Mitsui Chemicals, Inc. · TSE:4183
Mitsui Chemicals — 1H FY2020 Earnings Presentation
57 slides from Mitsui Chemicals's earnings presentation, Nov 26, 2020
Slide 1: CEO Presentation: Creating New Customer Value through Innovations
FY20-2 Creating New Customer Value through Innovations CEO PRESENTATION 橋本 修 HASHIMOTO Osamu Mitsui Chemicals Inc. President & CEO Nov 26, 2020
Slide 2: Introduction
1 Introduction Nov 26, 2020 With a “second wave” of COVID-19 on the rise – first in the West and now also in Japan – I would like to offer my deepest sympathies to those who have contracted the virus. I would also like to express my heartfelt gratitude to health care workers, as well as to everyone
Slide 3: Contents
Nov 26, 2020 Contents ▶Business Performance ▶FY20 Strategic Policy and Progress -Direction of Transformation in Basic Materials -Topics on Targeted Business Domains -Toward a New VISION 2030 ▶Financial Overview
Slide 4: 1H/FY20 Results & FY20 Outlook
2 1H/FY20 Results & FY20 Outlook Nov 26, 2020 ① Income down for first half of FY2020 due to impact of COVID-19 ② Expected to face lingering impact in second half but recover to largely match second half of FY2019 ③ Net income expected to be on par with FY2019 level （JPY bn） FY2019 FY2020 Increase (D
Slide 5: Profit by Segment
3 Profit by Segment Nov 26, 2020 ① Major income drop in Mobility segment due to significant automotive production decline, delayed prototyping projects ② Steady performance expected in Health Care, Food & Packaging segments despite recession ③ Major impact in Basic Materials segment from inventory v
Slide 6: Executive Summary
4 Executive Summary Nov 26, 2020 Good rate of recovery to our level of orders received Segment Area 1H FY20 2H FY20 Current circumstances • Production levels recovering at all bases around the world PP Compounds N.A., Asia, Japan • Sales good in China and North America, and operations going Elastome
Slide 7: Segment 1: Mobility
5 Segment 1: Mobility Nov 26, 2020 Operating income before special items（IFRS） １H/FY20 HIGHLIGHTS 1H/FY19→1H/FY20 YoY Initial plan ➡ Outlook Operating income Sales ▲19.1 ▲3.5 before special items （JPY bn） ▲ 30% ▲ 64% FY19 Results ✔ Major impact due to global automotive production falling amid FY19 3
Slide 8: Segment 2: Health Care
6 Segment 2: Health Care Nov 26, 2020 Operating income before special items（IFRS） 1H/FY20 HIGHLIGHTS 1H/FY19→1H/FY20 YoY Initial plan ➡ Outlook Sales Operating income +2.8 +5.5 before special items ▲ 5% +22% （JPY bn） HoH Change (2H vs 1H) ✔ Demand down due to closure of glasses retailers, especially
Slide 9: Segment 3: Food & Packaging
7 Segment 3: Food & Packaging Nov 26, 2020 Operating income before special items（IFRS） 1H/FY20 HIGHLIGHTS 1H/FY19→1H/FY20 YoY Initial plan ➡ Outlook Sales Operating income +1.5 +2.5 before special items （JPY bn） ▲ 7% +22% Volume +3 Price ▲1.4 Fixed costs, ✔ Business going well for semiconductor tape
Slide 10: Segment 4: Basic Materials
8 Segment 4: Basic Materials Nov 26, 2020 Operating income before special items（IFRS） 1H/FY20 HIGHLIGHTS 1H/FY19→1H/FY20 YoY Initial plan ➡ Outlook Operating income Inventory ▲12.4 +8.5 before special items valuation loss*1 Naphtha price In Red ▲ 7B Naphtha price 42,900JPY/kl 29,800JPY/kl in 1H yen
Slide 11: Contents
Nov 26, 2020 Contents ▶Business Performance ▶FY20 Strategic Policy and Progress -Direction of Transformation in Basic Materials -Topics on Targeted Business Domains -Toward a New VISION 2030 ▶Financial Overview
Slide 12: Strategic Outlook for FY2020: 4 Priorities
9 Strategic Outlook for FY2020 Nov 26, 2020 Response to COVID-19 01 4 PRIORITIES ① Strengthening financial infrastructure and securing cash flow for further downside risks ② Making substantive contributions in the fight against COVID-19 Solidifying reform for Basic Materials 02 ① Solidifying further
Slide 13: Financial Infrastructure
10 Financial Infrastructure Nov 26, 2020 Maintaining sound financial position even amid COVID-19 recession ■Shareholders’ equity Cash Flow ●Net D/E 600,000 1.60 （JPY bn） 150 1.39 573 1.40 1.20 Net D/E ■Operating cash flow 115 1.00 ●Free cash flow 300,000 0.80 FY20 Outlook 0.73 349.9 0.60 55 0.40 40
Slide 14: Careful Selection of Investment
11 Careful Selection of Investment Nov 26, 2020 Investments Cost down 00 ■+■ Investment 00 ■ J-GAAP→IFRS 135 Reduce investments (JPY bn) 122 ▲25Byen 00 Reduce & Compared to Emergency measure delay initial plan 00 ▲13 ▲12 110 Proactive stance 00 00 85.2 Continuing investments and M&A for the future M
Slide 15: Contributions to Combating COVID-19
12 Contributions to Combating COVID-19 Nov 26, 2020 Masks and medical gowns Face shields ①Production increases for MB nonwovens (Dow-Mitsui Polychemicals) (Jan.2020) Developed face shields *For mask nose clamps using Himilan™ ②Production increases for TEKNOROTE™* Used Himilan™ – a strong, transparen
Slide 16: Strategic Outlook for FY2020: 4 Priorities
Strategic Outlook for FY2020 Nov 26, 2020 Response to COVID-19 01 4 PRIORITIES ① Strengthening financial infrastructure and securing cash flow for further downside risks ② Making substantive contributions in the fight against COVID-19 Solidifying reform for Basic Materials 02 ① Solidifying further r
Slide 17: Basic Materials: Reduce volatility by restructuring
13 Basic Materials Nov 26, 2020 Restructuring efforts proving to reduce volatility, providing a major boost to cumulative cash flow * Includes effects of pricing formula cutoff （JPY bn） Cumulative free cash flow (Basic Materials) ■Operating income (Restructuring biz.) 38.5 38.9 ■Operating income (Ot
Slide 18: Our Approach to Reform-1
14 Our Approach to Reform-1 Nov 26, 2020 Pursuing reform with a view of company-wide optimization for reduced volatility range and ratio Crackers as a strategic foundation Reducing volatility for the entire Group Stably supplying competitive raw materials Current understanding Future direction Crack
Slide 19: Our Approach to Reform-2
15 Our Approach to Reform-2 Nov 26, 2020 Pursuing product portfolio reform through two approaches Product portfolio for Basic Materials Ⅰ Bolstering and expanding downstream businesses Bolstering profitability via our distinctive technologies and products ① Higher performance Market Share ② Bolsteri
Slide 20: Takeover Bid for Honshu Chemical Industry
16 Takeover Bid for Honshu Chemical Industry Nov 26, 2020 HONSHU CHEMICAL INDUSTRY Outline of Takeover Bid -Friendly takeover bid- Founded 1914 Mitsui Chemicals Mitsui & Co Raw material for high-performance polymer, 26.99% electrical materials, pharmaceuticals, 26.99% Business and agrochemicals Waka
Slide 21: Aims of Takeover Bid for Honshu Chemical Industry
17 Aims of Takeover Bid for Honshu Chemical Industry Nov 26, 2020 ① Bolstering aroma chain with an expanded lineup of high-performance monomers for ICT, Health Care ② Realizing synergies quickly through increased capital relationship (26.99% → 51%) Expanded lineup of high-performance Enhanced produc
Slide 22: Synergy with Honshu Chemical Industry
18 Synergy with Honshu Chemical Industry Nov 26, 2020 Expansion and growth for aroma derivatives (high-performance monomers) Strong olefin chain Benzene Phenol BPA Epoxy resin Specialty bisphenol Polyimide ICT Strengthening business raw material centered on organic Biphenol synthesis technologies Ne
Slide 23: Strategic Outlook for FY2020: 4 Priorities
Strategic Outlook for FY2020 Nov 26, 2020 Response to COVID-19 01 4 PRIORITIES ① Strengthening financial infrastructure and securing cash flow for further downside risks ② Making substantive contributions in the fight against COVID-19 Solidifying reform for Basic Materials 02 ① Solidifying further r
Slide 24: ICT Materials
ICT MATERIALS Actively investing to form our next target domain
Slide 25: ICT Materials
19 ICT Materials Nov 26, 2020 Our next target domain: ICT materials that contribute to digitalization (Sales target: 100B JPY) Basic New Business Mobility Health Care F&P Materials Incubation Center Expanding Expanding Expanding Special gas PIVAR™：Polyimide varnish Semi ICT-related materials MITSUI
Slide 26: Topics-1: EUV pellicle and APEL
20 Topics-1 Nov 26, 2020 EUV pellicle Construction on track for new APEL™ plant (Completion: March 2022 at Osaka Works) (Completion: 4Q/FY2020 at Iwakuni-Ohtake Works) Growing needs for refinement of Steady growth due to multi-lens smartphones Volume semiconductor circuits for 5G FY08-25 【Sales Volu
Slide 27: Topics-2: ICROS Tape plant and screen printing
21 Topics-2 Nov 26, 2020 New ICROS™ Tape plant in Taiwan Development of (Mitsui Fine Chemicals) successfully on stream ultrafine screen printing technology World’s No.1 share protective tape used in High-performance polyurethane squeegees semiconductor wafer back grinding to enable micro-scale circu
Slide 28: ICT-Related Projects
22 ICT-Related Projects Nov 26, 2020 Progress in growth investments and new projects
Slide 29: Mobility
Nov 26, 2020 計数目標まとめｰグラフ Mobility Providing solutions that make full use of our comprehensive strengths
Slide 30: Status of PP Compounds Business
23 Status of PP Compounds Business Nov 26, 2020 Resumed production at all bases along with global recovery in automotive production Growing needs for lightweighting as various countries shift to EV strategies North America Europe Japan Market Outlook ▲25%→ ▲16% Market Outlook ▲25%→ ▲18% Market Outlo
Slide 31: Bolstering SMC Operations: Acquisition from DIC Kako
24 Bolstering SMC Operations: Acquisition from DIC Kako Nov 26, 2020 Acquiring DIC Kako’s SMC and molding operations to strengthen our own SMC business and fiber-reinforced composite materials (Set to launch as JC Kako in December 2020) 70% increase to SMC production capacity Increasing adoption in
Slide 32: Major Investments Reach End of Construction
25 Major Investments Reach End of Construction Nov 26, 2020 Construction finished for new LUCANT™ plant Increasing production capacity for TAFMER™ (20KTA; set to begin operations in April 2021 at Ichihara) (25KTA; After 3Q/FY20 in Singapore) Ceremony for end of construction in November 2020 Japan 50
Slide 33: Mobility Projects Schedule
26 Mobility Projects Schedule Nov 26, 2020 Expanding our pipeline for monetization projects for FY21 onward; moving into a phase where we can reap the rewards of our investments Schedule for profit contribution Mobility investment projects Capacity Stable growth Accelerate growth Note (partial list)
Slide 34: Health Care
Nov 26, 2020 Health Care Providing products & services that contribute to quality of life through chemical innovations
Slide 35: Bolstering Business for Vision Care Materials
27 Bolstering Business for Vision Care Materials Nov 26, 2020 Sales growth for lens monomers Strengthening operations for coating materials ① Making sure to capture global demand growth Acquired COTEC, a German manufacturer ② Switching to MR™ Series in North American of hydrophobic, antireflective c
Slide 36: Nonwovens
28 Nonwovens Nov 26, 2020 Capacity expansion completed in line with growing nonwovens demand Speeding up rollout for industrial use October 2020 Increased production capacity for TEKNOROTE™ for mask nose clamps (approx. 150% increase) April 2020 ● Established emergency supply system for October 2018
Slide 37: Food & Packaging
Nov 26, 2020 Food & Packaging Providing solutions for world food problems and seizing new business opportunities
Slide 38: Agrochemicals & Functional Sheets
29 Agrochemicals & Functional Sheets Nov 26, 2020 New material that senses temperature Speeding up overseas rollout of while conforming to the contours of human body agrochemicals HUMOFIT™ CONCEPT TENEBENAL™ Dinotefuran ●Temperature Agrochemical Vector HUMAN + THERMO + FIT = dependency (BASF & our c
Slide 39: New Business Incubation Center
Nov 26, 2020 New Business Incubation Center Pursuing creation and early-stage development of future new businesses
Slide 40: New Business Incubation Center
30 New Business Incubation Center Nov 26, 2020 Exploring and creating new businesses in all fields ICT Creating new businesses to become our next target MATERIALS domain INCUBATION CENTER NEW BUSINESS ROBOT Developing materials and components for industrial MATERIALS and communications robots of the
Slide 41: Topics in Robot Materials
31 Topics in Robot Materials Nov 26, 2020 Investment into Monozukuri Ventures Production support for powered prosthetic legs (Nov. 2020) (BionicM) Venture capital and technical consulting for hardware startups Supporting, and collaborating on multiple parts for, (operating in Japan & North America)
Slide 42: Strategic Outlook for FY2020: 4 Priorities
Strategic Outlook for FY2020 Nov 26, 2020 Response to COVID-19 01 4 PRIORITIES ① Strengthening financial infrastructure and securing cash flow for further downside risks ② Making substantive contributions in the fight against COVID-19 Solidifying reform for Basic Materials 02 ① Solidifying further r
Slide 43: Changes in Post-COVID Society
32 Changes in Post-COVID Society Nov 26, 2020 New Society / New Values Industry Centralization→ Changes in Environmental Digital shift restructuring decentralization human activity awareness Individualized Manufacturing work styles □Creation of organizational setups, business systems and □Decentrali
Slide 44: Initiatives Toward Circular Economy
33 Initiatives Toward Circular Economy Nov 26, 2020 Tackling climate change and plastic waste to achieve circular economy Plastic waste Circular Economy Climate change Issues Countermeasures Infrastructure/ Reuse Lighter/Thinner systems Collection Reduce Longer life Sorting Paris Agreement Post- Mec
Slide 45: Visualizing Our Path Toward Carbon Neutrality
34 Visualizing Our Path Toward Carbon Neutrality Nov 26, 2020 Using a three-pronged approach to reach net zero GHG emissions (Examples) (GHG emissions reduction) Going step-by-step as we aim for Change in Use of LNG cold energy ▲38KTA net zero emissions by 2050 fuels (October 2010, Osaka) Introducti
Slide 46: Declaration Regarding Climate Change Efforts
35 Declaration Regarding Climate Change Efforts Nov 26, 2020 Mitsui Chemicals Group to become a carbon neutral company by 2050 1 To make major contributions to social reform by pursuing net zero GHG emissions by 2050 Working with customers to achieve widespread 2 implementation of GHG-reducing produ
Slide 47: Efforts Toward New Work Styles
36 Efforts Toward New Work Styles Nov 26, 2020 Aiming to facilitate diverse working styles, improve engagement and maximize productivity Improved labor productivity = higher competitiveness Maximization Optimization Higher engagement (more quality & diversity) Work style reform Phase I Work style re
Slide 48: Contents
Nov 26, 2020 Contents ▶Business Performance ▶FY20 Strategic Policy and Progress -Direction of Transformation in Basic Materials -Topics on Targeted Business Domains -Toward a New VISION 2030 ▶Financial Overview
Slide 49: Cash Flow
37 Cash Flow Nov 26, 2020 (JPY bn) ■Cash flows from operating 150 ■Cash flows from investing 145.9 ー Free cash flows 115 109.5 ←100B yen→ Operating cash flow 45.2 29.8 40 remains at high level ▲64.3 even amid COVID-19 recession ▲85.2 ▲110* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 *As we mov
Slide 50: Net D/E Ratio
38 Net D/E Ratio Nov 26, 2020 8,000 800 1.60 (JPY bn) ■Shareholders’ equity FY20 (IFRS) ■Interest-bearing debt (net) 700 7,000 ー Net D/E 1.40 6,000 600 1.20 Net D/E 500 5,000 1.00 Initial Plan Revised Outlook 0.80 0.73 400 4,000 0.80 300 3,000 0.60 200 Improving 2,000 0.40 1,000 100 0.20 financial p
Slide 51: Shareholder Returns
39 Shareholder Returns Nov 26, 2020 ■ Dividends (interim) 100JPY 100JPY 100JPY + + ■ Dividends (year-end) Acquisition of Acquisition of 1,000 ■ Memorial 90 JPY* treasury stock treasury stock ー Net income + Acquisition of 10B yen 10B yen 900 Interim Year-end FY20 treasury stock Total return ratio 5B
Slide 52: Summary of Financial Targets
40 Summary of Financial Targets Nov 26, 2020 J-GAAP J-GAAP J-GAAP IFRS Reviewing (JPY bn) FY15 FY18 FY19 FY20 VISION IFRS Results Results Results Outlook 2025 Sales 1,344 1,483 1,339 1,175 2,000 revenue*1 Operating income before special items*1 70.9 93.4 71.6 50.0 200 (ROS) (5.3%) (6.3%) (5.3%) (4.3
Slide 53: Concluding Message
41 Concluding Message Nov 26, 2020 To seize opportunities brought by new values, needs, risks and other rapid social changes in the post-COVID world, we will review our long-term business plan with an eye toward a new vision for our Group, which links strategic, organizational and technological appr
Slide 54: Creating new customer value and solving social challenges through business activities
Creating new customer value and solving social challenges through business activities
Slide 55: Challenge Diversity One Team
Challenge Diversity One Team Statements made in this document with respect to Mitsui Chemicals' current plans, estimates, strategies, and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Mitsui Chemicals. Information provided h
Slide 56: Setup for Implementing Climate Change/Plastics Strategy
Ref Setup for Implementing Climate Change/Plastics Strategy Nov 26, 2020 Launched a company-wide structure Climate change policy (June 2020) (May 2019) Board of Directors / Management Committee / Mitigation Realizing a low-carbon society Corporate Sustainability Committee by reducing GHG emissions P
Slide 57: Climate Change Scenario Analysis
Ref Climate Change Scenario Analysis Nov 26, 2020 Carrying out scenario analysis and business impact evaluations to help devise and execute a concrete strategy (℃) Scenario analysis (2050) Impact on business (*IPCC AR5 Synthesis Report Fig. SPM.6) 6.0 A rise of (GHG emissions rise 30%) Government So