Kureha Corporation · TSE:4023
Kureha — FY2020 Earnings Presentation
46 slides from Kureha's earnings presentation, May 12, 2021
Slide 1: FY2020 Financial Results
FY2020 Financial Results May 12, 2021
Slide 2: Contents
1 Contents I. FY2020 Results IV. Review of ‘Kureha’s Challenge 2020’ • Overview 3-5 • KC2020 review 30-34 • Segment results 6-10 • Financial position 11 V. ‘Kureha’s Challenge 2022’ • Cash flow results 12 FY2021-2022 Mid-term Management Plan • Key indicators 13-14 • What we do in FY2021-22 36 • Mana
Slide 3: I. FY2020 Results
2 I. FY2020 Results (Period April 1, 2020 – March 31, 2021)
Slide 4: FY2020 Financial Summary
3 FY2020 Financial Summary (in billions of yen except as otherwise indicated) Change Vs. FY2019 FY2019 FY2020 YOY Revenue 142.4 144.6 2.2 • Revenue growth driven by higher sales volumes in (+1.5%) PVDF (LiB cathodes binder), agrochemicals, home Core operating profit 16.0 18.9 2.8 products, fishing l
Slide 5: FY2020 Financial Summary: Performance by segment
4 FY2020 Financial Summary (in billions of yen) Performance by segment FY2019 FY2019 Revenue FY2020 Core operating profit FY2020 7.7 41.8 44.5 43.5 42.4 6.3 24.3 23.5 4.4 3.7 3.5 18.3 20.3 2.7 14.513.9 2.1 2.2 1.1 1.1 Advanced Specialty Specialty Construction Other Advanced Specialty Specialty Const
Slide 6: FY2020 Financial Summary
5 FY2020 Financial Summary (in billions of yen) FY2019 AM SC SP CO OO Total Revenue 41.8 24.3 43.5 14.5 18.3 142.4 Notes: Segment operating profit 3.7 2.1 6.3 1.1 2.7 16.0 Intersegment adjustment 0.0 (FY2019) - Other income includes a gain from Other income 13.4 non-current asset sales (¥10.2bn) Oth
Slide 7: Segment Results: Advanced Materials
6 Segment Results: Advanced Materials (billions of yen) Vs. FY2019 FY2019 FY2020 Change Revenue Up, Operating Profit Down % Advanced plastics Advanced Materials Revenue increased on higher PVDF (automotive Advanced plastics 27.4 28.8 +5% LiB binder) sales volumes, partially offset by slower PGA and
Slide 8: Segment Results: Specialty Chemicals
7 Segment Results: Specialty Chemicals (billions of yen) Vs. FY2019 FY2019 FY2020 Change Revenue Down, Operating Profit Up % Agrochemicals Specialty Chemicals Growth in revenue and profit supported by Agrochemicals 5.8 7.1 +23% higher fungicide sales volume -18% Pharmaceuticals Pharmaceuticals 4.9 4
Slide 9: Segment Results: Specialty Plastics
8 Segment Results: Specialty Plastics (billions of yen) Vs. FY2019 FY2019 FY2020 Change Revenue Down, Operating Profit Up % Home products / Fishing lines Specialty Plastics Revenue and profit grew, driven by sales Home products 21.3 21.8 +3% volume growth of ‘NEW Krewrap’ (home-use wrap film) and ‘S
Slide 10: Segment Results: Construction
9 Segment Results: Construction (billions of yen) Vs. FY2019 FY2019 FY2020 Change Revenue Down, Operating Profit Down % Construction Construction Revenue and profit declined as a result of Construction 22.4 21.1 -6% cancellations and delays for private construction projects, while construction Elimi
Slide 11: Segment Results: Other Operations
10 Segment Results: Other Operations (billions of yen) Vs. FY2019 FY2019 FY2020 Change Revenue Up, Operating Profit Up % Environmental engineering Other Operations Revenue and profit increased on volumes Environmental growth related to low-level PCB wastes 12.8 14.9 +17% engineering and post-typhoon
Slide 12: Financial Position
11 Financial Position (billions of yen) Assets Liabilities and Equity Mar. 31 Mar. 31 Mar. 31 Mar. 31 Change Change 2020 2021 2020 2021 Cash and cash equivalents 7.3 17.8 10.6 Trade and other payables 19.4 19.2 -0.2 Trade and other receivables 28.3 28.2 -0.1 Interest-bearing debt 37.3 29.5 -7.8 Inve
Slide 13: Cash Flow
12 Cash Flow (billions of yen) FY2019 FY2020 Change Profit before income tax 17.9 17.7 -0.2 Depreciation 12.1 11.7 -0.4 Other -14.9 -2.7 12.2 Cash flow from operating activities 15.2 26.7 11.6 Cash flow from investing activities 5.5* -3.9 -9.4 Free cash flow 20.6 22.8* 2.2 Cash flow from financing a
Slide 14: Key Indicators
13 Key Indicators (billions of yen) Capital investment Depreciation expenses 200 20 150 17.0 15 12.1 14.9 11.7 11.7 14.3 10.3 10.2 10.3 150 15 13.2 9.9 11.4 100 10.3 9.8 10 6.1 5.9 100 8.2 8.2 5.4 5.1 5.0 5.4 10 7.4 6.0 5.5 5.8 50 505 5 6.0 5.8 5.8 6.7 6.1 5.0 5.1 4.9 5.0 5.4 4.8 4.0 00 00 FY2015 FY
Slide 15: Key Indicators
14 Key Indicators ROE ROIC 10% 9.0% 8% 8.4% 7.7% 6.3% 6.5% 8% 7.1% 6.1% 5.8% 6% 4.9% 6% 4.1% 3.5% 4% 2.9% 4% 2% 2% 0% 0% 2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 ROA DE ratio 8% 7.1% 7.3% 7.0% 1 5.3% 0.69 6% 0.57 3.8% 4% 0.5 2.7% 0.32 0.24 0.23 2% 0.16 0% 0 F
Slide 16: II. Consolidated Companies
15 II. Consolidated Companies
Slide 17: Consolidated Companies: Revenue, Assets
16 Consolidated Companies: Revenue, Assets (billions of yen) FY2019 FY2020 Change Revenue Total assets Revenue Total assets Revenue Total assets Kureha Corporation 76.3 192.3 74.2 199.1 -2.1 6.8 Kureha Trading Group 21.6 12.3 23.2 13.3 1.6 1.0 Kureha Corporation 30.6 -- 29.8 -- -0.9 -- Kureha Tradin
Slide 18: Consolidated Companies
17 Consolidated Companies (billions of yen) FY2019 FY2020 Change Revenue Total assets Revenue Total assets Revenue Total assets Kureha Nishiki Group 19.9 11.6 17.4 11.9 -2.5 0.3 Construc- Kureha Engineering 2.5 1.9 3.7 2.0 1.2 0.1 tion Consolidation adjustments -7.9 -- -7.2 -- -- -- Total 14.5 -- 13
Slide 19: III. FY2021 Outlook
18 Ⅲ. FY2021 Outlook (Period April 1, 2021 – March 31, 2022)
Slide 20: FY2021 Forecast
19 FY2021 Forecast (in billions of yen except as otherwise indicated) FY2021e Change Vs. FY2020 FY2020 YoY 1H 2H Full-year 5.4 - Revenue expected to grow on sales volume Revenue 144.6 74.5 75.5 150.0 (+3.8%) growth in the Advanced Materials segment, Core operating profit 18.9 7.5 8.5 16.0 -2.9 parti
Slide 21: FY2021 Forecast
20 FY2021 Forecast Segment performance forecast (Vs. FY2020) (in billions of yen) Revenue Core operating profit FY2020 FY2020 808 7.7 53.0 FY2021e 7.3 FY2021e 500 50 44.5 42.4 42.5 606 4.0 4.4 404 3.5 250 25 23.5 23.5 2.6 20.3 18.5 2.2 13.9 12.5 202 1.7 1.1 0.4 00 00 Advanced 化学製品 Other Advanced Spe
Slide 22: FY2021 Forecast
21 FY2021 Forecast (in billions of yen) FY2020 AM SC SP CO OO Total Revenue 44.5 23.5 42.4 13.9 20.3 144.6 (Notes) Segment operating profit 3.5 2.2 7.7 1.1 4.4 18.9 Intersegment adjustment 0.1 Other income 0.9 (FY2020) Other expenses - Other expenses include an 2.5 impairment loss of ¥1.6bn on non-
Slide 23: FY2021 Forecast: Core operating profit analysis
22 FY2021 Forecast FY2020-2021e Core operating profit analysis (¥ billions) AM 20 OO SC 0.5 SP 19 1.6 18.9 CO SP -0.5 OO 18 CO -0.4 1.4 17 SC -0.7 AM -0.1 16.0 0.1 16.0 16 -0.2 -1.8 15 14 13 12 FY2019 FY2020 FY2021 Core ope. profit Core ope. profit Core ope. profit Total Total Total
Slide 24: FY2021 Forecast: Advanced Materials
23 FY2021 Forecast: Advanced Materials Vs. FY2020 (billions of yen) Revenue Up, Operating Profit Up FY2020 FY2021e Change % Advanced plastics Revenue and profit expected to improve on Advanced Materials higher PGA and PPS sales volumes: Advanced plastics 28.8 36.8 +28% - PGA frac plug sales expandin
Slide 25: FY2021 Forecast: Specialty Chemicals
24 FY2021 Forecast: Specialty Chemicals Vs. FY2020 (billions of yen) Revenue Levelling Out, Operating Profit Up FY2020 FY2021e Change % Agrochemicals Revenue likely to decrease in competitive Specialty Chemicals market conditions, while operating profit will Agrochemicals 7.1 6.7 -6% decline due to
Slide 26: FY2021 Forecast: Specialty Plastics
25 FY2021 Forecast: Specialty Plastics Vs. FY2020 (billions of yen) Revenue Up, Operating Profit Up FY2020 FY2021e Change % Home products / Fiber products - A slight decrease in revenue from home Specialty Plastics products and flat revenue growth for fishing Home products 21.8 21.5 -1% lines - Oper
Slide 27: FY2021 Forecast: Construction
26 FY2021 Forecast: Construction Vs. FY2020 (billions of yen) Revenue Down, Operating Profit Down FY2020 FY2021e Change % Construction Revenue and operating profit to decrease Construction due to lower construction volumes in the Construction 21.1 20.0 -5% private sector, intensified competition and
Slide 28: FY2021 Forecast: Other Operations
27 FY2021 Forecast: Other Operations Vs. FY2020 (billions of yen) Revenue Down, Operating Profit Down FY2020 FY2021e Change % Environmental engineering Revenue and profit expected to decrease Other Operations due to a lack of post-typhoon waste Environmental treatment projects seen in the previous 1
Slide 29: Cash Flow Forecast
28 Cash Flow Forecast (billions of yen) FY2020 FY2021e Change Profit before income tax 17.7 15.0 -2.7 Depreciation 11.7 11.7 0.0 Other -2.7 -8.0 -5.3 Cash flow from operating activities 26.7 18.7 -8.0 Cash flow from investing activities -3.9 -17.3 -13.4 Free cash flow 22.8 1.4 -21.4 Cash flow from f
Slide 30: IV. Review of 'Kureha's Challenge 2020'
29 Ⅳ. Review of ‘Kureha’s Challenge 2020’ (FY2019-2020 Mid-term Management Plan)
Slide 31: KC2020 Review
30 KC2020 Review ‘Kureha’s Challenge 2020’ - Product Differentiation and New Business Creation - Strategic direction Management Goals • Expand the PGA business and generate profit As a company driven by innovation, Kureha will develop differentiated • Strengthen the PVDF business for further expansi
Slide 32: KC2020 Review
31 KC2020 Review (billions of yen) Revenue and operating profit fell below KC2020 targets: KC2020 FY2020 Change Advanced Materials targets results YOY - Achieved operating profit target for PVDF, despite a shortfall of volumes in the automobile LiB market due to Revenue 157.0 144.6 -8% China’s revis
Slide 33: KC2020 Review: Segment performance vs. targets
32 KC2020 Review Segment performance (FY2020 results vs. targets) (billions of yen) Revenue Core operating profit 55.0 FY20 Targets 7.6 7.7 FY20 Targets 44.5 46.0 FY20 Results 6.2 FY20 Results 42.4 4.4 26.0 23.5 3.5 20.3 17.5 12.5 13.9 2.1 2.2 1.8 1.1 0.3 Advanced Specialty Specialty Other Advanced
Slide 34: KC2020 Review: Progress & Challenges
33 KC2020 Review: Progress & Challenges Priority Measures Progress and Challenges 1. PGA: Business expansion and profit generation • Delays in the development of PGA frac plugs for ultra low-temperature application • Generate earnings • Market development in China lagged behind schedule • Launch ult
Slide 35: KC2020 Review: Progress & Challenges
34 KC2020 Review: Progress & Challenges Kureha’s Challenge 2020（重点課題と課題） Priority Measures Progress and Challenges 4. Exploration and development of new businesses • Collaborative projects continuing with multiple start-up companies Explore new business themes in Japan and overseas • Invested additi
Slide 36: V. 'Kureha's Challenge 2022'
35 Ⅴ. ‘Kureha’s Challenge 2022’ FY2021-2022 Mid-term Management Plan (A Final stage of Kureha’s Challenge extension plan)
Slide 37: Kureha's Challenge 2022
36 Kureha’s Challenge 2022 FY2021-2022: What We Do.. ➢ A ‘follow-through, uncompromising’ stance (Kureha’s culture)→ will complete the measures remaining from the previous mid-term management plan ➢ Will embody and clarify a future vision of Kureha Group and formulate an action plan to fulfill this
Slide 38: Kureha's Challenge 2022: Management Goals and Priority Measures
37 Kureha’s Challenge 2022 Management Goals and Priority Measures Expansion of Advanced Optimization of Existing Identification and Development Materials Businesses Businesses of New Businesses • Solidify the foundation for the PGA • Review business strategies and growth • Develop and commercialize
Slide 39: PGA Business
38 PGA Business FY2020: ¥3.0bn in operating loss, ¥1.6bn impairment Revenue & Operating profit loss on manufacturing facilities 60 6 5.5 (¥ billion) - Frac plug market volumes decreased by half from pre- 4.4 4.5 pandemic levels due to plunging oil prices and a sharp drop in 40 4 2.8 FY2023 shale oil
Slide 40: PVDF Business
39 PVDF Business PVDF business revenue 20020 (¥ billion) • Kureha maintains a roughly 40% share in the automotive LiB cathode binder market, serving 15015 major South Korean and Chinese lithium-ion battery (LiB) makers 10010 • Demand recovered and growing rapidly after a temporary halt of LiB produc
Slide 41: Capital Policy and Returning to Shareholders
40 Capital Policy and Returning to Shareholders ◼ Aiming for sustainable growth and enhanced corporate value, Kureha will set the stage for future business development by steadily achieving the management goals and quantitative targets set forth in Kureha's Challenge 2022 mid-term management plan. W
Slide 42: VI. ESG Management
41 KUREHA CORPORATION VI. ESG Management KUREHA a
Slide 43: Advancing ESG Initiatives: Environment
42 Advancing ESG Initiatives For Environment ◼ Set forth a goal to reduce greenhouse gas emissions in Sept. 2020 FY2030 Goal: Reduce CO₂ emissions from energy use by 20% from FY2013 levels Our step-by-step approach to this goal includes: - Reduce in-house power generation and review its long-term op
Slide 44: Advancing ESG Initiatives: Society
43 Advancing ESG Initiatives For Society ◼ Revised Kureha Ethical Charter and set forth our policy on human rights in Nov. 2020 - Aims to join the UN Global Compact https://www.kureha.co.jp/en/newsrelease/docs/20201102_Ethical%20Charter_en.pdf ◼ Implements a new human resources system and gradually
Slide 45: Advancing ESG Initiatives: Governance
44 Advancing ESG Initiatives To Strengthen Governance ◼ Employed a delegation-type executive system in April 2020 ◼ Continues to reduce cross-shareholdings to improve corporate governance - We have sold off cross-shareholdings in companies who are remotely related to our business ¥ billion 300 30 17
Slide 46: Disclaimer
45 Disclaimer • These materials are supplied to provide a deeper understanding of our company, and are not intended to as a solicitation for investment or other actions. • These materials have been prepared by our company based on the information available at this point in time. However, actual perf