passion extension 2009 2010 · 2014. 9. 26. · passion extension (2009~2010) showa denko...
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Passion Extension (2009~2010)
SHOWA DENKO K.K.
Kyohei Takahashi, President & CEO
Showa Denko’s Strategy in Drastically Changed Environment
Showa DenkoShowa Denko’’s Strategy s Strategy in Drastically Changed Environmentin Drastically Changed Environment
February 10, 2009February 10, 2009
This presentation, containing performance forecast and business/product development programs, has been prepared based on information available at this moment. The Company cannot guarantee that these programs will be implemented or the performance forecast will be accurate. Please note that actual results may differ materially from the forecast or plans due to a variety of factors, including changes in the market conditions. Development of businesses and products may be delayed or not materialized due to a variety of factors, including market acceptance and the introduction of new products by competitors.
Unprecedented global recession triggerd by the U.S. financial crisis
Drastic changes in the business environment
(2009-2010)While maintaining the basic concepts of the Passion Project, we have
worked out “Passion Extension” to meet the drastic changes in the environment.⇒Preparing for the new project for 2011 and thereafter Speedily carry out structural reform in response to the changes in the
business environment
Identify market segments that will grow in the future
Return to the track of continuous growth as soon as the economy recovers.
Passion Extension~ Preparation for a new business plan
Page 2
HD
Petrochemicals Ethylene A 30% cut (due to SM, PP and acetic acid production cuts)
Acetic acid Suspended plant operation (w ithdrew from PTA market)
Chemicals Acrylonitrile A 30% cut in production
Inorganics G. electrode Producing in line with demand; maintenance in 1Q
(Progress in inventory adjustment)
Aluminumheat exchangers, and aluminum cylinders for printers
Production cuts in response to a sharp decline in HDD production
Production cuts in high-purity foils for capacitors, Shotic ,
Production cutbacks at the moment~ Making intensive cuts; inventories in supply chains being reduced
■
■
■
■
■
Page 3
Carry out drastic structural reform and focus on high-growth areas where we have competitive advantages
Create individualized products by deepening and merging wide-ranging material technologies centering on inorganics and metals
Original image Revised image(2010)
Companyimages
Images of the financial targets
(2010)
By enhancing the company value, we will contribute to the interests of all stakeholders.
Unique chemicalcompany with individualized productsTechnology-oriented company
Financial strength
CSR
Operating income 100.0 billion yen ⇒ 40.0 billion yenD/E ratio 1.0 times ⇒ 1.4 times
Earn the full trust and confidence of the market and society
Establish financial strength by squeezing assets and reducing interest-bearing debt
Passion Extension(2009-2010)
Passion ExtensionPassion Extension((20092009--20102010))
Contribute to the good of society
Maintain basic concepts, but lower financial targets~ Carry out structural reforms in response to drastic changes in environment
Page 4
(billion yen)
Revised target images in 2009 and 2010~ Expecting slow recovery after hitting bottom in 2009
Net Sales 1,003.9 800.0 900.0 1,000.0
Operating Income 26.8 17.0 40.0 100.0
Profit ratio 2.7% 2.1% 4.4% 10.0%
Interest-bearingdeat 392.9 385.0 360.0
D/E ratio 1.63 times 1.6 times 1.4 times 1.0 times
2010(Original image)
2009(Forecast)
2010(Revised image)
2008Actual
Page 5
Improve business portfolio by promoting growth strategies and structural reform
Carry out drastic cost reductions
Secure sufficient cash flows
Improve financial strength
1
2
3
4
5
Allocate managerial resources efficiently by very carefully selecting investments
Strengthen R&D to ensure future growth6
Major tasks under “Passion Extension” (2009-2010)
Page 6
Rare earth magnetic alloysRare earth magnetic alloysHDHDUltrabright LED chipsUltrabright LED chips
HighHigh--purity foil for capacitorspurity foil for capacitors
HighHigh--performance componentsperformance components
Heat exchangersHeat exchangers
Aluminum cansAluminum cans
Aluminum, etc.Aluminum, etc.
CeramicsCeramics
Graphite electrodesGraphite electrodesFine carbonsFine carbonsInorganicsInorganics
Conventional compound Conventional compound semiconductorssemiconductors
SemiconductorSemiconductor--processing materialsprocessing materials
CapacitorsCapacitorsElectronicsElectronics
Basic chemicalsBasic chemicalsFine chemicalsFine chemicals
AmmoniaAmmoniaLife scienceLife scienceChemicalsChemicals
Specialty polymers Specialty polymers (development)(development)
Plastic productsPlastic productsOlefins Olefins ((Improve facilities at Oita)Improve facilities at Oita)
Organic chemicalsOrganic chemicalsPetroPetro--
chemicalschemicals
Cash cowCash cowGrowth driversGrowth driversNew growth driversNew growth drivers
Base businessesBase businessesGrowth businessesGrowth businesses
Launch of new productsLaunch of new products Business expansionBusiness expansion Structural reformStructural reform
- Sold shares in Showa Aluminum Powder and Heisei Polymer
- Sold the business of moisture removal sheet for perishable foods
- Formation of JV in aluminum alloy
- Dissolution of Showa Aluminum Alloy
-Completion of withdrawal from the commodity foils business
Specialty polymers Specialty polymers (SHP now a 100%(SHP now a 100%--owned owned subsidiary)subsidiary)
- Sold Kokusai Eisei(Tender offer for Showa Tansan shares)(Tender offer for Showa Tansan shares)
Portfolio~Step up portfolio improvement based on accomplishments under the Passion Project
1. Portfolio improvement through implementation of growth strategies and structural reform
Page 7
Rare earth magnetic alloysRare earth magnetic alloys
HDUltrabright LED Ultrabright LED
chipschips
HighHigh--purity foil for capacitorspurity foil for capacitorsHighHigh--performance componentsperformance components
Heat exchangersHeat exchangersAluminum cansAluminum cans
Aluminum, etc.Aluminum, etc.
CeramicsCeramics
Graphite electrodesFine carbonFine carbon無機無機
Conventional compound Conventional compound semiconductorssemiconductorsSemiconductorSemiconductor--
Processing materialsProcessing materials
ElectronicsElectronics
Basic chemicalsBasic chemicalsFine chemicalsFine chemicals
AmmoniaAmmoniaLife scienceLife scienceChemicalsChemicals
Specialty polymers Specialty polymers (development)(development)
Olefins (improve facilities at OitaOlefins (improve facilities at Oita))
Organic chemicalsOrganic chemicalsPetroPetro--
chemicalschemicals
Cash cowCash cowGrowth driversGrowth driversNew growth driversNew growth drivers
Base businessesBase businessesGrowth businessesGrowth businesses
Specialty polymers (SHP now a 100%Specialty polymers (SHP now a 100%--owned subsidiary)owned subsidiary)
Tender offer for Showa Tender offer for Showa Tansan sharesTansan shares
Expand overseas production bases
Aim to become the world leader in
CNT
Develop and launch high-value
products
Promote alliance to solidify business
foundation
Drastic reform;consider alliances
Shift production to overseas sites
Concentrate on selected areas
Introduce new furnaces to reduce CO2 emissions and increase competitiveness
Use proprietary technologies to
establish presence
Expand flourinechemical business
Portfolio~Further improvement in business portfolio in 2009 and 2010
1. Portfolio improvement through implementation of growth strategies and structural reform
Page 8
Growth drivers
New growth drivers
Structural reform
HD
Semiconductor-processing materials
Based on our leading position in technologysolidify our business foundation through M&Astrategy
Focus on fluorine chemicals business
Ultrabright LED chips Use proprietary technologies to establish our presence in the market
Fine carbon Establish “only one” technologies and products on a global scale
Fine chemicals Develop and launch high-value products
Rare earth magnetic alloys Expand overseas production sites
Aluminum
Petrochemicals
Ceramics (alumina)
Carry out drastic structural reform; start alliances
Increase competitiveness of naphtha cracker
Move production bases overseas
Major topics for business portfolio improvement1. Portfolio improvement through implementation of growth strategies and structural reform
Page 9
Other 1%Fujitsu7%
HGST18%
Samsung7%
Seagate30%
Toshiba 9%
WDC 28%
[ HDD shipment ](Oct.-Dec. 2008)
TrendFocus
HDD demand trends in 20091. Portfolio improvement through implementation of growth strategies and structural reform
■ HDD industry trends Shipment volumes:Total demand will be lower than the
results in 2008.Inventory adjustments in 1H. Substantial cuts in media production in 1Q.Gradual recovery in 2Q. Recovery in 2H depends on macroeconomicrecovery.(No change in medium-term growth outlook: 10%/y or more)
Notebook PCs will continue to drive growth in 2009. Further reorganization of the industry is expected.
Substantially cut production in response to sharp declines in demand.
Leading the world in commercial production of high-capacity media. Started the world’s
First commercial production of the fourth-generation PMR media. Also leading in the race for the fifth-generation.
Rapid increase in the production of high-capacity glass-based media (Shipment of aluminum-based media declining)
We will further strengthen our position through positive reorganization focusing on glass-based media.
■ Showa Denko’s HD media business
Page 10
Intensively cutting production in response to sharp production cuts by the HDD industry(Our plant utilization rates: 70% in 4Q ’08; 40% in 1Q, and 60% in 2Q, ‘09)
Rationalization measures to be implemented in 1H ’09
Fixed costs at all production sites to be cut by a total of ¥3 billion
(including ¥1 billion fixed-cost reductions in Taiwan and Singapore due to intensive production cutbacks in 1Q and workforce reduction)
Renewed VPA with major customers
■ HD
HD:Improving profitability through production cuts in response to a sharp drop in demand
1. Portfolio improvement through implementation of growth strategies and structural reform
Page 11
Fuji Fuji ElectricElectric9.4%9.4%
FujitsuFujitsu3.9%3.9%
HOYAHOYA11.1%11.1%
Showa Showa DenkoDenko36.3%
HGSTHGST20.3%20.3%
WDC(Komag) 4.2%
Trend Focus
SeagateSeagate1414..77%%
2006 2007 2008 2009(Forecast)
(SDK estimated)
0
10
20
30
40
50
60
70
80
90
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Desktop PC Notebook PC
The HDD market will shrink slightly in 2009. In the medium term, however, demand for HD media for mobile PC applications will grow.
Showa Denko will focus on rapidly growing glass-based high-capacity HD media. Consolidation with HOYA’s glass-based HD media business
1) The new JV will start up in 2Q ‘09.2) Our position in the glass-based HD media market will be strengthened further.
(Million units)
HD: Integration with HOYA to become world No. 1 in notebook PC applications
1. Portfolio improvement through implementation of growth strategies and structural reform
[ HDD shipment trends]Mobile application growing
[HD media market share for mobile applications ](CQ3)
Page 12
0.1mm0.1mm0.1mm
Graphite electrodes・World leader in 30- and 32-inch electrodes・Future capacity expansion is being considered.
Rare earth magnetic alloys
VGCF High-performance ceramic products・Ceria-based glass polishing slurries for LCD/HD applications
・Titanium oxide for capacitors
・A leading maker in the world・Demand growing for use in HDDs and cars・Building a plant in Vietnam (already 2 in China)
・World leader in LIB applications・Build a 400t/y plant for use in resin composites・World leader in carbon nanotube
TM
Aiming to become a leader in inorganics/metals (1)1. Portfolio improvement through implementation of growth strategies and structural reform
Page 13
Ultrabright LED chips・Covering the whole wavelengths
Photocatalyst
SiC epitaxial wafers・For energy-saving power devices・Commercially producing high-quality epi-wafers
・Highly efficient production setup・Trial manufacture of new catalysts responsive to visible light
・Commercialization efforts in NEDO project・Future market size: ¥2.8 trillion
・Graphite cathode material for LIBs・Growing demand for use in PCs, mobiles and cars
SCMGTM
・Planning to use 6-inch wafers
Aiming to become a leader in inorganics/metals (2)1. Portfolio improvement through implementation of growth strategies and structural reform
Page 14
Ready to contribute to the expansion of electric vehicle market(For GHG reduction and energy conservation)
1. Portfolio improvement through implementation of growth strategies and structural reform
To provide high-performance parts for electric vehicles
Additive in anode/cathode (VGCFTM ) Graphite cathode material (SCMGTM) Aluminum laminate package Aluminum foils for electrodes
Small inverters with minimized loss
SiC power devices
Small and efficient motors
Rare earth magnetic alloys
High-capacity, long-life lithium ion batteries
Page 15
■ Adopted in LIBs for cars
Key technologies Graphitizing
Raw material evaluation
Quality desigining
Vapor-grown carbon fiber CNT synthesis
technology
Graphitizing technology
Graphite cathode material Graphitizing technology Raw material evaluation
technology
100nm
Page 16
■ We have the largest share in the world’s large-diameter graphite electrode market.
■ Exclusive supplier to the LIB market
■ Participating in resin composites market
Graphite electrodes VGCFTM SCMGTM
Graphite cathode material (SCMGTM) adopted in electric vehicles1. Portfolio improvement through implementation of growth strategies and structural reform
Large LIB for cars, and LIB for power tools
■ Restructure production setup to improve profitability■ Pursue alliances as one of the alternatives
Commodity aluminum materials (rolled products and extrusions) ⇒Review production setup, including saving of labor
Aluminum cans⇒Increase production efficiency and reduce costs; withdraw from bottle production
Heat exchangers⇒ Accelerate restructuring of our North American production site, and expand capacity in Asia
Cylinders for LBP⇒Establish a global production setup to
meet growing demand
Net Sales 2008
232.8billion yen
【Aluminum sales breakdown】
Sheets
Extrusion
Bevaragecans
Shotic
Ingots
Aluminum: Carry out drastic structural reform and consider alliances
1. Portfolio improvement through implementation of growth strategies and structural reform
Page 17
Other,elimination
Heat exchangers
0
10
20
30
40
50
60
70
80
90
100
2002 2003 2004 2005 2006 2007 2008 2009(forecast)
■ Reduce investment from 2008 level Results in 2008: ¥54.8 billionPlan for 2009 : ¥44.0 billion
Very carefully select investment items and focus on strategic areas of high growth Rationalization and labor-saving measures will be given priority.
[Capital investment trends](billion yen)
Substantially reducing capital investments in 20092. Efficient allocation of resources through careful selection of investments
Page 18
Electronics 6.0Aluminum and other 3.5Inorganics 1.5Chemicals 1.0
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009(forecast)
(billion yen)
• Breakdown by segment (billions of yen)
Reduce purchasing costs of all items, including raw materials and auxiliary materials
Establish an optimized production setup in accordance with the present levels of plant utilization
Increase productivity through SPS(Showa Denko Production System)activities
Set to take additional measures in response to further declines in economic conditions
[Cost reduction trends]
Planning to reduce costs by ¥12 billion in 20093. Carry out drastic cost reductions
Page 19
55.7
17.0
76.7
40.026.8
68.7
52.138.5
57.2
60.0
49.8
60.4
38.0
34.234.1
34.5
0
10
20
30
40
50
60
70
80
90
100
110
120
130
2003 2004 2005 2006 2007 2008 2009 2010
O.I. Results Depreciation expenses
The total of operating income and depreciation expenses in 2009 will be maintained at the 2003 level; will increase again in 2010.
[ O.I. before depreciation ]
Passion ProjectPassion Project Passion ExtensionPassion Extension
Page 20
Ensure sufficient cash flows4. Ensure sufficient cash flows
(billion yen)
Higher depreciation expenses due to HD capacity expansion, etc.
(forecast) (revised Image)
360
502
581
622
527
433
396 393385
449
3.18
2.83
3.87
4.46
1.841.63 1.6
2.17
1.4
300
350
400
450
500
550
600
650
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
Interest bearing debt D/E ratio
(billion yen) (times)Outstanding debt D/E ratio
2009 forecast 385 billion yen 1.6times2010 revised images 360 billion yen 1.4times
Passion ProjectPassion Project
1.43
Page 21
Passion ExtensionPassion Extension
(forecast) (revised image)
Continue to steadily improve financial strength despite severe environment⇒ Drastically reduce inventory and very carefully select investments
Improve financial strength5. Improve financial strength
Growing needs in the areas of environment
and energy
Individualized technologies of Showa Denko accumulated over many years
Interconnection of organic/inorganic chemical technologies
<<Future target areas:Future target areas:““imageimage”” in 2015in 2015>>
Environment/energyEnvironment/energy・・ Semiconductor devicesSemiconductor devices・・ Energy devicesEnergy devices・・ Lighting modulesLighting modules
IT Chemicals IT Chemicals
6. Strengthen R&D to realize our ”image” under the new business planFully utilizing our position as the unique chemical company with excellent
inorgnic/metal technologies
Page 22
<<Three major target segmentsThree major target segments>>
ElectronicsElectronicsAutomotive partsAutomotive partsEEnergynergy and environmental goodsand environmental goods
<<New growth driver businesses in 2010New growth driver businesses in 2010>>
Six SMUSix SMU projects (Environment/energy; projects (Environment/energy; semiconductor devices; energy devices; semiconductor devices; energy devices; displays/illumination; IT chemicals; displays/illumination; IT chemicals; automotive parts)automotive parts)
SDK Group technologies Individualized technologies: Fusion of organic/inorganic chemical and metal technologies
accumulated over many years Deepening core technologies for the future (Molecular design, reaction control,
organic/inorganic hybrid, and other technologies)
Trends in society and market Request for reductions in environmental impact Increased demand for energy; Measures to cope with the depletion of resources
<Contribute to environmental protection as the unique chemical company with excellent inorganic/metal technologies>
GHG reduction: Cathode material for LIBs for cars; carbon separtors for fuel cells, etc. Conservation of energy: VGCFTM; LED chips; SiC power devices; organic EL, etc. Conservation of resources & recycling: Platimum-subsitute catalysts for fuel cells; production
of chemials based on used materials
Value to be provided by the Showa Denko Group
6. Strengthen R&D to realize our “image” under the new business plan
Contribute to reduction of impact on global environment
Page 23
First company in Japan to commercially produce epitaxial wafers for SiC power devices
■ SiC power devices
Development roadmap
Achieved 100-times improvement in material performance
■ Organic EL
Developing InGaN-based LED chip technologies
■ LED chips
Requirements for commercial use in electric vehicles
Showa Denko’s efforts for FCEV commercialization
■ Fuel cell components
Supplementary data~ Development efforts by Showa Denko Group
Page 24
Showa Showa DenkoDenko
AISTAIST CRIEPICRIEPI
【【Joint Joint researchresearch】】
<SiC<SiC epitaxial wafer supplierepitaxial wafer supplier>>ESICAT Japan,ESICAT Japan, LLPLLP
Supply of SiC epitaxial wafersSupply of SiC epitaxial wafers
SiC epitaxial wafer consortium
Technology Technology transfertransfer
• Epitaxial wafers (2, 3, and 4 inches in diameter) with world’s leading quality
• Starting full-scale epitaxial wafer business following takeover of ESICAT Japan’s business
• Epitaxial wafers (2, 3, and 4 inches in diameter) with world’s leading quality
• Starting full-scale epitaxial wafer business following takeover of ESICAT Japan’s business
2”φ 3”φ 4”φ
Developing SiC epitaxial wafers with the top-level quality in the world: large diameter, low deficiency, and high uniformity Taking over ESICAT Japan’s business; becoming the first Japanese company
to produce SiC epitaxial wafers on a commercial scale
SiC power devices: First in Japan to commercialize epitaxial wafers
Showa Denko
Takeover in January 2009
Supplementary data
Page 25
Developed an innovative film-forming technology for nitride-based compound semiconductors Developed a new crystal process using MOCVD; production based on four-inch
epitaxial wafers; aiming to shift to six-inch epitaxial wafers
Hybrid-PPD enables the use of 4” wafers.
Hybrid-PPD enables the use of 4” wafers.
MOCVDMOCVD
New technology (Hybrid PPDTM)
New technology (Hybrid PPDTM)
PPD(Plasma-assisted Physical Deposition)
PPD(Plasma-assisted Physical Deposition)
HybridHybridMOCVDMOCVD
Launched green LED chips
Launched green LED Launched green LED chipschips
Launched blue LED chips
Launched blue Launched blue LED chipsLED chips
Shift to Hybrid-PPD-based production
Shift to HybridShift to Hybrid--PPDPPD--based productionbased production Shit to 6“linesShit to 6Shit to 6““lineslines
Shift to 4“ linesShift to 4Shift to 4““ lineslines
‘05 ‘06 ‘07 ‘08 ‘09 ‘10
4“lines completed44““lines completedlines completed
LED chips: Developing InGaN-based LED chip technologiesSupplementary data
Page 26
0
50
100
150
200
2005 2010 2015
Effic
iency
(lm
/W
)
Incandescent lamps
Fluorescent lamps(Efficiency )
2008
cost
(¥/lm
)40lm/W10,000hr
2012
¥3/lm or less
150lm/W50,000hr
10
To achieve high durability and efficiencyby developing white luminescent deviceswith a “new-concept” structure
R&D
MarketingReplacing
incandescent lamps
Sample distribution LaunchReplacing fluorescent
lamps
White EL device
Organic EL:~ Development roadmapSupplementary data
For next-generation lighting
Page 27
Now at a level close to commercialization for the illumination market due to longer life and higher efficiency
(Evaluated based on conventional-structure OLED)
Efficiency
(lm/W
)
1,000 10,000 100,000 10,000,000
Durability (hr@100cd/m2)
Illumination market (¥1.5 trillion)(including ¥0.5 trillion for lamps)
FPD market (¥6.2 trillion)(including ¥0.15 trillion for materials)
1,000,000
1
10
100
1000
Signboard market (¥0.7 trillion)
:Progress in 2008○:Device performance(In colors as emitted)
:Progress in 2008○:Device performance(In colors as emitted)
SDK blue SDK green
SDK yellow
SDK red
Organic EL: Achieved 100-times improvement in material performanceSupplementary data
Page 28
Fuel cell costs should be reduced to 1/100 to realize commercialization. Develop platinum-substitute catalysts Reduce the weight of separators Establish an infrastructure of hydrogen,
including its storage
Development of platinum-substitute catalysts is essential because of limited deposits of platinum.
Development of a substitute for metallic separators is essential in view of their weight and costs.
Materials-based approaches
World total: 922 million units
100 kW FCV→100 g Pt !!
50,000 tons(218 t/y)
300 million cars or less even when half of
the deposits is used
Japan: 76 million units (8.2%)
No. of four-wheeled cars (2007)
Platinum deposits
Fuel cell components: Requirements for commercial use in electric vehiclesSupplementary data
Page 29
Low-cost, thin, and light carbon separators
Fine powder of graphite with high electrical conductivity
Low-cost production using a high-speed molding process
Special surface treatment for high drainage
Member of a project at NEDO
Niobium-based (Ⅳ/Ⅴ group ) oxide catalyst
High specific surface High crystallinity High-speed production Member of a new project at NEDO
Platinum-substitute catalystCarbon separators
Developing “1/100 cost” materials for fuel-cell electric vehicles (FCEVs) Commercialize fuel cell components in preparation for the expected spread of
FCEVs in and after 2015
Supplementary data
Fuel cell components: Showa Denko’s efforts for FCEV commercialization
Page 30
NetSales
OperatingIncome
NetSales
OperatingIncome
NetSales
OperatingIncome Net Sales Operating
Income
Petro-chemicals
335.4
16.4
395.1
19.6
400.2
-1.3
245.0
3.0
Chemicals79.2
5.1
84.7
7.4
93.3
5.3
100.0
2.0
Electronics165.5
28.6
201.0
25.8
188.8
9.3
155.0
0.0
Inorganics74.3
16.1
84.6
20.9
88.8
19.2
90.0
17.5
Aluminum260.1
6.5
257.8
8.0
232.8
-0.2
210.0
0.0
HQ costs andother -3.9 -5.1 -5.5 -5.5
Total914.5
68.7
1,023.2
76.7
1,003.9
26.8
800.0
17.0
2006
〔Passion Project〕 2009(forecast)2007 2008
(billion yen)
Reference~ Operating Income by segment
Page 31
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