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High Performance Plastics (HPP) Company

Last updated: Aug 26, 2016

Keita Kato President of High Performance Plastics Company

Business Strategies

We will introduce high-value-added products using our unmatched “prominent” technology in markets and fields with prospects for high future growth with the aim of establishing the HPP Company as the global leader in those fields. We will also flexibly develop global operations geared to specific market conditions and characteristics.

Business Overview

The High Performance Plastics (HPP) Company’s strengths are its original fine particle, adhesion, precise synthesis, and other technologies upon which it develops a wide range of businesses centered on providing materials for advanced technology fields.

The HPP Company focuses on business development driven by high value-added products and commands top global market shares for products ranging from conductive fine particles and liquid crystal sealants to interlayer films for automotive laminated glass, polyolefin foam for automobile interiors, and cholesterol diagnostic reagents.

The HPP Company is the primary operating income generator for the Sekisui Chemical Group and is introducing competitive products into global markets with the aim of achieving earnings growth that outpaces the global economic growth rate. Under the new medium-term management plan, the HPP Company will fortify its current core products, develop new products, augment its operations through M&A and other measures in its four strategic fields of Electronics, Automobiles and Transportation, Building and Infrastructure, and Life Sciences.

High Performance Plastics (HPP) Company

1.Automotive bumper components 2.Foaming material for automotive interiors 3.Interlayer film for automotive laminated glass 4.Blood coagulation analyzers 5.Cholesterol diagnostic reagents 6.Double-sided LED fixed placement tape used in smartphones and tablet computers 7.Conductive fine particles 8.Thermal expansion fire-resistant materials 9.Chlorinated polyvinyl chloride (CPVC) resin compound

Press Releases on HPP Company’s Topics
Press Releases on HPP Company’s Topics

Development of Interlayer film to meet the demands to increase the amount of Information displayed on a vehicle windshield

Performance Highlights

PERFORMANCE HIGHLIGHTS

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*Please see the presentation materials for the most recent business plan and results.

Fiscal 2015 Performance

Record high profit for three consecutive fiscal years

The HPP Company reported a substantial increase in earnings posting record high profit for a third consecutive fiscal year in fiscal 2015. This was largely attributable to steady growth in net sales across all four of the company's strategic fields. Among a host of factors, the increase in sales volume in the Automobiles and Transportation field supported by an improved product mix thanks to the shift to high value-added products in particular contributed to the strong result. Moreover, the company's operating income ratio hit an unprecedented level, climbing 1.8 percentage points compared with the previous fiscal year, to 14.1%.

Looking at the HPP Company's four strategic fields in light of the market environment throughout fiscal 2015, trends in interlayer films for automotive laminated glass in the Automobiles and Transportation business in Europe and the United States were sound. Sales growth was especially strong for high-performance and high value-added products for use in the head-up displays mounted on luxury models.

In the Life Science field, sales of cholesterol diagnostic reagents, where demand remains firm, diagnostic reagent systems including influenza test kits, and testing equipment grew steadily both in Japan and overseas.

Meanwhile, results in the Electronics field were impacted by adjustments in the manufacture of mobile devices due mainly to the slowdown in economic growth in China. Despite the startup of operations at the company's CPVC plant in Thailand, the HPP Company inevitably struggled in the building and infrastructure business owing mainly to political instability in the Middle East, which triggered a slump in the construction market.

Analysis of Operating Income for FY2015 (year-on-year))

While growth in the four strategic business fields was uneven in fiscal 2015, profit for the HPP Company as a whole exceeded initial plans. At the same time, efforts to rationalize underperforming products by reforming the business structure helped to improve the operating income ratio. Looking at the factors that contributed to the increase in operating income in fiscal 2015, the company's results were buoyed by the upswing in sales volume, the increase in marginal profit on the back of improvements in the product mix, and successful efforts to reduce costs thanks to the decrease in raw material prices. As a result, operating income climbed 7.4 billion yen compared with the previous fiscal year.

Steady progress in carrying out medium- to long-term strategies

In the fiscal year under review, the HPP Company achieved an increase in revenue and earnings. At the same time, the company took definitive steps to push forward three growth strategies and was successful in further fortifying the fours strategic fields, strengthening the overseas business, and creating new products and businesses.

In order to further fortify its four strategic fields, the HPP Company undertook active investments in expanding its interlayer film plant in Mexico and acquiring EIDIA Co., Ltd. with the aim of boosting the diagnostic reagent business. Moreover, steps were taken to reform the structure of the company's electronics business by shifting to semiconductors thereby alleviating the dependence on mobile devices in the HPP Company's overseas operations. Successful efforts were also made to reinforce the company's global purchasing structure. As far as the company's new product and business activities are concerned, considerable progress was made in the development of promising products including self-luminous interlayer films for use in head-up displays.

Drawing on the underlying strengths of sound performance trends as well as steady progress in the promotion of growth strategies, the HPP Company recognized the importance of strengthening its business foundation in anticipation of entering the next stage of growth. As a result, the company took steps to reform its business structure by reorganizing domestic sales companies and the tape business, integrating the film business, and investing in funds as well as Dexerials Corporation in a bid to uncover the seeds for new business activities.

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Fiscal 2016 Plan

Targeting an increase in operating income despite a harsh market environment

The Sekisui Chemical Group is aware that business conditions in each of the HPP Company's mainstay markets including Japan will become difficult throughout fiscal 2016, the fiscal year ending March 31, 2017. The company is also anticipating a turnaround in the foreign currency exchange market with value of the yen appreciating sharply.

Under these circumstances, the HPP Company plans to further bolster its earning power by shifting to high-performance, high value-added products in the global markets of each of its four strategic fields. Cognizant of the difficulties involved in continuously working toward a high-profit company, the HPP Company is determined to take on each new challenge in a bid to further strengthen its earning power.

Analysis of Operating Income for FY2016 (year-on-year)

Net sales in fiscal 2016 are projected to fall 7.6 billion yen year on year, to 371 billion yen. This is largely due to the impact of foreign currency conversion. Despite this decline in sales, the HPP Company is targeting a fourth consecutive fiscal year of record earnings growth. The goal is to secure operating income of 54 billion yen, up 0.6 billion yen, and an operating income ratio of 14.6%. These targets for both operating income and the operating income ratio significantly exceed the forecasts set when the Company's Medium-Term Management Plan was first launched.

Looking at factors that affect the company's operating income, movements in foreign currency exchange rates are expected to have a negative impact of 5 billion yen. In contrast, the quantity and composition of sales is projected to have a positive impact of 9.8 billion yen. The negative impact of movements in foreign currency exchange rates reflects appreciation in the value of the yen against the U.S. dollar from 120 yen in fiscal 2015 to 110 yen in fiscal 2016.

Turning to the quantity and composition of sales in fiscal 2015 in more detail, the Automobiles and Transportation field as well as the Life Science field experienced steady growth. On the other hand, sales in the Electronics field declined substantially owing mainly to adjustments in the manufacture of mobile devices. Accounting for each of these factors, sales climbed 4.9 billion yen year on year. In fiscal 2016, the Automobiles and Transportation as well as the Life Science fields are again expected to expand. The HPP Company is also targeting an upswing in the Electronics field on the back of an increase in the pickup of new mobile device models. Based on the aforementioned, profits are forecast to climb 9.8 billion yen  year on year.

Securing an upswing in profit on the back of life science business growth

Fiscal 2016 is the final year of the current Medium-Term Management Plan. As such, the HPP Company will put the finishing touches on ongoing measures during fiscal 2016. In addition to bolstering measures in the company's four strategic fields, overseas as well as new product and business engines of growth, energies will be channeled toward completing the current Medium-Term Management Plan and putting in place a new Medium-Term Management Plan in a timely fashion.

In the Electronics business, the HPP Company will focus on the liquid crystal and mobile device sectors, areas in which the company excels. At the same time, the company will lower its dependence on markets where conditions are volatile. Steps will be taken to accelerate the pace of development in the semiconductor and organic EL fields in a bid to broaden the scope of the company's activities. In the Automobiles and Transportation business, the HPP Company will continue to pioneer new product fields and regions while strengthening global collaboration. Taking into consideration the limited product scope in the building and infrastructure business, the company will continue to expand by focusing on core and peripheral products including CPVC. In the Life Science field, the HPP Company will make the most of synergies with the newly acquired EIDIA Co., Ltd. as the means to generate sales growth.

In the overseas business, every effort will be made to step up activities aimed at becoming an approved global vendor for semiconductors.

Turning to new products and new businesses, the HPP Company will accelerate the priority allocation to high-quality themes while continuing to increase new product brought to the market. Furthermore, the company will pursue new businesses by utilizing investment in funds and other activities undertaken during the previous fiscal year.

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HPP Company and Market Data

HPP Company and Market Data1

HPP Company and Market Data2

HPP Company and Market Data3