We would like to express our sincere gratitude to our shareholders and investors for your continued and exceptional support. Below are our performance results for the six months ended September 30, 2018 and our initiatives.
Basic Policy for FY2018
The CRESCO Group embarked on its new five-year vision “CRESCO Ambition 2020” in April 2016, in a bid to ensure capturing business opportunities and achieve a further leap, and is striving to achieve the target of business performance, implement focus measures, and enhance the corporate value.
Under the corporate philosophy of “management in line with “CRESCO Ambition 2020,” “steady growth based on raising the quality of the business and productivity,” and “expansion of the size of group businesses through M&A,” we are tackling 11 items of issues to be addressed and pushing forward with the business operations.
Issues to be Addressed
- Providing ironclad quality
- Pursuit of productivity
- Strengthening of resource strategy
- Hiring and development of human resources
- Research and development of new technologies
- Enhancing group-wide coordination
- Strengthening sales structure and relationships with customers
- Generating new businesses
- Strengthening corporate governance
- Promotion of health management and work style reform
- Initiatives to promote diversity
Business Environment for FY2018
Despite the existence of numerous matters of concern including the uncertainty in the business conditions arising from the overseas situation, trends in the foreign exchange market and the stock market, and natural disasters, the business environment continued to improve on the back of, among others, recovery of personal spending and robust inbound tourism demand, and improvements in corporate earnings. Efforts to address the “fourth industrial revolution,” “work style reform,” and “labor shortage” to strengthen the competitiveness and the growth potential of enterprises are generating further demand for software and systems development that contributes to productivity improvements.
These trends bring opportunities to demonstrate the superiority of the CRESCO Group, which operates in a wide range of business fields encompassing advanced technologies such as artificial intelligence (AI), robotics, and IoT (Internet of Things) in addition to its core technologies of application development technology, IT infrastructure construction technology, and embedded technology. On the other hand, however, the shortage of engineers has been a bottleneck for business expansion in the contracted development business.
Endeavors To Be Undertaken in the Interim Period of FY2018
The CRESCO Group has not only worked to revise the customer portfolio and business structure in response to changes in the market, including solving the issue with unprofitable projects that arose in the first quarter, but also striven to secure an appropriate level of order volume commensurate with resources available and further improve customer satisfaction by focusing on development of businesses and services with advanced technologies incorporated, strengthening cooperation within the Group as well as reinforcing quality management. The CRESCO Group has also worked to recover the business performance by actively implementing measures such as the Group-wide productivity improvement activity (internal innovation activity), increase in unit price of orders received and selective orders-taking.
Outlook for FY2018
Although uncertainty arising from, among others, geopolitical risks and economic policies of the U.S. and China continues to linger, the economy in the second half of FY2018 in general looks on the growth path. As evident in the BOJ Tankan published in September 2018, the future capital investment is suggested to become active, and in particular the investment in software looks to be on an expansionary trend. Although different levels of strength among industries and business types, we predict, given continued strong performance of Japanese companies in general, that an increasing number of companies will continue allocating abundant cash on hand to IT investments. The trend of the information services industry as a whole capitalizes on the trend of “digital transformation,” which promotes the transformation of business models that utilizes digital technology, in addition to more active IT investment under the backdrop of a cyclical improvement in performance of companies and “aggressive IT management.” As a result, it is considered certain that the demand for system development is expected to rise.
Within the main segments in which the Company operates, growth is expected particularly in the areas of human resources, travel, and distribution in the software development segment and automotive electronics and information appliances in the embedded software development segment. With the advent of “digital transformation,” these areas are experiencing further expansion of customer base and we expect to see them grow for some while. We expect that promising business opportunities will arise from, among others, the renewal of the enterprise system, systems to support new services, embedded systems for new products, systems with artificial intelligence and RPA (robotic process automation) to address the needs for productivity improvements caused by manpower shortage, and transition to the cloud for reducing the cost for hardware operation.
Toshio Iwasaki, Chairman & CEO
Hiroyuki Nemoto, President