Dual Management
Overall Structure of Dual Management at Tosoh Corporation
The Tosoh Group operates and grows its business based on two pillars: the Commodity business, which includes products that are indispensable for society’s sustainable development and are basic materials such as chlor-alkali and petrochemicals for which demand remains constant, and the Specialty business, which comprises of high value-added product groups. The Commodity business is not only a source of cash flow and profit; it also supports the competitiveness of the Group’s specialty products by serving as a source of utilities and basic raw materials to specialty product manufacturing processes. Through the Specialty business, the company aims to establish an overall business structure that is less susceptible to external factors, enabling it to further expand profits using the Specialty business as a growth driver. Tosoh’s main focus is on increasing profits in the Specialty business through dual management of the Specialty business and the Commodity business with the aim of enhancing corporate value.
Business
Characteristics of Business
Commodity Business
Originating from Japan’s largest electrolysis facility, Tosoh operates a vinyl chain that manufactures products from industrial salt, such as vinyl chloride monomer (VCM), and an integrated vinyl isocyanate chain based on an isocyanate business that manufactures methylene diphenyl diisocyanate (MDI)—a raw material for urethane. The company has optimized the efficiency of production by establishing a fully integrated system, from raw materials to finished products.
The market for basic materials, used in a broad range of applications, is expanding in line with the continued development of the global economy. Demand is stable, and the level of profit generated is the key indicator, as one characteristic of the company is that it secures a solid profit through high volume sales. Profit margins tend to vacillate, due to susceptibility to market fluctuations, which is an indication that the domestic market is maturing.
Tosoh has businesses with strong global positions in functional products such as organic chemicals, bioscience, and advanced materials. The company has designated Life Science, Electronic Materials, and Environment and Energy as its three main priority fields and will make aggressive R&D investments to develop products that solve various social issues.
Despite somewhat limited markets and applications, the chosen preferred products are more resilient to market fluctuations and feature high added value due to the backing of their considerable technological capabilities, and thus possessing characteristics that enable the securing of higher profit margins. There is, however, the risk of product life cycle shortening, therefore, continuous R&D investment is required to ensure the constant development of new product release. This concern is a reality and always needs to be taken into consideration.
Business Restructuring and Profitability
Tosoh experienced a lower level of profitability compared to that of its competitors because of the global recession and internal factors, which have been in play since the bubble economy collapsed in Japan back in the early 1990s. Given this, in the early 1990s, the company underwent a period of restructuring of its business. With the aim of being a highly distinctive, comprehensive chemical manufacturer, the business vision for the company was to achieve a strengthening and expansion of its core vinyl chain business while selectively fortifying its Specialty businesses. In addition, the company constructed a group of high value-added businesses that have established global positions in specialized fields. To follow on from these achievements, we now plan to reinforce our Specialty business and develop new products and technologies with the medium- to long-term goal of formulating a profit base in excess of ¥100 billion in Specialty business operating income by FY2031.
Specialty Products Valued for Functionality
Tosoh is now developing business groups with global positions in numerous business sectors, including fields that are on the cutting edge of global trends including healthcare, semiconductors and electronic materials, and the environment. In R&D, we have designated Life Science, Electronic Materials, and Environment and Energy as our three main priority fields of interest and are concentrating our R&D resources on the creation of high value-added products. And, by effectively leveraging our research infrastructure and materials informatics (MI) technology, promoting open innovation, and acquiring cutting-edge technologies, we are looking to develop products that solve a variety of social issues.
TOYOPEARL® separation and purification agent
TOYOPEARL is a chromatographic separation and purification resin, produced in the form of a porous, spherical polymer, to which functional groups are attached. It is used primarily as a purification agent in the manufacturing of pharmaceuticals and functional foods, and in biopharmaceuticals such as antibody and diffusion drugs. From analysis to purification, Tosoh’s various products are attracting attention for their consistent and stable availability.
Zirconia
Zirconia is a high-purity powder that serves as a raw material in the production of fine ceramics. It is used in cosmetic dental applications because of its excellent mechanical properties, aesthetic quality which closely resembling that of natural teeth, and is a biocompatible material. Tosoh’s strength lies in our ability to provide superior developed products with high technological capability that meets our customer’s requirements and deliver a reliable supply of high-quality products.
Silica glass
Silica glass is a material characterized by its high purity, high heat resistance, and superior light transmittance capability. Tosoh sells two types of silica glass—fused silica glass and synthetic silica glass, each of which is available in multiple grades with different characteristics. These products are used in a wide range of applications, including the production of semiconductors and flat panel manufacturing, optics, energy, and telecommunications.
Bromine
Over many years, Bromine has proven its mettle as an indispensable raw material in areas where the properties of halogens are utilized. This includes flame retardants for resins, bromobutyl rubber for automobile tires, and organic synthesis of intermediates for pharmaceuticals and agrochemicals. Tosoh Corporation has been manufacturing this historic product for over 80 years and, on the back of steady growth in demand, is aiming to further expand its interest in this business sector.
Major Production Base Integrating Commodity and Specialty Businesses
The Nanyo Complex is the core of Tosoh’s vinyl isocyanate chain, which originates from the country’s largest electrolysis facility. The caustic soda, chlorine, and hydrogen produced at this facility also serves as raw materials for the company’s Specialty products and manufacturing processes, which makes Nanyo a competitive production base with an organic connection between commodities and specialties. At the Yokkaichi Complex, Tosoh has constructed an integrated production system, encompassing everything from naphtha cracking furnaces to PVC resin, and is developing and bolstering its functional products business, while effectively using each distillate refined from naphtha. Each of the two complexes has its own power generating capability, which enables high production efficiency, including a reliable power supply to all plant utilities.
Financial and Nonfinancial Highlights