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Urban Infrastructure & Environmental Products (UIEP) Company

Last updated: Aug 26, 2016

Hajime Kubo President of Urban Infrastructure & Environmental Products Company

Business Strategies

The Urban Infrastructure & Environmental Products (UIEP) Company commands leading market shares from comprehensive strength in its fundamental businesses and is creating an operating structure to maintain steady profit in contracting markets. It also seeks to boost earnings by applying the technologies of its fundamental businesses to the existing stock field and other growth fields.

Business Overview

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.

In recent years, Japan's construction-related markets have experienced shrinking demand for new construction. On a positive note, signs of an increase in demand in the stock field continue to emerge on the back of such factors as the aging of existing machinery and equipment. Under these circumstances, the UIEP Company has positioned this field as a growth domain and is concentrating its efforts on this area.

As part of its medium- and long-term growth strategy, the UIEP Company is channeling management resources to its sheet business for high-performance plastic molds as well as its industrial piping materials, performance materials typically used in railway sleepers, and other businesses while drawing on the underlying strengths of technologies nurtured through its fundamental business activities. At the same time, the company is concentrating on efforts to expand activities in high profitability fields and to cultivate overseas markets.

In its general-purpose products business, the UIEP Company is continuing to create fully streamlined operations in anticipation of declining demand. In low revenue businesses, the company remains committed to a policy of selection and concentration while carrying out structural reforms. Taking each of the aforementioned into consideration, the company is entering a phase during which it will shift its focus firmly toward accelerating the pace of growth.

Urban Infrastructure & Environmental Products (UIEP) Company

1.Residential water supply and drainage system   2.High corrosion resistant and chemical performance brand products   3.ed PVC pipe   4.ater supply pipe (polyethylene pipe) construction site   5.Pharmaceutical and related product storage and sterile transportation bags   6.Sewage heat recovery system   7.Geothermal heat system   8.Sewage pipe rehabilitation   9.Sewage pipe maintenance operations   10.High-performance seismic polyethylene pipe   11.Plastic sheet for an aircraft interior   12.FFU synthetic railway sleepers

Press Releases on UIEP Company's Topics
The 3rd Factory of High Performance Plastic Sheets in United States Starts Production

The 3rd Factory of High Performance Plastic Sheets in US Starts Production

Performance Highlights

PERFORMANCE HIGHLIGHTS

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

Fiscal 2015 Performance

Profits increased for the first time in two business terms on the back of structural reforms in Japan and overseas

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

The UIEP Company positioned fiscal 2015 as a year during which it would rebuild its business structure in order to attain an operating income ratio of 5%. Throughout the fiscal year under review, the company took steps to clarify profits by product and technology, and to restructure its organization by transitioning toward business departments based on individual product categories in a bid to establish sound initiatives. Complementing these endeavors, the UIEP Company implemented a variety of measures aimed at fortifying its profit structure both in Japan and overseas. Accounting for each of these factors, operating income increased 2.3 billion yen compared with the previous fiscal year, to 3.6 billion yen, despite the year-on-year decline in net sales of 1.4 billion yen, to 226.3 billion yen in fiscal 2015. This increase in profit reversed the downward trend that had lasted for two business terms.


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Adhering strictly to a policy of profit improvement by product in Japan

Turning to the specific measures implemented throughout fiscal 2015, the UIEP Company shifted to a profit margindriven sales policy by strictly engaging in customer-based profit management on a business department basis by product in Japan. At the same time, the company worked diligently to expand sales of growth products.

In light of the usual operating practice and concentration of sales at the end of each business term in March each year, the UIEP Company pushed forward measures aimed at securing a more even distribution of sales throughout the period. As a result, signs of an increasingly even impact on manufacturing and distribution are beginning to emerge. This in turn is contributing to improvements in the manufacturing and distribution costs. As part of the company's structural reforms, the UIEP Company also made every effort to reduce inventories at distributors. Moreover, steps were taken to cutback distribution costs and direct sales expenses.


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Completed overseas structural reforms in Europe and the inland areas of China

Meanwhile, the UIEP Company implemented full-fledged structural reforms in its Pipeline Rehabilitation business in Europe and its Water Infrastructure business in China.

In the Pipeline Rehabilitation business in Europe, the company has traditionally undertaken the supply of components combined with installation. Buffeted by the downturn in public works attributable to the prolonged deterioration in economic conditions in Europe, and the limited prospect of a turnaround in the decline in prices reflecting intense competition, the UIEP Company completed the transfer of this business. In the inland areas of China, the company was engaged in the manufacture and sale of wide-diameter reinforced compound plastic pipes commonly used in irrigation and related activities. Due again to the prolonged contraction in local public works, the UIEP Company determined that there was little likelihood of a profit recovery in near future. Accordingly, steps were taken sell the company's equity stake in the operating entity and to withdraw from the water infrastructure business.

As far as the company's other overseas business activities are concerned, energies were channeled toward restructuring the Pipeline Rehabilitation business in the United States as well as operations in the coastal regions of China. In contrast, the UIEP Company undertook capital investments targeting the aircraft sector in the sheet business where growth is expected.


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Fiscal 2016 Plan

Carry out structural reforms and position fiscal 2016 as a year to establish a robust earnings structure

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

In fiscal 2016, the UIEP Company completed structural reforms that continued in earnest throughout fiscal 2015. With this completion, fiscal 2016 has been positioned as a year during which the company will pursue new growth. As a result, every effort will be made to complete structural reforms in the Pipeline Rehabilitation business in the United States, the Water Infrastructure business in the coastal regions of China, and the low revenue businesses remaining in Japan in the current fiscal year. Furthermore, the UIEP Company will expand investment in the development of products and services in areas that offer the potential for growth both in Japan and overseas while working to strengthen sales.

As a result of these outcomes, and the transfer of control over Sekisui Seikei Ltd. and Hinomaru Co., Ltd., which were previously classified under the Company's other businesses, net sales of the UIEP Company are projected to reach 250 billion yen, up 23.7 billion yen compared with fiscal 2015. From a profit perspective, operating income is forecast to total 10 billion yen, an increase of 6.4 billion yen year on year. These forecast results represent an upswing in revenue following a downturn over the past three business terms, and an increase in profit for a second consecutive fiscal year.

Signs of an improvement in operating income of 3.2 billion yen owing to the effects of structural reforms implemented in fiscal 2015 are already being seen against the full fiscal year forecast upswing of 6.4 billion yen. In addition to the 1.8 billion yen attributable to the aforementioned transfer of two companies, the UIEP Company has identified improvements totaling 5 billion yen with a high degree of certainty.


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Strengthen the company's earning power in Japan and overseas by introducing high-value-added products

Looking at the business environment in Japan in fiscal 2016, condominium sales are projected to remain firm. Housing starts and public investment, on the other hand, are expected to fall below the levels recorded in fiscal 2015. Against this backdrop, the UIEP Company will pursue growth by actively introducing high-value-added products to the market in Japan and increasing the amount of development investment. Furthermore, the company will build on its customer-based profit management from the previous fiscal year and introduce a new cost management method in a bid to lift efficiency to the next level.

In the sheet business conducted overseas, the UIEP Company will pursue growth in those fields in which it has the potential to excel through technologies in such areas as Industrial Piping and Performance Materials. The company will also look to expand sales in the aircraft field following the start of operations at a new plant in the Sheet business, and cultivate new markets in Asia, Europe, and the United States for Industrial Piping and Performance Materials. Outside Japan, the UIEP Company is considering rebuilding its Pipeline Rehabilitation business, which engages in the manufacture and sale of products using the proprietary high-value-added SPR method.

Accounting for each of these factors, plans are in place to increase the number of businesses that generate an operating income ratio of 10% or higher from three in fiscal 2015 to five in fiscal 2016.


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Growth strategies going forward

In its quest for future growth, the UIEP Company will leverage the strengths of its technologies to expand activities in high profitability fields while cultivating markets overseas. To this end, the company will concentrate management resources into areas where it can differentiate its products and boost sales through metal alternative, all-plastic product, chemical-, corrosion-, weather-resistant, and other technologies in the pipe & related products, performance materials, sheet, functional case, and other fields. In the general-purpose products and low revenue business, the UIEP Company will continue to implement structural reforms by further promoting efficiency and adopting a strict selection and concentration policy.

In specific terms, the UIEP Company will pursue a variety of initiatives in the pipe & related products field. The company will promote the shift to all-plastic products and other metal alternatives for use in water supply and drainage, air conditioning, and other systems in the construction and civil engineering sector and broaden the product domain by introducing new products in a bid to fill the product line shortfall in the field of Industrial Piping materials. Moreover, the company will work to expand its overseas business focusing mainly on Southeast Asia. In the Performance Materials field, the company will advance the development of FFUs as railway sleepers for use in Europe and Australia in earnest while evaluating applications other than as railway sleepers. In the sheet business, where the company has been active in the overseas aircraft field, operations will commence at a new plant in North America in fiscal 2016. At the same time, the UIEP Company will work to capture demand in the railcar and medical equipment fields while entering markets in Japan.

The company is assessing opportunities across a wide range of other fields. While the scale of each business remains small at this stage, the UIEP company will accelerate the pace of growth from fiscal 2016 and beyond by specializing in high profitability fields.


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UIEP Company and Market Data

Japan Sales/Overseas Sales

Housing Starts

Government Construction Investment (nominal value)