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High Performance Plastics (HPP) CompanyLast updated: Oct 19, 2017

President’s Policy

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 current 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.

Press Releases on HPP Company’s Topics

Apr. 2016
Merger of 2 Medical Companies in the Sekisui Chemical Group
Oct. 2016
Line-up Expansion of Industrial Double-Sided Tape for “Narrower Bezel” and “Thinner Body” of Mobile Devices1
Nov. 2016
Expansion of the Drug Substance Manufacturing Facility at Sekisui Medical Co., Ltd.’s Iwate Plant
Mar. 2017
Establishment of a Polyolefin Foam Production Company for Automobile Interiors in Wuxi, China2
Apr. 2017
Notice of Acquisition of Management Rights to “Polymatech Japan Co., Ltd. Group”
Jun. 2017
Notice Concerning the Start of Plans to Establish a New Company for the Research, Commercial Manufacture, and Sale of Peptide Pharmaceuticals by PeptiDream Inc., Shionogi & Co., Ltd., and Sekisui Chemicals Co., Ltd.
Jul. 2017
Establishment of an Automotive Interior and Exterior Plastic Parts and Industrial Components Manufacturing Plant in Tochigi in April 2018
Jul. 2017
New European Research Center for Interlayer Films for Laminated Glass in the Netherlands
Jul. 2017
Notice Concerning the Acquisition of Shares (i.e., Subsidiarization) in “SoflanWiz Co., Ltd.”, which Manufactures and Sells Urethane Products

Performance Highlights

Performance Highlights
Performance Highlights

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

Summary of the Previous Medium-term Management Plan and Fiscal 2016 Performance

Achieved a record-high profit thanks to an increase in sales volumes and improvement in the product mix

Over the three-year period of the previous SHINKA!-Advance 2016 Medium-term Management Plan, net sales in the High Performance Plastics (HPP) Company were held to a slight increase due to the effects of movements in foreign currency exchange rates. In contrast, operating income continued to grow by leaps and bounds.

These results were largely attributable to the increase in sales volumes and continued progress in improving the product mix by shifting to high-value-added products in the four strategic fields that were expected to drive growth. Buoyed by the positive flow-on effects of these factors, operating income in the HPP Company climbed 51.0% from 36.1 billion yen in fiscal 2013, to 54.5 billion yen in fiscal 2016, the final year of the previous Medium-term Management Plan. This represents five consecutive fiscal years of profit growth and a fourth consecutive fiscal year of record-high operating income. Moreover, the operating income ratio also improved substantially from 10.2% in fiscal 2013, to 15.3% in fiscal 2016.

Also during the three-year period of the previous SHINKA!-Advance 2016 Medium-term Management Plan, the HPP Company undertook investments totaling 85.0 billion yen. This comprised ordinary investments of 50.0 billion yen as well as strategic investments and M&As of 35.0 billion yen. Based on the company’s results, successful steps have been taken to recoup the sufficient return on investments.

Moreover, the company made progress with efforts to rationalize low-profit businesses and is confident that the groundwork has been laid to push forward growth strategies aimed at securing increases in net sales and profit margins in the next Medium-term Management Plan.

Offset the negative impact of movements in foreign currency exchange rates through successful efforts to expand sales volumes and improve the product mix

In fiscal 2016, the HPP Company reported net sales of 357.5 billion yen, a decrease of 21.0 billion yen compared with the previous fiscal year. Operating income, on the other hand, climbed 1.2 billion yen year on year, to 54.5 billion yen.

The downturn in net sales was attributable to a variety of factors. One factor was the movement in foreign currency exchange rates. In specific terms, the value of the yen against the U.S. dollar appreciated from an average rate of 120 yen in fiscal 2015 to an average of just on 108 yen in the fiscal year under review. Another factor was the deterioration in market conditions in the Electronics field. The increase in profit was mainly due to an upswing in the pace of demand growth for high-performance products in the Automobiles and Transportation field as well as steady growth in diagnostic reagent systems and testing equipment in the Life Sciences field.

In the Building and Infrastructure field, there was a sense that demand for chlorinated polyvinyl chloride (CPVC) had bottomed out in the Middle East. On a positive note, trends in fire-resistant materials were firm in existing domestic markets. Turning to the reasons behind the increase or decrease in operating income, the company adhered strictly to a policy of controlling raw material expenses and reducing costs to offset any negative impact associated with movements in selling prices. In the fiscal year under review, successful steps were taken to further expand the spread between selling prices and raw material costs. As far as marginal profit is concerned, which measures the increase attributable to growth in the spread between selling prices and raw material costs as well as sales volumes and improvements in the product mix, the company achieved a substantial upswing of 13.9 billion yen compared to the previous fiscal year.

With an eye on fiscal 2017 and beyond, the HPP Company continues to put forward a variety of initiatives. In addition to promoting the step up activities aimed at becoming an approved global vendor with respect to semiconductor materials and OLED-related components in the Electronics field, the company worked diligently to realize synergies with EIDIA Co., Ltd., which it acquired in 2015 for the Life Science field.

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

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

Targets of the Medium-term Management Plan “SHIFT 2019 -Fusion-” and Fiscal 2017 Forecasts

Identify new enhancement areas under the Medium-term Management Plan and cultivate new sources of earnings

Under the Medium-term Management Plan “SHIFT 2019 -Fusion-,” the HPP Company will target sales and profit growth by undertaking business portfolio reform. Moreover, the company will continue to reform its business structure while strengthening its global business foundation as the means to carry out its various measures.

Based on a forecast foreign currency exchange rate of 100 yen to the U.S. dollar, the HPP Company is targeting net sales of 390.0 billion yen and operating income of 65.0 billion yen in fiscal 2019, the final fiscal year of the Plan. As far as its operating income ratio is concerned, the company is also anticipating its profit margin to surpass the level recorded in fiscal 2016. On this basis, the HPP Company has set the operating income ratio of 16.7% in fiscal 2019, up from 15.3% in the fiscal year under review.

In order to achieve these targets, steps are being taken to identify new enhancement areas and to allocate management resources accordingly in each of the company’s four strategic fields. The company’s new enhancement areas are classified into two categories; the growth enhancement category aimed at the growth exceeding the market, and the fusion enhancement category where efforts can be directed toward cultivating new sources of earnings in collaboration within and outside the company. The HPP Company will manage progress in each category through quantitative and qualitative evaluations.

Looking at the specific components of the growth enhancement category that are expected to also contribute to earnings under the Medium-term Management Plan, implementation and semiconductor materials as well as OLED-related components in the Electronics field, interlayer films with new functions in the Automobiles and Transportation field, overseas infrastructure materials in the Building and Infrastructure field, and overseas diagnostic reagent systems in the Life Sciences field are expected to play a significant role.

In addition, the HPP Company will endeavor to reinforce step up activities aimed at becoming an approved global vendor through marketing by strategic field in its overseas business. At the same time, the company will work to reform its sales company structure and systems. Moreover, the HPP Company’s new product and new business endeavors are expected to serve as major growth engines. With this in mind, the company will undertake intensive investment and consolidate work hours.

Realize growth in excess of the market and continue to secure record-high profit in fiscal 2017

In fiscal 2017, the first fiscal year of the Medium-term Management Plan “SHIFT 2019 -Fusion-,” the HPP Company will work toward sales and profit growth by expanding volume and improving its product mix through a shift to high-value-added products focusing mainly on its four strategic fields. The company has set the net sales and operating income targets of 375.0 billion yen and 58.0 billion yen, respectively. This translates to a fifth consecutive fiscal year of record-high profit.

In order to achieve these targets, steps will be taken to secure growth that exceeds the market in each of the four strategic fields, with a particular emphasis on the Automobiles and Transportation field. In specific terms, every effort will be made to accelerate the pace of demand growth by increasing the number of automobile models and parts that use high-performance products in the Automobiles and Transportation field. In the Electronics field, the company will increase its share of mainstay products and focus mainly on the semiconductor and OLED. In the Building and Infrastructure field, energies will be channeled toward increasing the company’s share in the CPVC resin markets of India and the Americas, finally, in the Life Sciences field, the HPP Company will realize growth by focusing on expanding sales of diagnostic reagent systems and testing equipment in China.

In the fusion enhancement category raised under the Medium-term Management Plan, having acquired the operating rights to Polymatech Japan Co., Ltd., we will make every effort to realize synergy effects mainly in automobile electronics domain with respect to the acceleration of development, technological fusion and marketing collaboration.

Analysis of Operating Income for FY2017 (year-on-year)

Analysis of Operating Income for FY2017 (year-on-year)

Business Model of the High Performance Plastics Company

The High Performance Plastics Company develops and provides high-performance and intermediate materials for a wide variety of fields such as the electronics, automobiles and transportation, building and infrastructure, and life science industries based on its advanced processing and materials technologies.

The Sekisui Chemical Group’s Business Process

Portfolio and Growth Strategy of the High Performance Plastics Company

The High Performance Plastics Company has established growth enhancement areas that target growth in excess of the market and cooperation enhancement areas in which energies will be channeled toward cultivating new sources of earnings by coordinating efforts within and outside the company in each of the four strategic fields. The company is undertaking the appropriate allocation of management resources to both areas.

Portfolio and Growth Strategy of the High Performance Plastics Company

Main Products

HPP Company and Market Data

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