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Urban Infrastructure & Environmental Products (UIEP) CompanyLast updated: Oct 19, 2017

President’s Policy

The Urban Infrastructure & Environmental Products (UIEP) Company is a manufacturing and sales leader in Japan in water sewerage and supply pipe systems as well as construction materials supply businesses, which collectively form the company’s core operating platform.

Based on the Medium-Term Management Plan that will start in fiscal 2017, we redesigned our business portfolio and set up a new strategic portfolio consisting of three strategic areas: “Piping and Infrastructure,” “Building and Living Environment” and “Advanced Materials”.

We will promote strategies, such as “overseas,” “growth,” “core” and “reform,” in accordance with the market and competitive environments in which the products are produced in each field.

In particular, under “growth” and “overseas,” we will actively introduce high-value-added products, based on the technologies cultivated in our fundamental businesses for many years, and promote business domain expansion through alternative materials, such as metal, wood and glass.

Topics

Apr. 2016
Structural Reform of the Water Infrastructure Business in China
June 2016
The 3rd Factory of High Performance Plastic Sheets in United States Starts Production1
June 2016
Restructuring and Reform of the Pipeline Rehabilitation Business in the U.S.
Feb. 2017
Establishment and Business Launch of the World’s First “Carbon Fiber Reinforced Thermo Plastics(CFRTP) Continuous Atypical Molding Technology”2
Mar. 2017
Establishment of Comprehensive Research Institute (Abbreviated as Kansoken), Establishment of Product Development Function within Shiga-Ritto Plant
May 2017
InfraGuardTM Series of Aging Infrastructure Countermeasure Products Launched
May 2017
Investment Decision Made to Increase Production Capacity in Response to Rise in Overseas Demand for FFU, Production Reorganization at Shiga-Ritto Plant Implemented
July 2017
Market Entry of High-Pressure PE Pipe as Product to Address High-Rise Building Construction
July 2017
Capital Participation in Vietnamese Plastic Manufacturer Implemented

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 record-high profit on the back of structural reforms carried out since fiscal 2015

Over the three-year period of the previous SHINKA!- Advance 2016 Medium-term Management Plan, the Urban Infrastructure & Environmental Products (UIEP) Company undertook a host of measures. While net sales remained essentially unchanged, profit continued to improve especially on the back of structural reforms that focused on the withdrawal from unprofitable businesses and of restructuring its organization by transitioning toward business departments based on individual product categories carried out from fiscal 2015. On a company basis, operating income reached an historic high, surpassing the previous record reported 10-years ago in fiscal 2006.

As one example of the structural reforms carried out by the company, for overseas businesses, steps were taken to withdraw from construction-related activities undertaken through the pipeline rehabilitation business in countries and regions including the U.S. and Europe. In addition, the UIEP Company has also withdrawn from the water infrastructure business in the inland areas of China.

Meanwhile, the company successfully increased profitability by leveling out shipments in Japan thereby improving costs and securing a proper spread between selling prices and raw material costs. In addition to this improvement in raw material expenses and the cost of goods sold in Japan, the company was able to create substantial improvement effects with respect to fixed costs overseas thanks largely to these initiatives. As a result, the UIEP Company generated operating income of 12.8 billion yen in fiscal 2016, the final year of the previous Medium-term Management Plan, compared with 1.3 billion yen in fiscal 2014.

Under the SHINKA!-Advance 2016 Medium-term Management Plan, the UIEP Company worked vigorously to improve profitability by carrying out structural reforms. Beyond that, the company also took significant strides toward putting in place the necessary groundwork for future growth. Drawing on its inherent strengths, every effort is being made to cultivate new fields and domains in which the UIEP Company can further distinguish itself. One such example is the success in expanding the use and sales of aircraft sheets to other areas of application.

Achieved profit growth in Japan and overseas through the effects of structural reforms

The UIEP Company reported net sales of 240.3 billion yen and operating income of 12.8 billion yen in fiscal 2016.

Looking at trends throughout the fiscal year under review, on the one hand, net sales declined as a result of structural reforms. This included the withdrawal from unprofitable and underperforming businesses overseas, which have now come to an end. On the other hand, net sales increased owing to the development of new fields and new domains as well as the transfer of control over Sekisui Seikei Ltd. and Hinomaru Co., Ltd. which were previously classified under the Company’s other businesses to the UIEP Company. Off-setting one with the other, the net sales of the company increased 14.1 billion yen.

From a profit perspective, operating income benefited substantially from improvements in earnings at existing businesses. Looking at domestic businesses, the decision to focus strictly on improving the cost of goods sold through such measures as the leveling of shipments led to a reduction in raw material expenses and other costs totaling 3.8 billion yen. These two factors therefore contributed to more than half of the 5.4 billion yen increase in profit from domestic businesses. Turning to the UIEP Company’s overseas activities, withdrawal from certain businesses helped cutback fixes costs by 4.8 billion yen. This accounted for virtually most of the 3.8 billion yen increase in profit from overseas businesses.

The UIEP Company has continued to implement harsh structural reforms throughout fiscal 2015 and fiscal 2016. As a result, measures aimed at addressing those businesses with an operating income ratio of 5% or lower have all but been completed. On this basis, preparatory steps have now been taken, and the UIEP Company is ready to move toward a renewed growth.

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

Shift to a growth track through aggressive investment in new domains

The UIEP Company will aggressively undertake investment in new domains while at the same time shifting to a growth track both in Japan and overseas over the three-year period of the Medium-term Management Plan “SHIFT 2019 -Fusion-.”

The company is targeting net sales and operating income of 251.5 billion yen and 18.0 billion yen, respectively, in fiscal 2019, the final fiscal year of the Plan. After essentially completing the necessary steps to reform the structure of businesses with low operating profit margins of 5% or less under the previous Medium-term Management Plan, the company intends to lift the operating income ratio from its current level of 5.3% in fiscal 2016 to 7.2% in fiscal 2019.

In a bid to shift to growth track, the UIEP Company will renew its business portfolio. In specific terms, the company has put in place a new strategic portfolio that is comprised of the three core Piping and Infrastructure, Building and Living Environment, and Performance Materials strategic fields. Taking into account market and competitive environment considerations, the products and businesses in each of these three fields will be further classified into the four overseas, growth, core and reform categories. The UIEP Company will then push forward strategies in line with each category.

In the growth category, for example, which is expected to contribute to earnings under the Medium-term Management Plan “SHIFT 2019 -Fusion-,” steps will be taken to concentrate resources on research and development and to expand sales and profits of growth products. For instance, the company will look closely at alternative materials made of metals, wood, and glass to replace plastics. In this manner, every effort will be made to pioneer new fields and domains. In the sheet business, where energies have been directed toward increasing sales for aircraft applications, the UIEP Company will explore opportunities in the railway, medicine, and construction fields. Moreover, the company is looking to ramp up activities across a wide range of areas including industrial piping materials, non-residential rain gutters, and FFU.

Work to increase marginal profit by expanding sales of high-value-added products and continue to achieve record-high profit

The UIEP Company is targeting net sales growth in all of the three Piping and Infrastructure, Building and Living Environment, and Performance Materials strategic fields in fiscal 2017. The company is also targeting an increase in profit through higher sales volumes and an improvement in the product mix attributable to the shift to high-value-added products. By adjusting product prices and CR effects, the company intends to offset any increase in raw material costs. Efforts to curtail costs are also expected to boost profit. In specific terms, the UIEP Company is forecasting net sales of 243.0 billion yen and operating income of 14.5 billion yen in fiscal 2017. This represents a second consecutive fiscal year of record-high profit.

The Sekisui Chemical Group will place considerable weight on developing new materials and cultivating new applications through fusion between operating companies in fiscal 2017. As one example, the Group is looking to uncover applications in the civil engineering, construction, and transportation fields for its thermoplastics including carbon fiber reinforced plastics (CFRPs), which combines the extrusion molding technologies of the UIEP Company and the carbon fiber pretreatment technologies of the Corporate R&D.

Outside Japan, the Sekisui Chemical Group will focus on business profitability. Steps will be taken to increase production of high-value-added products such as the sheet business in the U.S. Energies will also be directed toward expanding sales by strengthening relationships with partners for FFUs in Europe and Piping and Infrastructure in Asia. Through these and other means, every effort will be made to put in place a platform for growth.

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

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

Business Model of the Urban Infrastructure & Environmental Products (UIEP) Company

In addition to developing, manufacturing and selling plastic products related to housing and social infrastructure with a focus on water, we also offer advanced materials, such as FFU and functional sheets, by applying our accumulated plastics-related technology.

Business Model of the Urban Infrastructure & Environmental Products (UIEP) Company

Portfolio and Growth Strategy of Urban Infrastructure & Environmental Products (UIEP) Company

We set up a new strategic portfolio, which is classified into three strategic fields and four strategic positions, and implement management appropriate for each field and position. Overseas, we realize growth with a focus on growth positions.

Portfolio and Growth Strategy of Urban Infrastructure & Environmental Products (UIEP) Company

Main Products

UIEP Company and Market Data

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