Nippon Shokubai Co., Ltd. · 2015. 2. 19. · 4 Table of Contents （1）Management Policy （1）Management Policy （2）Issues and Solutions ①Existing Business ②Group Strategy

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Nippon Shokubai Co., Ltd.

November 19, 2003

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[ I ] Medium-Term Management Plan (FY3/02～FY3/04)

Current Situation and Outlook

President: Hiroshi Yanagida

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Table of Contents（１）Management Policy

（１） Management Policy

　（２） Issues and Solutions

　　　　 ① Existing Business

　　 ② Group Strategy

　 ③ New Products

　（３）　Results

Note: This is a voluntary translation of the original in Japanese provided by the company for convenience of readers. Translation can be corrected without notice.

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Management Policy（１）Management Policy

A global company creating new value thru unique technology

Future Goals　

Slogan

“Change from quantitative growth to qualitative growth”

Moving towards a Development Platform for the 21st Century

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Basic Policy

１．New ProductsSelection and concentration of business resources

　 Improvement of accuracy and acceleration regarding new products development

２．Existing ProductsCreation of business portfolios and clarification of profit responsibilities

３．Revitalization of Human Resources and Organisations　 Increased vitality and flexibility to respond quickly to

outside changes

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Safety Operational Management

Basic Stance

Company Motto：”Safety prior to Production”Commitment to promotion of “Responsible Care” (RC) and continuing improvement of operational and environmental safety and of quality assurance

Structure and Organisation- RC promotion committee which is headed by the president leads and promotes activities　- The committee is the highest deliberation council for “RC”including safely control　　

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System for Promoting RC including Safety Control

Plant Environment & Safety Plans

Current Evaluations

Set Activity Plans

Maintenance and Improvement

Review of Plant Environment & Safety Plans

Re-evaluation

Internal Inspections

Annually

• ISO14001• ISO9001　• OSHMS

Annually

(Workplace Activities)

Annually(Plant activities)

Mid-Term Environ/Safety Promotion Basic Plan

(Corporate Activities)

RC Inspections

Annually

Focus・Environ/Safety Plan・Annual Theme

External Inspections

Annually

・ISO14001 ・ISO9001

Review of Basic PlanOSHMS:Occupational Safety and

Health Management Systems

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Undertaking Safety Operations

Zero Equipment Accidents since 1996

Achievements

ContributionStable Operations　→　Achievement of high customer trust

Minimize opportunity loss

Establishment of independent safety control system 　

Kawasaki Plant

Continuous approval for independent safety inspection

of high pressure gas production

→ Bi-annual maintenance of large production facilities

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Issue Responses in 2003ＳＡＰ Business

Nov 2003 –　China ＰＪ: Construction of 30K T/Y plant startedDec 2003 –　Himeji: Mechanical completion of

“New manufacturing process” 30K T/Y plant

Resin BusinessApril 2003 -　Smooth start-up of

new joint venture company, “Japan Composite”

Management Reform

April 2003 -　Introduction of “virtual” business divisions and new human resource system

April 2004 -　Planned introduction of ERP System

ERP：Enterprise Resource Planning（SAP Germany R3 software）

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2,3022,171

1,6701,6351,5971,605

2,1672,304

150

5543

109

0

500

1,000

1,500

2,000

2,500

3,000

FY3/01 FY3/02 FY3/03 FY3/04

0

50

100

150

200

250

300

SalesAssetsOperating Income

Sales/AssetsY100mil

Op IncomeY100mil

　Business Performance FY3/01-FY3/04


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Medium-term Plan（2001-2003)Target（FY3/04) ＲＯＡ Above 5%

5.7%5.7%

1.9% 3.8%2.7%

6.9%

4.7%

2.4%

6.9%

0.0%

2.0%

4.0%

6.0%

8.0%

FY3/01 FY3/02 FY3/03 1HFY3/04

FY3/04

Medium-term Plan

Actual & Forecast

Target　５％

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New Medium-term Plan for FY3/05-FY3/07

Pursuit of Policy of Long-term Management Plan

Functional Chemicals BusinessFurther acceleration of new products development

Improving cost competitiveness of existing products

Environment and Catalyst Businesses

Setting the direction and pursuing the policy of establishing and strengthening these as our core businesses

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（２）Issues and SolutionsTable of Contents

（１） Management Policy


　　　　 ① Existing Business




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Basic Chemicals Business（２）-①Current Business

Outlook for Product Markets FY３/04～FY3/０6　

Demand in Asia, based on China ５-６％ growth estimatedFY3/04: Estimated around ７００＄/ton in 2nd half

9/03 - Nanya（Taiwan）350K T/Y new production, but little effect expected

FY3/05: End/04 Saudi Arabia 675K t/yr production increase expected

FY3/06: 2nd half, production increases in China, Saudi Arabia, and Iran could lead to market weakening

EG

Our Actions

Expand EO derivatives

so to minimize EG production

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ＥＧ Production Capacity and Market Conditions

470

570

675 700 700650

0

400

800

1,200

1,600

2,000

1HFY3/03

2HFY3/03

1HFY3/04

2HFY3/04

FullFY3/05

FullFY3/06

Capacity10K T/Yr

0

200

400

600

800

1000

MarketConditon(＄／Ｔ）

SaudiArabia

Iran

Asia

Existing

AsiaMarket

７００

（NS Analysis & Estimates）


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Estimated 3-5% growth in world demand

2004 : J/V of Sasol and Mitsubishi Chemical will establish 80K T/Y production facility at beginning, but no significant market softening expected

2005 : BASF Nanjing will start up 160k T/Y production; could cause market weakening

AES

Our Actions① Establish optimal geographic production ② Strengthen high added value AA derivatives　③ Reduce overall costs

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AES Production Capacity and Market Conditions

790875

1000

1200 1200 1200

0

100

200

300

400

1HFY3/03

2HFY3/03

1HFY3/04

2HFY3/04

FullFY3/05

FullFY3/06

Capacity（10K t/Yr）

0

400

800

1200

1600

MarketCondition(＄／Ｔ）

SouthAfrica

Asia

Existing

AsiaMarketConditions

10001100

（NS Analysis & Estimates）


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ＳＡＰ Business（２）-① Current Business

Sales Situation

Full Scale Production and SalesVery high operation at all sites: Japan, USA, Europe

Background

３．Customers sales expansion

１．Stable supply of high functional and high quality SAP２．Licensing strategy to protect R&D technology

Reached target share of 25%

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Demand Trend

１．Multiple sources of demand　　　　Global players as well as 　　　　many private brand producers　　　　　（Mid-Size, OEM specialists, etc.）２．More SAP demand because of high 　　　

　　functionality of end product　　

３．Shift in demand to high functional SAP

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Facility Expansion Plans

Dec 2003 due for completion

Build a new process plant

Early 2004 trial operation ～　Users’ quality checkProve the new process

commercial operation

Himeji

China Nov 2003 Construction started

Dec 2004 Completion planned

Oct 2003 Permit for construction obtained

Europe2005 : 30k T/Y of new plant construction under study

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0

5

10

15

20

25

30

35

2003 MarchEnd

2004 MarchEnd

2005 MarchEnd

2006 MarchEnd

NisshokuChem. Ind.(China)NSE（EU）

NAII（US）

Himeji （JP）

（10K T/Y）

２３

２６

２９

３２

Production Capacity Outlook

NAII：NA　Industries,　Inc. 　 NSE：Nippon　Shokubai　Europe　NV

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Situation of Competitors

AA business acquisition of Celanese by DOW ChemicalStrengthening of AA/SAP business by a major chemical

company in the global market

Effects on SAP business: No major change currently envisaged

①Celanese has no SAP production plants

②Combination of Celanese AA business and former UCC alcohol business could create more competitiveness

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Situation of CompetitorsMajor ＳＡＰ Producer Production Capacity

0 5 10 15 20 25 30 35

2005

2004

2003

2002

Production Capacity(10K ton）

NipponShokubaiCompany B

Company C

Company D

Company E

（NS analysis and estimate）

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AA Business（２）-①Current Business

Our Strength - Technology

　１．Simple Process [Single reactor]　　　⇒Compact plant　　　　 ⇒Reduce plant costs (Construction、Servicing, Repair）　２．High Performance Catalyst [Optimal for our licensees’ plant]　　　⇒Long-life, High yield, High concentration of crude AA in solution　　　　 ⇒Reduce running costs (catalysts, materials, utilities)　３．Licensing successes

[11 companies in 8 countries over 30 years]　　　⇒Competition in license business, Achievement of accountability

to licensees, Performance guarantees⇒ Continuous improvement of process,

plant design and catalysts

Strongly supported by strategic patent policy

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Our Strength – Process Comparison

△○◎Production costs

△△○Catalyst performance

Azeotropicdistillation method

Distillation method by crystallization

Azeotropic distillation method –fewer distillation columns⇒ Less equipment and running

costs

Purification method

Water collection (low concentration solution)

High boiling point solvent collection

Water collection (high concentration solution)

Easy separation because less water and impurities ⇒Energy saving　　　　

Collection method

Tandem reactor (Two reactors)

Tandem reactor (Two reactors)

Single reactor (One reactor)　　　

⇒Compact peripheral equipments Reactor

Co. CCo. BNippon Shokubai

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Our Strength – High Technology Share

７２５Others

１２４２C Co. technology

２４８２B Co. technology

５７１９６Nippon Shokubai technology　※

Share（％）Production (10k t/yr）

※　Data: Our process licensees and/or catalysts customers (Source: Nippon Shokubai)

(As of Sept. 2003)

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Our Strength – Business Development

　１．Globally spread production sites　　　 ⇒・ Optimize production by locations

・ Cover widely spread customers　　　　 ⇒Low distribution costs, timely delivery, broad customer base　２．Major licensing achievements　　　 ⇒Relationships with strong domestic and overseas producers　　　　 ⇒Broad choice of alliance and swap partners　３．High added value business development of AA

(Big volume of in-house consumption)　　　 ⇒Big in-house use for world No.1 SAP, emulsions, resins, etc 　　　　 ⇒ ・ High level of operation　　　　　　・ AA consumption ratio for general-purpose acrylic esters

decreased consequently.

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Functional Chemicals Business（２）-①Current Business

Launch new products quickly and strengthen advantageous business areas

Maintain European market share, enter U.S. and China Markets５５Special esters

Maintain High-end Product market share, expand share of mid-function products

４０Concrete admixtures

Focus on super-strong resins for building and construction industry６５Resins for paints and

adhesives

Expansion of iodine compounds and focus on medical intermediates２９Halogen-based

compounds 　　(Nippoh Chemicals)

Plan2003 Sales Estimates

Products

Products with annual sales over 1 billion yen（１）　 (Unit: 100 million Yen)

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Functional Chemicals Business（２）-①Current Business

Launch new products quickly and strengthen advantageous business areas

Expand to LCD Display use, food packaging material (FDA approval)２８Organic & inorganic fine

particles

Expand to use for phosphate-free detergents in response to high demand２２Water soluble polymers

Focus on Ortho-acetic acid, methyl, etc. for medical and agricultural ingredients１９Orthoester-based

compounds (Nippoh Chemicals)

Polymer Development１７Resin Modifiers

Develop new markets using polymers２５Ethylenimine and　derivatives

Plan2003 Sales Estimated

Products

Products with annual sales over 1 billion yen（２）　 (Unit: 100 million yen)

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Ethylene Oxide Derivatives Business（２）-①Current Business

EA (ethanol amine) status- Targeting non-EG production ratio 75% -

April 2003, EA plant with new process started operation

　⇒ Produce mono-, di- and tri- EA in optimal ratios

Increase DEA (diethanolamine) sales for agricultural chemicals⇒ Respond to demand with full operation of 40KT/Y

　　(approx. 10KT increase compared to last year）　

Optimal(DOW)/Malaysia New EA facility of 75KT/Y

2Q/2003: Regular operation ⇒ Softening of demand-supply balance seems

temporally because of market expansion.

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Ethylene Oxide Derivatives Business（２）-①Current Business

Non-EG production ratio

52 56 56 55

75

0

5

10

15

20

25

30

'００ '０１ '０２ '０３ '０６

EOconsumption

(10K ton）

0

20

40

60

80

100

Non EGConversion

Ratio（％）

EG

Non EG

Non EG

EO consumption volume for non-

EG products increased

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Environment & Catalysts Business（２）-①Current Business

　　Automobile Catalyst Trend (Diesel)Our strength

Progressive technology and

global supply-ability including JV partner

Effects of stricter environmental regulationsYear 2003 regulation for diesel engines (“New short-term regulation”):

New demand for diesel catalysts to clear hurdles created

Effective from Oct. 2003, local regulations in 4 prefectures in Kanto:

Demand for “retro-fit” catalysts created

Year 2005 regulation for diesel engines (“New long-term regulation”):

Big rushing demand before enforcement of new regulations

New demand to meet the requirements of “New long-term regulation”

Rooms for upgrading diesel catalyst technology exist. Higher value added diesel catalysts will increase our market share and guarantee continuing profits.

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Review of 'Japan Composites'Resin Business ≪ Unsaturated Polyester Resin ≫

（２）-①Current Business

April `03: Business activities started

Smooth start as initially planned, forecasting profitability in first year

Contribution to Nippon Shokubai　

Sales：1st half FY03/04 1.5 billion yen　（37% decrease compared with last year)

Operating income：Deficit in 1H FY03/03 will turn to black in 1H FY03/04

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Group Strategy（２）-②Group Strategy

　 Raising value of the group as a whole

Overseas Affiliated Companies

・Business development under new unified strategyNSI　- Effect of ongoing cost restructuring and stronger market

conditions are helping profits

NAII - Obtaining materials from ＡＡＬ⇒

Leading to profit improvement as planned

- Concern over increased materials & fuel costs

　 NSE - Full operation due to strong market demand

Considering capacity increase of 30KT/Y （FS stage）

・Making efficient use of the current AA/SAP production sites

to support business development of other functional

chemicals.

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New Products（Basic Policy）（２）-③New Products

“Selection and Concentration of Management Resources”～thru speed up and refinement of

new product development～

◇ Identify actual needs by meeting customers and offering solutions

◇ Focus R&D on areas of core competence

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New Products（２）-③New Products

0

20

40

60

80

2001

Plan

2001

Res

ults

2002

Pla

n20

02 R

esul

ts

2003

Pla

n20

03 R

esul

ts

ConstructionChemicalsConsumer Goods

Environment &EnergyBasic Chemical

Information &Communication

(100 million yen)

1611

43

22

60

24 2320

03 1

st Half

Budge

t20

03 1

st Half

Result

80Units: 100 million yen

　New Product Sales（Products sold since 1999）

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’03 1st Half Budget/Result ComparisonUnits: 100 million yen

２４

４

１０

２

２

６

2003

1st Half Budget

Pigment for PDP doing well

DEA doing well､Vinyl pyrrolidone below target

Low-temp.Dioxin decomposition catalysts exceeded budget

ｰ

New concrete admixture doing well

Comments

△１２３Total

０４Information & Communication

△１９Basic Chemicals

０２Environment & Energy

０２Consumers

０６Construction

Diff.

2003

1st Half Result

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Biodegradable Resin “Lunare ＳＥ” (Polyethylene Succinate)

Characteristics

２．High gas barrier performance （Equivalent to PET）３．Good moldability（Can be formed with regular PE molder）４．Superior biodegradability

　　（Faster than competitive products and capable of anaerobic decomposition）

５．Low combustion calorie (Less than ½ of PE)

１．Integrated production from raw materials(EG and succinic acid)

Applications：Being soft it is suitable for film１．Packing material (buffer agent, film)２．Agricultural material (multi-film)３．Garbage sack (compost bag)

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Biodegradable Resin “Lunare ＳＥ” (Polyethylene Succinate)

Target: in 2006, ３ KT/Y of salesDomestic market:

in 2010, 100KT/Y in 2015, 1,500KT/Y （10% of all resins biodegradable）　　　　

　　　　　 (Source：Biodegradable Plastics Society Estimate）In May 2003 a food recycling law went into effect thereby boosting demand

Issue：Coping with price reduction

PVC Soft

Hard

△△○◎aerobicBiodegradability○△○anaerobic

Polystyrene

Polyethylene

Polylactic acid Other companies aliphatic type

Lunare SE

PET

Polypropylene

Hardness (Soft）

(Hard)

Aromatic aliphatic type

Comparable Plastics

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Environmentally Friendly Chelating Agents

Introduced and developing alternatives to EDTA (ethylene diamine 4 acetic acid)

There are currently environmental concerns about EDTA

Chelating agent market (world wide): 130 KT/Y - - EDTA: 110 KT/Y

Compound　　 Usage　 Demand (world wide)

ＣＥＩＳ Photo processing 20 KT/Y

ＨＩＤＳ Industrial detergent 20KT/Y

ＡＥＳ　 Metallic ion remover 16 KT/Y 　　　　 for paper industry

1H FY03/04On Sale

Under Development

（Worldwide Market Scale and Demand：Our estimation、ＣＥＩＳ： Carboxy Ethyl Imino Succinate、　ＨＩＤＳ：Hydroxy Imino Di Succinate、ＡＥＳ: Aspirate Ethyleneoxide Succinate）

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Environmentally Friendly Chelating Agents

Our Strengths：１．Function

　　L- Aspartic acid derivative⇒ High biodegradability

２．Production Technology　　Newly developed, environmentally

friendly process　 ① Aqueous solution reaction

② Simple process　③ New catalyst

３．Raw Materials　 Utilizing our own products -ＡＡ、ＭＡ（Maleic acid）、ＥＯ４．Product Development

　　Develop and supply various environmentally friendly chelating agents that are suitable for each application.

L-AsparticAcid

ＣＥＩＳN a O 2 C

N H

C O 2 N a

C O 2 N a*

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（３）Results

Table of Contents

　（１） Management Policy


　　　　 ① Current Business




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（3) Results

（３）　Results (Consolidated)Unit: 100 Million Yen　(Truncated below 100 million yen)

FY 3/03 FY 3/04

Actual Planned Amt Chg(%)

Net Sales 1,635 1,670 34 +2.1Operating Income 127 135 7 +5.8Ordinary Income 109 150 40 +36.7Net Income 55 85 29 +54.1

Diffrence

　 ◆ Increase in sales and profits　　　　① Basic chemicals：Large increase in sales and profit due to better market condition and

volume increase of EG and AA&AES, ② Environment & Catalysts: decreases in sales and profit due to decrease in process catalysts, ③ Functional chemicals:: Sales increase of SAP was offset by decreased sales of concrete admixture and unsaturated polyester, etc.

　　◆ Non-operating revenueLarge increase in ordinary income due to improvements from process licensing fees and equity method profit

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ＩＲ　Contact

Leaders: Yoshinori Morita （IR Team Leader)

Akio Kaneko （IR Team Sub Leader）

Contact: General Affairs Department

Public Relations Group　

　　　　　　（Phone：+81-(０)６－６２２３－９１０５）

[email protected]

Documents

Nippon Shokubai Co., Ltd. · 2015. 2. 19. · 4 Table of Contents （1）Management Policy （1）Management Policy （2）Issues and Solutions ①Existing Business ②Group Strategy