Denka Value-Up. To Become a Specialty-Fusion Company. Denka Company Limited Management Plan (Fiscal )

Transcription

1 Denka Value-Up To Become a Specialty-Fusion Company Denka Company Limited Management Plan (Fiscal )

2 Table of Contents The Positioning of the Denka Value-Up Management Plan Page 3 Review of the Outcomes of the Denka100 Management Plan Page 4 Management Plan Denka Value-Up Growth Vision Page 10 Numerical Targets Page 11 Growth Strategy Page 13 ⅠBusiness Portfolio Shift Page 14 Ⅱ Introduction of Innovative Processes Page 19 Investment Plan Page 20 R&D Plan Page 21 Shareholder Returns Page 22 2

3 The Positioning of the Denka Value-Up Management Plan The Denka Value Denka Mission Denka Principles Management plan Denka Value-Up Growth Strategies Business Portfolio Shift Introduction of Innovative Processes Fulfilling Our Social Responsibilities Place the utmost priority on safety Give due consideration to environmental concerns Nurture and better utilize human resources ＥＳＧ (Environment, Social, Governance) 3

4 Review of the Outcomes of the Denka100 Management Plan 4

5 Review of the Outcomes of the Denka100 Management Plan Trend in Operating Income and EBITDA Billion yen EBITDA Profit grew steadily, better positioning us to realize ideals of Denka Operating income FY cumulative total FY FY Denka100 A significant increase in EBITDA suggests stable growth in our earnings power, enabling us to allocate greater resources to forward-looking investment Note: EBITDA ratio = (operating income + depreciation and amortization) / net sales 5

6 Review of the Outcomes of the Denka100 Management Plan ① Create the Most Optimal Production System Overseas bases (production and R&D) Overseas production items 5 bases as of FY2012; currently 14 bases, with 9 bases being established since FY items as of FY2012; currently 15 items, with 8 items being added since FY2013 Tianjin Special cement additives Vietnam Dalian ALSINK PVC tapes and cover tapes Denka Performance Elastomer Chloroprene Suzhou (production) bottom tapes, Food packaging sheets Overseas sales ratio Suzhou (R&D) CR, Special cement additives, Adhesives, Food packaging sheets Malaysia Special cement additives 30% Singapore (FY2012) 42% Europe Indonesia (FY2017 Estimates) Special cement additives Tuas Plant Fused Silica South Plant Toyokalon] Merbau Plant AB Seraya Plant PS,Clearen,MS,IP Denka Life Innovation Research Icon Genetics Vaccines and antibodies for diagnostic reagents Vaccines and other products aimed at addressing tropical infectious diseases 6

7 Review of the Outcomes of the Denka100 Management Plan ② Scrutinize Every Cost Element Estimated cost reduction during fiscal 2017: 12.6 billion (Surpassing our target by 26%) Billion yen 14 Logistics Raw materials 12.6 The expansion of hydroelectric and other power generation capacities 12 Energy-saving initiatives and measures to raise the yield ratio 11.2 Facility repair and construction FY Target for cost reduction: billion FY2013 FY2014 FY2015 FY2016 FY2017 Estimates 7

8 Review of the Outcomes of the Denka100 Management Plan ③ Shift Our Focus to Priority Fields in Business Portfolio Priority fields: Healthcare, the environment and energy, and infrastructure Denka was able to remain resilient to changes in external conditions and achieved stable growth. ( In order for Denka to ensure further growth into the future, challenges attributable to volatility in other fields have to be overcome. ) Billion yen Other fields Priority fields FY2014 FY2015 FY FY2013 FY2017 estimates 8

9 Management Plan Denka Value-Up (fiscal ) 9

10 Management Plan Denka Value-Up Growth Vision Specialty-Fusion Company Become a Specialty-Fusion Company with a Strong Global Presence Sustained Growth Maintain Sustained Growth by Significantly Enhancing Productivity through Innovative Processes Our Threefold Growth Vision Sound Growth Secure Sound Growth through Work Style Reforms 10

11 Management Plan Denka Value-Up Numerical Targets Operating income 32 billion Operating income ratio 8.0% 42 billion 10% or greater 50 to 60 billion (Figures will be officially decided in fiscal 2020) 15% or greater The ratio of specialty business 60% FY % FY % FY2022 Denka s definition of a specialty business: A business that meets or has the potential to meet the following conditions in the near future: 1) boasting distinctive strengths and product value; 2) possessing resilience to changes in external factors; and 3) commanding an industry-leading market share 11

12 Management Plan Denka Value-Up Numerical Targets the Ratio of Specialty Business Commodity Specialty 10% Healthcare 25% 90% Key operations specialized) 25% High-value-added The environment and energy infrastructure 10% 30% Our fiscal 2022 target for the ratio of specialty businesses (based on the operating income ratio) Current EBITDA ratios Healthcare 30% The environment and energy 20% High-value-added infrastructure 10% Key operations 10% Note: EBITDA ratio = (operating income + depreciation and amortization) / net sales 12

13 Management Plan Denka Value-Up Growth Strategy 成 戦略 Two Growth Strategy Business Portfolio Shift Introduction of Innovative Processes Accelerate Growth of Specialty Businesses Production process reforms Specialize our key operations R&D process reforms Redefine the positioning of the commodity businesses Operational process reforms Work style reforms /Diversity promotion 13

14 Management Plan Denka Value-Up Growth Strategy I Business Portfolio Shift 1. Accelerate Growth of Specialty Businesses Healthcare Policies Primary themes Expand into cancer remedy and gene alteration analysis to help enhance people s quality of life in addition to providing illness prevention and early diagnosis Diagnostic reagents to measure lipoprotein subclasses, methods capable of multiplex-assays (genes and proteins) and technologies to manufacture proteins using the tobacco plant services aimed at assisting in genome-based cancer treatment (the selection of candidate drugs for molecular-targeted therapy) and processes for mass-producing oncolytic viruses Collaboration with external partners and M&A Current operations Vaccines Diagnostic reagents Macromolecular hyaluronic acid preparation Development of new businesses Infectious disease prevention: Norovirus vaccines, etc. Play ever broader and more significant roles in disease prevention and treatment Cancer Heart diseases Infectious diseases Regenerative medicine Combination of Denka technologies and externally introduced technologies Health checkups: Diagnostic reagents for measuring sd LDL-C and antibody test kits for helicobacter pylori bacteria Cancer remedy: The G47Δoncolytic virus Genome-based cancer treatment: Gene alteration analysis services Multiplex-assays:IntelliPlexTM Regenerative medicine: Peripheral materials for cell processing in clinical use 14

15 Management Plan Denka Value-Up Growth Strategy I Business Portfolio Shift 1. Accelerate Growth of Specialty Businesses The Environment and Energy Policy 方針 Primary themes Employ such core technologies as cutting-edge inorganic materials in product development, with the aim of better satisfying the latest needs for solutions that help achieve zero emissions; support autonomous driving systems; and assist in other technological pursuits aimed at creating a clean and safe futuresociety Lithium ion battery materials, materials for holding fuel cell catalysts, films as alternatives for coatings, materials for surface decoration of interiors, etc. Areas where Denka can play new roles (Features of futuristic automobiles) Theenvironmentandenergy Weight reduction Material composite technologies Ceramics technologies Core technologies Eco-friendly vehicles Zero emissions Vehicle interiors Automobile radar Inter - vehicle communication Polymer design and processing Autonomous driving systems IoT Adhesion Comfort Driving safety A care-free vehicle body User convenience 15

16 Management Plan Denka Value-Up Growth Strategy I Business Portfolio Shift 1. Accelerate Growth of Specialty Businesses High-Value-Added Infrastructure Policy Satisfy high-profile infrastructure development needs in countries around the world through the provision of cutting-edge materials and solutions Primary themes Promote global expansion via M&A and market products tailored to meet region-specific needs Deliver structural diagnosis solutions Tunnels: A mortar-spraying construction system Runways: Ultrahigh-strength fiber -reinforced concrete 16

17 Management Plan Denka Value-Up Growth Strategy I Business Portfolio Shift 2. Specialize our key operations Policies Policies Work to increase specialty grade ratio in product lineup to secure resilience to changes in external conditions Place greater emphasis on product functionalities to promote specialization of our CR business Shift our focus to the solution business Apply our special cement additive technologies to develop such products as weedpreventing soil solidifiers, thereby stepping up the provision of comprehensive solutions in our agri-products business 17

18 Management Plan Denka Value-Up Growth Strategy I Business Portfolio Shift Growththe strategies 3. Redefine positioning of the commodity businessespolicies Policies Establish a dedicated Head Office organization in charge of designing our future strategies, thereby facilitating the transformation of our portfolio Redefine the positioning of commodity businesses that are intrinsically unsuitable for specialization Optimization of value chains for calcium carbide and styrene-based products Suspended the production of calcium carbide at the Omuta Plant, decisively overhauling operations boasting a century-long track record since Denka s founding Entered an alliance with Sumitomo Osaka Cement Co., Ltd. to launch a joint logistics scheme Stepped up collaboration with external companies housed in the same industrial complex in Chiba to streamline utilities 18

19 Management Plan Denka Value-Up Growth Strategy II Introduction of Innovative Processes Production process reforms R&D process reforms z Operational process reforms Restructure our production facilities into ICT-based next-generation smart factories Build a robust, overarching information platform capable of managing all data on a real-time basis Realize manufacturing operations with greater productivity and superior stability Identify R&D themes oriented toward specialization Develop R&D assistance systems employing ICT Nurture diverse human resources by providing them with strategically designed career paths Facilitate active in-house collaboration through the introduction of futuristic office functions Enhance operational productivity Develop a location-free working environment Work style reforms/diversity promotion Shift our focus from quantity to quality in terms of working hours Help employees enhance their quality of life Create an innovation-oriented organization by welcoming diverse human resources 19

20 Management Plan Denka Value-Up Investment Plan Five-year investment budget totaling 200 billion Of this, we allocate 75 billion to strategic investment Process reforms 15 billion Regular investment: Strategic investment: 25 billion/year 15 billion/year Strategic investment 75 billion Investment in specialty businesses 60 billion 20

21 Management Plan Denka Value-Up R&D Plan Invest a total of 90 billion in R&D over a five-year period Billion yen 20 Healthcare The environment and energy High-value-added infrastructure Key operations FY2017 FY2018 FY2019 FY2020 FY2021 FY

22 Management Plan Denka Value-Up Shareholder Returns Our Shareholder Return Policy Keep committed to the targeted total z shareholder return ratio of 50% Flexibly carry out own-share repurchases by giving due consideration to trends in stock prices 22