January 2004
Management Newsline
|
Toshio Kimura |
Marketing Epson's Potential
(Summary Article)
Executive Vice-President and CFO Toshio Kimura talks about Epson's financial strategies.
By Nita Howard
Photo credit: Nobusato Matsuzaki
|
-------------------------------------------------------------------------------------------
For Toshio Kimura, 2003 was a frantic whirlwind of a year. Almost immediately after being named executive vice-president and chief financial officer of Seiko Epson Corporation (Epson) in April, Kimura traveled to Europe and the United States to meet with investors in preparation for
Epson's June 24 listing on the Tokyo Stock Exchange.
"I really enjoyed the presentations because they were essentially opportunities to market our company and our future
potential," says Kimura, who has had a highly successful career marketing Epson printers and other products. Kimura was quick to see the connection between investor relations and marketing.
"While I had never been directly involved in corporate finance until now, I believe my current position is a godsend. I sensed that institutional investors were prepared to invest in a company with strong growth
potential."
The initial public offering price of ¥2,600 and the first trading price of ¥3,690, as well as the subsequent surge to above ¥4,600, bear testimony to investor confidence in Epson and its future. The successful listing was a major landmark for the company in its 61-year history.
In April 2003 Epson launched a five-year management strategy dubbed SE07 to more organically integrate the
company's imaging technologies and raise profitability to 10% - nearly double the current
level - by March 2008. However, top management is now contemplating raising the bar, bringing forward the target date for double-digit profits by a whole year to March 2007. Kimura feels that the new goal may be met through further cost cutting, higher productivity, and a competitive lineup of products.
Diversified Financing Options
Enhanced profitability would strengthen Epson's financial position, with the increased cash flow helping to reduce bank borrowings to a level on a par with the
company's internal cash reserves. The initial public offering has given Epson broader options to strengthen its financial position, and additional equity sales may be in the offing.
Kimura foresees Epson maintaining investment levels of between ¥80 billion and ¥90 billion annually over the next few years. However, if the current favorable business environment and brisk sales call for investments exceeding these levels, Epson would now be better able to respond positively. It will no doubt proceed carefully, though, so as to avoid the pitfalls of
"overinvestment" that have hampered the company's growth in the past.
"We will invest where necessary," Kimura notes succinctly, adding that half the new investments would be channeled into electronic devices and components, including liquid crystal displays, and the other half into information-related products, such as printers.
The June 2003 listing released 44.5 million new issues and 6.27 million outstanding shares on the market, representing just over 25% of
Epson's total outstanding shares. Thanks to the overseas investor-relations drive by Kimura and other members of top management, non-Japanese ownership currently stands at around
12%. Once the company reaches the 10% profitability target, and its financial position is further strengthened, Kimura predicts that the market will wake up to
Epson's full potential, pushing up the share price closer to where it should be.
"Our investor-relations activities and corporate communications will continue to be very
active."
--------------------------------------------------------------------------------------------
Nita Howard is a freelance writer based in Tokyo.
*Note
This Information was correct at the time of issue. Epson does not update or delete any information that has become out-of-date.
