In fiscal 2023, revenue increased 3.6% year on year to \2,960.9 billion, thanks to solid performance in the Healthcare segment, which benefited from strong results in the Medical Systems business and the Bio CDMO business, and the Imaging segment, as well as the impact of the yen’s depreciation. Operating income rose 1.3% to \276.7 billion, due to increased profits in the Imaging segment and foreign exchange factors, and net income attributable to FUJIFILM Holdings increased 11.0% to \243.5 billion, mainly due to increased operating income and a gain on valuation of investment securities. We reached our initial VISION2023 targets for revenue and operating income in fiscal 2022, one year ahead of schedule. In fiscal 2023, the final year, we surpassed those results, posting record-high figures for revenue, operating income, and net income attributable to FUJIFILM Holdings. We believe this is proof that the Group is on a solid growth trajectory. We have made particularly good progress in building business foundations for the Healthcare segment and Electronic Materials (now Semiconductor Materials) segment and have put the Imaging segment on an elevated growth trajectory, which is a major achievement.
On the other hand, we still have a number of challenges to address moving forward. A particularly important issue is improving capital efficiency across all business segments. We also failed to meet our targets for capital efficiency indicators.
In fiscal 2023, we posted return on equity (ROE) of 8.2%, falling short of our 8.4% target, and return on invested capital (ROIC) of 5.6%, missing our 6.1% target. This was due to large-scale capital investments we made in the Bio CDMO business and increased inventories of raw materials and components across multiple segments in response to supply chain disruptions caused by COVID-19.
We recognize that generating solid returns on large investments in growth areas, such as Bio CDMO and Semiconductor Materials, as well as enhancing resilience to structural changes in the market and society and further improving the profitability of each business, are important themes for the Group to address in its pursuit of sustainable growth.
In August 2017, we announced our long-term CSR plan, Sustainable Value Plan 2030 (SVP2030). SVP2030 is a long-term plan with fiscal 2030 as the final year. It is designed to lay the foundations of the Group’s business management strategies for sustainable growth.
When formulating VISION2030, announced in April 2024, we set fiscal 2030 as the final year to coincide with SVP2030.
We believed we needed to provide a clear pathway to fiscal 2030, so we set VISION2030 on a seven-year scope with fiscal 2030 as the final year.
VISION2030 is an action plan that outlines specific growth strategies to enhance our earning power. Our ultimate goal is to achieve the Group Purpose we announced in January 2024 of “Giving the world more smiles.” VISION2030 is designed to help us continuously generate the profits that will fund our effort to realize our Group Purpose.
To realize our Group Purpose, we must focus on three initiatives: (1) Make new product and R&D investments and capital expenditures that lead to sustainable business growth; (2) Engage in ESG-related initiatives, such as procurement activities from a sustainability perspective with consideration for the environment and human rights; and (3) Invest in human resource development, workplace improvement, wage increases and other areas that foster high employee engagement. To sustain these initiatives, it is crucial to enhance the earning power of each business and evolve into a profitable company. The core concept of VISION2030 is to reinvest the cash generated into the three aforementioned initiatives to create a perpetual cycle of growth and thus evolve into a globally recognized excellent company.
Our aspiration for 2030 is as follows: “By practicing management that prioritizes profitability and capital efficiency, we aim to further enhance the corporate value of the Fujifilm Group. Our goal is to evolve into a global top-tier business group that brings value (‘more smiles’) to our various stakeholders.” To achieve this, we will focus on four key areas: “Invest in growth and emphasize profitability,” “Improve capital efficiency,” “Practice R&D management” and “Generate steady investment returns” .
With respect to generating steady investment returns, we expect our Bio CDMO business to become free cash flow positive in fiscal 2027 as we phase out new capital investments, mainly in Denmark and North Carolina, and use new tanks to start up operations. The resulting Company-wide increase in free cash flow will provide greater managerial flexibility, allowing for enhanced shareholder returns, including share buybacks. From a capital efficiency perspective, this is also expected to lead to improvements in ROIC. As a global top-tier business group, we have set a goal to fully leverage the results of our past efforts while demonstrating a long-term scenario beyond our ongoing growth investments. This is crucial to meeting the expectations of our stakeholders, including shareholders and other investors.
Our consolidated financial targets for fiscal 2024 are as follows: Revenue of \3,150 billion (up 6.4% year on year) and operating income of \315 billion, up 13.8%, both of which will be record-high figures. Over the next three years, we will focus on profitability, with the aim of achieving an operating margin of 10% or higher by fiscal 2026. We will also actively invest in high-growth areas, such as Bio CDMO and Semiconductor Materials, accelerating returns on these investments from fiscal 2027 onward. By fiscal 2030, our goals are to reach revenue of \4 trillion, an operating margin of 15% or higher, ROIC of 9% or higher, and an ROE of 10% or higher.
* The Graphic Communications business has been reclassified from the “Electronics” (former “Materials”) segment to the “Business Innovation” segment. In conjunction with this reclassification, the figures for FY2021–FY2023 have been restated.
In our business portfolio, we must acknowledge that both the Graphic Communications and Pharmaceuticals businesses are currently not contributing significantly to profitability. However, we believe that by realigning our business strategies and implementing key initiatives, we can transition these businesses into “Earnings Base” ones. In VISION2030, therefore, we have identified these businesses as “Value Reconstruction” businesses and made a clear commitment to the capital markets that we will enhance their performance.
The Graphic Communications business has experienced a decline in profitability due to the continued decrease in demand for its mainstay printing plates (CTP plates), driven by structural market factors, while market conditions and the rising costs of key raw materials have further impacted profitability. In response, in fiscal 2024 we reorganized the business by integrating it into the Business Innovation segment and adopting a unified organizational management approach. This will enable us to become the only “solution partner” capable of covering the entire spectrum, from office to commercial and industrial printing, thus further enhancing the value of the business. In addition to our strong market share and customer base in the analog offset printing market that we have built over the years, we aim to turn our printing plates into a “cash cow” by streamlining our global production lines. At the same time, we will strengthen our inkjet business to further improve the overall profitability of the Graphic Communications business. In addition, we will leverage our xerography and inkjet technologies, along with their synergies in devices and digital transformation (DX) solutions, to help resolve customers’ issues. We will also work to maximize sales-related synergies by mutually utilizing the channels and customer bases of the former Business Innovation segment and the Graphic Communications business. By swiftly implementing these strategies, we aim to improve profitability and shift Graphic Communications from a “Value Reconstruction” business to an “Earnings Base” business.
In the Pharmaceuticals business, we are advancing our contract manufacturing business for antibiotics and liposomal formulations while preparing for the launch of a domestic biopharmaceutical CDMO business*. We are shifting our focus “from drug discovery to drug discovery support” and “from small-molecule drugs to biopharmaceuticals” to align with growth markets. By supplying high-quality biopharmaceuticals efficiently, we will transition Pharmaceuticals from a “Value Reconstruction” business to an “Earnings Base” business.
* To expand its business in Asian markets and strengthen its vaccine production capabilities in Japan, FUJIFILM Toyama Chemical decided to establish its first domestic biopharmaceutical CDMO facility, in Toyama City, Toyama Prefecture. The facility will be equipped with dual-use capabilities, enabling the production of biopharmaceuticals, such as antibody drugs and antibody-drug conjugates, during normal times, and mRNA vaccines and recombinant protein vaccines during pandemics. In the process, we will establish an integrated system covering everything from drug substance manufacturing to assembly and packaging.
In the Healthcare segment, we are targeting revenue of \1.2 trillion and operating income of \140 billion (operating margin of 11.7%) by fiscal 2026 and an operating margin of around 20% by fiscal 2030.
In the Medical Systems business, we aim to further improve profitability by leveraging medical IT and AI to expand our recurring business. We also plan to expand the number of NURA health screening centers, which focus primarily on cancer screenings, to accelerate the growth of our medical screening service business. Our target is to achieve revenue of \710 billion by fiscal 2026.
In the Bio CDMO business, we are making good progress in negotiations aimed at achieving our fiscal 2026 targets of \355 billion in revenue and an EBITDA margin of around 25%.
To meet growing demand for antibody drugs, meanwhile, we are investing $1.2 billion to expand our North Carolina facility, equipping it with eight 20,000-liter tanks, with the aim of starting operations in fiscal 2028. With this additional investment, we will achieve a fivefold increase in tank capacity for antibody drugs, from 140,000 liters at the end of fiscal 2023 to 750,000 liters in fiscal 2030. Through these efforts, we intend to increase the revenue ratio of highly profitable large tanks from the current level of just under 50% to just under 70%. In the Bio CDMO business, we aim to raise revenue to \700 billion and the EBITDA margin to around 40% in fiscal 2030.
In the Life Sciences business, we anticipate continued growth in materials for drug discovery support and pharmaceutical manufacturing, driven by rising demand for biopharmaceuticals. With a focus on iPS cells, cell culture media and reagents, we aim to become a trusted partner (“Partners for Life”) for pharmaceutical companies, biotech firms and academic institutions. During the period of our previous medium-term management plan, ensuring a stable supply of cell culture media to meet demand was a challenge. Moving forward, we will focus on stabilizing product supply, particularly for antibody drug manufacturing, by expanding global production facilities and strengthening the resilience of our supply chain.
In the Electronics segment, we are targeting revenue of \470 billion and operating income of \70 billion (operating margin of 14.9%) by fiscal 2026 and an operating margin in the high teens by fiscal 2030.
Under VISION2030, we separated the Graphic Communications business, which was included in the Materials segment in the previous medium-term management period, and integrated it into the Electronics segment, which also consists of Semiconductor Materials and Advanced Functional Materials. As a group of businesses in the electronics field, with a focus on semiconductors, we will further leverage our unique strengths to accelerate growth. The semiconductor market continues to expand, driven by advances in high-performance technologies, such as 5G/6G for faster and higher-capacity communications, the growth of autonomous driving and the spread of the metaverse. The market has been growing at an average annual rate of 7%, and we expect this strong growth to continue in the future. In addition to advances in miniaturization technology, the evolution of back-end processes that integrate multiple chips is also accelerating. With this in mind, we will strengthen our supply chain network for large global customers while expanding business opportunities, particularly in advanced EUV technology. Here, we will leverage our strength in CMP slurries and our high market share for NTI developer solutions. In the Semiconductor Materials business, we are targeting revenue of \300 billion by fiscal 2026 and \500 billion by fiscal 2030 and aim for a CAGR of 14%, which significantly exceeds the market growth rate.
In the Business Innovation segment, we are targeting revenue of \1,275 billion and operating income of \90 billion (operating margin of 7.1%) by fiscal 2026 and an operating margin of 10% or higher by fiscal 2030. As mentioned earlier, we aim to position ourselves as the only “solution partner” capable of covering the entire spectrum, from office to commercial and industrial printing. Based on our strategy, we integrated the Graphic Communications business into the Business Innovation segment alongside Business Solutions and Office Solutions.
In Business Solutions, we aim to drive growth by focusing on IT solutions and operational solutions tailored to small and medium-sized companies, centered on our own solutions. In addition, we will expand our ERP solutions business, anchored by Microsoft Dynamics 365, to establish a new revenue base. By also leveraging accumulated data from the various solutions we provide, we will support business optimization and provide new value to our customers, which will drive business growth. In Office Solutions, we will focus on the A3 color category, where we hold a top-level market share. In addition to strengthening our environmental initiatives and production capabilities, we will improve sales efficiency to maintain and enhance profitability. We will also expand sales in new markets by starting the distribution of our multifunction devices through leading dealers in the United States and various European countries. In Graphic Communications, we will focus on expanding sales of high-value, process-free plates to improve profitability despite the overall decline in demand for analog printing. In digital printing, we will invest in the digital transformation (DX) of the growing commercial printing market by offering devices and DX solutions to support customers in their shift from analog to digital printing. By also reviewing our pricing strategies and withdrawing from or restructuring low-profit products, we will further enhance our cashgenerating capability and build a stronger profit base.
In the Imaging segment, we are targeting revenue of \505 billion and operating income of \105 billion (operating margin of 20.8%) by fiscal 2026 and an operating margin of 20% or higher by fiscal 2030.
During the previous medium-term management plan period, our instax instant photo system and digital camera businesses experienced significant growth, becoming key pillars of profitability. To maintain our strong performance, our strategy for instax is to continuously launch attractive and unique products that combine analog taste with digital technology. This will help expand our user base and capture event- and business-related demand. We will also strengthen marketing DX and direct communication with users to accelerate the conversion of more customers into loyal ones. In addition, we will promote the use of devices and services while developing systems that encourage customers to print films. In digital cameras, we will reinforce our two-line strategy covering the compact, lightweight X Series and the large-format, highest-image-quality GFX Series. In addition to our unique color reproduction technology, we will target wider coverage of photography categories and image expressions with the aim of establishing a distinct position in the industry and enhancing our market presence. In addition, we will target growth in new BtoB fields, such as the Z projector for space production, the SX series of long-range surveillance cameras and DX solutions for business use (including inspection, surveillance and photography) using AI image analysis/synthesis technology. Through these strategies, we aim to maintain high profitability in the Imaging segment with an operating margin of 20% or higher moving forward.
* The Graphic Communications business has been reclassified from the “Electronics” (former “Materials”) segment to the “Business Innovation” segment. In conjunction with this reclassification, the figures for FY2023 have been restated.
To capture robust demand in the rapidly growing biopharmaceutical and semiconductor markets, which are expanding more quickly than anticipated when VISION2023 was formulated, we have made large-scale investments that far exceed the initial plan. These include a cumulative three-year investment of \1,070 billion (up \320 billion compared with VISION2023) and M&A activities, such as our October 2023 acquisition of the semiconductor process chemical business of Entegris, Inc., to enhance our product lineup in the semiconductor materials field. By utilizing funds secured through strengthened cash management, we were able to make these investments over the three-year period without increasing the balance of interest-bearing debt. This allowed us to implement our investment strategy while maintaining financial discipline.
For the three-year period from fiscal 2024 through fiscal 2026, we plan to invest \1.9 trillion in growth initiatives (sum of R&D expenses and capital expenditures), surpassing the VISION2023 figure. Of this amount, we will invest \1.6 trillion in “New/Future Potential” and “Growth Driver” businesses. In fiscal 2024, we will also leverage interest-bearing debt to make growth investments, mainly in Healthcare and Electronics, of approximately \750 billion, which will exceed cash flows from operating activities. While cash flows from investing activities will peak in fiscal 2024, cash flows from operating activities are expected to continue increasing steadily over the threeyear period. We expect the balance of interest-bearing debt to increase by \220 billion over the three-year period.
However, we will maintain a disciplined approach by keeping the interest-bearing debt/EBITDA ratio within 2x and working to retain an international credit rating of single-A or higher. In fiscal 2026, we expect EBITDA to be approximately \600 billion and the year-end balance of interest-bearing debt to be around \850 billion, resulting in an interest-bearing debt/EBITDA ratio of 1.4x.
In the previous medium-term management plan, we set ROIC and CCC as KPIs and have since been promoting efficient management. As a result, our price-to-book ratio (PBR) has steadily risen to exceed 1x and reached 1.34x on June 30,
2024. Moreover, our total shareholder return (TSR; June 30, 2024 basis) has outperformed the TOPIX Index and the TOPIX Chemicals Index over the past five and 10 years. We estimate our cost of capital to be around 8%–9% and our weighted average cost of capital (WACC) to be in the 5%–6% range. Due to growth investments in the Bio CDMO and Semiconductor Materials businesses based on medium- to long-term perspectives, ROIC relative to WACC in fiscal 2023 remained mostly unchanged. From this level, we aim to become free cash flow positive on a Company-wide basis by fiscal 2026 and raise ROIC to 9% or higher by fiscal 2030.
To achieve this, we will further entrench the business management efforts we have made to date. Meanwhile, the fact that ROE remains around the 8% level is an issue. By working to improve ROIC and other measures, we will achieve our ROE target of 10% or higher by fiscal 2030. In a specific initiative, we improved the overall CCC from 125 days in fiscal 2022 to 116 days in fiscal 2023.
This was achieved through financial data-driven management, in which we utilized the “One-Data” management information analysis system to analyze profit/ loss, CCC, ROIC and other metrics by business segment. To strengthen our commitment to financial targets, we added CCC as a KPI, in addition to consolidated operating income and consolidated revenue, for short-term performance-linked executive remuneration starting this fiscal year.
Under VISION2030, we will continue targeting a stable dividend payout ratio of 30%, as we have in the past, with respect to returning profits to shareholders. In addition, we will consider and implement share buybacks while closely monitoring cash flow conditions and stock price trends, with the aim of further increasing shareholder value.
Furthermore, by maintaining sound financial discipline while implementing effective future investments, we aim to increase earnings per share (EPS), which serves as the foundation for stock price formation.
Regarding dialogue with the capital markets, we use multiple opportunities to promote understanding of the Group’s growth strategies. These include small meetings with institutional investors hosted by the CEO and CFO, business briefings where department heads directly convey the growth potential of our business, one-on-one meetings during overseas road shows, online presentations for individual investors, and information dissemination through various IR tools and media. In our dialogues, we provide an overall picture of our long-term growth scenario aimed at 2030 and explain its effectiveness, while also describing our efforts to enhance human capital and intellectual capital, which are the sources of value creation for the Group. We also give serious consideration to the expectations and proposals raised through our various dialogues. Going forward, we will work to provide clearer disclosures focused on growth areas while implementing optimal capital policies, thereby strongly eliciting empathy and hope from our stakeholders, including shareholders and other investors.