Investor Relations

KONDOTEC has two sides, as a wholesale company and a manufacturer. Fusion of these two has been generating not simply two, as a result of one plus one, but infinite expansion. The Company divides the growth strategy into two; organic growth strategies and periphery-strengthening growth strategies. Organic growth strategies are the business strategies for existing businesses, based on which KONDOTEC has established the earnings base to date.
On the other hand, periphery-strengthening growth strategies are the initiative to strengthen those other than the existing businesses, which is advocated as strategies for a possible new earnings driver aiming for a further leap going forward. With these as pillars, we will strive to exceed net sales of 100 billion yen during 2020s. We will continue to expand businesses to achieve sustainable growth.

Existing business strategies (organic growth strategies)

Expansion of operating sites

We strive for expansion of operating sites which maintained a local-community-oriented sales structure in order to respond quickly to customer needs.
Recently, we opened the Okayama office of the Company in April 2018 and the kusatsu office of CHUOH GIKEN Co., Ltd. which is our group company in April 2019.
We will continue to execute quick deliveries in an effort to realize customer-focused management.

Okayama office

Response to natural disasters

Our products and merchandise support recovery/restoration efforts from disasters and are in demand in the event of abnormal weather conditions, such as extremely heavy rainfall everywhere.
All operating sites have inventories and maintain a structure across Japan that enables us to immediately respond to such urgent demand for products and merchandise and carry out our responsibility to supply.

One of merchandise for natural disasters
Left:Tarpaulins
Right:Flexible container bags

Four growth strategies

KONDOTEC is taking the following four initiatives toward expanding orders.

①Cultivation of new customers

KONDOTEC achieves a monthly average of one new customer per sales representative and a yearly average of 1,500 new customers as a company.
In addition, we exploit a yearly average of 10 dormant customers per sales representative and these activities form the source for 20,000 sales customers.

 

②Offer of new merchandise

For the purpose of developing new merchandise, joint New Merchandise Committee meetings are held between the sales division and the manufacturing division periodically to discuss requests from customers and proposals for improvement. We have adopted imported products and merchandise including the Yellow Point series from Yoke Industrial Corp., which is a lifting equipment manufacturer in Taiwan, as well as developing the weight saving forging hook “LS hook” in 2020 (Manufacturing by Kyushu Factory of the Company).
We will continue to develop and cultivate products and merchandise with even higher added value in order to offer such products and merchandise.

YOKE Industrial Corp.’s eye bolt
(Yellow Point Series)

LS hook

 

③Adoption of flexible sales methods

KONDOTEC not only sells merchandise but also maintains a structure to enable the undertaking of anchor construction by having construction managing engineers and acquiring a construction business license. By becoming involved in the initial phase of a construction project, we are able to acquire information on necessary construction materials ahead of others and make use of such information on sales activities.
Furthermore, we also issue product catalogs specific to certain sectors and customers, such as those on lifting equipment, materials to prevent damage from wildlife, and agricultural equipment, in addition to the general product catalog containing products and merchandise with high customer needs.

Catalog of lifting equipment

Catalog of materials to prevent damage from wildlife, and agricultural equipment

 

④Cultivation of distribution routes

We are working to expand our business into new sectors, such as Home improvement centers and railroad companies, in addition to the existing distribution routes.
We also established the “E-commerce Group” in July 2017 to explore sales through the Internet.
Further, we have in place a sales force dedicated to the Tokyo metropolitan area to accommodate bulk purchasing from large trading companies and headquarters of general construction companies from which orders have been increasing in recent years.

Net sales (million yen)

Initiatives for enhancing activities in non-existing business (Periphery-strengthening growth strategies)

Increasing presence in foreign markets

Based on our view that increasing presence in foreign markets where growth is expected will contribute to enhancing our earnings capability, we established a subsidiary in Thailand in November 2012. We executed a capital increase in August 2014, acquired all shares from the two joint venture companies and substantially made the company our fully-owned subsidiary. Currently, we are moving ahead with activities to expand our business in ASEAN countries with Thailand as our base location. Going forward, we will further strengthen our sales & marketing capabilities by widening our sales network and reinforcing manpower with a view to increasing the ratio of net sales from our overseas business.

KONDOTEC INC. and overseas expansion

While the planned figure for net sales from overseas business in the year ending March 31, 2022 is 234 million yen (total for International Sales Division and subsidiary in Thailand), our export business was active prior to the Plaza Accord in 1985 and handled exports worth approximately 2,000 million yen. However, given the currency crisis in 1997, when Asian currencies slumped, the export business became difficult and we shifted from export to import. Subsequently, we established a dozen OEM plants in China to establish a structure that is not affected by the yen’s appreciation and resumed exports around 2006.

Toward accelerating the growth of the present’s KONDOTEC (Organic) and the future’s KONDOTEC(Periphery-strengthening)

M&A strategy

We view that pursuing corporate acquisitions and capital/business tie-ups is an important strategy to strengthen our business platform. For potential acquisitions and tie-up opportunities,we analyze and discuss the growth potential of the relevant business while taking capital costs into consideration.
Based on the results of the discussion, we strive to improve corporate value in the medium to long term by actively investing in areas expected to grow.

Actual M&A

_2010_
 
 Acquired shares of Sanwa Denzai Co., Ltd. to make the company a consolidated subsidiary.

2012
 
 Established KONDOTEC INTERNATIONAL (THAILAND) CO., LTD.

2014
 
 Acquired shares of CHUOH GIKEN Co., Ltd. to make the company a consolidated subsidiary.

2016
 
 Acquired the "ALPS-mark iron pulley" manufacturing business from Akinaga Factory Co., Ltd.

2018
 
 Concluded a business/capital alliance with N-PAT Co., Ltd.,
 which manufactures and sells construction hardware centered on "Post-construction anchors".

2019
 
 Acquired labor-saving and image processing equipment business from Mechatro Engineering Co., Ltd.
 
 Acquired shares of HIROSE KOSAN CO., LTD. (currently TECBUILD CO., LTD. ) to make the company
 a consolidated subsidiary.

2020
 
 Acquired shares of TOKAI STEP CO.,LTD. to make the company a consolidated subsidiary.

2021
 
 Acquired shares of FUKOKU, Ltd. to make the company a consolidated subsidiary.
 Established an intermediate holding company,"Nippon Scaffolding Holdings Co.,Ltd.",by
 an incorporation-type company split to manage subsidiaries which provide scaffolding construction
 services.
 Acquired shares of KURIYAMA ALUMINUM Co., Ltd. to make the company a consolidated subsidiary.

Four perspectives in pursuing M&A

1.Neighboring industry

Pursue M&A with companies associated with industries other than the construction industry and promote business expansion
Actual case: Sanwa Denzai Co., Ltd.

2.Deepening of business

Pursue M&A with material manufacturers, etc.
Actual case:
CHUOH GIKEN Co., Ltd.
TECBUILD CO., LTD.
(Changed the company name from HIROSE KOSAN CO., LTD.)
TOKAI STEP CO.,LTD.
FUKOKU, Ltd.

3.Expansion of business area

Pursue M&A with companies that maintain overseas sites to promote business area expansion

4.Amplifying sales patterns

Pursue M&A with companies that operates different sales patterns from those of KONDOTEC, such as retail, catalog-based selling, and online sales.

Strength / Characteristics

Strength (1): Strength in procurement

Characteristics

  • Many suppliers
  • Establishment of the purchasing division to handle not only domestic goods but also imported ones.
  • Establishment of own factories at four sites in Japan
  • Dealing of special orders
  • Owning of OEM production factories in Japan and abroad

Strength (2): Strength in sales methods

Characteristics

  • Development of the quick delivery system with all operating sites fully equipped with warehouses
  • Capture of demand in each area of Japan through expansion across the country
  • Proposals of merchandise rooted in the area, dealing with about 50,000 items
  • Quick delivery of made-to-order products from four factories in Japan

Strength (3): Strength in customers

Characteristics

  • Sales to various industries/businesses
  • Diversified small-lot sales (many counter-parties)
  • Establishment of a sales desk specialized in targets
    (Tokyo metropolitan area, railway environment, home improvement center, e-commerce, etc.)

The KONDOTEC group has not incurred a deficit for ordinary profit since establishment to the present (*excluding irregular periods for financial settlement). In our more than 60 years of history, we have responded to changes in external environments each time, and continued changing the business structure and expanding the merchandise we handle.

The three strengths have been nurtured in such history of reforms. With external environments expected to change even more rapidly going forward, we will continue to be conscious about what should be changed and what should not to reflect them in our management.
Moreover, having decided growth strategies separately for sustainable growth going forward, the Company will strive for further development.