High Performance Plastics Company
President of High Performance Plastics Company
At a Glance
|The High Performance Plastics Company’s strengths are its unique fine particle, adhesion, and precise synthesis technologies upon which it builds a wide range of businesses centered on leading-edge materials. In recent years, the HPP Company has focused on expanding business in its three strategic business fields of information technology materials (IT), automotive materials (AT) and medical products (MD). The HPP Company is the primary driver of the Company’s operating income growth through its business development centered on high value-added products and its top global market shares for its liquid crystal spacers and conductive fine particles in the IT field and its high-performance interlayer films and polyolefin foam for automobile interiors in the AT field. The HPP Company continues to strengthen its existing core products while also developing new products and reinforcing its operations through M&A and other strategies to support the ongoing expansion of its business centered in the increasingly sophisticated IT, AT, and MD fields.
|Primary Business Products||Main Products and Brand Names|
IT (IT-related materials)LCD fine particles, Photosensitive materials,
Semiconductor materials, Optical adhesive tape and film,
Micropearl™ (Spacer, Conductive fine particles)
AT (Automotive materials)Interlayer films for laminated glass, Polyolefin foam,
Molded resin products and double-faced tape for vehicle use
S-LEC™ (Interlayer film)
Softlon™ (Foaming material)
MD (Medical products)Diagnostic agents, Medical devices, Pharmaceuticals,
Drug-discovery support businesses
Cholestest™ (Cholesterol diagnostic agents)
Insepack™ (Blood sampling plastic tubes)
Functional materials and othersAdhesives, Fire resistant tapes and sheets,
Packaging tape, Packaging and agricultural film,
Plastic containers, Polyvinyl alcohol resins
Fiblock™ (Thermal expansion fire-resistant material)
Note: The previous fiscal year results encompassed the 15-month period from January 1,
2012, to March 31, 2013, owing to the revision to the overseas subsidiaries’ accounting period effected in fiscal year 2012. Overseas subsidiary earnings in the January - March 2012 quarter included net sales of 32.7 billion
yen and operating income of 1.3 billion yen.
Note2: Please see the presentation materials for the most recent business plan and results.
The High Performance Plastics (HPP) Company, guided by its “Chemistry for your Win” banner, employs a business strategy focusing management resources on the IT-related materials (IT), automotive materials (AT) and medical products (MD) fields. The company views these three fields as presenting significant growth potential and as areas where it can fully apply Sekisui Chemical’s highly differentiated products leveraging the company’s advantages.
In each of these fields, the HPP Company develops products and operates production and sales structures geared to the global market. The company’s leading products already maintain high market shares around the world and are establishing a competitive advantage.
The Medium-term Management Plan sets targets for the HPP Company of 360 billion yen in net sales and 36 billion yen in operating income in fiscal year 2013, the final year of the plan, and we have implemented various measures, including M&A in the strategic business field and aggressive development of new markets overseas, to reach the targets.
At this point, the global economic conditions, particularly in Europe, are worse than we had anticipated, and we believe it will be a significant challenge to achieve the targets for the year. Nevertheless, we are making steady progress toward realizing an operating structure that positions the company for earnings growth.
Results for Fiscal Year 2012
Net sales: Increase of 35.1 billion yen to 332.0 billion yen
Operating income: Increase of 2.7 billion yen to 23.2 billion yen
In fiscal year 2012, the HPP Company recorded an increase in net sales on sales growth in the strategic business fields and regional sales growth in Japan, Asia, and the United States. Our performance in Europe suffered from the sluggish conditions in the region. Operating income also turned upward supported mainly by growth in sales volume and an improved sales composition.
Net sales rose 35.1 billion yen year on year to 332.0 billion yen and included steady sales growth in the three strategic business fields of 5.0 billion yen to 150.1 billion yen*.
The global business development centered on the strategic businesses continued during the year, and expanding sales of high-performance interlayer films in the U.S. market contributed to net sales overseas rising 8.8 billion yen year on year to 168.4 billion yen*.
The company’s operating income increased by 2.7 billion yen year on year to 23.2 billion yen.
Increased sales volume, an improved sales composition, cost cuts, lower materials prices, and other positive factors offset the impacts from the foreign exchange rate, lower product prices, higher fixed costs, and other factors.
The consolidated fiscal years of overseas subsidiaries were revised in fiscal year 2012. To facilitate examination of the factors influencing changes in the operating income results, the consolidated subsidiary figures for fiscal year 2012 are presented for the 12-month period from April 1, 2012, to March 31, 2013.
In the strategic business fields, fiscal year 2012 net sales rose year on year in the IT field as growth in mobile solution products for smartphones and tablet terminals overcame sluggish demand for TV and computer applications, which was largely due to production adjustments for liquid crystal panels. During the year, we also expanded our production capacity for capacitive ITO films, which are in strong demand for touch panel applications. The adverse market conditions, which included production adjustments by key customers in the fourth quarter, resulted in IT field net sales rising just 0.5 billion yen year on year to 37.8 billion yen* in fiscal year 2012.
Net sales in the AT field increased by 4.2 billion yen year on year to 62.1 billion yen* as the ongoing negative impact from the economic conditions in Europe was offset by strong demand and expanding sales of high-performance interlayer films in the United States. During the year, we established the joint venture PT ADYAWINSA SEKISUI TECHNO MOLDING to manufacture and sell injection mold products for automotive components in the promising growth market of Indonesia.
In the MD field, emphasis was placed on developing new products while we aimed to expand the diagnostic equipment businesses. Progress was also made in the structural reorganization of our operations in the MD field, including the consolidation of our North America bases.
Although sales in the MD fields rose only slightly in fiscal year 2012, we made steady progress with measures designed to lead to expanding earnings going forward.*Overseas subsidiary net sales figures exclude the period from January to March 2012.
Fiscal Year 2013 Plan
Net sales: No change at 332.0 billion yen
Operating income: Increase of 6.8 billion yen to 30.0 billion yen
The HPP Company is aiming to raise operating income to 30.0 billion yen in fiscal year 2013, the final year of the GS21-SHINKA! Medium-term Management Plan. Although these targets are short of the plan’s goals of 360.0 billion yen in net sales and 36.0 billion yen in operating income, we will continue laying the groundwork to enable ongoing growth by advancing earning structure reform and strengthening the core capabilities of each business. Specific measures will include fortifying the strategic businesses and developing new products and businesses to advance our growth strategies and paralleling this with measures including strengthening our personnel management capability to fortify our management base.
The market environment forecast, which serves as the basis for the HPP Company’s business plan for fiscal year 2013, includes the regional outlook for improving business conditions in the United States supported by recoveries in consumption and production and improving employment conditions. We also anticipate improving business sentiment in Japan on rising stock prices, a weaker yen, and recovering personal consumption. We also forecast generally strong growth in emerging countries. At the same time, we expect demand to remain sluggish in Europe and the economic expansion in China to continue slowing.
The market environment forecasts for the business fields the company is developing include, in the IT field, demand holding steady from fiscal year 2012 for LCD TVs and computers and rising further for smartphones, tablet computers, and other mobile devices. The macroeconomic outlook for the AT field is similarly mixed, as we anticipate growing demand on economic recovery and growth in the United States, Japan, and emerging countries along with diminishing demand in Europe and a continued slowing of demand in China.
MD field operations, particularly in the diagnostic agent field, are relatively unaffected by general business conditions. We expect demand in the MD field to remain solid overall with rising trends developing from the aging populations in advanced countries and broader compulsory testing in emerging countries.
Sales and Income Targets
The HPP Company is aiming to substantially boost overseas sales in the three strategic businesses in fiscal year 2013. By expanding business in each of the IT, AT, and MD fields, we plan to raise total net sales in the three strategic business fields by 16.8 billion yen year on year to 166.9 billion yen.
We plan to increase net sales overseas by 30.5 billion yen to 198.9 billion yen by expanding in the AT field, with a focus on Asia, and by fully developing the diagnostic equipment business in the MD field in Europe and the United States. As a result, the HPP Company is targeting overall net sales of 332.0 billion yen in fiscal year 2013.
The company expects operating income to benefit from profit contributions from the increased sales volume and improved sales composition as well as from favorable foreign exchange rates. These positive factors are expected to more than offset negative factors, such as higher raw material and fixed costs, generating a 6.8 billion yen rise in operating income to 30.0 billion yen.
Fiscal Year 2013 Initiatives
The HPP Company’s fiscal year 2013 growth strategies will focus on three themes: strengthening the strategic businesses, expanding overseas business, and developing new products and businesses.
The first initiative, strengthening the strategic businesses, will entail focusing efforts in the IT field on steadily raising sales in growth markets. Specific efforts will focus on expanding sales of mobile solutions products for smartphones and tablet computers and on enhancing production capacity for ITO film. In the AT field, we will accelerate the sales growth and raise profits of high-performance interlayer films while also developing business in India and Indonesia, which we consider to be frontier regions in the AT field. In the MD field, we will seek to fully develop the diagnostic equipment business in Europe and the United States and develop our domestically marketed diagnostics reagents for overseas markets.
The second initiative, expanding overseas business, will entail capturing the rising demand in growth markets. We will seek to increase our export volume and expand domestic production capacity for chlorinated polyvinyl chloride (CPVC) resin. We will also leverage the joint-venture company in Thailand to capture the brisk construction demand in Southeast Asia and ASEAN, particularly in India, as well as in the Middle East region.
Implementing the third initiative, developing new products and businesses, will include stepping up efforts to bring new products to market, such as components for lithium-ion batteries and binding materials for semiconductors, and to expand FP Business sales of thermal expansion fire-resistant materials.
Through the steady implementation of these initiatives, we aim to strengthen our core business capabilities to raise both sales and profit in fiscal year 2013 realize continuous business growth in the future.