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Other IR Events

Small meeting for sell-side analysts

Held on Sep 6, 2017

(About the Group’s “Fusion” Initiatives in Its Current “SHIFT 2019 –Fusion-” Medium-term Management Plan)

What up till now has prevented you from carrying out the “Fusion” initiatives identified in your current “SHIFT 2019 –Fusion-” Medium-term Management Plan?
In the past, each employee, has for the most part, focused on his or her duties in isolation within the confines of each individual company and business and limited knowledge of the activities of other areas throughout the Group. Recognizing the weaknesses that this entails, we have initiated measures aimed at promoting mutual awareness and understanding.
Have you put in place any mechanisms or incentives to help newly promote this “Fusion?” Will you be able to achieve the incremental increase in sales of 50 billion yen identified under the current Medium-term Management Plan?
We have, for example, established the New Innovation Committee to supplement our existing structure from the current fiscal year. We are calling for new research themes that offer considerable potential by straddling multiple business departments. After undertaking the necessary due diligence and screening required, we have already initiated trials and market research funded in part by corporate headquarters.
At the time the current Medium-term Management Plan was formulated, we factored into our target for an incremental increase in sales specific themes that were considered to offer potential. On this basis, sales are expected to increase around 12 billion yen in the current fiscal year, the first year of the Medium-term Management Plan. While there will undoubtedly be themes that will eventually be abandoned, we are confident that new themes will emerge and be added following deliberation by the New Innovation Committee and other screening activities. With this in mind, we believe that the target of 50 billion yen is realistic.

(About the Group’s Environmental Initiatives)

I am aware that the Company engages in sound environmental activities. Can you provide details of three examples that would appeal to investors?
First, we were quick to introduce a third-party structure and system to evaluate Environment-contributing Products. In this manner, Environment-contributing Products are identified after a stringent screening and certification process conducted by several external experts across a variety of fields.
Second, we established an energy saving investment framework of 12 billion yen under the current Medium-term Management Plan. This framework is designed to push forward projects that historically were difficult to undertake from an investment return perspective. The aim is to invest an amount equivalent to roughly 0.3% of sales each year. This is a considerable amount even when compared with other companies that place considerable emphasis on the environment.
Third, we maintain a strong commitment to global environmental education and training. Just the other day, we held the Global Children’s Eco Summit. Bringing together roughly 50 young children of employees from around the world, steps were taken to heighten awareness toward the environment through various measure including experience-based learning activities.

(About the Film-type Lithium-ion Battery Business)

What is the current status of the Film-type Lithium-ion Battery Business? Are you making progress with new developments in the Automotive field?
The Housing Company commenced sales of Smart Power Station 100% Edition installed our Film-type Lithium-ion Battery, from January 2017. Over the ensuing period, results have been robust with orders for the first three months exceeding initial projections. As a proprietary product, Housing Company sales staff are well positioned to market the Film-type Lithium-ion Battery to clients.
In addition to putting in place a volume production structure while working to reduce costs, we are promoting the development of a compact model that leverages the products distinct thin, flat, and high capacity features.
In the Automotive field, vehicle manufacturers have a sound understanding of the benefits that our film-type lithium-ion battery provides compared with conventional products. Building on its thin and flat configuration, our product allows for the increased use of interior space while also delivering improved charging speed as well as high output. Taking each of the aforementioned factors into consideration, we are engaging in discussions with a view to adoption in fiscal 2021.
A considerable investment will be required in the event that you enter the automotive market in earnest. Will you undertake this move and associated investment on your own?
As far as core components are concerned, we intend to carry out on our own. We are not currently contemplating OEM or other avenues. Compared with conventional products, we are confident in our ability to hold down capital costs utilizing proprietary production methods.

(About Interlayer Film Business Strategies in the Automobiles and Transportation Field)

To what degree are you anticipating increases in demand for and sales of high-performance interlayer films under the current Medium-term Management Plan?
Operations are expected to commence at our new Mexico Plant line from the second half of 2017 according to initial plans. This will help boost production mainly of high-performance interlayer films and allow us to not only supply the Mexican market, but also the Americas including North America. As far as head-up display (HUD) systems are concerned, use has traditionally focused on luxury vehicles. We are now seeing signs of increased use in standard vehicles.
With the development of new methods other than glass projection for HUD interlayer films, is there a risk that the Company’s products will no longer be used?
While the combiner system does indeed currently exist, the glass projection method is recognized as better helping minimize the burden on drivers. We anticipate the glass projection method will remain the preferred method for the foreseeable future.
What are production capacity expansion plans in the Interlayer Film Business after the new Mexico Plant comes on line?
Demand for HUD interlayer films is expanding especially in Europe. Currently, efforts to address this demand focus on export activities. We are considering establishing new facilities in Europe.
As the trend toward electric vehicles gathers momentum, do you see demand increasing for any products? Conversely, are there any products where demand will decline?
There is the possibility of a decline in the use of drive system-related parts owing to a reduction in the number of component items. Meanwhile, we are looking at an upswing in demand for heat dissipating and other materials as the focus on reducing weight and improving comfort increases. There are also those who are projecting higher demand for sound insulation films.

(About the Electronics Field Strategies)

Is there any risk that existing products will become obsolete as a result of advances in technology in the Electronics Field? What is the status of new product development?
We have received information regarding the development of new products from customers in such fields as conductive fine particles and UV adhesives. We are maintaining a high market share by developing new applications and providing additional value.
Looking at tapes as one example, we are promoting a process of repetitive improvement in line with the characteristics of end products. This includes products to address the growing trend toward smartphones with narrow and curved surface frames. On this basis, we believe the risks of sudden obsolescence are low. Having said this, we are fully aware that the risk of obsolescence due to advances in technologies is ever present especially in the dramatically changing electronics market.
What impact will the trend toward organic LEDs have on sales of liquid crystal-related products? What semiconductor-related products do you have in your portfolio?
We have a significant number of products that are used in both liquid crystal and organic LEDs. We are increasing the number of products for use in organic LEDs. As far as semiconductors are concerned, we offer such products as after-process protection films. Sales continue to expand on the back of robust demand.

(About the High Performance Plastics Company’s Strategic Investment Activities)

The Company announced details of the acquisition of Polymatech Japan Co., Ltd. and SoflanWiz Co., Ltd. Looking at the operating income ratios of both companies, do you see the returns on investment as slightly weak?
Rather than pursue a short-term contribution to earnings, our expectations for both companies are based on a medium- to long-term scenario. Each acquisition represents an effort to put in place a growth platform. Looking ahead, we will continue to undertake acquisitions of companies that offer technologies and customers not currently in the Group’s fold.
What is your role in the newly established PeptiStar Inc.? The general impression is that the volume production of specialty peptide drug substances is extremely difficult. What technologies can Sekisui Chemical bring to the table and effectively use?
Our role and the expectations that we hope to meet rest in our specialty peptide manufacturing technologies. Historically, the solid phase method has been used to products specialty peptides. Sekisui Chemical has developed and patented a lower cost, high yield method. In the future, we will target the contract manufacturing of specialty peptides after firmly establishing this technology.

(About the Housing Company Strategies)

Are there any concerns that newly launched products of hit-selling volume zone will negatively impact existing products?
We are receiving favorable feedback after implementing test sales, and at this stage we have not seen much negative impact. We are looking forward to commencing sales in earnest.
How do you plan to increase earnings in the Renovation Business?
Demand for solar systems that helped drive earnings growth up to around 2013 continued to decline. However, we are gaining in confidence with efforts to transition toward a composite proposal-type marketing style that matches the lifestyles of customers. This includes strengthening our lineup of materials in such fields as modular baths and external walls.
In addition, a portion of the Feed in Tariff system will come to an end from fiscal 2019. As a result, we anticipate demand for storage cells will increase. We will put forward proposals focusing mainly on existing customers that have adopted our solar systems in an effort to a pillar for renewed growth.