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Contents1. FY2020 Summary of Consolidated Business Performance2. The SIC-II Medium-Term Management Plan
2-1. Basic Policy (i) - Improve the profitability of businesses2-2. Basic Policy (ii) - Create more priority areas of development2-3. Basic Policy (iii) - Enhance the value of management resources for
sustainable growth2-4. Cash Flow Policy2-5. Numerical Targets in SIC-II2-6. Priority Measures for FY2021
[Reference] Overviews of Balance Sheet and Profit & Loss StatementPerformance by Region and by Segment
The forecast or projections in this presentation are based on the assumptions and beliefs of ourmanagement in light of the information available as of February 18, 2021. Changes in global,economic and business conditions could cause actual results to differ materially from theseforecasts. All amounts are rounded to the nearest 100 million yen.
Prices of raw materials made in China remained high, reflecting the in-house production of raw materials and the effects of improvements in supply chain management against the backdrop of tightened environmental regulations
Raw material prices
Effects of the price revisions implemented in FY2019 (offset inks, etc.).
Price revision
FY2019Fall in
quantity sold
-6.0
(Unit: 1 billion yen)
Cost reductions due to structural reform.Decrease in expenses due to the fall in quantity sold.
Fixed costs
+0.6Price revision
Exchange rate fluctuation
-0.5
+3.7
Reduction of fixed costs
+1.7
Raw material prices
FY2020
-1.0
Fall in sales prices
Materials for displays (sales mix change due to increased sales in China)
Fall in sales prices
Fall in quantity sold
Demand for many products, such as offset inks and printing materials/equipment, sharply decreased due to the COVID-19 pandemic.
+1.2
Increased sales of high added value
products
Increased sales of eco-friendly products and materials for sensor and functional films.
Increased sales of high added value products
12.9 billion yen
13.2 billion yen
1. FY2020 Analysis of Factors Behind YoY Difference in Operating Profit
Colorants & Functional Materials: Materials for displays remained strong, but commodity-type pigments and plastic colorants struggled.Polymers and Coatings: Demand for packaging material was stable and demand for electronics grew, mainly for 5G applications.Packaging Materials: For materials for food packaging, demand remained stable and sales grew mainly overseas.Printing and Information: Secured profit through structural reforms such as organizational downsizing.
1. FY2020 Summary of Performance by Segment
FY2019 FY2020 Increase/ decrease (%) Targets for FY2021
Net sales Operating profit Net sales Operating
profit Net sales Operating profit Net sales Operating
Sales of adhesives, including pressure sensitive adhesives, for food packaging and labels were strong.
Electronics Sales of functional films for 5G-based applications grew sharply, partly reflecting strong sales for tablets due to a rise in demand for remote work equipment.
Medical and health care
Demand for pressure sensitive adhesives declined due to the COVID-19 pandemic, despite progress on sales expansion in China.
Pigments Demand for offset inks remained weak due to the COVID-19 pandemic.Materials for displays Progress was made in sales expansion in the Chinese/Taiwanese markets.
Plastic colorants Inbound demand and demand for beverages and automobiles decreased.
Functional dispersions Acquired commercial rights to in-vehicle lithium-ion battery materials for Europe and the United States.
5
(Unit: 1 billion yen)
Colorants and Functional Materials
(Unit: 1 billion yen)
Polymers and Coatings
18.0 17.9 -0.9 18.5
Key Product Sales Targets Results for FY2019 Results for FY2020 Increase/ decrease (%)
Targets for FY2021
Materials for displays
Key Product Sales Targets
Electronics-related products 12.6 13.1 3.9 14.0
Results for FY2019 Results for FY2020 Increase/ decrease (%)
Targets for FY2021
1. FY2020 Summary of Performance by Segment(Colorants and Functional Materials/Polymers and Coatings)
Sales of inks for flexible food packaging materials remained strong both in Japan and overseas, partly reflecting an increase in sales of biomass inks.
Construction and renovation demand decreased due to the COVID-19 pandemic.
Packaging Materials
Printing and Information
Offset inks Facilitated structural reforms such as the formation of alliances in production in response to the accelerating contraction of demand for printing.
Functional Inks* UV curable inks: Sales grew for packaging materials with respect to biomass and antibacterial products in the UV curable ink product lines.
* Functional inks: UV curable inks, metal decorating inks, inkjet inks and screen inks* Segment changes: Effective FY2021, inkjet inks are classified as products of the Colorants and Functional Materials Business
instead of the Printing and Information Business.
1. FY2020 Summary of Performance by Segment(Packaging Materials/Printing and Information)
(Unit: 1 billion yen)
(Unit: 1 billion yen)
27.5 29.3 6.4 31.5
Key Product Sales Targets Results for FY2019 Results for FY2020 Increase/ decrease (%)
Targets for FY2021
Overseas liquid inks
Key Product Sales Targets
Functional Inks 31.9 28.7 -10.0 28.0
Results for FY2019 Results for FY2020 Increase/ decrease (%)
Surge in prices of raw materials from China due to the tightening of environmental regulations (photopolymerization initiators and pigment intermediates).
Sharp rise in naphtha prices
COVID-19 pandemicChanges in the market structure (printing and displays)
202020192018
• The Polymers and Coatings and Packaging Materials Businesses now accountfor a larger share of total profit.
• Allocated resources to new businesses.• Promoted eco-friendly products.• Facilitated expansion into the overseas business area.
• Further expedite structural reforms.• Create pillars that support new products and businesses.• Take measures to address quick changes in the market structure due to the
COVID-19 pandemic.
2. The SIC-II Medium-Term Management Plan (2021-2023)
Review of the previous SIC-I Medium-Term Management Plan (2018-2020)• Failed to meet the performance targets
■ Make investments intensively in overseas growth markets, such as China, India, Turkey and Southeast Asia
■ Increase sales of functional inks for packaging applications such as paper containers and use in the industrial field*
■ Facilitate the launch of the color communications business
* Segment changes: Effective FY2021, inkjet inks are classified as products of the Colorants and Functional Materials Business instead of the Printing and Information Business.
2020 2023
66.6 billion yen
3.9 billion yen
80.0 billion yen
5.6 billion yen
2020 2023
65.6 billion yen
0.2 billion yen
64.5 billion yen
1.3 billion yen
Take the lead in eco-friendly initiatives and achieve growth and expansion especially in the Asian marketPackaging Materials
■ Facilitate the launch of the packaging materials recycling business
2-1. Basic Policy (i) –Measures to strengthen segments' profitability
Printing and Information Move forward with evolution into a profitable business structure that adapts to market conditions.
* Capital investment: Results shows the amount on an acceptance inspection basis, while the targets shows the amount on an order-placing basis.Enhanced cash on hand by a new borrowing as a countermeasure against the
COVID-19 pandemic.
Capital investment
Depreciation
Results for FY2020
14.5
10.0
Full year targets for FY2021
Investment in facilities and depreciation expenses (Unit: 1 billion yen)
13.9
9.2
45.0 45.0Interim
FY2019 FY2020
Year-end
Dividend payment (Unit: Yen/share)
45.0 45.0 (Forecast)
(Reference) Consolidated Balance Sheet
As of December 31, 2019
As of December 31, 2020
Increase/ decrease (%)
Current assets 200.0 214.1 7.1
Non-current assets 176.2 166.1 -5.7
Total assets 376.1 380.2 1.1
Current liabilities 106.7 91.4 -14.4
Non-current liabilities 42.5 71.5 68.3
Total liabilities 149.2 162.9 9.2
Total net assets 226.9 217.3 -4.2
Total of liabilities and net assets 376.1 380.2 1.1
(Reference) Consolidated statement of income and special notes
279.960.347.213.22.01.3
13.82.13.6
12.33.48.98.5
100.0
21.6
16.8
4.7
0.7
0.5
4.9
0.7
1.3
4.4
1.2
3.2
3.0
257.757.244.312.92.02.4
12.50.12.6
10.03.56.56.0
-7.9
-5.2
-6.1
-2.0
2.4
84.2
-9.4
-95.6
-27.4
-18.7
3.2
-27.1
-29.3
100.0
22.2
17.2
5.0
0.8
0.9
4.9
0.0
1.0
3.9
1.4
2.5
2.3
FY2019
Net sales
Gross profit
Total selling, general and administrative expenses
Operating profit
Total non-operating income
Total non-operating expenses
Ordinary profit
Total extraordinary income
Total extraordinary losses
Profit before income taxes
Total income taxes
Profit
Profit attributable to owners of parent
Ratio tonet sales
(%)
FY2020 Increase/decrease (%)
Ratio tonet sales
(%)
(Unit: 1 billion yen)
*1. Non-operating expenses: Foreign exchange losses increased.*2. Extraordinary income: Gain on sales of investment securities was posted as extraordinary income in the previous year.*3. Extraordinary losses: Include expenses for the consolidation of unprofitable bases in both Japan and overseas, and loss on remittance fraud at U.S. subsidiary.