Basic Strategy for Capital Policy
The Company's business model is to generate profits efficiently from slim assets. We believe that the Company's current capital structure is fully capable of underpinning the future growth of the Group's businesses, without major reliance on outside financing.
The Company sets a WACC (weighted average cost of capital) of 5% and sets targets that greatly exceed the capital costs for PVA (Pigeon Value Added, the Company's original performance indicator), ROIC (return on invested capital), and ROE (return on equity). The Company carries out concrete measures to achieve these targets and discloses progress in biannual results briefings. In addition, we are promoting the management of working capital based on CCC (cash conversion cycle), thus, the Pigeon Group as a whole is striving to improve its efficiency and reduce it. The 5% set for the WACC is used as the base value of the hurdle rate for investment projects.
As for dividend policy, in our Eighth Medium-Term Business Plan, our basic policy is to stably and continuously return profits to shareholders maintaining the current level of dividends, while further improving our consolidated performance and financial position.
Basic Strategy for Business Portfolio
The Company recognizes that the appropriate allotment of management resources is vital for sustainable growth and improving medium- to long-term corporate value. Accordingly, we will conduct an annual review of the business portfolio at a meeting of the Board of Directors held in February or March after the settling of accounts. Each business is evaluated using the three following evaluation criteria: 1. Purpose of the Pigeon Way; (does this business contribute to realizing Purpose?); 2. Economic value (can this business produce profit exceeding the cost of capital?); 3. Social value (does this business contribute to solving social issues?). Based on these criteria, we confirm our basic stances of “investment and growth,” “maintain the status quo,” “restructure,” and “reduction and withdrawal” for each business.
