of funeral ceremony supplies, hearse operations, administrative tasks, etc.) and control functions for these operations. Another step for differentiation is the use of digital marketing for more effective sales activities.
Providing services with substantial added value and outstanding quality is one of our most valuable strengths. To maintain and upgrade this quality, we will use quality management and employee training programs concerning services for funerals, funeral-related products (courtesy gifts, food, etc.), support before and after the funeral, and the quality of funeral halls. We will use this powerful quality management system for achieving even greater customer satisfaction.
By raising revenue and earnings consistently, we are aiming for revenue of ¥23 billion and operating profit of ¥3.63 billion in FY3/25, the final year of the medium-term management plan. The operating margin and ROIC are expected to decline temporarily during the plan because of expenses for increasing the number of funeral halls. We forecast an improvement in these two profitability indicators to begin in FY3/26 as the new funeral halls start generating earnings. During the current medium-term management plan, the targets are an operating margin of at least 15.5% and an ROIC of at least 7%.
(Millions of yen)
| Actual FY3/22 | First year FY3/23 | Second year FY3/24 | Third year FY3/25 | |
|---|---|---|---|---|
| Operating revenue | 20,001 | 20,800 | 21,800 | 23,000 |
| Operating profit | 3,376 | 3,400 | 3,450 | 3,630 |
| Operating margin | 16.9% | 16.3% | 15.8% | 15.8% |
| ROIC | 7.3% | 7.0% | 7.0% | 7.0% |
|---|
* ROIC = Operating profit after tax / Invested capital
Invested capital = Interest-bearing debt + Net assets, operating profit after tax = Operating profit x (1 - Effective tax rate)
During the current medium-term management plan, there will be a large volume of investments for growth that is backed by a sound financial position. During the plan’s three years, operating cash flows are expected to be more than ¥8.8 billion. Investments involving existing facilities will be ¥1.0 to ¥1.5 billion and investments for growth will be more than ¥4.5 billion.
For the distribution of earnings to shareholders, our policy is to maintain dividend stability while aiming for dividend growth and to consider buying back stock with timing determined by the level of cash flows, the stock price and other factors. We are constantly seeking ways to further improve profitability and use equity more efficiently. Another goal is improving our ability to generate cash by maximizing returns on capital expenditures and investments made in prior years and raising productivity.
