“for tomorrow 2015”€¦ · 27/05/2013 · business strategy. 3. future development of “for...

“For Tomorrow 2015” Mid-term Management Initiative

(FY 2011–2015) progress and outlook

May 27, 2013Taketsugu Fujiwara

PresidentAsahi Kasei Corporation

2

1. Progress of basic strategy

2. Progress and forthcoming steps of business strategy

3. Future development of “For Tomorrow 2015”

3




Megatrends Group Mission and Values

Creating for Tomorrow – the Asahi Kasei Group is creating new things for the future based on the perspectives of “living in health and comfort” and “harmony with the natural environment.”

1. Business Strategy 2. Reformation of corporate systems

Promotion of “one AK” management

1. Global business expansion

2. Creation of new businesses

3. Propagation of our mission, values, and vision

4. Human resource policies

5. Management control, resource allocation

Pursuit of growth1. Expansion of world-leading

businesses2. Creation of new value for society

Promotion of businesses based on living in health and comfort and harmony with the natural environment

1) Environment/energy-related2) Residential living-related3) Health care-related

Basic Strategy

Framework of basic strategy

Streamlining project for improved profit structure (Additional measure in FY 2012)4

Outlook in FY 2011 and FY 2012

5

•Falling short of performance goal due to deteriorated performance of highly- volatile businesses such as commodity chemicals and electronics with change of global and Japanese economy and market structure

•Establishment of base for growth by advancing basic strategy

Expansion of world-leading businessesExecution of aggressive investment and expansion actions; contribution from FY 2013

Creation of new value for society

• Start of actions for expansion in all businesses towards creation of value for society in three aspects

(Acquisition of ZOLL Medical Corporation to boost the Health Care business sector as a driver of growth)

• Development of “For Tomorrow” projects combining technologies and businesses from both inside and outside the Asahi Kasei Group

Streamlining for improved profit structureEstablishment of group-wide streamlining project

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Main actions for growth in FY 2011 and FY 2012

Start of streamlining project for improved profitEstablishment of infrastructure for growth; Asahi Kasei (China) Co., Ltd. and Asahi Kasei India Pvt. Ltd.

Blue letters indicate completed actions

• Establishment of Asahi Kasei Pharma America Corp.Overseas clinical trial of Recomodulin™

• Acquisition of ZOLL- Entry into critical care- Establishment of Japanese

subsidiary• Additional indication for

Famvir™ anti-herpes agent• Acquisition of sales right for

overactive bladder drug

• R&D on cell therapy

• Product lineup of Hebel Haus™ and Hebel Maison™- 2-generation homes w/room for an

unmarried sibling- Apartment buildings which support

raising children- 2-generation homes w/system for

energy saving between families- Homes with semi-outdoor space

• Establishment of Asahi Kasei Fudousan Residence Corp.

• New lifestyle proposals Completion of “HH 2015” demonstration house

• Nonwovens New plant in Thailand

• Insulation panels Plant expansion in Sakai

• Ultraviolet light-emitting diodes (UV LEDs)- Crystal IS, Inc. in US becoming wholly owned subsidiary

- Construction of pilot line in Fuji• Lithium ion capacitors (LICs)

Establishment of joint venture and increase in capital

• Acrylonitrile (AN) New propane-process plant in Thailand and expansion in Korea

• Solution-polymerized SBR (S-SBR) Completion of plant and decision for expansion

• Hipore™ Expansion of overseas processing and sales bases, expansion of Hyuga plant

• Dry film photoresist New plant in Changshu, China, establishment of technology center in Suzhou, China

• Bemberg™: Decision of plant expansion• Roica™: Enhancement of Asian plants• LSIs: Expansion of overseas business

World-leading businesses

Environment & Energy Residential Living Health Care

Measures across different business units

Business performance in FY 2011 & FY 2012, and forecast for FY 2013

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Business sector

Overview (black letters indicate FY 2011 & FY 2012, and blue letters indicate FY 2013)

Chemicals & Fibers

• Good performance of polymer products and specialty products in Chemicals, good performance in Fibers. Chemicals and derivative products struggled against sluggish demand in emerging markets. Decreased operating income for 2 years in a row.

• Large increase in operating income due to correction of the high yen and contribution of results of measures for expansion.

Homes & Construction

Materials

• Record high operating income in both FY 2011 and FY 2012 enabled by innovative lifestyle proposals.• Further growth by meeting increased demand before consumption tax increase. Advancing countermeasures

against demand decline after the tax increase.

Electronics• Falling far short of the plan due to strong yen, poor condition of Japanese electronics manufacturers, and

accelerated hollowing-out of domestic electronics industry. Decreased operating income for 2 years in a row.• Recovery of performance due to correction of the high yen and strengthening of overseas operations. Advancing

recovery plan for growth.

Health Care

• Rapid growth exceeding plan by volume expansion of new drugs developed in-house. Expansion of ZOLL in critical care as planned.

• Pharmaceuticals & critical care: continuing good performance Medical devices: recovery of performance of overseas businesses with correction of the high yen. Advancing measures for expansion.

FY 2011 & FY 2012: Falling short of the plan due to deteriorated performance of global businesses• Poor performance in chemicals and derivative products such as AN, electronics, etc. due to change of operating

environment, including extreme strength of Japanese yen, European sovereign debt crisis, and slowdown of Chinese economic growth.

• Good performance in other businesses, especially homes and pharmaceuticals, in line with or exceeding plan.FY 2013

Forecasting record high operating income, ¥130 billion by reaping results of actions for growth and favorable turn of environment. Return to growth.

38.657.3 65.5

7.08.8

15.920.57.38.2

68.6 47.6

48.2

50.0

27.9

14.36.4 2.8

10.0122.9

104.3 92.0

130.0

(40)

(20)

0

20

40

60

80

100

120

140

160

180

FY 2010 FY 2011 FY 2012 FY 2013 forecast

8

Operating income by business sector

Good performance of Homes & Construction Materials and pharmaceuticals & medical devices

Market slowdown due to change of business structure in Electronics and sluggish demand for AN Electronics

Chemicals & Fibers

Pharmaceuticals & medical devices

Critical Care, excluding amortization of goodwill, etc.*

Homes & Construction Materials

Others, corporate expenses and elimination, and

amortization of goodwill, etc.*

Consolidated operating income(billion $)

*

Operating income of Critical Care segment excluding amortization

of goodwill, etc. shown.

Amortization of goodwill, etc. related to acquisition of ZOLL is

included in “Others,

corporate expenses and eliminations, and amortization of goodwill, etc.”

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S-SBR (synthetic rubber for fuel-efficient tires)・Plants in Singapore

Phase 1: completion of 50 kt/y plant in Apr. 2013Phase 2: new 50 kt/y plant under construction

・Smooth expansion of sales volume exceeding plan

Dry film photoresist (for printed wiring boards)・Development in China

- Suzhou: establishment of technology center- Changshu: construction of new plant

with start-up in autumn 2013→ capacity expansion of 120 million m2/y

・Continuing expansion of sales & production in line with market growth

AN (material for ABS resin and acrylic fiber)・Thailand: start of commercial production at

propane-process plant in Jan. 2013・Korea: completion of additional line in Jan. 2013・Strengthening of position as top supplier

in Asia

Hipore™ (lithium-ion battery separator)・Korea: expansion of processing capacity ・China: establishment of processing facility

in Sep. 2012・New line in Hyuga: start of commercial

production in H1 2013 → capacity expansion of 50 million m2/y

・Establishment of processing & sales bases overseas to meet growing market demand in automotive applications

World-leading businesses (1) Performance in FY 2011 and FY 2012

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2010 2012 2013

Total capacity of annual production

200 kt in Thailand

245 kt in Korea

750 kt965 kt

1,210 kt Asahi Kasei production capacity and global market forecast for S-SBR for fuel-efficient tires

2010 2013

Domestic plants

Phase 1 plant in Singapore

Phase 2 plant in Singapore under

construction Global market

forecast: 490 ktProduction

capacity 62 kt130 kt

50 kt

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Steady implementation of investment for growthCompletion in and after FY 2013• Dry film photoresistStart-up of plant in Changshu in autumn 2013

• S-SBRStart-up of phase 2 plant with 50 kt/y capacity in Singapore in 2015

• Bemberg™ regenerated cellulose Capacity expansion in Nobeoka; completion in 2014 and start-up in 2015

• Hipore™Successive expansions of processing capacity in major markets of China and Korea

Quick earnings contribution from plant completions• Raising product strength

Development of S-SBR and Hipore™ for automotive applications• Raising of marketing capability

Reinforced marketing of AN and dry film photoresist with aggressive investments

Cash flows of world-leading businesses• Net cash from operating activities from FY 2011 to FY 2015: about ¥300 billion• Investment for growth from FY 2010 to FY 2015: about ¥180 billion (cash out)

1 Technology to produce butadiene from butene gas

Under study (contribution to profit in and after FY 2015)•AN Joint venture in Middle East：

capacity expansion to global No. 1 capacity, 1,410 kt/y

•S-SBRNew plant at 2nd site overseas; sales expansion with market growthConstruction of BB-FLEX1 demonstration facility

• Volume expansion of Planova™, LSIs, and Hipore™

• Overseas development of dialysis business

World-leading businesses (2) Development in and after FY 2013

Creation of new value for society: Health Care (1) Performance of Critical Care in FY 2011 and FY 2012

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• Good growth of ZOLL (acquired at the end of Apr. 2012)- Growing as expected at time of acquisition

FY 2012 sales increased by 18% year-on-year on 12-month basis

- Growth of LifeVest™ wearable defibrillator FY 2012 sales increased by 57% year-on-year on 12-month basis

• Actions and progress in FY 2012- Smooth integration into Asahi Kasei Group- Up-front investment of resources for

accelerated growth- Developments in Japan

Establishment of Asahi Kasei ZOLL Medical Corp. in Oct. 2012Regulatory approval and sales launch of Thermogard™ in Feb. 2013*

0

200

400

600

800

1,000

FY 2010 FY 2011 FY 2012 FY 2013forecast

Sales of ZOLL

Revenue from LifeVest™

0

100

200

300

400


Growing by >50% per year

Recalculated to fiscal years from April to March

* Central venous placement temperature management system

(million $)

(index based on FY 2010 as 100)

Pharmaceuticals• Expansion of Teribone™ osteoporosis drug• Expansion of Recomodulin™ recombinant thrombomodulin and start of Phase III clinical trial overseas

• Acquisition of sales rights for NEOXY™ Tape overactive bladder therapeutic drug

• Enhancement of product pipeline

Medical devices• Deteriorated performance of dialysis businesses overseas due to strong yen

• Strengthening of overseas development by selectivity and focus; strategic alliance and investment with NxStage Medical Inc.

Establishment of Health Care Council among Asahi Kasei Pharma, Asahi Kasei Medical, and ZOLL to advance strategy for expansion in Health Care sector

0.0

50.0

100.0

150.0

200.0

250.0


0.0

5.0

10.0

15.0

20.0

25.0

Net sales (left axis)Operating income (right axis)

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Performance of pharmaceuticals and medical devices

Creation of new value for society: Health Care (2) Performance of pharmaceuticals and medical devices in FY 2011 and FY 2012

Mar. 2012Nov. 2011 Mar. 2013

Monthly sales of Teribone™ since launch

Cumulative sales since launch: about ¥19 billion

(¥ billion)

(index based on Nov. 2011 sales as 1)

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Pharmaceuticals ・Expansion in osteoporosis area: aiming to be No.1 company in the field of locomotive syndrome1

-Development of transdermal patch formulation of Teribone™ -Development of zoledronic acid (code name AK-156) as bisphosphonate drug for once-per-year injection

・Overseas development of Recomodulin™ – expansion to Europe, US, and Asia ・Strengthening of product pipeline by utilization of CVC 2, etc.

Medical devices ・Enhancement of overseas development, heightening competitiveness in both performance and cost

Critical care ・Reinforcement of base in Chain of Survival3

- M&A to acquire future growth business from long-term viewpoint

・Intermittent expansion of existing businesses

Pursue of synergy effect in Health Care business sector ・Accelerated expansion by sharing business base and know-how in Europe, US, and Japan

Focus on expansion as growth driving areaDevelopment of synergy effect among 3 businesses; promoting at Health Care CouncilPursuit of growth through alliance, technology licensing, and M&A

1 Conditions under which the elderly have been receiving care services or high-risk conditions under which they may soon require care services, due to problems of the locomotive organs.

2 Corporate Venture Capital3 Series of actions required for treatment in critical care

Creation of new value for society: Health Care (3) Development in and after FY 2013

0

20

40

60

80

100

120

140

160


Remodeling

Real estate

Creation of new value for society: Residential living (1) Performance in FY 2011 and FY 2012

・Order-built homes (unit homes and apartment buildings)- Record high orders, sales, and operating

income in both FY 2011 and FY 2012- Succession of innovative lifestyle proposals

(Homes with features for families living with their parents and an unmarried sibling, two-generation Hebel Haus™ homes with a system for energy sharing between families, apartment buildings facilitating communication among mothers with young children, etc.)

・Housing-related operations - Expansion of remodeling and real estate

businesses by leveraging existing Hebel Haus™ customer base and reallocation of human resources

・Business combinations- Establishment of “HH 2015” demonstration house

combining various know-how from inside and outside of the company to meet emerging market needs

0

100

200

300

400

500

600

700

FY 2010 FY 2011 FY 2012 FY 2013 forecast

0

10

20

30

40

50

60

70Net sales (left axis)Operating income (right axis)

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Net sales of remodeling and real-estate related operations

Performance of residential-living businesses

(¥ billion)

(¥ billion)

• Order-built homesCreating value in both tangible and intangible aspects- Products incorporating lifestyle proposals that match changes in society- Long Life Homes that embody unchanging security and comfort

• Housing-related businesses- Remodeling

Providing long-term services for the 300,000 Hebel Haus™ units sold to date: Enrichment of proposals and responsiveness regarding various stages in life and changes in the social environment, based on experience with 60-year inspection system

- Real estate Development: Expansion of condominium business based on building consensus

among stakeholders for rebuildingRental: Expansion of number of rental units (50,000 at end of FY 2012)

• Business combinations- Utilization of “HH 2015” demonstration house to enhance lifestyle proposals through

combinations with technology and businesses from inside and outside the Asahi Kasei Group (research on home healthcare, security/monitoring systems, etc.)

16

Advancing stable growth as an earnings platformWidening domain by dealing with market decline after consumptiontax rise, expanding housing-related businessesManifesting function as the center for expanding the scope of operations in combination with other businesses

Creation of new value for society: Residential living (2) Development in and after FY 2013

Electronic devices and materials• Struggled with high yen and slow growth in

emerging markets, rebuilt strategy and operational configuration- Devices: Strengthened overseas, expanded

automotive applications, reconfigured manufacturing infrastructure for power- management ICs

- Materials: Strengthened Hipore™ overseas, developed automotive grades

Energy conservation/environment-related• Capacity expansion for S-SBR• Capacity expansion for Neoma™ high-performance phenolic foam thermal insulation• Developed overseas business for Microza™ water treatment membranes• Building business for current sensors and infrared sensors• Start-up of propane-process AN plant

“Environment & Energy for Tomorrow” project• LICs1 – capital increase and acceleration of development at Asahi Kasei FDK Energy

Device Co., Ltd., joint venture with FDK Corp.• UV LEDs2 – development of business in the field of energy-conserving devices with UV

LEDs based on technology of Crystal IS, Inc. for aluminum nitride (AlN) substrates → World’s highest UV LED output achieved with improved crystal growth technology

0

500

1,000

1,500

2,000

2,500


0

50

100

150

200

250Net sales (left axis)Operating income (right axis)

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Creation of new value for society: Environment/energy (1) Performance in FY 2011 and FY 2012

1 Lithium ion capacitors, which are next-generation energy storage devices that enable highly efficient use of electric power.

2 Ultraviolet light-emitting diodes.

Performance of environment/energy businesses (¥ billion)

Electronic devices• Diversifying from consumer electronics applications to industrial equipment and

automotive applications using established compound semiconductor and mixed-signal LSI technology

Electronic materials• Hipore™ – expanding bases in China and Korea• Dry film photoresist – new plant in Changshu, China

Water treatment• Microza™ – meeting growing demand in Europe, US, and China• UV LEDs – advancing development of water sterilization applications;

completing a pilot line in H2 2014 (providing initial commercial supply)• LICs – advancing product development and applications development for

market growth from FY 2015 onward; applications including power assistance, power regeneration, load leveling, and backup power

• Environmental automotive products – studying 2nd overseas base for S-SBR, expansion of performance plastics business18

Demonstrating true value as a diversified chemical companySwift creation of pillar operations through business combinationsTransition from independent business models to integrated model on Asahi Kasei Group scale

Creation of new value for society: Environment/energy (2) Development in and after FY 2013

Launch of streamlining projectEstablishment of an organization focused on achieving progress

In each business unitMeasuring the project’s effectiveness with numerical data from FY 2012

Throughout all unitsRaising efficiency and enhancing operations across the Asahi Kasei GroupImproving the profit structure through more favorable procurement, reformation of cost structure, etc.

TargetsCost reduction of ¥10 billion or more in FY 2013Increasing to ¥20 billion or more between FY 2013 and FY 2015

Advancing structural reformsWithdrawal from unprofitable businesses, improving business efficiency

- Coping with declining demand in the domestic Japanese petrochemical market 19

Progress and forthcoming steps of project to enhance profitability

100104

108

120

90

100

110

120

2010 2011 2012 2015target

Quantitative indexes of achievement of Group Mission

Living in health and comfort

20

Index for number of people Asahi Kasei’s health care business contributed toInitial 2015 target was 30% higher than 2010.This is changed to 40% due to acquisition of ZOLL.

2015 target: 20% higher than 2010

Index for number of residents in Hebel Haus™ homes

Harmony with the natural environmentCO2 reduction based on LCA* vs. CO2 emissions

• Target of increasing the ratio between CO2 reduction based on LCA and CO2 emissions from 3.2 in 2010 to 8.0 by 2020 → ratio in 2012 was 6.3

• Continuous improvement through expanding sales of S-SBR for fuel-efficient tires, Hall elements, etc.

* Life cycle analysis of CO2 reduction in the entire product life cycle from raw material processing to disposal of the product.

Mill

ion

tons

/yea

r

100 107122

140

0

50

100

150

2010 2011 2012 2015target

15.96

22.5824.18

5.05 4.47 3.780

10

20

30

FY 2010 FY 2011 FY 2012

CO2 reduction based on LCA

CO2 emissions

21




No change in assumptions for basic trends in the economic climate→ No change in the targeted growth field

Basic trends: growth in emerging countries, maturity of Japanese economy, limitations of the Earth, and aging of the population

Implementing the basic strategy while advancing streamlining project to strengthencapability to respond to significant issues such as the sovereign debt crises in Europewhich may frequently occur.

Building up a strong foundation based on the strategic investments and measures executed in FY 2011 and FY 2012Accelerating the basic strategy while reaping results of investments executed so far.

For Tomorrow 2015FY 2011–2015

FY 2006–2010Growth Action – 2010

Strategic investment(Shifting to growth)

Business portfolio realignment for

expansion and growth

Ishin2000FY 1999–2002

Selectivity and focus

Disposal of negative legacies

Ishin-05FY 2003–2005

Selective diversification

Creation of cash flow

Future development of “For Tomorrow 2015”

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Pursuit of growth on two axes

Expansion of world-leading businesses

Creation of new value for society“Harmony with the natural

environment”“Living in health and comfort”

Continuation of basic strategy, Seeking growth and change

Asahi Kasei grows

through change

Asahi Kasei grows

through change

“For Tomorrow 2015”business strategies

Asahi Kasei’s direction for growth

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Globally expanding businesses where we have the initiative and growth is

projectedAN, S-SBR, Hipore™,

dry film photoresist, etc.

Creating new value for society by generating new growing

businesses through collaboration both inside and

outside the company

Hebel Haus™, Neoma™, LICs, UV-LEDs, electronic compass,

Teribone™, S-SBR, LifeVest™, etc.

Creating new value for society by providing

new technology, products, and services

Implementation of strategic investment for growth with maintenance of strong financial constitution

Concept for ¥1 trillion of investment during “For Tomorrow 2015”

24

Investment plan

Investment in existing businesses¥550 billion

New operations, M&A, intermittent expansion of

existing businesses¥450 billion

→Debt/equity ratio at the end of FY 2015 after ¥1 trillion investment: 0.5

Resources for further growth

Decisions adopted in FY 2011・Capacity increase for S-SBR in Singapore

・Capacity increase for acetonitrile in Korea

・Capacity increase for insulation panels・Research complex for pharmaceuticalsTotal approx. ¥100 billion

Decisions adopted in FY 2012 ・Acquisition of sales rights for overactive bladder therapeutic drug

・Capacity increase for Bemberg™・Overseas expansion of Hipore™Total approx. ¥100 billion

Decisions adopted through FY 2012･Acquisition of ZOLL･Acquisition of Crystal IS; construction of pilot line for UV-LEDｓ

･Establishment of joint venture for lithium ion capacitors (LICs)

Total approx. ¥200 billion

Progressing toward ¥200 billion of operating income in few years after FY 20151. Chemicals & Fibers → Expansion of world-leading businesses by reaping results of investment2. Homes & Construction Materials → Overcoming slump in demand in FY 2014 and FY 2015 following rush in

demand before consumption tax increase3. Health Care (pharmaceuticals, medical devices, and critical care) → Accelerating expansion4. Electronics → Swift action in response to changes in market structure and customer base

47.6 270

50.070

482582

65.5508.8 23.2

28.7 35

6.4 2.8

10.020

(25)

0

25

50

75

100

125

150

175

200

FY 2011 FY 2012 FY 2013forecast

FY 2015outlook

FY 2016onward

25

Others, corporate expenses and eliminations, and amortization of goodwill, etc.*

160160

Consolidated operating incomeConsolidated operating income200200(¥ billion)

* Health Care includes operating income of Critical Care segment excluding amortization of goodwill, in addition to

operating income of Health Care segment from FY 2012.

Amortization of goodwill related to acquisition of ZOLL is included in “Others, corporate expenses and

eliminations, and amortization of goodwill, etc.“

Future development of “For Tomorrow 2015”

Chemicals & Fibers

Health Care*

Homes & Construction Materials

Electronics

Basic standard for payout ratio: 30%FY 2010 FY 2012 Target in FY 2016 onward

ROE 9% 7% ≥10%

ROIC 7% 5% ≥7%

130

104.3 92

ResidentialLiving

Health Care

Others

Environment &Energy

0

500

1,000

1,500

2,000

FY 2011 FY 2012 FY 2013forecast

FY 2015outlook

Original planfor FY 2015

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120

FY 2011 FY 2012 FY 2013

forecast

FY 2015

outlook

Original plan

for FY 2015

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300

400

500

600

700

FY 2011 FY 2012 FY 2013

forecast

FY 2015

outlook

Original plan

for FY 2015

Environment &Energy

ResidentialLiving

Health Care

Others

0

50

100

150

200

FY 2011 FY 2012 FY 2013 forecast

FY 2015outlook

Original planfor FY 201526

Sales (¥ billion)

Global-leading businesses

Target: more than

2/373%

Businesses creating new value for society

* Operating income of each business plus equity in earnings of AN affiliates

Operating income (¥ billion)

Performance of global-leading businesses and businesses creating new value for society

Sales (¥ billion)

Operating income* (¥ billion)

27

Creating for TomorrowThe commitment of the Asahi Kasei Group:

To do all that we can in every era to help the people of the world

make the most of life and attain fulfillment in living.

Since our founding, we have always been deeply committed to contributing to the development of society,

boldly anticipating the emergence of new needs.

This is what we mean by “Creating for Tomorrow.”

“for tomorrow 2015”€¦ · 27/05/2013 · business strategy. 3. future development of “for...

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