HORIBA started a new management team in 2018, the 65th year since its founding, and achieved sales of over 200.0 billion yen. During an era in which technologies are undergoing significant changes in a variety of fields, HORIBA will continue to work to create products and services with high added value, focusing primarily on its core business of “Measurement Technologies.”
We started a new top management team in fiscal 2018 and achieved record-highs in terms of both sales and operating income at 210.5 billion yen (up 7.8% year-on-year) and 28.8 billion yen (up 7.5% year-on-year), respectively. In particular, sales of over 200.0 billion yen inspired strong confidence that we can fulfill the goals outlined in our Mid-Long Term Management Plan (MLMAP2020) by its target year 2020.
If I were to summarize 2018, I would say that HORIBA was able to take a large step toward creating new markets and business models, conducting proactive investment in the future. This investment included expansion of the Aso Factory in Japan where construction has been completed and full-fledged operation has begun, enhancement of our development and production base in New Jersey in the United States, and our acquisition of FuelCon AG in Germany, which develops and manufactures our battery test and fuel cell test systems. For fiscal 2019, we anticipate that we will achieve sales of 218.0 billion yen (up 3.5% year-on-year) and operating income of 29.0 billion yen (up 0.6% year-on-year), once again achieving record highs in both categories*1. We also forecast higher sales and income (year-on-year) in the Process & Environmental, Medical-Diagnostic, and Scientific Instruments & Systems segments while the Semiconductor Instruments & Systems and Automotive Test Systems segments continue to drive results.
Looking at the current business environment, we realize that emission gas and environmental regulations are strengthening around the world. As represented by the word “CASE*2,” the automotive industry is facing a type of dynamic paradigm shift said to only occur once per century. In addition, various Asian nations, such as China and India, are achieving growth with a momentum rivaling that of developed nations, and market structures are beginning to undergo large changes. HORIBA will further refine its management capabilities in order to compete on a stage different from those it has experienced up until now.
*1 Forecast as of February 12, 2019
*2 “CASE” is a general term used to describe next-generation vehicle technology and stands for “Connected,” “Autonomous (autonomous driving),” “Shared & Services,” and “Electric (development of electric vehicles).”
One year has passed since we formed our new management team, with me as Chairman and Group CEO, Juichi Saito as Executive Vice Chairman and Group COO, and Masayuki Adachi as President and COO. Throughout this year, we worked through a division of roles under which Mr. Saito conducted oversight of global management and business operations; Dr. Adachi performs cross-sectional observation of business segments while supervising basic technologies and research and development in order to enhance HORIBA as a provider of technology; and I ensured balance throughout the entire group. I also had the opportunity to gain a better picture of what was happening outside than ever before, and aimed to spread our corporate culture further by actively visiting group companies and sharing my own thoughts.
Furthermore, I was able to build a wide range of new relationships in countries around the world by meeting many customers and individuals representing academic institutions and national government agencies.
When viewing circumstances in the operating environment, I observe that technologies and customer needs in a wide variety of fields are rapidly changing and once again become keenly aware that trends in technology can and will change. I feel very confident that our new structure will hold up under these conditions, as it has enabled us to conduct swift decision-making based on multifaceted viewpoints, including decisions regarding acquisitions, base enhancement, and investment in technological development.
During the five years leading up to 2023, which will mark the 70th year since the establishment of HORIBA, Ltd., changes in technologies and markets larger than ever before are forecast in industries such as automotive. We will combine our resources, which are spread over our five business segments, and utilize them in a coordinated fashion to speedily comprehend customer needs while opening new paths forward into the next generation by establishing new business models.
HORIBA has achieved growth by welcoming companies with businesses projected to synergize with its proprietary technologies and markets into its group.
When conducting corporate acquisitions, it goes without saying that products and services are important points of consideration. However, more vital than anything else are the people that work at the companies targeted for acquisition and the knowledge and technologies they create. When conducting acquisitions, I view the characteristics of not only management but also employees working at the target companies, as well as what motivates them in their daily work. I believe that this ability to assess and understand people is of paramount importance to global management. MIRA, Ltd. in the United Kingdom joined HORIBA in 2015, followed by FuelCon AG in Germany in October 2018. Our management team, myself included, is trying to directly meet with the employees of companies who join our group as new members. We believe that we can create strong synergy and grow together with the employees of our group companies by placing technology and people at the center of our brand strength and by sharing and creating sympathy for our unique corporate culture, which embodies our corporate motto of “Joy and Fun.”
HORIBA has conducted well-balanced investment across its five business segments. Previously, we were able to avoid a lapse into the red during a period of stagnation in the semiconductor industry, thanks to contributions from the Medical-Diagnostic Instruments & Systems and Scientific Instruments & Systems segments. However, we continued to invest in the Semiconductor Instruments & Systems segment out of consideration for the future and were able to develop it into what is now our largest source of growth. We have also been able to achieve well-balanced business expansion on a global scale through proactive M&As conducted primarily overseas, as we continue to invest in acquired companies after they join HORIBA. In order to achieve sustainable growth, it is essential to conduct investment from a broad perspective. Results may take five to ten years to appear when conducting this style of investment, but persevering in continuous and tenacious management will enable it to bear large fruit in the future.
Many of HORIBA’s clients are global leaders at the forefront of fields, such as automotive and semiconductors, that demand sophisticated technology. Naturally, demand levels are extremely intense, and we must continue to consistently refine our technical capabilities in order to respond to these needs. These needs are not related to a limited number of fields but instead span a wide range of industries, creating an environment in which we are able to regularly conduct business with some of the top customers in the world while making full use of the technical capabilities we have raised up until now. I believe that being able to work in an environment like this has an exceedingly large appeal for a company. At HORIBA, we have established a cycle. In this cycle, many excellent human resources, which we call HORIBARIANs that range from new university graduates to mid-career hires gather to utilize their own individual specialties to create unique products and services, and they respond to new customer needs.
Currently, more than 60% of 8,000 HORIBA Group employees are non-Japanese, and 220 group members hold doctoral degrees. These diverse members are what support HORIBA’s growth today. We are additionally focusing on initiatives, such as the HORIBA Stained Glass Project, in which people of various backgrounds and ways of thinking come together to demonstrate their unique abilities and create pleasant working environments.
The management team at HORIBA is keenly aware of our mission to develop a great number of HORIBARIANs that will lead the next generation and believes that it is important to compete in overseas business environments from an early stage and accumulate many experiences in a wide range of posts and regions, as Mr. Saito, Dr. Adachi, and I have done. Of course, working overseas necessarily includes experiencing many difficulties and failures, but there is no greater method of human resource development. In addition, facing many challenges while living abroad allows us to discover new social issues that HORIBA should solve and widens our fields of view as business people. More than 90% of our internal directors and corporate officers have experienced overseas assignments, and HORIBA prepares systems that will also offer the current generation of young employees many chances through a posting system offering opportunities such as overseas training.
The United Nations formulated the Sustainable Development Goals (SDGs), which it currently advocates, in 2015. These goals mention a variety of social issues, and I believe that finding the solutions to many of these issues will start with measurement.
Fortunately, customers have described HORIBA as a “partner,” rather than as a “supplier” these days. Making use of various analytical methods and core measurement technologies, such as automotive exhaust gas analyzers and monitoring systems for wastewater produced in factories, we are offering products that provide assistance in resolving social issues. In other words, I believe that providing high-quality “Measurement Technologies” as a true partner to our customers is precisely how we will contribute to society moving forward. We will fulfill our social responsibilities by always behaving out of consideration for how we can activate society through business growth.
I sincerely hope for your continued support for HORIBA and its employees, as we unite to accomplish our goal of contributing to an affluent society through “Measurement Technologies” and pursue a prosperous future.
April 2019
Atsushi Horiba
Chairman & Group CEO