Strategy

The following is a summarized version of Tosoh's new medium-term business plan covering fiscal 2020 - 2022. For more details, please download a copy of the fiscal 2020-2022 medium-term business plan here. 

Toward Sustainable Growth

Medium-Term Business Plan Progress

Tosoh is executing a medium-term business plan for the three fiscal years from 2020 to 2022.

Progress in Fiscal Year 2020

Our results for fiscal 2020, the first year of our three-year medium-term management plan, did not meet expectations. This was primarily due to deterioration in overseas market conditions for commodity products and sluggish growth in demand for semiconductor-related products.

The direction of the plan’s three-year policies for management, investment, R&D, finance, and shareholder returns remain unchanged. We will, however, review when we implement any of its measures in response to the ongoing COVID-19 pandemic and global economic trends.

Business Objectives: Basics

1. Stabilize and expand earnings through the dual management strategy.

  • Commodities
    • Reinforce the business foundation with a view to increasing production capacity to improve competitiveness and profitability.
  • Specialties
    • Stabilize and expand the revenue base by differentiating and increasing capacity in growth areas and by cultivating new business.

2. Maintain a solid financial base.

  • Ensure a strong financial base to facilitate timely large investments and M&A

3. Strengthen the safety infrastructure and foster a culture of safety.

  • Pursue safe plant operation as a social responsibility that takes precedence over everything else.

4. Promote energy conservation and the use of CO2.

  • Pursue energy conservation as another social responsibility and invest in it constantly.

Performance Targets

 

Fiscal 2020

Fiscal 2022 Targets

Target

Result

Sales*

¥860 billion

¥786.1 billion

¥890 billion

Operating income

¥95 billion

¥81.7 billion

¥110 billion

Operating profit ratio

11.0%

10.4%

10% or higher

ROE

—

10.0%

10% or higher

 *Sales figures are for reference only and are based on the following assumptions: sales may vary significantly because of changes in the market for naphtha (formula products) and for commodity products.

  Assumptions

  US dollar

¥110/$1

¥109/$1

¥110/$1

  Euro

¥125/€

¥121/€

¥125/€

  Naphtha

¥46,000/kl

¥42,725/kl

¥46,000/kl
  • 1. Dual management strategy for earnings expansion and stability

    Direction of Capital Investment

    Commodities

    Strengthen the business base

    • Strengthen the base for chlor-alkali (considering establishment of a new overseas base; closure of the Osaka Plant of Taiyo Vinyl Chloride) and enhance MDI debottlenecking.
    • Increase the efficiency of power generation facilities and of biomass co-firing, with CO2 emission reduction in mind.

    Strengthen derivative products

    Emphasize calcium hypochlorite and ultrahigh molecular weight polyethylene.

    Specialties

    Increase production capacity for growth businesses

    • Emphasize chloroprene rubber, new ceramic materials, A1c columns and reagents, and bromine and bromine flame retardants.

    Discern demand trends and make additional investments in semiconductor-related products

    • Look in particular at silica glass materials and fabricated products.

    Infrastructure

    Strengthen and enhance the efficiency of logistics infrastructure

    • Establish integrated logistics warehouse and renew ethylene and vinyl chloride monomer (VCM) vessels.

    Investment Financing Schemes

    • Plan for capital investments of ¥140 billion + ¥30 billion in M&A, etc. + α (chlor-alkali growth investment).
    • Aim for ¥30 billion for M&A, with a focus on bioscience business.

    Major Capital Investment Plans for Fiscal 2020

    • Chloroprene rubber (debottleneck production)
    • Semiconductor-related products (expansion)
    • Power generation boiler (ensure biomass co-firing)
    • High-silica zeolite (expansion)
    • Integrated logistics warehouse (build facility)
    • Calcium hypochlorite (renew facility)

    R&D

    • Accelerate new product development in line with previous medium-term business plan.
    • Increase efficiency of material design by devising materials informatics (MI) technologies.
    • Promote R&D based on SDGs.

    Fiscal Year 2020 Results

    • R&D expenses: ¥18.2 billion
  • 2. Maintain a solid financial base

    Financial Foundation

    • Maintain a solid financial foundation to facilitate timely large-scale investments and M&A
    • Ensure the financial foundation is capable of continuous and stable dividends

    Fiscal Year 2020 Results

    • Equity capital: ¥567.5 billion (up ¥26.7 billion from the end of the previous fiscal year)
    • Equity ratio: 64.0% (up 2.4% from the end of the previous fiscal year)
    • Interest-bearing debt: ¥95.9 billion (-¥5.2 billion from the end of the previous fiscal year)

    Shareholder Returns

    • Pursue continued stable dividends as fundamental
    • Determine dividends by thoroughly considering results for the period, free cash flow, future business development, and other factors
    • Set target for dividend payout ratio of around 30%

    Fiscal Year 2020 Results

    • Dividends per share: ¥56 (+/-0 yen compared with the previous fiscal year)
    • Dividend payout ratio: 32.7% (+9.4% compared with the previous fiscal year)
  • 3. Strengthen the safety infrastructure and foster a culture of safety

    Fiscal Year 2020 Results

    • Continued and expanded training, system installation, and equipment maintenance.
    • Continued to invest funds in strengthening preventive maintenance.
    • Strengthened the construction system (continuous).
    • Aimed to raise safety awareness by continuing and enhancing the president's visits to control rooms, by strengthening KYT training, and by ensuring 5S activities.
    • Deepened risk assessment (evaluation of potential hazards).
  • 4. Promote energy conservation and the use of CO2

    Fiscal Year 2020 Results

    • Introduced the latest technology to power generation facilities.
    • Expanded ability to use waste material at cement plant.
    • Lowered volume of coal used in power generation boiler for co-firing of biomass construction waste.
    • Developed CO2 concentration and purification technology and considered transforming CO2 into raw material.
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