Message from the President

Message from the President

We will proceed on the path tothe future that we should follow
with confidence.

time and the sector is important from theviewpoint of sustainability and our role insociety (the meaning of our existence).
Therefore, want to use this opportunity tosteadily produce results.

Confident in the path tothe future that we should
follow in the second
year of the medium-term
management plan
Two of the three years of our CG23
medium-term management plan havealready passed. We started the planwith the slogan: Change to Growth. As
in the first year, we were able to exceed
the targets for all of the major financial
indicators, net sales, operating profit, andROE, in the second year.
In last year’s integrated report, I stated,“CG23 is the first phase of our actions
towards what we aspire to be like ten
years from now. Results in the second
year are significant in the sense ofbringing some clarity to the future.” Overthe course of the year, we were able tobecome confident about the path to thefuture that we should follow. Specifically,
this path is in the new energy sector.
There is an ongoing global trend
toward the decarbonization of society,and both the power supply businessand the power semiconductor businesshave received many inquiries from the
new energy sector, and we have receivedorders.
We expect this trend to continue for asuppliers including overseas suppliers
and arranging for materials in advancein line with our production plans, aiming
to ensure a stable supply of materials.
We will also change designs to replacematerials with materials we are able toprocure, aiming for stable production.
The other issue is the delays in ourown investments in equipment.
In the fiscal year ended March 31,2023, we planned to make capital
investments of 2.1 billion yen. However,
the equipment that was actually delivered
was approx. 1.0 billion yen. As materials
and parts are in short supply in ourbusiness activities, so is the equipment
for which we have placed orders.
We have remained in a state whereequipment has not been delivered, eventhough we have placed orders for it inaccordance with our investment plan.
We invest in equipment for two major
purposes. One is to increase our capacity
to manufacture power semiconductors.
The other is to automate our plants.
The goal of automating our plants is toimprove manufacturing efficiency andproductivity, which improves profitability,
while preparing for future labor shortages
is also an objective.

Issues andcountermeasures thathave been highlighted
On the other hand, issues were also
highlighted. This time, we exceeded
quantifiable targets such as net sales andoperating profit. However, we actuallyachieved them by biting off much morethan we could chew. While materials
and parts remained in short supply
throughout the year, we managed togather materials and parts from various
quarters and people working on-siteused their ingenuity and overcame thesituation. We are still facing difficult
conditions due to the COVID-19
pandemic and the Russian invasion ofUkraine. Naturally, the prices of materials
and parts that are in short supply arerising. As one misfortune follows another,electricity expenses and other energy
costs have soared.
We will take measures to overcome
this situation, such as looking for new

CG23: Quantifiable targets and results

Actual and planned capital investment(in million yen)

1,900

2,000

FY2021

Hajimu Yoshimura
Representative Director & President

09

FY2022

FY2023

PlanResults

PlanResults

Plan

Forecast

1,500

Net sales

21.8
billion yen

22.6
billion yen

24.0
billion yen

28.0
billion yen

26.0
billion yen

30.5
billion yen

1,000Operatingprofit800
million yen

1.3
billion yen

1.3
billion yen

1.6
billion yen

1.9
billion yen

2.0
billion yen

2.8%

5.9%

4.4%

6.1%

6.1%

6.5%

ROE

995
641

500

513
35902019

20202021

2022

2023

FYPlanSanRex REPORT 2023

10

Message from the President

A duty to create a corporate
culture and climate

AC Cafe, a place for employees tocommunicate with the president

Taking on challenges tostandardize designs
Unfortunately, I do not think that theproblem of the delays in the deliveryof manufacturing equipment will besolved quickly. While we will continue
striving to improve the efficiency of ourmanufacturing processes, I think that
we can do more in the design phase. Inthe power supply business in particular,
I think we can improve productivity bydevising creative measures in the design
stage. While many of the power supplies
we handle are large, we work to meetthe needs of customers in the designphase. This measure itself is one of ourstrengths. Actually, however, it eventuallyplaces burdens on the manufacturingsite, in the manufacturing processes.
While various approaches are possible
to improve this, I think that one of themis the standardization (formatting) ofdesigns. For example, power supplies
have many wires in them. While atpresent we do complex wiring for eachcustomer, I presume that wiring can be
standardized to a certain extent. While
improving productivity and manufacturing
efficiency through standardization will
generate a positive impact in terms ofquality improvement and profitability, it
can also have positive effects from theperspective of sustainability. Specifically,
it can help us tackle the climate change
problem and in giving consideration tothe environment. Because manufacturing
companies have no choice but to use
the earth’s resources in our businessactivities, we must keep environmental
considerations in mind in our activities.

11

We understand that we have this large
responsibility. Because I was an engineer,I understand that it is not easy to change
the manufacturing approaches andmethods of the company that have been
applied for more than 90 years. Although
it is not easy to make this a reality, we
would like to take on the challenge ofstandardizing our designs as a mediumto long-term target for our activities in thenext ten years.

Aiming to focus on
more overseas businessmarkets toward our 100thanniversary
At the time that I am writing this for theintegrated report, we are already in thefinal fiscal year of the CG23 mediumterm management plan. While we workto achieve the CG23 plan, we havebegun discussing the next medium-termmanagement plan. Our medium-term
management plan is a three-year action
plan. We formulate it based on ourlong-term vision, applying a backcasting
approach. We have started by discussing
what we aspire to be like ten years fromnow, setting our eyes on 2033, when
we will celebrate our 100th anniversary.
At present, our overseas business isfocused mostly on China. We would liketo focus on more overseas markets in thenext ten years. The regions that we arepaying attention to are India and Europe.
At present, our business in India islimited to transactions with Japanesecompanies. Moving forward, we would

like to expand this to local companies.
This year, we will sow the seeds for the
next ten years.
In Europe, we still receive manyinquiries about our power semiconductorbusiness. With the high interest in
the green energy sector, Europe is a
big market in which we see massive
potential. We began to engage inactivities to increase our visibility inEurope last year, such as running a boothat a hydrogen energy trade show. I thinkthat area-specific strategies will be very
important in thinking about the next tenyears. We must make our strategies
more muscular. In the next ten years,
we aim to enhance our presence in the
sector of new energy in India and Europe
in addition to Japan and China as ourexisting markets.

Possibilities of SiC power
semiconductors
In addition, silicon carbide (SiC)
semiconductors are attracting
attention as next-generation power
semiconductors. SiC semiconductors,
which are made mainly from siliconcarbide, are high-performance power
semiconductors featuring smaller
dimensions and lower power loss thanconventional power semiconductors.
We would like to expand these
semiconductors strategically as one of
our themes in the next ten years.

While I have a wide range of duties as
the president, the one that I have beenstrongly aware of since I took office isthe creation of our corporate culture andorganizational climate. To date, we haverefined our technologies through solving
the challenges that customers presentto us. In other words, our company has
been developed by its customers.
This is by no means bad. However, I
would like to make this company a teamof people who think and run on their own,
partly to achieve our vision of being a
global power solution partner.
We hold the AC Cafe internal
community event which is aimed atenabling participants to talk with me.
It was named AC, alternating current,
because the Japanese word for AC iskoryu, which also means interaction.
The AC Cafe is a place for seven to eightpeople including myself to have a real,face-to-face discussion. The duration ofeach session is about one hour. While
the time spent talking is short, this event
allows me to identify on-site problems
that I had not been aware of. I also
receive e-mails directly from participants
after each session. Therefore, I feel theAC Cafe has begun to produce results.
Through this project, I am planning totalk with all employees, including themembers working overseas.

leaders prepared a draft, and project
members who play leading roles in the
management of our brand considered
the draft. The Board of Directors further
refined the purpose through discussions.
As a result, we were able to create ourpurpose, “Contributing to society in thedomain of power electronics.” Hereafter,
we will continue working to create a new
future with this purpose.

employees and their families. Please letme reiterate that in the past year, we havebecome confident in the direction that weshould move in. As a listed company, wewill continue to improve our management
efficiency in our efforts to be a company
that is deemed to be promising. I
appreciate your continued support.
Please have high hopes for the Sansha
Electric Manufacturing Group which willcontinue to evolve over the next ten years
toward the 100th anniversary.

Improving management
efficiency and striving tocreate corporate value
Thanks to all of you, Sansha Electric
Manufacturing celebrated our 90thanniversary in April 2023.
I would like to express my gratitude
to all of our stakeholders, including
our customers, business partners,Formulating our purpose
toward the next step
One of the major topics in 2023 is theformulation of our purpose. We alreadyhave our corporate philosophy. I thinkthat the corporate philosophy is the ideapositioned at the top, and this position
will not change. However, the corporate
philosophy states our frame of mind
for operating our businesses. We had
yet to define in which domains we willcontribute to society in what ways.
Therefore, we decided to determine
a purpose at this time to move to thenext stage. The process of formulation
was as follows. Members that weremainly young employees who are future

SanRex REPORT 202312