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.
The High Performance Plastics (HPP) Company achieved an increase in both net sales and profit in fiscal 2017. Despite the impacts of a decline in demand in the Electronics field as well as high raw material costs, this was largely due to increases in sales volumes and improvements in the product mix mainly in the Automobiles and Transportation field.
Net sales for the fiscal year under review increased across all four strategic fields climbing ¥28.6 billion compared with the previous fiscal year, to ¥386.2 billion. On an actual basis after excluding the impacts of business structural reform as well as mergers and acquisitions that led to the new inclusion of companies in Sekisui Chemical’s scope of consolidation, net sales expanded ¥16.9 billion.
Operating income in the HPP Company came to ¥57.8 billion, an increase of ¥3.3 billion compared with the previous fiscal year. This represented a sixth consecutive year of operating income growth and a record high for the fifth consecutive fiscal year. In contrast, the operating income ratio was essentially unchanged from the previous fiscal year at 15%. This was primarily due to the temporary effects of M&A expenses.
Looking at the HPP Company’s activities across each of its four strategic fields, investments aimed at expanding production capacity in response to the steady upswing in demand for interlayer films and especially high-performance products helped boost results in the Automobiles and Transportation field. The HPP Company continued to experience growth in the Life Science field. This was largely attributable to the steady progress achieved in cultivating markets in emerging countries for the Company’s mainstay diagnostic reagents and testing equipment. Meanwhile, impacted by a slowdown in FPD market conditions, the HPP Company accelerated its shift to non-liquid fields including semiconductors in the Electronics field. In the Building and Infrastructure field, as competition continued to intensify in the target India market, the HPP Company took steps to expand in surrounding areas.
Fiscal 2017 was the first year of Sekisui Chemical’s Medium-term Management Plan “Shift 2019 -Fusion-," which aims to pivot the Company toward growth. Guided by this plan, the HPP Company is committed to the active implementation of M&As as well as strategic investments. As a part of these endeavors, steps were taken to implement M&As with Polymatech Japan Co., Ltd. and SoflanWiz Co., Ltd. while also undertaking the investment necessary to commence commercial operations at a third interlayer film production line in Mexico.
In fiscal 2017, the first year of the Medium-term Management Plan, the HPP Company made a firm start toward determining the measures required to boost performance as well as future growth in a comprehensive manner.
The HPP Company is expected to confront a harsh global business environment in fiscal 2018. Against this backdrop, the Company will work to secure increases in sales volumes and further improvements in the product mix across all four strategic fields by quickly realizing the effects of strategic investments including past efforts aimed at implementing M&As and expanding production capacity. At the same time, the Company will increase profit through a variety of measures including the further reduction of costs. Based on the aforementioned, the HPP Company is projecting increases in both net sales and profit. In specific terms, net sales are forecast to reach ¥418 billion and operating income ¥59.5 billion. Focusing especially on profit, every effort will be made to promote an ongoing increase. Here, the HPP Company will target a sixth consecutive fiscal year of record-high operating income and a seventh consecutive fiscal year of profit growth.
Commenting on each of the four strategic fields, the HPP Company is expecting the fiscal 2017 second half impacts of smartphone market slowdown to continue into fiscal 2018 in the Electronics field. 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. As an example of activities in the non-liquid fields, the HPP Company will consider increasing production as and when required in order to realize the fruits of mechanisms implemented to date in such areas as semiconductor-and OLED-related products.
In the Automobiles and Transportation field, the HPP Company will target increases in both net sales and profit on the back of contributions for the full fiscal year from the new interlayer film production line in Mexico that commenced operations during the previous fiscal year. Moreover, the Company will accelerate the pace of heat dissipation product rollout in the car electronics field by generating synergies with the previously acquired Polymatech Japan Co., Ltd.
In the Building and Infrastructure field, the HPP Company will work to increase market share in mainstay products and expand overseas. In addition to expanding CPVC sales in the Americas, the Company will increase sales of non-combustible urethane by realizing synergies with SoflanWiz Co., Ltd., which has a top market share in Japan in the area of thermal insulation material sprays for buildings in the fire-resistant materials field.
Finally, in the Life Science field, the HPP Company will focus on its mainstay diagnostics business. Every effort will be made to promote strong growth in developed countries and to expand in emerging countries. The Company will acquire a diagnostic reagent company in Singapore in a bid to expand its presence in the diagnostics domain and realize synergies through the region.
In fiscal 2018, the HPP Company will also advance growth strategy mechanisms in cooperation enhancement areas, where profit is expected from the next medium-term management plan and beyond. The thrust of the Company’s endeavors will revolve around realizing synergies with Polymatech Japan Co., Ltd. and SoflanWiz Co., Ltd. in the car electronics and high-value-added fire-resistant material fields, respectively. In the healthcare domain, the Company will work to establish special peptide pharmaceutical ingredient production technologies at PeptiStar Inc. as a part of efforts to build a new platform for growth. Through these endeavors, the HPP Company will expand new products and businesses in cooperation enhancement areas.
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 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.