Annual Report 2017

Water Treatment

Construction

 

The Engineering Group's water treatment business was boosted by strong demand in Japan and from abroad.

  • Snapshot

    The Engineering Group comprises water treatment and pure water generation leader Organo Corporation and construction-related group companies such as Tohoku Denki Tekko Co., Ltd.

    Organo maintains three principal businesses. Its plant business sells water treatment systems to electronics, chemicals, oil refinery, food and beverage, paper and pulp, waterworks and sewage treatment, health care, and other companies. Its solution business maintains and manages systems, suggests ways to enhance efficiency and lower environmental impact, and provides water treatment outsourcing services. And its functional products business sells standardized water treatment systems and chemicals and food processing materials.

    Tohoku Denki Tekko has five main businesses. The construction business engages in machinery, plant, steel structure, environmental and sanitation facilities, and container construction. Its four other businesses encompass electrical machinery, instrumentation, civil engineering, quality assurance, and maintenance.

  • Group Performance

    A Solid Performance

    In fiscal 2017, the Engineering Group’s net sales amounted to ¥86.6 billion (US$799 million), an improvement of 2.8% over fiscal 2016. The group’s operating income climbed 12.4%, to ¥5.1 billion (US$47.5 million). The group accounted for 11.7% of Tosoh’s consolidated net sales, compared with 11.2% the previous fiscal year. Its operating margin was 5.9%, an increase of 5.5% from fiscal 2016.

    Tosoh’s water treatment business increased its sales during the year under review through growth in plant construction, maintenance, and reconstruction projects for general industrial wastewater treatment and water purification facilities. Its overseas sales were steady to the electronics industry in Taiwan and to the petrochemical industry in Southeast Asia. Sales by the Engineering Group’s construction subsidiaries increased.

  • Developments

    Strategic Collaborations

    Organo has taken steps to consolidate its businesses and expand its service capabilities and reach. It has strengthened its factories in Indonesia and Vietnam and expanded beyond its established business regions.

  • Positioning

    Water Treatment

    In fiscal 2018, Tosoh subsidiary Organo plans to bolster its earnings capacity, develop and improve technologies and products that strengthen its businesses, and allocate resources to bolster its R&D activities. Its efforts to generate long-term growth will center on such specific areas as functional products, semiconductor processing, and the separation and purification of nonaqueous solvents and gas.

    Organo’s management expects sales and operating income to increase, reflecting Organo’s progress in expanding its sales of functional products and improving its profitability. The subsidiary’s management also anticipates increased capital investment to improve and further differentiate technologies and products and to carve out new business areas for medium- and long-term sustainable growth.

    Organo intends to enhance its operations in Asia and to extend its services to new regions and business areas. The latter include semiconductor manufacturing processes, energy and natural resources, and life sciences.

    Organo’s expansion into semiconductor manufacturing sees it developing etching, stripping, and cleaning solutions as part of the chemical purification process in wastewater treatment. This positions Organo between the chemical manufacturer and chemical purifier in the semiconductor manufacturing process.

    In energy and natural resources, Organo looks to develop its purification of electrolytic solutions and separation and recycling of rare metals. Its N-methyl-2-pyrrolidone (NMP) production is expected to grow 10% annually.

    Life science needs are growing simultaneous with aging and increasingly health-conscious societies. And Organo will respond with its development of functional materials for diverse applications.

    Large electronics industry projects should again contribute most to Organo’s performance. Its domestic and overseas orders from that industry will probably decline in fiscal 2018, but it foresees an increase in sales of plants in China. Organo will also target sales to the water treatment chemicals industry and reinforce its solutions business while continuing to reduce costs to improve profitability.

    A mature domestic market, however, compels Organo to increasingly look abroad for business, especially in water treatment for power stations. Organo is thus leveraging its network of subsidiaries and affiliates in China, Thailand, Malaysia, Taiwan, Vietnam, and Indonesia and converting its overseas activities to local operations and staffing as appropriate.

    Construction

    Tohoku Denki Tekko is constantly seeking new business. To that end, the subsidiary is pushing beyond hardware to planning, construction and installation as part of its continued efforts to adopt a solution-oriented sales approach for its industrial electrical machinery businesses.

  • Medium-term Business Plan

    Over the next two years, Organo will prioritize areas of most potential. It will cultivate domestic business for power plants and establish operations overseas where electricity demand is rising. It will also enhance its equipment and systems businesses for the supply of water treatment chemicals and standardized water treatment equipment.

    Organo will improve its R&D to ensure its growth over the medium and long terms. Its emphases in functional products include semiconductor processing, the separation and purification of nonaqueous solvents and gas, and expanded scale through the cultivation of new markets. Organo views the medium-term business plan’s three-year span as an investment period for improved profitability.

    The Engineering Group’s construction-related group companies will continue to prioritize bolstering their technological and service capabilities so as to heighten customer satisfaction.

Copyright © 2017 Tosoh Corporation