Management Policy

In order to achieve sustainable growth of its enterprise value in the medium- to long-term, Nikon Group announced the Medium-Term Management Plan that will run until FY2021 (for the year ending March 31, 2022) in May 2019. Based on that plan, Nikon Group is working on various strategic initiatives to successfully reach its goals.

Nikon's Medium- to Long-Term Goal

Nikon will be a leading company in precision and optics fields, consisting of businesses possessing scale and leadership position within the fields.

Positioning of the Medium-Term Plan

Nikon will invest proactively in preparations for establishing a foundation for growing enterprise value sustainably.

Overview of Strategic Initiative

Through aggressive investment in new areas, Nikon will make "Generating New Core Pillars of Profit" one of the major parts of our strategy. At the same time, Nikon will work to enhance the profitability of our three main existing businesses (Imaging Products, FPD and Semiconductor Lithography).

Generating New Core Pillars of Profit

Early acquisition of new engines through aggressive investing in new areas (Establish Material Processing Business)

Improving Profitability of Existing Businesses

Enhance profitability of the three main existing businesses (Imaging Products, FPD, Semiconductor Lithography)

  • Imaging Products Business: Stably secure ¥20 billion or more operating profit as a base cash flow for Nikon.
  • FPD Lithography Business: Keep leadership position in markets where stable demand is expected in the medium- to long-term.
  • Semiconductor Lithography Business: Continue stable generation of cash flow through the profitability-first business strategy.

Cost Structure Reform

  • Cost reduction 3-year total: ¥18 billion
  • Optimize supply chain
  • Zero-based review of the costs, duties, and functions of management and back-office departments
  • Optimize marketing and production systems
  • Reform processes and shorten manufacturing lead-time

Enhancing Manufacturing ("Monodzukuri") Foundation

Enhancing the Corporate Governance Structure

Establish "monodzukuri structure" by digital manufacturing

Enhancing the Corporate Governance Structure

Appointment of management, successor training plan

System where evaluation and monitoring of strategic decision-making can be implemented effectively

Areas of Long-Term Growth

Considering various social issues and Nikon's assets that could be applied to those solutions, we have set "Digital Manufacturing", "Vision Systems/Robotics" and "Healthcare" as areas of long-term growth.

Macro Trends (Social Issues and Needs)

  • Digital transformation
  • Industry 4.0
  • IoT
  • AI
  • Aging
  • Rising medical costs

Existing Assets

  • Optical
  • Precision measurement and manufacturing
  • Image processing
  • Control
  • Customer base
  • Supply chain management

Areas of Long-Term Growth

Digital Manufacturing

Vision Systems/Robotics

Healthcare

Progress and Direction for Medium-Term Management Plan

Based on the strategic initiatives above, Nikon announced its progress status and future direction in May 2020.The important points are shown below.

Enhancing Profitability of Imaging Products Business

Progress
  • Difficult to achieve the goal of stably secure ¥20.0B or more operating profit, announced last year.
Direction
  • Rebuild business and aim to achieve early profitability by further restructuring.
  • [Progress of Restructuring]

    • Overall: During Medium-Term Management Plan period, cut ¥50.0B in business costs vs. FY2019/3.
    • Development: Further selection of product development. Aggressively shift resources to growth areas.
    • Sales: Drastically revise sales strategy, optimize sales companies. Thoroughly improve efficiencies.
    • Production: Optimize site function and size.

Enhancing Profitability of FPD Lithography Business and Semiconductor Lithography Business

Progress
  • Recently, revenue recognition postponed to next FY2021/3, yet mostly in line with plan.
Direction
  • FPD lithography: Revenue growth by capturing demand for high-resolution displays.
  • Semiconductor lithography: Growth in immersion sales, strengthen China business and expand sales in semiconductor related measuring equipment.

The progress status and future direction of businesses other than the Imaging Product Business, FPD Lithography Business and Semiconductor Lithography Business are as follows.

Healthcare Business

Progress
  • Steady growth in biological microscopes and fundus cameras.
  • Obtained a license for manufacturing regenerative medicine products and established structure for mass production of contract cell manufacturing.
Direction
  • Strengthen competitiveness of products and solutions to improve profitability.
  • Scale up contract cell manufacturing by pursuing new customer opportunities.

Digital Solutions Business

A new business unit responsible for integrating Material Processing Business and Vision System & Robotics related businesses, and accelerating scale up businesses of the growth areas, collaborating with Next Generation Project Division.

Progress
  • Built structure for alliances, such as with DMG MORI, and begin launch of optical processing machines to the market.
  • Began shipment of lidar sensors to Velodyne, under contract manufacturing agreement.
  • Receiving orders for high-precision optical components from major customers, and built a foothold toward sales expansion.
Direction
  • Utilize alliances and M&A to scale up for transitioning from building a foundation to phase of achieving growth.

Industrial Metrology & Others

Progress
  • Sales expansion activities to targeted customers, such as the automotive industry, proceeding as planned.
  • Developing 3D metrology systems aiming for in-line use.
Direction
  • Focus on target areas and launch products that fulfill needs.
Progress
  • Improvement of headquarter efficiency is proceeding as planned.
  • Procurement cost reduction is affected by the decrease in procurement volume, but the results exceeded the target in the first year
  • Aim to achieve target with new logistic reform.
Direction
  • Achieve target of ¥18.0B or more, by further improvement of operation efficiency and cost reduction measures.
Progress
  • Establish a nominating committee, chaired by an external director.
  • Increase diversity among directors.

Digital Manufacturing Area

Progress
  • Built structure for alliances with partners.
  • Launched optical processing machines into the market.
  • Began collaboration with launch customers.
  • Supplied non-contact 3D metrology systems to machine tool manufactures.

Vision Systems/Robotics Area

Progress
  • Began shipments of lidar sensors as contract manufacturer.
  • Launched intelligent actuator unit for robotic joint units for collaborative robot.
  • Developed and began sales of embedded cameras.
  • Started mass production of high precision optical components for semiconductor related equipment.

Healthcare Area

Progress
  • Obtained manufacturing license for Contract Cell Manufacturing.
  • Concluded contract with Heartseed to produce iPS cell-derived cardiomyocytes for clinical trials.
  • Preparing to start diagnosis support with AI for retinal disease in Europe.

Material Processing Business

For the Material Processing Business which is focused on strongly establishing itself during this Medium-Term Management Plan, Nikon is pursuing its unique material processing business strategies. By utilizing synergies from the Alliance, Nikon aims to effectively provide diverse customer values. The status of current progress and future direction are as follows.

Cus-
tomers
Nikon Part-
ners
Energy Aerospace Automotive Healthcare Others Provide value through wide range of approaches such
as equipment sales, contract processing business etc.
Phase 1:
Additive processing
Phase 2:
Removal processing
Phase 3:
Riblet processing
Nikon's unique digital manufacturing utilizing optical technologies Manufacturers inside and outside Japan, tech
companies and start-ups

Business expansion scenarios for growth areas in the mid-/long-term

In order to establish new business pillars for Nikon, we will promote business expansion scenarios.

FY2021/3-22/3 FY2023/3-25/3 FY2026/3 and beyond
Customer and product
development
Scale up businesses Establish new core pillars of Nikon
  • Accelerate launch through M&A and alliances
  • Forge partnerships with pilot customers and begin some joint projects
  • Agile cross-functional development
  • Deploy varieties of customer applications
  • Acquire major customers in each industry to scale up
  • Grow to high profit business making approx. ¥100.0B sales
  • Establish whole growth areas of material processing business, Vision Systems/Robotics related businesses
M&A and alliances
M&A and synergies
Material Processing Business
Vision System/Robotics, high-precision
optical components

Management KPI Targets

As targets to achieve during this Medium-Term Management Plan, Nikon has committed to ROE higher than 8% in FY2021.