November 29, 2021
Press release
Company name

KOKUYO Co., Ltd.

Representative

Hidekuni Kuroda, President and CEO(Stock code 7984 TSE First Section)
Contact

Naotaka Umeda, Managing Officer,
Finance Administration Division(TEL: +81-6-6976-1221)

Kokuyo Unveils New Three-Year Business Plan: Field Expansion 2024
Kokuyo Co., Ltd., hereby announces that its Board of Directors, at a meeting held on
November 29, 2021, approved the company’s new three-year (2022–2024) businessplan as follows.
1.

Long-Term Vision (CCC 2030)

We are working on CCC 2030, our long-term vision for 2030, which we first announced
in the press release dated February 12, 2021 (Notice Regarding Long-term Vision CCC2030).
(1) CCC 2030
CCC 2030 sets out a long-term vision for sustainable corporate development. It
envisages a world of authentic and interdependent lives, in which everyone enjoys
personal and social fulfilment in work and life. In line with this vision, we have redefined
our role in building such a world: We want to be a work and lifestyle company. Tochange our organization into one that generates new solutions for a fulfilling life, rather
than one that just focuses on tangible stationery and furniture, we will reorganize ourbusinesses into two broad domains. The first is the domain of work. The second is thedomain of learning and daily life.
(2) The forest model
To achieve CCC 2030, we are undergoing a strategic transformation toward the Forest
Model. Underpinning the Forest Model is an awareness of the broad changes in society
and an awareness that our strength lies in the way we design with empathy. This
strength has served us well over the years. We have always worked with customersand partners to design new experiences and develop them into successful businesses.
Crucially, we have shifted our focus from tangibles to intangibles. For example, wehave moved from producing furniture to providing office space solutions that support
diverse working patterns. Likewise, we have moved from producing stationery toproviding innovative tools that support people in their learning and daily routines.
To ensure that our businesses resonate with people’s desire for authentic andinterdependent lives, we will focus on creating more experience value in each businessfield by linking tangible products to intangible value (this means expanding eachbusiness field, tweaking existing businesses, and nurturing new business ideas).
We will reorganize our businesses into the two broad fields of workstyles and lifestyles
as part of our transition into an ecosystem of diverse businesses that meet the needsof customers in their respective fields. We believe this approach will deliver sustainablegrowth in all our businesses.
(3) A culture of experimentation
When it comes to designing customer value, we already have an approach for creating
unique Kokuyo value: We experiment internally with ideas for addressing the needs ofcustomers and society and then develop these ideas into winning experiences—before
anyone else. Verbalizing this as our “culture of experimentation,” we will now
communicate and inculcate this culture throughout the organization to promote bottomup innovation. Because our culture of experimentation underpins our design-withempathy values, by facilitating this culture, we expedite the process of turning new
ideas into reality.
(4) A work and lifestyle company
CCC 2030 sums up our purpose in the self-determined, interdependent society as
follows: “be Unique.” It also casts our organization as a work and lifestyle company. To
expand our businesses in both fields, we will uphold our design-with-empathy values,
capture the growing demand for intangible experience alongside tangible products, andgenerate one new idea after another through our culture of experimentation.
Through this strategy, we aim to become, by 2030, an ecosystem of diverse
businesses achieving net sales of ¥500 billion.

2.

Second Medium-Term Plan (2019–2021) in Review

We are reaching the end of our second medium-term plan (for the 2019–2021 period),
titled “Enabling Sustainable Growth – Smart & Sustainable Transformation 2021.”
Under this plan, we have worked to smarten our earning power by diversifying revenue
streams. We have also worked to streamline our workflows to enable the dynamic
investment we need for better growth in the medium to long term.
During the three-year period, Covid-19 dramatically reshaped the business landscape,and our own businesses were hit hard. Consequently, we had to downgrade ourtargets. However, the pandemic-driven changes also presented business opportunities.
In the spatial value domain, for example, we saw the beginnings of a shift to a newnormal in working practices. Winds of change were also felt in the other domains. We
managed to accelerate efforts to capitalize on these emerging business opportunities.
In that respect, we can end the three-year period on a high note.

- 2 -For your reference:
2018/12ResultNet sales
Gross profit(%)
Operating income(%)¥315.1 bn¥112.6 bn(35.7%)¥18.2 bn(5.8%)2021/12
Downgraded target
Latest forecast(announced(announcedOct 2020)
Jul 2021)*> ¥305.0 bn> ¥322.0 bn> ¥109.3 bn> ¥116.7 bn(> 35.8%)(36.2%)> ¥13.0 bn> ¥20.2 bn(> 4.3%)(6.3%)*These are the full-year forecasts announced during the financial results briefing for the first half of the year
ending December 2021.

3.

Introducing the Third Medium-Term Plan (2022–2024): Field Expansion 2024

(1) Position in CCC 2030
Field Expansion 2024 forms the next three-year phase of our long-term vision, CCC
2030. The wording of the title expresses our intention to broaden our horizons andexpand our business fields. During the three years, we will start to tweak our existing
businesses and expand the business fields in anticipation of emerging needs.
(2) Quantitative KPIs
Our quantitative targets for 2024 (the last year of the period) are as follows: We aim fornet sales of ¥360.0 billion, gross profit of ¥143.7 billion, operating income of ¥27.5
billion, and an operating margin of 7.6%. The following table presents these targets
against the forecasted results for the current year. Please note that these forecasted
results have been adjusted to account for the impact of the new standard forrecognizing revenue, which will take effect next year (the year ending December 2022).
2021/122024/12

Forecast
Net sales
Gross profit(%)
Operating income(%)

Target¥294.2 bn¥114.6 bn(39.0%)¥20.1 bn
(6.8%)> ¥360.0 bn> ¥143.7 bn(> 39.9%)> ¥27.5 bn(> 7.6%)

Change from2021/12+ 22.3%+ 25.4%(+ 1.0pt)+ 36.5%(+ 0.8pt)(3) Four organization-wide strategic prioritiesOver the three years, we will work on the following four organization-wide strategicpriorities.
-Dynamic investment
Determine R&D budget, determine deliberative/decision-making processes,delineate responsibilities, build framework for investment governance, (PDCA rules,organizational infrastructure)-

Empowered talent
Increase employees’ internal mobility to create more opportunities for unleashing- 3 -the potential of diverse talent-

Active innovation
Establish processes and infrastructure for business incubation
Social Value and Business Value
Create more opportunities for employees to experience social/environmental issues
first-hand(4) Business strategies for the workstyle and lifestyle fields-Workstyle field:
The pandemic has entrenched the dispersed workplace and diverse working
patterns. Against this backdrop, we will target emerging needs related to the rise of
hybrid work.
For our furniture businesses, we will target demand for office renovation driven bythese changes. We will also work to expand the field in terms of digital solutions
and interior design. Such expansion will drive earnings growth for our organization
as a whole. As for our business supply distribution operations, we will target theCovid-driven growth of e-commerce in the e-commerce/mail-order market.
Meanwhile, Kaunet will strengthen its online marketing to attract a larger following
and thereby improve its revenue and profitability.
Through these actions, we aim to capitalize on the changes in working patterns toachieve significant earnings growth across the workstyle field.

-Lifestyle Field:
In this area, we will target the rising demand for authentic self-expression inlearning and lifestyle tools.
For our stationery businesses, we will focus on the growing market for value-addedstationery, which is driven by the demand for self-expression (as exemplified bysocial media). Targeting this market, we will tweak our existing stationery
businesses and strengthen our digital marketing in Japan and overseas to achieveearnings growth. As for interior retail, Actus will expand its focus from stay-at-homedemand to emerging living-space needs. To capture these emerging needs, theretailer will follow an online-merge-offline strategy to integrate its online store withits brick-and-mortar stores in pursuit of higher earnings.
Through these actions, we aim to capitalize on consumers’ desire for a moreauthentic life as well as consumers’ social consciousness and thereby achieveearnings growth across the lifestyle field.

(5) Capital policy
To provide for the above strategies, we will strike an optimal balance between
reinvesting profits and returning profits to shareholders in dividends. To achieve thisbalance, we will work to improve the efficiency of our business assets and keep capital
cost foremost in mind when vetting prospective investments and evaluating existing
investments.

- 4 -To provide for sustainable corporate development and growth in enterprise value, wewill commit ¥30.0 billion as growth capital expenditure on top of ¥20.0 billion yen in
regular (or maintenance) capital expenditure. To build social value, we will set aside
1% of our ordinary income (around ¥200 million) for charitable donations. We will also
set aside an amount for ESG initiatives. Additionally, our investment department andsustainability department will coordinate efforts in this area and clarify the criteria.
For shareholders, we commit to a stable dividend with a dividend payout ratio of 40%.
We also commit to proactive shareholder engagement, in which we fulfill ourresponsibility to explain our corporate growth story.
Through the above actions, we aim to achieve a return on equity of 8% in 2024.
(6) Reorganization of reportable segments
As mentioned earlier, with a view to achieving CCC 2030, we have redefined our role insociety as that of a work and lifestyle company and reorganized our businesses into
two broad domains: 1) work and 2) learning and daily life. Under the new medium-termplan, Field Expansion 2024, we will reorganize them further to help us focus on
creating new ways of adding color into people’s lives, as opposed to just producing
tangible stationery and furniture. Specifically, we will reorganize our three segments
into four segments: two workstyle segments and two lifestyle segments.
Reportable segments before and afterWorkstyle Field
Spatial Value
DomainFurniture businesses

Business supply distribution
Business Supplies
DomainLifestyle Field

Stationery businesses
Global StationeryDomain
Interior retail businesses

The following table shows the targets for each reportable segment.

- 5 -2021/12

2024/12
Change(B-A)%
changeNet sales
Op. income(%)¥260.5 bn ¥230.9 bn ¥275.0 bn ¥44.0 bn¥20.7 bn ¥20.6 bn ¥27.2 bn ¥6.5 bn
8.0%
9.0%
9.9%
+0.9pt19.1%
31.6%-Net sales¥138.8 bn ¥135.3 bn ¥170.0 bn ¥34.6 bn

25.6%

Op. income(%)
Net sales¥17.5 bn
12.7%
¥121.6 bn¥17.5 bn ¥23.4 bn
13.0%
13.8%
¥95.5 bn ¥105.0 bn¥5.8 bn+0.8pt¥9.4 bn

33.2%
9.9%

Op. income(%)
Net sales¥3.1 bn
2.6%¥94.2 bn¥3.1 bn¥3.8 bn ¥600 mn
3.3%
3.6%
+0.4pt¥93.2 bn ¥116.0 bn ¥22.7 bn

22.3%
24.4%

Op. income(%)¥6.9 bn
7.4%¥6.8 bn
7.4%¥10.2 bn
8.8%

¥3.3 bn+1.4pt48.5%-Net sales
Op. income(%)¥76.1 bn
¥6.1 bn
8.1%¥75.5 bn
¥6.0 bn8.0%¥95.0 bn ¥19.4 bn¥8.8 bn ¥2.7 bn
9.3%+1.2pt25.8%
44.9%-Net sales
Op. income(%)
Net sales¥18.0 bn
¥700 mn
4.4%¥400 mn¥17.7 bn
¥700 mn
4.5%¥400 mn¥21.0 bn ¥3.2 bn¥1.4 bn ¥600 mn
6.7%+2.2pt¥600 mn ¥100 mn

18.2%
76.4%
35.3%

Op. income
(%)

-¥0-

-¥0-

Reconciliation

Net sales
Op. income(%)-¥33.1 bn-¥7.3 bn-

Total

Net sales
Op. income(%)

Nonadjusted
forecast
Workstyle Field

Furniturebusinesses
Business
supplydistribution
Lifestyle Field

Stationerybusinesses
Interior retailbusinesses

Other

Adjusted
forecast(A)*

Target(B)

-¥0-

¥-0--

-¥30.3 bn -¥31.6 bn-¥7.3 bn-¥9.8 bn--¥1.3 bn-¥2.5 bn--

¥322.0 bn ¥294.2 bn ¥360.0 bn ¥65.7 bn¥20.2 bn ¥20.1 bn ¥27.5 bn ¥7.3 bn
6.3%
6.8%
7.6%
+0.8pt

22.3%
36.5%
-

*The forecasts in this column have been adjusted to account for the impact of the new standard forrecognizing revenue, which will take effect next year (the year ending December 2022).

- 6 -