Tokyo, Japan—Tosoh Corporation is pleased to present the following overview of its fiscal year 2017 through fiscal year 2019 medium-term business plan.
1. Management policies
1) Basic policies
• Focus on hybrid management
- Strengthen both Commodity business and Specialty business in a balanced way
- Enhance the competitiveness and the profitability of our Commodity products based on existing capacities
- Invest in expansions for our high growth products while expanding the scope of our businesses through research and development (R&D) and mergers and acquisitions (M&A)
• Maintain and strengthen financial base
- Build a rock-solid financial foundation to support a flexible growth investment strategy
• Advance safety reforms
- Develop safe and stable operating technologies
- Eliminate problems and abnormal events
2) Business positioning
• Leverage Commodity products
- Ensure cash flow and profitability to underpin business
- Fuel Tosoh products with highly competitive internal utilities and basic raw materials
- Leverage the fact that demand for basic raw materials remains firm despite the economic environment’s impact on profits
• Grow Specialty products
- Strive for greater profits to drive our growth.
- Maintain high profitability through continuous development
- Lead times of over 10 years from development to profitable business
Tosoh will strengthen both its Commodity and Specialty products to build a robust business portfolio that can withstand external pressures and enhance corporate value.
3) Numerical targets
| | | | (Unit: Billion yen) |
| | FY 2016
actual | FY 2017
forecast | FY 2019
target |
| Sales | 753.7 | 720.0 | 750.0 |
Operating profit
Operating profit margin | 69.4
9.2% | 72.0
10.0% | 85.0
> 10% |
| ROE | 12.6% | > 10% | > 10% |
|
|
|
|
| Note: Sales figures are reference values based on the following assumptions: |
| Exchange rates | USD | ¥120/USD
| ¥110/USD
| ¥110/USD
|
| EUR | ¥133/EUR
| ¥120/EUR
| ¥120/EUR |
| Domestic naphtha price | ¥42,775/kl
| ¥40,000/kl
| ¥40,000/kl
|
2. Capital expenditure policies
1) Basic policies
• Invest in commodities products
- Focus on renewal and productivity improvements that maintain and improve our supply stability and competiveness
• Boost investment in Specialty products
- Increase our capacity of existing growth businesses
- Expand our business scope through R&D and M&A*
*Our R&D activities will include partnerships with universities and start-up companies, while our M&A activities will involve especially Bioscience-related businesses.
2) Main capital expenditure plans
| (Unit: Billion yen) |
| FY 14-16 cumulative
Actual
| FY 17-19 cumulative
Plan |
Capital expenditures
| 84.8*1
| Growth: 50.0 | 130.0
|
| Other: 80.0 |
| M&A, etc. | 3.5 | 30.0*2
|
| Total | 88.3 | 160.0
|
*1 FY 14: ¥23.7 billion; FY 15: ¥33.1 billion; FY 16: ¥27.9 billion
*2 Mergers and acquisitions, research fund investment, and others |
Principle capital expenditures:
- Increase high-silica zeolite production capacity
- Increase zirconia production capacity
- Increase Toyopearl separation and purification media production capacity
- Increase PVC production capacity at our Philippines subsidiary
- Increase functional polymers and functional urethanes production capacity
- Raise the efficiency of our electric power generating facilities
3. Policies for strengthening Tosoh’s financial base
• Equity Ratio
- Our goal is for the equity ratio to exceed 50%.
• Interest-bearing debt
- Continue our efforts to reduce our interest-bearing debt
4. Policy on shareholders’ return
• Continue our fundamental policy of paying stable dividends
• Determine dividends based on a comprehensive assessment of performance, free cash flow, and business development potential through the period
• Aim in the midterm and long term for a payout ratio of 30%
Note: This overview of the fiscal 2017–2019 medium-term business plan is based on information available at the time of writing. Changes in economic conditions and other unknown factors in Japan and internationally could cause actual results to differ significantly from any projections presented above.
TOSOH CORPORATION
WHO WE ARE
Tosoh is the parent of the Tosoh Group, which comprises over 100 companies worldwide and a multiethnic workforce of over 12,000 people and generated net sales of ¥753.7 billion (US$6.3 billion at the average rate of ¥120.15 to the US dollar) in fiscal 2016, ended March 31, 2016.
WHAT WE DO
Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh’s petrochemical operations supply ethylene, polyethylene, and functional polymers, while its advanced materials business serves the global semiconductor, display, and solar industries. Tosoh has also pioneered sophisticated bioscience systems that are used for the monitoring of life-threatening diseases. In addition, Tosoh demonstrates its commitment to a sustainable future in part by manufacturing a variety of eco-products.
Stock Exchange Ticker Symbol: 4042
DISCLAIMER
This document may contain forward-looking statements, including, without limitation, statements concerning product development, objectives, goals, and commercial introductions, which involve certain risks and uncertainties. Forward-looking statements are identified through the use of the word anticipates and other words of similar meaning. Actual results may differ significantly from the results expressed in forward-looking statements.