Business Overview by Segment
High Performance Plastics

Continuing to take on the global market while creating new functions
to meet the needs of society

A review of fiscal 2022

Sumitoshi Asakuma

Sumitoshi Asakuma
Director, Executive Vice President of the Company

Fiscal 2022 was a difficult year to navigate due to the uncertain business environment. During the first half of the year in particular, profits were sharply squeezed due to factors such as the war in Ukraine, China's "zero-Covid policy" and increased labor costs due to inflation in Europe and the United States. We began to see signs of recovery in the second half of the fiscal year due to effective cost-cutting measures and price hikes in response to soaring raw materials and energy prices. However, this was short-lived, and consumer demand in the Asian market declined after the end of the year alongside automotive sales. As a result, business profits fell below the previous fiscal year. On the other hand, there are products that achieved good results through new applications and new materials, and I feel that we are starting to see a recovery in 2023.

A year that will serve as a stepping stone to where we want to be in 2030 through transformation of our business portfolio

Fiscal 2021, the first year of the Medium-term Business Plan, began amid a chaotic social situation due to concerns about the impact of COVID-19. Thanks to a quicker than expected market recovery, we posted results that surpassed our numerical targets. However, negative factors remained unsolved, including automotive production adjustments due to the semiconductor shortage, logistics disruptions, and increases in various costs. Making things worse, amid these trends in fiscal 2022 we were hit hard by automotive production adjustments and a sharp fall in demand in China. As a result, our annual budget and business profits fell short of the targets in our Medium-term Business Plan.

By contrast, efforts to transform our business portfolio for the future have produced solid results, and we recognize this as a key measure. In our aircraft interior components business, we have achieved profitability by consolidating locations at our affiliate Vaupell, strengthening relationships with customers, and streamlining efforts.

In our new Medium-term Business Plan starting from the next fiscal year, we will "lay out our vision for 2030, and work out the next three years for reaching it," then set concrete numerical targets based on this. We will swiftly convert our business portfolio with the aim of achieving a form that emphasizes profit margins.

Also, to expand the scale of our business, we want to focus on creating a workplace culture in which "All members can build relationships of acceptance and trust with one another. And each employee can have autonomy, think for themselves, and act on their own."

[Strategic products]

Accelerate the shift to sustainability and introduce materials aligned to customer needs

In our existing businesses, we are working to improve the profitability of phenol-related products in particular, and expand our lineup of products adapted to sustainability in areas where we foresee future market expansion.

At present, we are pursuing measures to enhance our competitiveness in the market at a rapid pace. We are currently building a new plant with high productivity and low environmental impact in Nantong, China. We intend to lay a solid foundation for business expansion by increasing production capacity targeting the Chinese market. We will also establish an organizational structure tailored to developing new products and applications.

Concerning environmental measures, we are promoting initiatives that leverage the strengths of our "seamless value chain for resins, molding compounds, and molded products." We will develop materials aligned to market needs such as lignin-modified phenolic resin, biomass-based polymers, and the molding compounds applied to them, and support customers from throughout our value chain. In addition, there are more and more cases in which companies must prove their environmental contribution from a LCA (Life Cycle Assessment) perspective, and we are working to respond accordingly.

Moreover, in the field of power device materials, which are seeing growing application in the automotive, consumer, and industrial equipment sectors, we will strengthen our lead in heat dissipation substrate materials, and aim to achieve a business scale in excess of 7 billion yen by 2030.

Close communication with customers is essential to implementing these measures. We plan to deepen the bonds of trust that form the foundation of our business.

Business Strategy to Achieve Medium-term Business Plan Targets

Becoming an Innovator who Creates Growth Markets and Opens Up New Possibilities

The purpose of the high performance plastics segment that we drew up last year is to "move us from a 'pioneer' to an 'innovator' and help create a sustainable society together with customers by expanding the possibilities of plastics." We are striving to renew our business portfolio to be full of technological innovation, and aim to achieve a business profit margin under the next Medium-term Business Plan of 10% or more.

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