We formulate four-year mid-term management plans, and in the 6th Mid-term Management Plan that starts in FY 2021,
we established a policy for business development that meets social demands to drive sustainable growth.
The 6th Mid-term Management Plan, which begins in FY 2021, inherits the "Technology Oriented Value Creation" vision from the 5th Mid-term Management Plan (FY 2017 to FY 2020). "Creativity to Realize a Sustainable Society" is the new plan's most important point, and "Diverse human assets" has been added to the concepts of "Product appeal & proposal capability" and "Technology & manufacturing capability" set forth in the 5th Mid-term Management Plan.
Regarding the management structure of the YKK Group, upon revising the capital and business management structure of YKK and YKK AP in FY 2020, the Group's Machinery & Engineering Group was integrated into the fastening business and AP business from FY 2021. The structure was changed to further speed up the engineering, whitch involves the development of equipment and manufacturing of machinery in line with each business. Additionally, the Technology Innovation Center will be newly established as a research and development division.
In response to this change in management structure, YKK will have a 5 region management system with the fastening business at its core, while YKK AP will have a consolidated management system with Japan's YKK AP at its core. Under differing management system, both companies will be part of the corporate group that shares the YKK Philosophy, "Cycle of Goodness," and the Management Principle, "YKK seeks corporate value of higher significance." The newly established Technology Innovation Center will support both businesses from a technical perspective and enhance the competitiveness of each business.
In addition to our ongoing YKK Philosophy and Management Principle, we have established the foundation of our Purpose, "We Build a Better Society Through Architectural Products," and we will promote activities in collaboration with the YKK AP Group in Japan and overseas based on our 6th Mid-term Business Policy of "providing social value through products and realizing manufacturing reform."
To provide social value through products, we will offer products that meet the demands of society regarding safety, security, energy conservation, easy installation, health, disaster prevention, ventilation and more. To realize manufacturing reform, we will strengthen our technological capability through the establishment of our Machinery and Engineering Department and promote structural reform through the creation of platforms and smart factories. In the residential business, we will develop new products for energy conservation, ventilation, safety and security, and in the commercial products business, we will work to enhance business in the Tokyo metropolitan area and renovation. In the midst of uncertain conditions in the overseas business, we will expand business according to the state of each country/region. Through these businesses, we will systematically work toward the realization of carbon neutrality by 2050.
In the FY 2021 business environment surrounding YKK AP, the newly built residential market is expected to gradually recover from the prolonged impact of the COVID-19 infections. Meanwhile, the remodeling market is expected to recover due to the new demand for more residential space. Accordingly, YKK AP plans to achieve consolidated Japan and overseas net sales of 423.1 billion yen (105% year on year) and operating income of 21.4 billion yen (102% year on year).
Formulation of the Mid-term Management Plan
As grasping the highly uncertain business environment is the top priority, we decided to formulate a single-year plan for FY 2021, rather than a four-year mid-term management plan. The plan for the remaining three years will be planned during 2021.
We plan to invest a total of 29.8 billion yen in FY 2021 through the construction of a new plant for commercial business in the Tokyo metropolitan area, the YKK AP 30 Building, sustainability investments, and investments to streamline and increase production in the U.S.A., Suzhou, and Indonesia.
Through this unprecedented assertive capital investment plan, we will promote sustainable growth by making investments aimed at business growth and early cost effectiveness.