Steady Growth Amid Severe Changes in the Business Environment
Fiscal 2013 is the final year of the five-year midterm management plan GS21-SHINKA!, which started the same time I took office as President. Looking back on the four years through fiscal 2012, they were a time of severe fluctuations in the business environment, from the slowdown that followed the collapse of Lehman Brothers through the sluggish economy in Europe, the rising value of the yen on international currency markets, the Great East Japan Earthquake, and new risks in China.
However, Sekisui Chemical Group has continued to steadily increase its operating income through reforming its business models in pursuit of sustainable growth.
In the housing business, we introduced the Shin Smart Heim Homes that realize both ecological and economic performance through use of solar power, HEMS, and storage cells, and we have strived to promote the use of homes that realize environmental performance, economic performance, and comfort, as our sales of homes equipped with solar power systems reached a cumulative total of 120,000 homes since their introduction in 1997. In the infrastructure business, we demonstrated our presence domestically, for example with the SPR pipeline rehabilitation method winning the Okochi Memorial Prize. It can greatly reduce waste when treating aged sewer pipe compared to traditional excavation construction method. Furthermore, we have secured the top share in the important resin pipes market with the acquisition of the pipe materials business of Mitsubishi Plastics, Inc. Also, we set a new record high in profits overseas for the third consecutive year since adopting the division companies system in 2000, thanks to the results of progress in market development in strategic businesses such as the IT field, including products for use in mobile devices.
As the recovery from the Great East Japan Earthquake finally is approaching the stage of revival, we will continue demonstrating the combined strengths of the Group to help build safe and secure homes and cities and, furthermore, to build a sustainable society, not just in Japan but globally.
Reviewing Fiscal 2012
Sekisui Chemical Group's CSR management efforts are based on the principles of the Three Prominences in the Environment, CS & Quality, and Human Resources and the Three Attitudes of Sincerity of Compliance, Risk Management, and Disclosure & Communication.
Once again in fiscal 2012, a major result was the expansion and growth of Environment-Contributing Products. We define Environment-Contributing Products as those that can contribute to reducing society's environmental load instead of just incorporating the perspectives of consideration for the environment. Our target for fiscal 2013 is to increase sales of Environment-Contributing Products to a share of 40% of net sales, and in fiscal 2012 , we grew this share to the 38% level. We also reduced carbon-dioxide emissions from production activities in Japan by 9% from the previous fiscal year, as environmental investment in production equipment gradually has begun to demonstrate results. These emissions reductions and the reductions in carbon-dioxide emission from increased sales of Environment-Contributing Products have demonstrated steady progress toward the target of carbon-negative status called for in our vision for 2030.
At the same time, in the area of compliance the year also saw some problems arise such as mistaken entry of certification numbers related to homes built using parts from certified manufacturers, such as certified residential components. This resulted in considerable inconvenience and concern for related parties including those living in the affected homes. Responding to this matter with the utmost seriousness, we will strive to prevent its reoccurrence through raising awareness and strengthening management systems.
Further Groupwide Enhancement and Thorough Implementation of CSR Management
Under the CSR Midterm Plan, we have deployed CSR management on a Groupwide basis, focusing our efforts on strengthening CSR management and achieving its permeation throughout the organization and on global deployment. In fiscal 2012, as an addition to the existing system, we established a Risk Management Group inside the CSR Department, with the goal of strengthening risk management and crisis management. We worked to complete disaster-prevention structures at individual sites together with risk analysis and drafting of solutions in each organization. We now address CSR through deployment of the business policy of having each division company and department establish and address its own CSR topics and priorities, all based on discussion and consideration in the CSR Committee and individual subcommittees.
However, amid progressive diversification andglobalization of our businesses accompanying growth, we still cannot be said to have achieved firm permeation of CSR management in areas such as sharing of the Group's thinking and values and coordinated efforts to address common topics in individual areas overseas.
In fiscal 2013, the final fiscal year of the midterm management plan, we will work to further deploy and achieve thorough permeation of CSR management throughout Sekisui Chemical Group as a whole, reflecting matters such as the business characteristics of each division company and the characteristics of each area overseas.
In addition, we will continue supporting the United Nations Global Compact as a platform for deploying CSR management on a global basis.
To be a Company Sustainable for the Next 100 Years by Creating Businesses for the Next Generation
In fiscal 2013, I would like us to steadily capture growing demand as interest increases in full implementation of earthquake-recovery activities and in addressing deteriorating infrastructure in Japan, and orders for homes increase in advance of the increase in consumption tax planned for 2014, among other developments. At the same time in overseas, I believe that we can expect to be able to capture demand in the promising markets of auto parts, functional resins, and housing since we have established an overseas production structure for growing markets, together with favorable developments in exports in the IT field, which had been impacted by the high value of the yen on international currency markets.
In the segments of the environment, energy, and building stock, which are expected to experience future growth, I believe that since Japan is one of the first countries in the world to face these issues, if we can develop a Japanese model for addressing them, then we will be able to develop next-generation businesses that can contribute to the world. For this reason, we in Sekisui Chemical Group need to continue to execute SHINKA ("evolution") ourselves, by reforming our business model through being sensitive to changes in the external environment. As the globalization of business accelerates and the human resources who can thrive in such business grow more diverse, we will continue in the future aiming to be a sustainable company that can continue to demonstrate its presence for 100 years, as we work to increase our corporate value and evolve CSR management Groupwide through achieving an environment in which individual employees can grow through improving their own skills and taking the initiative to take on challenges; growing our businesses with a focus on the environment and contributing to society by expanding and creating Environment-Contributing Products; and supplying truly satisfying products and services that reflect customer feedback, through improving their basic and attractive qualities.
Naofumi Negishi, President