High Performance Plastics (HPP) Company

Last Update : Sep 25, 2019

President’s Policy

“Fusion for New Values”

-with “Resolution & Challenge” and Revolution-

(1) Growth Engine
(2) Competitiveness Enhancement
(3) Global Management

The High Performance Plastics (HPP) Company’s strengths are its original fine particle, adhesion, precise molding, 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 and polyolefin foam for automobile interiors. The HPP Company is the primary operating income generator for 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.

During the final fiscal year of the 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 three strategic fields of Electronics, Automobiles and Transportation, and Building and Infrastructure.

* Life Science business transferred control to the Company’s headquarters as the Medical Business since FY2019.

Fiscal 2018 Performance

Sudden deterioration in smartphone and automobile market conditions along with higher raw material costs leads to lower profits for the first time in seven years

During fiscal 2018, the High Performance Plastics (HPP) Company secured higher net sales, primarily with the help of higher sales volumes in its four strategic fields. Meanwhile, the Electronics field saw contraction in smartphone demand starting in the third quarter, while the Automobiles and Transportation field saw worsening automobile market conditions in Europe and China. Along with these developments, the impact of higher raw material costs meant that the Company was unable to cover increases in fixed costs coinciding with strategic investments and experienced a decline in operating profit for the first time in seven years.

Net sales for the fiscal year under review increased across all four strategic fields climbing ¥25.8 billion compared with the previous fiscal year, to ¥412 billion. On an actual basis after excluding the impacts of mergers and acquisitions that led to the new inclusion of companies in SEKISUI CHEMICAL’s scope of consolidation, net sales expanded ¥7.6 billion. Operating income in the HPP Company came to ¥54.5 billion, a decline of ¥3.3 billion compared with the previous fiscal year, which led to lower profits for the first time in seven years. As a result, the operating margin also dropped 1.8 points to 13.2%.

Looking at the Company’s activities across each of its four strategic fields for the period under review, the Automobiles and Transportation field saw market conditions worsen, including prolonged problems related to exhaust emissions regulations in Europe and lower automobile sales coinciding with the economic downturn in China. Despite this, increased sales on the relatively healthy US market helped the Company achieve higher sales volume overall. Moreover, high-performance interlayer films, such as those used in head-up displays, continued to see demand growth.

Despite the impact of worsening smartphone market conditions, the Electronics field saw higher sales as a result of the steady expansion of non-liquid fields, such as component packaging and semiconductors. In the Building and Infrastructure field, although the Company’s fire-resistant materials, one of its mainstay products, saw healthy sales, this field was also affected by more intense CPVC price competition, particularly in regions such as the Middle East and India.

Steady emergence of the effects of strategic investments targeted at expanding high-performance products

Under the Medium-term Management Plan “SHIFT 2019 – Fusion –”, which aims to pivot the Company toward growth, the HPP Company is advancing growth strategies centered on focusing its energies on non-liquid fields in the Electronics field, expanding sales of high-performance interlayer films in the Automobiles and Transportation field, and enhancing thermal insulation and non-combustible materials in the Building and Infrastructure field. During 2018, the effect of investments made into expanding production capacity for high-performance interlayer films in Mexico at the end of the previous fiscal year contributed, and the Second Polyolefin Foam Plant in Thailand went into operations. In addition, the effects of strategic investments are steadily beginning to yield positive results, including advancing synergy between Polymatech Japan Co., Ltd. (current Sekisui Polymatech Co., Ltd.), acquired in fiscal 2017, and SoflanWiz Co., Ltd. (current Sekisui SoflanWiz Co., Ltd.).

Fiscal 2019 Forecasts

Aiming for profit growth for the first time in two years driven by focusing energies on non-liquid fields and expanding high-performance interlayer films

In its fiscal 2019 plan, the HPP Company expects the harsh business environment in the Electronics and Automobiles and Transportation fields to continue for the foreseeable future. Despite this, the Company projects higher profits based on a positive outlook for strategic investment effects, including focusing energies on expanding sales in non-liquid fields as part of the Electronics field and expanding sales of high-performance interlayer films in the Automobiles and Transportation field, primarily on the European market where a new production line will go into operations during the second half of the year.

Although the Medical Business will be placed under the jurisdiction of the Headquarters during the period under review, net sales during fiscal 2019 are projected to reach ¥351 billion, a ¥9.7 billion increase compared with the ¥341.3 billion recorded during fiscal 2018, after excluding the influence of this transfer. Operating income was calculated in the same manner, and is projected to increase to ¥50 billion from the ¥44.9 billion recorded during fiscal 2018.

Continuing to focus energies on non-liquid fields as part of the Electronics field

The fiscal 2019 plan for the three strategic fields assumes that the slowdown in the smartphone market as part of the Electronics field, which started during the third quarter of the previous fiscal year, will continue throughout fiscal 2019. Under these circumstances, emphasis will be placed on shifting to non-liquid fields and accelerating the pace of efforts aimed at strengthening the portfolio while at the same time increasing the Company’s market share in mainstay products and expanding its new customer base.

The non-liquid related products on which the HPP Company will focus its energies include those for which new applications are foreseen, such as Heat-resistant Selfa™, used during the semiconductor production process, and elastic adhesives, used for joining parts and materials. Moreover, the Company aims to go beyond simply replacing existing items to uncover new demand, thereby achieving growth that is not affected by fluctuations in the market.

As a result of these moves, the Company increased net sales for non-liquid products in the Electronics field to 43% during fiscal 2018 and aims to increase these further in the future.

Aiming for growth that outpaces global automobile production with a focus on expanding adoption of high-performance interlayer films in the Automobiles and Transportation field

Despite the continuation of severe market conditions, in the Automobiles and Transportation field, the HPP Company is targeting higher sales with the help of the new interlayer film production line in Mexico, which has been operating steadily since the previous fiscal year, and a new high-performance interlayer film production line in Europe, which is scheduled to begin full-scale operations during the third quarter of the fiscal year under review.

High-performance interlayer films with solar control and sound insulation capabilities help improve the level of comfort inside automobiles and reduce automobile weights, which has led to their use in a wider range of automobile parts besides windshields, including side and roof panels. Moreover, the wedge-shaped films used in head-up displays can help improve safety, so their use is also gradually expanding from luxury vehicles to mass-market automobiles. In addition, the Company is aiming to launch products that address the increased use of electronics in automobiles, such as thermal interface materials used in electric vehicles. In this way, the Company is aiming to achieve growth that outpaces global automobile production in the Automobiles and Transportation field during the fiscal year under review.

In the Building and Infrastructure field, the Company expects to see a continuation of severe CPVC market conditions as a result of intensifying price competition. Despite this, the Company is aiming to expand sales on the high-value-added US market and is focusing its energies on expanding sales of non-combustible polyurethane and other fire-resistant materials.

Contributing to the SDGs through Operations

Main Products

  • Conductive fine particles
  • Component packaging materials for semiconductors
  • Double-sided LCD fixed placement tape used in smartphones and tablets
  • Rainwater storage system
  • Foaming material for automotive interiors
  • Moldings for automobile bumpers
  • Interlayer film for automotive laminated glass
  • Wedge-shaped high performance interlayer films for head-up display (HUD) system use
  • Chlorinated polyvinyl chloride (CPVC) resin compound
  • Thermal expansion fire-resistant materials
  • Non-combustible polyurethane
  • Products for industrial application (tape)

Performance Highlights

HPP Company and Market Data

*Regarding the current earnings plan for FY2019, please see IR Briefig Materials.