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Creating New Value - Outline of the Medium-term Business Plan -

Outline of the Medium-term Business Plan Efforts by Each Business Unit toward Adding New Value
[PROJECT 2020+ SHAPING THE FUTURE]This section outlines our Medium-term Business Plan, “Project 2020+,” which was launched at the beginning of this year.

Our commitment to the realization of a sustainable future

  • PDFWhat is the most important change compared with the previous Medium-term Business Plans?
  • PDFWe have identified five market domains in which the Group’s products, technologies and services will be offered: namely, Infrastructure, Energy, Mobility, Living environment, and Electronics.
    The Showa Denko Group has traditionally engaged in business based simply on a “product-oriented” approach. However, we believe that a more “market- oriented” approach—creating products to suit the needs of the market or customers—is essential. To realize this, we need to change our product development in such a way that will fit the needs of the five market domains.
    This will deepen and broaden the product development of the Showa Denko Group and lead to establishing a business structure where revenue fluctuations are minimized as the impact of market conditions are likewise minimized.
  • What is the future vision the Showa Denko Group aims to achieve?
  • Regarding the vision in terms of the sales composition we aim to achieve by 2025, we will increase the contribution of our “individualized businesses” to net sales from the current 30% to 50% of the Group’s sales. We will also increase the share of overseas net sales from the current 40% to 60% to enhance profitability and reduce fluctuations. We will set a course to achieve these targets during the next five years under the current medium-term business plan.

We offer high value-adding “products × technology × services” to 5 market domainsWe oer high value-adding “products × technology × services”to 5 market domains

  • PDFHow is the plan related to the issues of materiality?
  • The issues of materiality selected in July last year and the issues cited as important by stakeholders during the materiality assessment match the medium- to long-term business issues dealt with in the plan. Our aim is to play an active role in solving social issues by offering our products, technologies and services in the five market domains.

Shaping the way in which we realize our future vision

  • What is “individualized business”?
  • The term “individualized business” refers to a business that is exceeding a certain scale, generating a certain level of profit, and offering highly competitive technologies and/or business models. A business that deals with a unique product offered only by the Showa Denko Group cannot be classified as an individualized business if it does not have a certain scale.
    Our businesses for HD media and high-purity gases for electronics are classified as individualized businesses, while our businesses for lithium-ion battery (LIB) materials and SiC epi-wafers for power devices are not, and we aim to develop the LIB materials and SiC epi-wafers businesses to such scale whereby they do qualify as individualized businesses during the medium-term business plan. There are also many existing businesses that can be developed into individualized businesses by changing their business models or through other measures. The graphite electrode business, which is currently experiencing extremely sluggish demand, is one such example. The business has the potential for increasing profitability along with improvement of the operating rate, so we seek to restore its individualized business status as soon as possible.
  • PDFHow will the share of overseas net sales be increased?
  • PDFWe will promote M&A and various other measures in and outside Japan. However, needless to say, advancing overseas is not something all of our businesses ought to aim for; some businesses need to concentrate solely on the Japanese market due to the nature of the products they provide.
    We first must ensure that businesses in which our significant business resources have been invested will show steady success. For high-purity gases for electronics, for example, we will continue the strategy of expanding sales channels in China and Southeast Asia. We are also expecting the aluminum processed products business to continue to grow in China and ASEAN countries—particularly the aluminum can business in Vietnam, where the market is developing rapidly.

Aiming to have business structure with less rate of change in protability through expansion of individualized businesses and protability improvement
Aiming to have business structure with less rate of change in protability through expansion of individualized businesses and protability improvement

  • PDFWhat is the most important change made for the new business portfolio?
  • PDFWe have defined a mission for each of the four categories of the business portfolio and re-classified our businesses into those categories by re-examining which mission is most apt for each business. This reflects our determination to avoid complacency and achieve a higher level of profitability while maintaining sustainable development.

Redefine mission of each business
Redene mission of each business

Creating new value

    • PDFWhat is the R&D strategy set out in the medium-term business plan?
    • PDF Under the basic policy of “Create new value by forging, polishing and linking diverse individualized technologies,” we will (1) input our business resources into R&D activities that will strengthen our core businesses and help expand businesses in their surrounding fields; (2) create nextgeneration businesses to meet a wide range of needs; and (3)continuously deepen our strategic technologies (nano-carbon, thin films, catalysts).
      To realize the Group’s growth strategy, we need to offer new products, new technologies and new solutions—in other words, new value—on an ongoing basis as the specific outcomes of R&D activities.
      We aggressively meet the challenge of creating new value for the five market domains by combining our elemental technologies for complex processing of various organic, inorganic and aluminum materials with our proprietary strategic technologies, including nano-carbons and thin films. To create new value, we will also promote joint research with and outsourcing of R&D to universities and other outside institutions and will acquire technologies in other fields through M&A and partnerships.
    • PDFPlease give one last comment that shows the Group’s determination to achieve the targets.
    • PDF“+” of Project 2020+ has the following three meanings:

      Project2020+

      • We will add extra measures other than those announced to achieve future growth;
      • We will work extra hard in terms of “Shaping Ideas” with a view to realizing the future vision of the Group for 2025, going beyond the targets for 2020; and
      • Every worker in the Group, including those working for our business partners and those working in countries other than Japan, will do their best to add extra value to our offerings in order to add extra strength to the Group.
      Implementing these three “+” (extra) efforts will lead to the accomplishment of Project 2020+. Each of us must continue working to add new value to our offerings so that we can contribute to creating a society where affluence and sustainability are harmonized.