Kureha Corporation · TSE:4023
Kureha — 1H FY2023 Earnings Presentation
43 slides from Kureha's earnings presentation, Nov 9, 2023
Slide 1: FY2023 Interim Report: 1H Results & Progress in New Mid- to Long-Term Management Plan
FY2023 Interim Report: 1H Results & Progress in New Mid- to Long-Term Management Plan November 9, 2023
Slide 2: Contents
1 Contents FY2023 Performance Overview ∙ ∙ ∙2 IV. Progress of Initiatives under the New Mid- to Long- term Management Plan I. FY2023 Half-Year Results • Management policy ∙ ∙ ∙ 28 • 1H FY23 Financial summary ∙ ∙ ∙ 4-6 • PVDF business ∙ ∙ ∙29-32 • Segment performance ∙ ∙ ∙ 7-10 • PGA business ∙ ∙ ∙33
Slide 3: FY2023 Performance Overview
2 FY2023 Performance Overview FY23 Half-Year Results & New Full-Year Forecast Half-year revenue and profits declined on a year-on-year (in billions of yen) basis 1H FY23 1H 1H FY22 Changes FY23 FY22 Changes New Actual YoY • PVDF, a binder material for automotive LiBs, saw a drastic YoY Forecast shif
Slide 4: I. FY2023 Half-Year Results
3 I. FY2023 Half-Year Results (April 1, 2023 through September 30, 2023)
Slide 5: 1H FY2023 Financial Summary (1)
4 1H FY2023 Financial Summary (1) (in billions of yen) Vs. 1H FY22 Changes Changes 1H 1H 1H vs. Forecast vs. • Revenue fell primarily due to weakening in FY23 FY22 1H FY22 Forecast PVDF (LiB binder) and agrochemicals -13.3 -7.5 Revenue 88.5 101.8 (-13.0%) 96.0 (-7.8%) • Operating profit decreased la
Slide 6: 1H FY2023 Financial Summary (2)
5 1H FY2023 Financial Summary (2) Revenue & Operating Profit by Segment (vs. 1H FY22) (in billions of yen) 1H FY22 1H FY22 Revenue Core operating profit 1H FY23 1H FY23 47.3 9.0 34.0 23.8 23.4 4.3 4.3 17.5 17.1 2.8 8.9 8.6 1.6 1.4 1.1 4.2 5.4 0.8 0.3 0.2 Advanced 機能製品 Specialty 樹脂製品 Construction 化学製
Slide 7: 1H FY2023 Financial Summary (3)
6 1H FY2023 Financial Summary (3) Revenue & Operating Profit by Segment (vs. Forecast) (in billions of yen) Core operating profit 1H Forecast Revenue 1H Forecast 1H Results 1H Results 4.3 39.0 34.0 2.8 3.0 23.8 23.4 2.6 19.0 17.1 1.5 1.1 6.0 5.4 8.2 8.6 0.8 0.7 0.2 0.2 機能製品 化学製品 Advanced Specialty 樹
Slide 8: Segment Performance: Advanced Materials
7 Segment Performance: Advanced Materials (in billions of yen) Vs. 1H FY22 1H 1H FY23 FY22 Change % Revenue ➘ Operating profit ➘ Advanced Materials Advanced plastics revenue and profit down: Advanced plastics 25.0 36.5 -11.6 -32% - Expansion of sales of PPS and PGA - PVDF (LiB binder) demand weakene
Slide 9: Segment Performance: Specialty Chemicals
8 Segment Performance: Specialty Chemicals (in billions of yen) Vs. 1H FY22 1H 1H FY23 FY22 Change % Revenue ➘ Operating profit ➘ Specialty Chemicals Agrochemicals & Pharmaceuticals revenue and Agrochemicals 4.9 6.6 -1.7 -26% profit down: - Part of agrochemicals sales postponed to 2H Pharmaceuticals
Slide 10: Segment Performance: Specialty Plastics
9 Segment Performance: Specialty Plastics (in billions of yen) Vs. 1H FY22 1H 1H FY23 FY22 Change % Revenue ➘ Operating profit ➙ Specialty Plastics Home products & Fishing lines revenue and profit up: Home products 12.2 11.8 0.5 +4% - Higher pricing for food wrap film (continually carried out in and
Slide 11: Segment Performance: Construction
10 Segment Performance: Construction (in billions of yen) Vs. 1H FY22 1H 1H Change % FY23 FY22 Construction Revenue ➚ Operating profit → - Profit remained flat despite higher volume for Revenue 5.4 4.2 1.1 +27% private construction Operating profit 0.2 0.3 -0.1 -22% Other Operations Revenue ➘ Operat
Slide 12: Cash Flow
11 Cash Flow (in billions of yen) 1H 1H Increase/ FY23 FY22 Decrease Profit before income tax 9.9 17.4 -7.5 Depreciation 5.7 5.7 -0.0 Other -8.3 -14.4 +6.1 Cash flow from operating activities 7.2 8.7 -1.4 Cash flow from investing activities -7.6 -4.9 -2.7 Free cash flow -0.3 3.8 -4.1 Cash flow from
Slide 13: Financial Position
12 Financial Position (in billions of yen) Assets Liabilities and Equity Sept. 30 Mar. 31 Increase/ Sept. 30 Mar. 31 Increase/ 2023 2023 Decrease 2023 2023 Decrease Cash and cash equivalents 29.9 32.2 -2.3 Trade and other payables 26.5 27.7 --1.2 Trade and other receivables 34.3 31.9 +2.4 Interest-b
Slide 14: II. FY2023 Full-Year Outlook
13 II. FY2023 Full-Year Outlook (April 1, 2023 through March 31, 2024)
Slide 15: FY2023 Financial Forecast (1)
14 FY2023 Financial Forecast (1) Vs. FY22 (in billions of yen) • Revenue to increase in Specialty Chemicals Change and Construction and decrease in Advanced FY23 Change FY23 Materials, Specialty Plastics and Other FY22 vs. 1H 2H New vs. Previous Operations Results FY22 Forecast Previous Forecast For
Slide 16: FY2023 Financial Forecast (2)
15 FY2023 Financial Forecast (2) Segment Revenue & Operating Profit Forecast (vs. FY22 Results) (in billions of yen) Revenue FY22 Results Core operating profit FY22 Results FY23 New Forecast FY23 New Forecast 82.7 10.1 69.0 8.6 6.9 46.8 46.6 33.2 5.1 31.8 18.7 2.8 17.7 1.8 2.0 11.3 13.5 0.9 0.8 0.7
Slide 17: FY2023 Financial Forecast (3)
16 FY2023 Financial Forecast (3) Segment Revenue & Operating Profit Forecast (vs. Previous Forecast) (in billions of yen) Revenue Previous Forecast Core operating profit Previous Forecast New Forecast 13.0 New Forecast 79.0 69.0 47.1 46.6 6.9 34.6 5.1 5.6 33.2 17.3 17.7 1.7 2.0 1.2 0.5 0.8 12.0 13.5
Slide 18: Segment Forecast: Advanced Materials
17 Segment Forecast: Advanced Materials (in billions of yen) Vs. FY22 FY23 FY22 New Results Change % Revenue ➘ Operating profit ➘ Forecast Advanced Materials Advanced plastics revenue and profit down: - PGA sales expansion Advanced plastics 48.5 63.0 -14.5 -23% - Slower PVDF sales in the automotive
Slide 19: Segment Forecast: Specialty Chemicals
18 Segment Forecast: Specialty Chemicals (in billions of yen) Vs. FY22 FY23 FY22 New Results Change % Revenue ➚ Operating profit ➘ Forecast Agrochemicals & Pharmaceuticals revenue up, Specialty Chemicals profit down: Agrochemicals 9.5 9.3 0.2 +2% - Higher pharmaceutical sales partially offset by low
Slide 20: Segment Forecast: Specialty Plastics
19 Segment Forecast: Specialty Plastics (in billions of yen) Vs. FY22 FY23 FY22 New Results Change % Revenue ➘ Operating profit ➘ Forecast Home products revenue up, profit flat: Specialty Plastics - Higher pricing for food wrap film (for and after Oct. Home products 23.0 22.5 0.5 +2% 2022 shipment)
Slide 21: Segment Forecast: Construction
20 Segment Forecast: Construction (in billions of yen) Vs. FY22 FY23 FY22 New Results Change % Construction: Revenue ➚ Operating profit ➘ Forecast - Higher construction volume in the private sector Construction Revenue 13.5 11.3 2.2 +19% Other Operations: Revenue ➘ Operating profit ➘ Environmental e
Slide 22: Cash Flow
21 Cash Flow (in billions of yen) FY23 FY22 New Change Results Forecast Profit before income tax 15.0 23.0 -8.0 Depreciation 11.2 11.6 -0.4 Other -3.8 -11.9 +8.1 Cash flow from operating activities 22.4 22.7 -0.4 Cash flow from investing activities -40.2 * -11.1 * -29.1 Free cash flow -17.9 11.6 -29
Slide 23: Key Indicators (1)
22 Key Indicators (1) (in billions of yen) Capital investment Depreciation expenses 39.7 12.1 11.7 11.6 11.6 11.2 10.3 10.2 9.9 10.3 28.8 * 6.1 5.9 16.5 5.9 5.9 5.5 13.2 14.9 14.3 14.3 5.4 5.1 5.0 5.4 11.4 10.3 9.8 6.7 7.4 8.2 8.2 7.6 6.0 5.5 5.8 5.0 5.1 4.9 5.0 6.0 5.8 5.7 5.7 5.7 9.8 10.9 5.4 4.8
Slide 24: Key Indicators (2)
23 Key Indicators (2) ROE ROIC 10% 9.0% 8.4% 8% 7.0% 7.7% 7.4% 8.1% 6.3% 6.5% 6.1% 6.6% 8% 7.1% 5.8% 6% 4.9% 6% 4.9% 4.0% 4.1% 3.5% 4% 2.9% 4% 2% 2% 0% 0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 estimate estimate ROA 10% 7.9% 7.1% 7.3% 7.0% 7.6% 8% 5
Slide 25: Key Indicators (3)
24 Key Indicators (3) Net D/E Ratio Equity Ratio 1 100% 0.63 0.52 72% 70% 73% 0.5 0.28 75% 65% 67% 66% 62% 0.21 0.18 0.13 53% 0.06 49% -0.01 -0.03 50% 0 estimate 25% -0.5 2015 2016 2017 2018 2019 2020 2021 2022 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 estimate D/E Ratio 1 0.69 0.57 0.5 0.32
Slide 26: III. 10-year Progress of Kureha Group
25 Ⅲ ．10-year Progress of Kureha Group
Slide 27: Kureha Group: 10-Year Growth Trajectory
26 Kureha Group: 10-Year Growth Trajectory (in billions of yen) 150 15 22.4 250 25 20.1 18.0 200 20 17.2 17.3 100 10 14.6 14.0 12.6 13.0 150 15 Advanced 1 11.9 Materials 8.5 9.3 Specialty 2 505 100 10 Chemicals Specialty 3 Plastics 50 5 4 Construction & 00 Other operations 2012 2013 2014 2015 2016 2
Slide 28: IV. Progress of Initiatives under the New Mid- to Long-term Management Plan
27 IV．Progress of Initiatives under the New Mid- to Long-term Management Plan
Slide 29: Management Policy
28 Management Policy Objectives Continuous enhancement of economic value Revive Kureha’s technology- driven focus Contribution toward resolving social issues Priority Strengthen the Contribution toward reduced environmental measures management base impact Synergism between company and employees To r
Slide 30: PVDF Business (1)
29 PVDF Business (1) PVDF sales volume trends Market environment and future outlook • The European EV market, which Kureha is targeting, is currently stagnant due to slumping consumption and other factors. As a result, LiB FY2024 onwards: manufacturers' inventory adjustments for European market reco
Slide 31: PVDF Business (2)
30 PVDF Business (2) LiB manufacturers’ expansion plans LiB factory construction plans in North America In August 2023, Kureha announced a plan to increase capacity by 8,000 ton/year at the Iwaki Factory (to be completed March 2026). Including debottlenecking of existing facilities, the production c
Slide 32: PVDF Business (3)
31 PVDF Business (3) PVDF production capacity Production equipment • Kureha will meet market growth by debottlenecking Iwaki existing equipment and inventory until March 2026, 120 capacity expansion when the Iwaki Plant capacity expansion is 115 completed. 110 R&D / Technology development 105 20,000
Slide 33: PVDF Business (4)
32 PVDF Business (4) Regarding PFAS regulations in Europe PFAS Chart This diagram does not represent an exact proportional relationship. Five European countries—Denmark, Germany, the Netherlands, Sweden, and Norway—have submitted draft regulations targeting PFAS (organofluorine High 3 substance Spec
Slide 34: PGA Business
33 PGA Business Business environment update • The number of completed shale oil and gas wells is about 80% of the pre-coronavirus level. The number of gas wells in areas where we have a high market share is expected to recover with the growth of LNG and export terminals in the U.S. • The ratio of "f
Slide 35: Shareholder Returns
34 Shareholder Returns • Kureha’s basic policy is to maintain stable dividends while increasing internal reserves for future business development, with a target dividend payout ratio of 30% or more. • Aiming for a total return ratio of 50% or more, we will acquire treasury stock of approximately 10
Slide 36: Environmental Impact Reduction Targets
35 Environmental Impact Reduction Targets CO2 emission reduction Zero waste emission ratio 30% or more 1.5％ (vs. FY2013 results) Based on the assumption of achieving carbon ・Achieve zero waste emission ratio 1.5% in FY2025 neutrality by FY2050, we will promote the use of ・Although the waste is expec
Slide 37: Strengthening the Management Base
36 Strengthening the Management Base Introduction of a stock compensation Strengthening the sustainability organization • We will continue to share value with shareholders and • On April 1, 2023, we established the Sustainability strengthen the link between the company's Promotion Committee, which i
Slide 38: Synergism between Company and Employees
37 Synergism between Company and Employees Employee engagement • Conducted employee engagement surveys from FY2023 onwards. Analyzing the results will enable us to understand issues and create a PDCA cycle for improvement. • Improve engagement by disseminating the management vision, promoting engage
Slide 39: V. Initiatives to Improve Cost of Capital and Stock Price
38 V．Initiatives to Improve Cost of Capital and Stock Price
Slide 40: Current Situation Regarding Stock Price and PBR
39 Current Situation Regarding Stock Price and PBR As profits have grown, the share price has risen above TOPIX. On the other hand, the P/B ratio has been below 1x for a period of time, and measures will be taken to achieve a P/B ratio above 1x. Kureha’s Challenge Kureha’s Challenge Kureha’s Challen
Slide 41: Initiatives to achieve a PBR above 1x
40 Initiatives to achieve a PBR above 1x We work to improve both ROE and PER. Operating profit plan (Unit: ¥ billion ) 35 • Expanding profits is a key to improving ROE. billion or more We will complete construction of a new 25.0 PVDF facility at the Iwaki Factory by the end 22.4 of FY2025, laying th
Slide 42: Cash Allocation (FY2023-2025)
41 Cash Allocation (FY2023-2025) Cash-In Cash-Out Capital investment plan (FY2023–FY2025) • Manufacturing capital investment (PVDF capacity Approx. ¥105 billion expansion, maintenance and renewal investment, etc.) Operating cash flow Capital • R&D, new business investment Approx. ¥5 billion (Approx.
Slide 43: Disclaimer
42 Disclaimer • This presentation material is intended to provide you with a better understanding of our company and is not intended as a solicitation of any investment or other activity. • This material has been prepared by our company based on information available as of the date of the presentati