Founded in 1972. Takemitsu Takizaki established the company as Lead Electric and concentrated investment in sensors. Achieving over 50% operating profit margin through direct sales and high-value-added strategy, the company grew into one of Japan's most profitable enterprises with a unique management approach that distributes operating profits as employee bonuses.
1972
Strategic Decision
Takemitsu Takizaki founds Lead Electric
Profit-margin-driven management that divested a founding business with 20% operating margin
1974
Strategic Decision
Entry into AC magnetic field sensors
The prototype of a pricing structure based on implementation value rather than cost
1974
Established Lead Electric Co., Ltd.
1974Established Lead Electric Co., Ltd.
1980
Began sales of optical sensors
1980Began sales of optical sensors
1982
Concentrated investment in sensors. Exited the cutting machine business
1982Concentrated investment in sensors. Exited the cutting machine business
1983
Began sales of optical sensors for the electronic components industry
1983Began sales of optical sensors for the electronic components industry
1984
Relocated headquarters to Takatsuki City, Osaka
1984Relocated headquarters to Takatsuki City, Osaka
1985
Established Crepo Co., Ltd. (manufacturing subsidiary)
1985Established Crepo Co., Ltd. (manufacturing subsidiary)
1986
Began sales of semiconductor laser sensors
1986Began sales of semiconductor laser sensors
1986
Changed trade name to KEYENCE
1986Changed trade name to KEYENCE
1987
Began sales of programmable controllers
1987Began sales of programmable controllers
1987
Strategic Decision
Listed on the Osaka Securities Exchange Second Section
Capital design that achieved both 60.1 billion yen in fundraising and 45% founder ownership
1991
Strategic Decision
Distributing operating profit as employee bonuses
Two sides of the same coin: 50% operating profit margin and 20-million-yen average salary
1994
Completed new headquarters and research center in Osaka City
1994Completed new headquarters and research center in Osaka City
1999
Significant revenue and profit decline
1999Significant revenue and profit decline
2000
Michio Sasaki appointed as President & Representative Director
2000Michio Sasaki appointed as President & Representative Director
2009
Significant profit decline due to the global financial crisis
2009Significant profit decline due to the global financial crisis
2009
Acquired shares in JustSystems
2009Acquired shares in JustSystems
2010
Strategic Decision
President Yamamoto takes office. Full-scale global expansion begins
20 years of groundwork and the overseas market opened by the financial crisis
2015
IR disclosure stance draws criticism from investors
2015IR disclosure stance draws criticism from investors
2021
President Nakata's reappointment approval ratio at 80%
2021President Nakata's reappointment approval ratio at 80%
2023
Achieved record-high profits
2023Achieved record-high profits
View Performance
RevenueKEYENCE:Revenue
Non-consol. | Consolidated (Unit: ¥100M)
¥922B
Revenue:2023/3
ProfitKEYENCE:Net Profit Margin
Non-consol. | Consolidated (Unit: %)
39.3%
Margin:2023/3
View Performance
PeriodTypeRevenueProfit*Margin
1982/3Non-consol. Est. Revenue / Net Income¥1B--
1983/3Non-consol. Revenue / Net Income---
1984/3Non-consol. Revenue / Net Income---
1985/3Non-consol. Revenue / Net Income¥4B¥1B17.9%
1986/3Non-consol. Revenue / Net Income¥6B¥1B17.6%
1987/3Non-consol. Revenue / Net Income¥7B¥1B16.4%
1988/3Non-consol. Revenue / Net Income¥10B¥2B15.6%
1989/3Non-consol. Revenue / Net Income¥15B¥3B18.9%
1990/3Non-consol. Revenue / Net Income---
1991/3Non-consol. Revenue / Net Income¥26B--
1992/3Non-consol. Revenue / Net Income---
1993/3Non-consol. Revenue / Net Income---
1994/3Non-consol. Revenue / Net Income---
1995/3Consolidated Revenue / After-tax Income¥39B¥8B20.1%
1996/3Consolidated Revenue / After-tax Income¥49B¥11B22.8%
1997/3Consolidated Revenue / After-tax Income¥59B¥13B22.7%
1998/3Consolidated Revenue / After-tax Income¥71B¥16B23.1%
1999/3Consolidated Revenue / After-tax Income¥65B¥13B20.1%
2000/3Consolidated Revenue / After-tax Income¥79B¥19B24.4%
2001/3Consolidated Revenue / After-tax Income¥101B¥27B27.1%
2002/3Consolidated Revenue / Net Income---
2003/3Consolidated Revenue / Net Income¥94B¥24B25.3%
2004/3Consolidated Revenue / Net Income¥117B¥35B30.0%
2005/3Consolidated Revenue / Net Income¥139B¥45B32.4%
2006/3Consolidated Revenue / Net Income¥158B¥50B31.8%
2007/3Consolidated Revenue / Net Income¥183B¥59B32.0%
2008/3Consolidated Revenue / Net Income¥201B¥63B31.5%
2009/3Consolidated Revenue / Net Income¥165B¥42B25.3%
2010/3Consolidated Revenue / Net Income¥136B¥38B27.6%
2011/3Consolidated Revenue / Net Income¥185B¥55B29.9%
2012/3Consolidated Revenue / Net Income¥199B¥58B29.1%
2013/3Consolidated Revenue / Net Income¥218B¥68B30.9%
2014/3Consolidated Revenue / Net Income¥265B¥87B32.7%
2015/3Consolidated Revenue / Net Income¥334B¥121B36.2%
2016/3Consolidated Revenue / Net Income¥379B¥137B36.1%
2017/3Consolidated Revenue / Net Income¥413B¥153B37.1%
2018/3Consolidated Revenue / Net Income¥527B¥202B38.2%
2019/3Consolidated Revenue / Net Income¥587B¥226B38.5%
2020/3Consolidated Revenue / Net Income¥552B¥198B35.9%
2021/3Consolidated Revenue / Net Income¥538B¥197B36.6%
2022/3Consolidated Revenue / Net Income¥755B¥303B40.1%
2023/3Consolidated Revenue / Net Income¥922B¥363B39.3%

Author's Insights

KEYENCE's competitive advantage lies in the founder's philosophy of designing 'what not to do'
How can a sales company with no factories or distributors maintain a 50% operating profit margin?

When discussing KEYENCE, the focus tends to fall on 'what they do'—the direct sales system and average annual salary of 20 million yen. However, the essence of KEYENCE's competitive advantage lies rather in the systematic design of 'what not to do.' No distributors. No made-to-order production. Virtually no owned factories. Divesting businesses with operating profit margins as high as 20%. No stated corporate philosophy. No disclosure of strategy in IR. Individually, none of these management decisions are particularly unusual, but what makes KEYENCE distinctive is that these acts of omission were established almost simultaneously from the founding period and have been maintained consistently ever since. At founding in 1972, they chose not to use distributors. When entering the sensor market in 1974, they refused custom products. In 1982, they sold off their founding business despite its 20% operating margin. In 1985, they established the manufacturing subsidiary Crepo and made 75% of all products fabless. KEYENCE's management history is simultaneously a record of starting things and a record of deciding 'not to do' things.

However, if these acts of omission were merely a collection of individually rational decisions, competitors could have made the same choices. What makes KEYENCE's structure unique is that each 'not to do' mutually reinforces the others, forming a closed profit structure. The direct sales system adopted in 1972 enabled sales representatives to directly grasp the challenges at customers' manufacturing sites by eliminating distributors. This on-site knowledge enhanced the planning precision of the standard products developed from 1974 onward. The focus on standard products suppressed design and production costs, enabling pricing based on the value of the product's impact on the customer—for example, pricing a sensor at 85,000 yen when it prevents mold damage worth hundreds of millions of yen. The resulting operating profit margin of 40% made it rational to sell off the founding business with its 20% margin in 1982—a decision that would be unthinkable at most companies. Each act of omission justified the next, and the chain closed into a profit structure.

So why can't competitors replicate this structure? The reason lies in the asymmetry between imitating 'what to do' and imitating 'what not to do.' Adopting a direct sales system is feasible in itself, but for a company like Omron that has already built a nationwide distributor network, dismantling it and switching to direct sales is virtually impossible. A company can declare a policy of focusing on standard products, but abandoning existing made-to-order customers would cause a massive short-term revenue decline. KEYENCE's acts of omission are a structure that was viable precisely because they 'never had these things in the first place' from the founding period, and it is structurally difficult for companies that already possess distributor networks and made-to-order production systems to retroactively replicate. The 'asset-light management' that Takemitsu Takizaki arrived at in his third venture after two bankruptcies was the result of failure stripping away the unnecessary—not something that companies built on success can intentionally imitate.

However, while the glamorous figures of a 50% operating profit margin and 20-million-yen average salary attract media attention, KEYENCE remains a 'closed company' from the capital market's perspective. Around 2015, institutional investors flagged KEYENCE as 'a listed company that avoids dialogue with shareholders.' Even when pressed for explanations on the use of surplus funds, the company maintained its stance of not disclosing details of management plans or investment policies. At the 2022 shareholders' meeting, President Nakata's reappointment approval ratio stayed in the 80% range, indicating that this non-disclosure stance is generating tangible friction with capital markets. Takizaki has stated that 'disillusionment with ideology was the catalyst for founding' and that 'things work better when you don't incorporate it into management,' making silence a deliberate part of his management design. Yet while the design of omission functions as a competitive advantage at the business and organizational level, at the capital market level it is beginning to exact a cost in eroded trust. The design of 'what not to do' that built a 50% operating profit margin may now be confronting a new question: 'when is it time to speak.'

2026-02-24 | by author
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1972
3

Takemitsu Takizaki founds Lead Electric

Profit-margin-driven management that divested a founding business with 20% operating margin

The most distinctive decision during KEYENCE's founding period was the divestiture of its founding business, which had an operating profit margin exceeding 20%, on the grounds of the difference in profit margins. The business was divested not due to poor performance but because its margin was low compared to the sensor business's 40% operating profit margin. Combined with the adoption of the direct sales system, a structure placing 'profit margin maximization' as the supreme management criterion was established within ten years of founding. This principle, arrived at by a founder who had experienced two bankruptcies, has defined KEYENCE's high-profit structure for the subsequent 50 years.

BackgroundA third startup at age 27 after two bankruptcies

The career of KEYENCE founder Takemitsu Takizaki is unconventional. His highest educational attainment was graduation from Amagasaki Technical High School, where he held a leadership role in the student movement during his school years, but came to the realization that ideology could not change the world and aspired to become an entrepreneur who could compete with numbers. After graduating high school, he worked at a foreign-affiliated plant control equipment manufacturer before attempting his first startup, but the electronic equipment manufacturer he launched went bankrupt. His second venture, launched as a contract assembler for manufacturers, similarly ended in bankruptcy.

In 1972, at the age of 27, Takizaki started Lead Electric as a sole proprietorship in Itami City, Hyogo Prefecture, as his third venture. The founding business was the manufacture of automatic wire cutting machines for electric wire manufacturers. At the time, cutting machines were typically large, but Takizaki determined that miniaturization through electronic control was feasible and developed a smaller cutting machine, successfully delivering it to electric wire manufacturers. Given that the company was based in Hyogo Prefecture, the customers were presumably manufacturers with factories around Amagasaki, such as Furukawa Electric and Sumitomo Electric.

DecisionAdoption of direct sales system and profit-margin-based business selection

From the founding period, KEYENCE adopted a direct sales system for its customers. The rationale was that since its products had specifications unavailable from other companies, the merits of the products would not be effectively communicated to customers through distributors. While competitor Omron employed a distributor-based sales system, KEYENCE differentiated itself with a sales structure that directly engaged end users. This direct sales system later became the foundation supporting KEYENCE's high-profit structure.

In 1982, the company divested its founding business of automatic wire cutting machines by transferring the business to another company. The cutting machine business was a profitable operation with an operating profit margin exceeding 20% and accounted for approximately 10% of sales. However, since the operating profit margin of the sensor business, which had become the main focus, was approximately 40%, the decision was made to divest the lower-margin business and concentrate management resources on sensors. The decision to divest the founding business not because of poor performance but due to the difference in profit margins epitomized KEYENCE's management philosophy.

ResultEstablishing the direction as a sensor-specialized manufacturer

The divestiture of the cutting machine business clarified KEYENCE's direction as a sensor-specialized manufacturer. The two principles of direct sales and profit-margin-based business selection were established within ten years of founding and have consistently governed KEYENCE's management ever since. Takizaki himself stated, 'There is no need to be fixated on sensors. Given KEYENCE's scale, sensors are simply our current mainstay—it's a temporary form.' This reveals a posture that prioritizes profit margin maximization over attachment to any particular business domain.

The company that the founder built on his third attempt after two bankruptcies was equipped from its founding period with a management system based on the principles of direct sales, high profit margins, and selective business portfolio management. In 1974, the company was incorporated as Lead Electric Co., Ltd., and in 1986, the trade name was changed to KEYENCE. These management principles established during the founding period became the foundation for KEYENCE's subsequent growth into one of Japan's most profitable companies.

TableCareer of Takemitsu Takizaki
YearEvent
1945Born
1964Graduated from Amagasaki Technical High School
n/aFounded first company, which went bankrupt
n/aFounded second company, which went bankrupt
1972Founded Lead Electric as sole proprietorship (now KEYENCE)
1974President & Representative Director, Lead Electric Co., Ltd.
2000Chairman & Representative Director, KEYENCE
2015Director & Honorary Chairman, KEYENCE
Year
1945
Event
Born
Profit-margin-driven management that divested a founding business with 20% operating margin

The most distinctive decision during KEYENCE's founding period was the divestiture of its founding business, which had an operating profit margin exceeding 20%, on the grounds of the difference in profit margins. The business was divested not due to poor performance but because its margin was low compared to the sensor business's 40% operating profit margin. Combined with the adoption of the direct sales system, a structure placing 'profit margin maximization' as the supreme management criterion was established within ten years of founding. This principle, arrived at by a founder who had experienced two bankruptcies, has defined KEYENCE's high-profit structure for the subsequent 50 years.

TestimonyTakemitsu Takizaki (KEYENCE founder)

I want to change the world through products. I always think that way. Right now we make sensors, but there's no need to be fixated on sensors. Given KEYENCE's scale, sensors are simply our current mainstay—it's a temporary form. If the times change and the environment shifts, the business can change too.

Beyond that, I have no intention of emphasizing philosophy or ideology. You see, when I was in high school, student protests were in full bloom, and I was in a position leading the movement. That's where I keenly realized that 'ideology is ultimately a world of likes and dislikes.' That became the catalyst for me to aim to become an entrepreneur who could compete with numbers. Since disillusionment with ideology was the very catalyst for founding, my belief is that things work better when you don't incorporate it into management. (...)

Recently, putting philosophy front and center seems to be in fashion, and even at gatherings of business executives, there are people who say things like 'from now on, it's about flowers over dumplings'—but once you start thinking that way, you can no longer call yourself an entrepreneur. The first condition of an entrepreneur is to skillfully use total assets to generate high profits. Being unable to generate profits—that is, being able to offer employees only low-value-added work—is the worst thing an entrepreneur can do.

Source1991/6/24 Nikkei Business
TestimonyNikkei Business

KEYENCE made two decisions to reduce its business scope. The first was selling the manufacturing and sales rights for automatic wire cutting machines—its founding business—entirely to another company in 1982. These machines were products for electric wire manufacturers used to cut wires. It wasn't an unprofitable business by any means. It was a solid profit-generating business with a 20% operating profit margin. Its share of sales was also about 10%. Yet they let it go without hesitation. (...)

President Takizaki had a clear policy in mind: 'The cutting machine business has a lower profit margin compared to FA sensors at 40% operating profit margin. Since the product content is also different, waste arises in development. Given that FA sensor work is growing, concentrating on that would strengthen profitability.'

Source1989/5/22 Nikkei Business
TestimonyTakemitsu Takizaki (KEYENCE founder)

A major characteristic is that we employ a direct sales system and do not use trading companies or distributor systems. This has been the case since our founding. The reason we did this is that since our products have specifications unavailable from other companies, we believed that going through trading companies and distributors would not effectively convey the value of our products to customers. There are cases where invoices go through distributors due to customer circumstances, but all actual negotiations are conducted by our company, and we have visibility all the way to end users.

TimelineTakemitsu Takizaki founds Lead Electric — Key Events
3/1964Takemitsu Takizaki graduates from Amagasaki Technical High School
Age at graduation18years old
3/1972Takemitsu Takizaki founds Lead Electric as a sole proprietorship
Age at founding27years old
1972Began manufacturing and selling automatic wire cutting machines
1982Sold the manufacturing and sales rights for automatic wire cutting machines
Operating profit margin20%
1979Opened Tokyo sales office (expansion into Kanto region)
1974
5

Entry into AC magnetic field sensors

The prototype of a pricing structure based on implementation value rather than cost

KEYENCE's sensor business began with the specific challenge of mold protection in press working at Toyota Motor. The combination of cost suppression through focus on standard products and pricing based on the customer's cost-effectiveness became the source of high operating profit margins. The structure where a price of 85,000 yen is viable for a sensor that prevents mold damage worth hundreds of millions of yen is a classic example of value-based pricing rather than cost-plus pricing. This prototype of the pricing structure was formed in the 1970s.

BackgroundThe manufacturing challenge of mold damage in press working

In the early 1970s, automobile manufacturers led by Toyota Motor were facing a serious problem in press working. When double-feeding occurred in automatic sheet metal feeding devices, expensive molds worth hundreds of millions of yen were repeatedly damaged. Detection devices existed at the time but were unstable in operation, and mold protection was a chronic issue on production floors.

Upon learning of this challenge, Takemitsu Takizaki developed a device that detected double-feeding of sheet metal using a magnetic sensor based on AC magnetic fields. In April 1973, he successfully delivered the device to Toyota Motor, and approximately one year later, it was designated as factory-standard equipment at Toyota. This led to expanded deliveries to Nissan Motor, Mitsubishi Motors, Honda Motor, and other major automobile manufacturers, forming the foundation of KEYENCE's sensor business.

DecisionFocus on standard products and value-based pricing

In expanding its sensor business, KEYENCE adopted two critical policies. First, it refused made-to-order production (custom products) and focused exclusively on catalog standard products. Since accommodating custom products would increase design and production costs, the company chose to plan and develop versatile standard products to suppress unit costs. As of 1975, the unit price of the double metal sheet detector was 85,000 yen.

Second, pricing was based not on cost but on the cost-effectiveness for the customer. A sensor was not essential for keeping the production line running, but by detecting anomalies it could improve yields and prevent mold damage worth hundreds of millions of yen. By setting prices based on this value of implementation, a structure emerged that secured high profit margins relative to cost.

ResultIncorporation and transition to a sensor-specialized company

With the Toyota Motor business on track, in May 1974, Takizaki incorporated Lead Electric. The direct reason for incorporation is presumed to be the need for a corporate account for transactions with Toyota. The company was established in Amagasaki City, and by 1977, it operated two factory locations in Ikeda and Higashi-Osaka. Throughout the 1970s, the company expanded its product lineup of anomaly detection sensors centered on metal piece detection at a pace of one to two products per year.

The entry into AC magnetic field sensors defined the direction of KEYENCE's business. Developing sensors that solve manufacturing floor challenges as standard products, pricing them based on value, and delivering them through a direct sales system. The prototype of this business model was established in the 1970s, and this led KEYENCE to subsequently divest its founding cutting machine business and complete the transition to a sensor-specialized manufacturer.

TableMain products as of 1977
Product nameFunctionApplication (estimated)
Micro-position detection switchDetects micro-position of metal objects-
Double metal sheet detectorNon-contact detection. Fires signal upon double feedingAutomobile factories, etc.
D.F DETECTORDetects compositional changes in metalsSteel manufacturers
Metal piece passage confirmation switchDetects micro metal piecesMetal processing manufacturers
Seam detectorDetects presence or absence of holes-
Product name
Micro-position detection switch
Function
Detects micro-position of metal objects
Application (estimated)
-
SourceAutomation Technology 9(6) Advertisement | 1977/6
The prototype of a pricing structure based on implementation value rather than cost

KEYENCE's sensor business began with the specific challenge of mold protection in press working at Toyota Motor. The combination of cost suppression through focus on standard products and pricing based on the customer's cost-effectiveness became the source of high operating profit margins. The structure where a price of 85,000 yen is viable for a sensor that prevents mold damage worth hundreds of millions of yen is a classic example of value-based pricing rather than cost-plus pricing. This prototype of the pricing structure was formed in the 1970s.

TestimonyTakemitsu Takizaki (KEYENCE founder)

In 1973, we developed a product that would become the catalyst for becoming a specialized FA sensor manufacturer. That sensor was used to detect feeding errors in automatic sheet metal feeding devices in press working. The automobile industry has the most press working, and we developed a sensor used to protect molds in this automobile industry. Automobiles are made from various pressed metal parts, starting with the body. These molds are quite expensive, with some costing hundreds of millions of yen. At that time, while devices existed to protect these molds, they were very unstable and occasionally damaged the molds, which was a problem in press working processes. At that point, the magnetic application sensor developed by our company was adopted because it could detect problems very reliably. (...)

This was adopted by automobile companies, particularly Toyota Motor, and approximately one year later, it became factory-designated equipment and was used in Toyota Motor's main factories. Following this, it was widely adopted by Nissan Motor, Mitsubishi Motors, Honda Motor, and other automobile and motorcycle manufacturers. (...)

Since then, we have released numerous magnetic sensors utilizing AC magnetic fields, developing them at a pace of roughly one to two per year.

TestimonyTakemitsu Takizaki (KEYENCE founder)

The magnetic application sensor 'double metal sheet detector' developed and launched in April 1973 was widely accepted primarily in the automobile industry, and with the company's foundation and direction established, we reorganized and established Lead Electric Co., Ltd. in May 1974, now in our 16th year. During this period, in October 1986, we changed the company name to KEYENCE Corporation to unify the brand and trade name.

TimelineEntry into AC magnetic field sensors — Key Events
4/1973Developed double metal sheet detector. Began transactions with Toyota Motor
Unit price8.5ten thousand yen
5/1974Established Lead Electric Co., Ltd.
10/1986Changed trade name to KEYENCE Corporation
1974
Established Lead Electric Co., Ltd.
1980
Began sales of optical sensors
1982
Concentrated investment in sensors. Exited the cutting machine business
1983
Began sales of optical sensors for the electronic components industry
1984
Relocated headquarters to Takatsuki City, Osaka
1985
Established Crepo Co., Ltd. (manufacturing subsidiary)
1986
Began sales of semiconductor laser sensors
1986
Changed trade name to KEYENCE
1987
Began sales of programmable controllers
1987
10

Listed on the Osaka Securities Exchange Second Section

Capital design that achieved both 60.1 billion yen in fundraising and 45% founder ownership

KEYENCE's IPO capital policy is characterized by achieving both large-scale fundraising and maintaining the founder's high ownership stake. The company raised a total of 60.1 billion yen through the IPO and two subsequent public offerings while maintaining the Takizaki family's stake at approximately 45%. The financial foundation with an equity ratio exceeding 90% and the ownership design that maximized the benefits of stock price appreciation subsequently produced KEYENCE's market capitalization expansion and the founder's 4.2 trillion yen in assets. It is a case where capital design at the time of listing defined long-term corporate value.

BackgroundIPO of a highly profitable company with 7.3 billion yen in revenue and 2.6 billion yen in recurring profit

In October 1987, KEYENCE listed its shares on the Osaka Securities Exchange Second Section. At the time of listing, KEYENCE demonstrated high profitability with revenue of 7.3 billion yen and recurring profit of 2.6 billion yen for FY1986, attracting attention as the IPO of one of Japan's most profitable companies. Through a public offering, the company raised approximately 20.9 billion yen, and the equity ratio surged from 62.6% before listing to 90.3% after listing.

The capital policy at the time of listing prioritized maintaining founder Takemitsu Takizaki's ownership stake. As of March 1989, Takizaki personally held 25.69% and his asset management company T.T. Co., Ltd. held 18.84%, giving the Takizaki family a combined approximately 45% stake. The pre-listing capital increase was designed to minimize dilution, with the capital structure intentionally constructed so that the founder would maintain a high ownership ratio even after listing.

DecisionStrengthening the financial base through post-IPO public offerings

KEYENCE continued to raise additional capital after listing. Public offerings of 17.6 billion yen in 1989 and 21.6 billion yen in 1991, combined with the IPO proceeds, brought total capital raised from the stock market to 60.1 billion yen. These raises brought the equity ratio to an extremely high level exceeding 90%, establishing a near debt-free financial structure.

KEYENCE's business model is fabless with direct sales, requiring no large-scale capital investment. Therefore, the raised funds are presumed to have been allocated to R&D and strengthening the sales organization. The profit structure that did not require large-scale borrowing or bond issuance, combined with equity accumulation through public offerings, formed KEYENCE's distinctive financial foundation.

ResultStock price appreciation and expansion of the founder's wealth

The combination of high profitability and high founder ownership created a structure where KEYENCE's stock price appreciation directly amplified the founder's wealth. With the Takizaki family holding approximately 45%, the continued rise in stock price expanded Takizaki's personal assets in direct proportion. In 2021, Takizaki's assets reached 4.2 trillion yen, surpassing Tadashi Yanai of Fast Retailing and Masayoshi Son of SoftBank Group to become Japan's wealthiest individual.

This outcome demonstrates that the dilution-minimizing design of the IPO capital policy held enormous long-term significance. The 60.1 billion yen raised through the listing solidified the financial foundation, while the founder's high ownership ratio maximized the benefits of stock price appreciation. It is a case where the capital policy design at the time of a highly profitable company's IPO defined both the founder's wealth creation and the company's financial structure.

TableMajor shareholders of KEYENCE (as of March 20, 1989 = shortly after listing)
NameOwnership ratioNotes
Takemitsu Takizaki25.69%KEYENCE founder
T.T. Co., Ltd.18.84%Takizaki family asset management company
Koichi Okamoto2.93%-
Sanwa Bank2.83%-
Daiwa Bank2.51%-
Taiyo Life Insurance1.89%-
Miyako Takizaki1.66%Founding family
Name
Takemitsu Takizaki
Ownership ratio
25.69%
Notes
KEYENCE founder
TableKEYENCE: Balance sheet (FY1987-89)
Fiscal yearTotal liabilitiesTotal equityEquity ratio
1987/32.8 billion yen4.7 billion yen62.6%
1988/32.9 billion yen27.2 billion yen90.3%
1989/34.9 billion yen47.4 billion yen90.6%
Fiscal year
1987/3
Total liabilities
2.8 billion yen
Total equity
4.7 billion yen
Equity ratio
62.6%
Capital design that achieved both 60.1 billion yen in fundraising and 45% founder ownership

KEYENCE's IPO capital policy is characterized by achieving both large-scale fundraising and maintaining the founder's high ownership stake. The company raised a total of 60.1 billion yen through the IPO and two subsequent public offerings while maintaining the Takizaki family's stake at approximately 45%. The financial foundation with an equity ratio exceeding 90% and the ownership design that maximized the benefits of stock price appreciation subsequently produced KEYENCE's market capitalization expansion and the founder's 4.2 trillion yen in assets. It is a case where capital design at the time of listing defined long-term corporate value.

TimelineListed on the Osaka Securities Exchange Second Section — Key Events
7/1983Capital increase (paid-in)
Amount raised0.5hundred million yen
10/1987IPO fundraising (public offering)
Amount raised209hundred million yen
3/1989Fundraising through public offering
Amount raised176hundred million yen
9/1991Fundraising through public offering
Amount raised216hundred million yen
1991

Distributing operating profit as employee bonuses

Two sides of the same coin: 50% operating profit margin and 20-million-yen average salary

KEYENCE's compensation system was designed in the company's third year as a rule distributing a portion of operating profit to employees. The structure of keeping base salaries low and paying the majority of compensation through performance-linked bonuses means that high operating profit margins are directly reflected in employee compensation levels. The virtuous cycle of acquiring excellent talent through high compensation and that talent generating high added value sustains KEYENCE's competitive advantage. It is a case where an institutional design directly linking profit and compensation has functioned for 50 years.

BackgroundThe founder's philosophy of returning high operating margins to compensation

KEYENCE's compensation system is rooted in founder Takemitsu Takizaki's management philosophy. Takizaki stated, 'The first condition of an entrepreneur is to skillfully use total assets to generate high profits, and being able to offer employees only low-value-added work is the worst thing an entrepreneur can do.' This management stance valued monetary compensation through numbers as equal to or more important than job fulfillment.

The institutional embodiment of this philosophy was the operating-profit-based compensation system that began operating in the company's third year. Specifically, the rule was established to 'add half of a portion of operating profit to monthly salaries, and accumulate the other half to add to bonuses.' While employees' base salaries were set relatively low, performance-linked bonuses constituted a large portion of total compensation, creating a structure where high operating profit margins were directly reflected in employee compensation levels.

DecisionA virtuous cycle of high compensation through operating profit linkage and talent acquisition

As of 1991, the average age of KEYENCE employees was 28, and employees over 30 were offered annual compensation of approximately 10 million yen. Takizaki stated, 'In the future, I want not only our stock price but also our salaries to be number one in Japan,' positioning high compensation levels as a competitive advantage in talent acquisition. By paying top-tier salaries among manufacturers, the company aimed to attract and retain excellent talent.

This compensation system is inseparable from KEYENCE's high-profit structure. High compensation is possible precisely because the operating profit margin is high, but the talent acquired through high compensation generates high added value, which in turn maintains the operating profit margin. This virtuous cycle of profit and compensation became one of the sources of KEYENCE's competitive advantage.

ResultReaching an average annual salary of 20 million yen and attracting public attention

KEYENCE's average annual salary exhibits high volatility as it is linked to operating profit, but it surpassed 20 million yen in FY2018 when the operating profit margin was strong. It temporarily dipped to the 18-million-yen range during the COVID-19 pandemic but rose to a record high of 22.79 million yen in FY2021 as business performance recovered. This salary level is remarkable for a company with such a young average employee age and is an outstanding figure among manufacturers.

Around 2022, multiple books analyzing KEYENCE's management methods were published, reflecting heightened public interest. The two figures—an operating profit margin exceeding 50% and an average annual salary exceeding 20 million yen—became widely recognized as symbols of KEYENCE's management model. The operating-profit-linked compensation system designed in the company's third year produced the reputation of 'Japan's highest-paying manufacturer' 50 years later.

Two sides of the same coin: 50% operating profit margin and 20-million-yen average salary

KEYENCE's compensation system was designed in the company's third year as a rule distributing a portion of operating profit to employees. The structure of keeping base salaries low and paying the majority of compensation through performance-linked bonuses means that high operating profit margins are directly reflected in employee compensation levels. The virtuous cycle of acquiring excellent talent through high compensation and that talent generating high added value sustains KEYENCE's competitive advantage. It is a case where an institutional design directly linking profit and compensation has functioned for 50 years.

TestimonyTakemitsu Takizaki (KEYENCE founder)

We always struggle with hiring. That said, considering the company's scale, I think we've been getting the best people available at any given time. We pay top-tier salaries among manufacturers. Past 30, annual compensation reaches about 10 million yen. That said, we don't employ any special compensation system. To attract people, job fulfillment is important, but ultimately, compensation that shows in the numbers has to be good. In the future, I want not only our stock price but also our salaries to be number one in Japan.

Source1991/6/24 Nikkei Business
TimelineDistributing operating profit as employee bonuses — Key Events
3/2022Average annual salary reached an all-time high
Average salary (non-consolidated)2279ten thousand yen
1994
Completed new headquarters and research center in Osaka City
1999
Significant revenue and profit decline
2000
Michio Sasaki appointed as President & Representative Director
2009
Significant profit decline due to the global financial crisis
2009
Acquired shares in JustSystems
2010
12

President Yamamoto takes office. Full-scale global expansion begins

20 years of groundwork and the overseas market opened by the financial crisis

KEYENCE's overseas expansion began in 1985, but meaningful results only materialized from the 2010s onward. Production rationalization demand in emerging markets became apparent after the global financial crisis, creating a market environment that leveraged the overseas presence maintained for over 20 years. By transplanting the domestic direct sales and same-day delivery model directly, globalization was achieved without erosion of profitability. It is a structure where long-term maintenance of overseas operations translated into results as the market environment shifted.

BackgroundOver 20 years of struggles with global expansion and the turning point of the financial crisis

KEYENCE's overseas expansion began with the establishment of a US subsidiary in 1985. Founder Takizaki set a target of 30-50% overseas sales ratio, but throughout the 1990s and 2000s, the vast majority of sales remained domestic. In Asia, particularly China in the 2000s, mass production was the priority, and the prevailing approach was to invest labor-intensively in personnel rather than introducing expensive sensors for automation.

This trend shifted after the 2008 global financial crisis. In the wake of the worldwide recession and currency fluctuations, demand for production rationalization grew even in emerging economies such as China. Combined with rising labor costs, conditions began to justify the introduction of expensive sensors that had previously not offered sufficient cost-effectiveness. The accumulated experience of KEYENCE maintaining overseas operations for over 20 years was finally positioned to bear fruit in this changing market environment.

DecisionUnder new President Yamamoto, setting a target of 50% overseas sales ratio

In December 2010, Akinori Yamamoto assumed the presidency of KEYENCE and announced a policy to accelerate global expansion. The management target was 'to raise the overseas sales ratio to approximately 50% at an early stage.' However, KEYENCE maintained its policy of not disclosing investment amounts or detailed management plans, presumably advancing overseas investment in a manner that prevented competitors from discerning the strategy.

The specific approach to overseas expansion was transplanting the direct sales system established domestically directly to overseas markets. Sales and technical support offices were widely established in regions with concentrated manufacturing industries, including the United States, China, and Germany, and lead times from order to shipment were shortened. From 2011 onward, the company accelerated expansion into emerging markets including Brazil, India, Indonesia, Vietnam, and the Philippines, building systems to provide same-day shipping as a value-added service overseas as well.

ResultSurpassing 50% overseas sales ratio and transformation into a global company

In FY2014, KEYENCE surpassed the 50% overseas sales ratio, achieving the target set by President Yamamoto. In terms of revenue, the United States, where KEYENCE had entered in 1985, contributed steadily while China sales grew remarkably. Sales in the 'Other' regions including Southeast Asia also expanded, indicating successful capture of broad-based production rationalization demand in emerging markets.

Throughout the 2010s, KEYENCE transformed from a domestically focused company into a global enterprise. It expanded overseas sales while maintaining its high-profit structure, achieving both revenue growth and margin preservation. The ability to deploy the direct sales, same-day delivery, and high-margin business model established domestically directly to overseas markets without modification is considered the key factor that enabled globalization without erosion of profitability.

20 years of groundwork and the overseas market opened by the financial crisis

KEYENCE's overseas expansion began in 1985, but meaningful results only materialized from the 2010s onward. Production rationalization demand in emerging markets became apparent after the global financial crisis, creating a market environment that leveraged the overseas presence maintained for over 20 years. By transplanting the domestic direct sales and same-day delivery model directly, globalization was achieved without erosion of profitability. It is a structure where long-term maintenance of overseas operations translated into results as the market environment shifted.

TestimonyAkinori Yamamoto (then President of KEYENCE)

We want to strengthen our global direct sales operations and develop even higher-value-added products.

TimelinePresident Yamamoto takes office. Full-scale global expansion begins — Key Events
3/1985Established subsidiary in the United States
5/1990Established subsidiary in Germany
1/2001Established subsidiary in China
5/2011Established subsidiary in Brazil
8/2011Established subsidiary in India
7/2013Established subsidiary in Indonesia
3/2014Established subsidiary in Vietnam
7/2016Established subsidiary in the Philippines
3/2015Overseas sales ratio surpassed 50%
2015
IR disclosure stance draws criticism from investors
2021
President Nakata's reappointment approval ratio at 80%
2023
Achieved record-high profits
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