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Message from CEO

Let us constantly PLUS new value toward the envisioned future

Changes in the business environment

In recent years, the preconditions that are important for the Showa Denko Group’s business, such as foreign exchange rates and crude oil and aluminum ingot prices, have been substantially changing under the influence of the political and economic trends of countries across the world. The magnitude of such changes has been increasing in the past few years, making our surrounding business environment even harder to forecast.
However, we will manage our business from medium- to longterm viewpoints, without being easily swayed by rapid and shortterm changes in the environment.

Enhancement of business competitiveness and R&D

Showa Denko launched its medium-term business plan, “Project 2020+,” in 2016 and has been expanding the individualized businesses for higher profitability, while implementing a range of measures to establish a business structure that helps minimize revenue fluctuations.In 2016, Showa Denko announced its decision to acquire the graphite electrode business of SGL GE Holding GmbH, while also making SunAllomer Ltd., a company engaged in the polypropylene business, a consolidated subsidiary in the petrochemical field. In the hard disk business, we worked to ensure the appropriateness of the production capacity, thereby increasing our competitiveness.
In and after 2017, we will continue to implement strategies to expand the lineup of products and services that are attractive to customers as well as the lineup of businesses in which we have competitive advantages and can take top shares in global markets of a certain scale. In particular we will focus on the business of high-purity gases for lectronics as this market is expected to flourish.
The future growth of the Showa Denko Group largely depends on R&D, and we have already achieved substantial R&D results for lithium-ion battery materials and SiC epitaxial wafers for power devices over the last couple of years.
We will continue to focus on R&D of these materials for their commercialization, while making effective use of the technologies possessed by the Group and the opinions of internal users for the creation of new products and businesses.

Toward achieving the cumulative target for 2018

With regard to the business results for 2016, we substantially increased profit in the Petrochemical segment against the backdrop of robust demand. Specifically, operating income came to 42 billion yen, up 25.5% from 2015, and net income sharply increased to 12.3 billion yen, due partly to a decrease in extraordinary loss.
Concerning the business results for 2016, we deeply apologize to our shareholders, investors, and other stakeholders for the concerns and problems caused by the delay of the announcement of financial results, which was finally approved at an extraordinary meeting of shareholders. The delay occurred because it took us extra time to make a detailed examination of the transactions related to one of our subsidiaries.
Under “Project 2020+,” we deem it most important to achieve the numerical target of 143 billion yen for cumulative operating income for the three-year period ending 2018. As for cumulative operating income for the two years from 2016 to 2017, it is expected to be 102.1 billion yen (as announced on July 24, 2017), and the actual results have been generally favorable, with the loss caused by the strong yen being covered by our cost reduction efforts. We will make investments proactively throughout 2017 toward the achievement of the goal for 2018.

Business activities, CSR, and governance

Corporate social responsibility (CSR) is one of the essential issues that we need to deal with from a medium- to long-term perspective. As stated in Our Vision, “We at the Showa Denko Group will provide products and services that are useful and safe and exceed our customers’ expectations, thereby enhancing the value of the Group, giving satisfaction to our shareholders, and contributing to the sound growth of international society as a responsible corporate citizen.” In line with this, all Group employees are committed to acting with firm integrity based on Our Code of Conduct and contributing to the Group’s business activities.
CSR is an integral part of our business activities and constitutes a core element of the management of the Group. In addition to conducting business activities in consideration of the environment as a matter of course, we will provide the products, technologies, and services that meet the needs of our customers and society at large, which we believe will in turn help us earn more trust from our stakeholders.
We also need to develop and improve various management frameworks within the Group, such as those for corporate governance, compliance, and diversity promotion.

Making use of our features as our strengths

Kohei Morikawa
President and CEO
森川宏平

Showa Denko has two unique features, which represent long- and hard-won assets. First, it has a favorable corporate culture nurtured by employees who are serious, steadfast, and enthusiastic about technologies. Second, it has a business foundation that encompasses a wide spectrum of technologies and products, including those concerning organic, inorganic, and aluminum materials. We need to meet the challenge of making these features our strengths, rather than letting them be weaknesses. We cannot survive the market competition by being satisfied with the status quo. I believe that we can come closer to our ideal by making tireless efforts for improvement and pursuing a repeated series of small changes for the better.
We will of course face various difficulties in the process, but we have multiple options to achieve our ideal. We need to formulate a multitude of success scenarios for the growth of the Showa Denko Group, and take actions promptly in response to changes in the market and the wider environment so as to not miss any opportunity. As its future vision for 2025, the Showa Denko Group aims to become a company contributing to the sound growth of society, which makes the dreams of humankind a reality through innovation in chemical technology and contributes toward creating a society in which prosperity and sustainability are harmonized. I believe that our Group will be able to achieve further growth by the strenuous efforts of individual employees.

For the desired future, each of us at the Group will continue adding new value. We warmly invite you to follow the progress of our upcoming activities.