Toagosei Co., Ltd. · TSE:4045
Toagosei — 2Q FY2023 Earnings Presentation
45 slides from Toagosei's earnings presentation, Aug 9, 2023
Slide 1: Financial Results for 2Q FY2023
Financial Results for 2Q FY2023 August 9, 2023
Slide 2: Table of Contents
Table of Contents 1. Results for 2Q FY2023 P.2- 2. Results Forecast for FY2023 P.11- 3. Topics P.22- 4. Toagosei Group’s Initiatives to P.29- Improve Our Price-to-Book Ratio (PBR) 5. Appendix P.36- 1
Slide 3: Results for 2Q FY2023
Results for 2Q FY2023 2
Slide 4: Summary of Financial Results for 2Q FY2023
Summary of Financial Results for 2Q FY2023 Business Environment Interest rates were raised to combat inflation in Europe and the U.S. Meanwhile, monetary easing continued in Japan to ease inflation. The pace of recovery in the Chinese economy slowed. It become possible to see a movement to reorg
Slide 5: Overview of Results for 2Q FY2023
Overview of Results for 2Q FY2023 Rate of 2Q FY2022 2Q FY2023 Change Change Net sales (Millions of yen) 77,977 76,947 (1,030) (1.3%) Operating income (Millions of yen) 7,891 4,746 (3,145) (39.9%) Operating income ratio 10.1% 6.2% (4.0P) － Ordinary income (Millions of yen) 9,387 6,172 (3,214) (34.2%)
Slide 6: Analysis of Changes in Operating Income
Analysis of Changes in Operating Income (Billions of yen) 5
Slide 7: Consolidated Results (by Segment)
Consolidated Results (by Segment) (Millions of yen) 2Q FY2022 2Q FY2023 Change Net sales A B Volume Unit price B－ A Commodity Chemicals 35,020 35,102 (3,375) 3,456 81 Polymer & Oligomer 18,000 16,425 (2,700) 1,125 (1,574) Adhesive Material 5,430 5,608 (141) 319 178 Performance Chemicals 4,983 5,285
Slide 8: Overview of Consolidated Subsidiaries (Results for 2Q FY2023)
Overview of Consolidated Subsidiaries (Results for 2Q FY2023) (Millions of yen) Net income (loss) Ownership Net sales Operating income attributable to Company name Segment (%) owners of parent 2Q FY2022 2Q FY2023 2Q FY2022 2Q FY2023 2Q FY2022 2Q FY2023 1 Toa Techno Gas Commodity Chemicals 100 1,718
Slide 9: Consolidated Statement of Income
Consolidated Statement of Income (Non operating Income/Expenses and Extraordinary Income/Losses) (Millions of yen) (Millions of yen) Non-operating 2Q 2Q Extraordinary 2Q FY2022 2Q FY2023 Change Change income/expenses FY2022 FY2023 income/losses Interest and dividend Gain on sales of 625 747 122 inve
Slide 10: Consolidated Balance Sheet
Consolidated Balance Sheet (Millions of yen) Dec. 31, 2022 Jun. 30, 2023 Change Dec. 31, 2022 Jun. 30, 2023 Change Current assets 138,985 133,097 (5,888) Total liabilities 54,328 55,367 1,039 Notes and accounts Cash and deposits 40,366 36,871 (3,495) payable 19,653 18,492 (1,161) Notes and accounts
Slide 11: Consolidated Cash Flow Statements
Consolidated Cash Flow Statements (Millions of yen) 2Q 2Q Change FY2022 FY2023 Cash flows from operating activities A 11,190 13,607 2,417 Cash flows from investment activities B (9,270) (4,454) 4,816 Free cash flow C=A+B 1,919 9,153 7,233 Cash flows from financial activities D (6,147) (13,172) (7,02
Slide 12: Results Forecast for FY2023
Results Forecast for FY2023 11
Slide 13: Challenges in the 2nd Half of FY2023
Challenges in the 2nd Half of FY2023 Business Environment Expectations for an economic recovery are rising in Japan. For example, there has been a recovery in the production volume of automobiles, a normalization of economic activities with the end of the COVID-19 pandemic and significant wage inc
Slide 14: Consolidated Results Forecast for FY2023
Consolidated Results Forecast for FY2023 (Year-on-year Comparison) (Millions of yen) 2023 Forecast FY2022 Results (Announced on Jul. 31, 2023) Change Annual 1H 2H Annual (B-A) 1H 2H (A) Results Forecast (B) Net sales 77,977 82,848 160,825 76,947 85,453 162,400 1,575 Operating income 7,891 6,491 14,3
Slide 15: FY2023 Operating Income Analysis Forecast
FY2023 Operating Income Analysis Forecast (Billions of yen) 14
Slide 16: FY2023 Consolidated Results Forecast by Segment
FY2023 Consolidated Results Forecast (Year-on-year Comparison by Segment) (Millions of yen) FY2023 Forecast FY2022 Results Net sales (Announced on Jul. 31, 2023) Change 1H 2H Annual 1H 2H Annual Commodity Chemicals 35,020 38,908 73,929 35,102 39,098 74,200 270 Polymer & Oligomer 18,000 17,808 35,809
Slide 17: Trends in Consolidated Results
Trends in Consolidated Results (Billions of yen) (Yen) 30.0 120.00 28.2 108.14 24.8 25.3 24.7 101.31 25.0 98.08 100.00 96.85 23.0 22.1 21.2 87.01 20.0 78.91 80.00 17.4 17.6 16.4 62.43 14.3 15.0 60.00 12.9 13.7 13.7 12.7 12.3 12.4 10.5 10.3 10.3 10.0 40.00 8.1 5.0 20.00 0.0 0.00 FY2017 FY2018 FY2019
Slide 18: Reference Trends for Consolidated Performance
Reference Trends for Consolidated Performance (Shareholders’ equity：Billions of yen) (Interest-bearing debt: Billions of yen) 210.0 50.0 205.9 209.3 45.0 201.7 79.8% 40.0 200.0 78.4% 78.8% 77.9% 77.7% 35.0 77.3% 76.5% 193.7 192.8 30.0 190.0 25.0 186.4 20.0 182.6 15.0 12.1 11.6 11.5 11.3 11.0 11.9 18
Slide 19: EBITDA/PP&E Ratio Trends
EBITDA/PP&E Ratio Trends (Property, plant and equipment: Billions of yen) (EBITDA：Billions of yen) 100.0 96.1 50.0 90.7 80.0 78.3 78.1 40.0 74.3 67.0 62.6 60.0 28.2 30.0 25.3 24.7 24.8 23.0 22.1 21.2 40.0 20.0 40.5% 36.9% 35.3% 31.0% 28.3% 27.4% 22.0% 20.0 10.0 0.0 0.0 FY2017 FY2018 FY2019 FY2020 FY
Slide 20: Reference for Consolidated Performance
Reference for Consolidated Performance (Billions of yen) FY2023 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 (forecast) Capital investment (acceptance basis) 10.0 12.5 15.8 13.6 11.9 22.8 16.1 Capital investment (approval basis) 22.1 17.0 16.9 11.8 24.9 26.0 45.2 Depreciation and amortization 7.9 8.3 9
Slide 21: Medium-Term Management Plan 2025 (Capital Investment Breakdown)
Medium-Term Management Plan 2025 (Capital Investment Breakdown) (Billions of yen) By Category By Category Total Ratio Other 28% Growth and rationalization 41.0 60% Updates 8.0 12% Growth and Other 19.0 28% Updates rationalization 60% 12% Total 68.0 100% By Segment Total Ratio By Segment Commodity Co
Slide 22: Operating Income Trends
Operating Income Trends (Billions of yen) 単位：億円 High-performance Commodity 高機能製品 Products 汎用製品 products 200 20.0 175 17.5 177 17.7 164 16.4 72 7.2 144 14.4 138 13.8 68 6.8 80 8.0 123 12.3 71 7.1 105 10.5 55 5.5 73 7.3 48 4.8 下 29 2.9 H2 Commodity 汎用製品 期 products 上 52 5.2 22 2.2 H1 期 12.8 128 107 10.
Slide 23: Topics
Topics 22
Slide 24: Topics by Basic Policy of 2023-2025 Medium-Term Management Plan
Topics by Basic Policy of 2023-2025 Medium-Term Management Plan (1) Strengthening of New Product and New Technology Development Capabilities • Preparations to establish Kawasaki Research Laboratory • Medical care business (2) Increase in Overseas Net Sales • Establishment of a new company in China •
Slide 25: Kawasaki Research Laboratory and Medical Care Business
Topics (Strengthening of New Product and New Technology Development Capabilities) Preparations to Establish Kawasaki Research Laboratory 3 We plan to open Kawasaki Research Laboratory in 2024 as a new research base in the Toagosei Group. 4 Purposes of Establishing Kawasaki research Laboratory 5 • To
Slide 26: New Company in China and Global Expansion of Aron Alpha
Topics (Increase in Overseas Net Sales) Establishment of a New Company in China • We established Toagosei (Shanghai) Management Co., Ltd. in May as a central base for our sales, development and management operations in China. • This will accelerate the pace of our development of the Chinese market i
Slide 27: Initiatives toward Carbon Neutrality
Topics (Contribution to the Realization of a Sustainable Society) Initiatives toward Carbon Neutrality Target: Reduce greenhouse gas emissions by 50% by 2030 (compared to the level in 2013) 〇 Consider in-house possession of 〇 Start sales of GRiNABLE renewable energy power environmentally-friendly ge
Slide 28: Growth Driver (1) (Mobility Related)
Growth Driver (1) (Mobility Related) Adhesive Materials Business Net Sales of Automotive Battery Adhesives ■ Automotive Battery Adhesives (Results and Forecast) Our adhesives are currently being (FY2021 = 100) adopted one after another in new hybrid 500 vehicles equipped with bipolar nickel- 400 met
Slide 29: Growth Driver (2) (Semiconductor Devices Related)
Growth Driver (2) (Semiconductor Devices Related) Performance Chemicals Business ■ High-purity liquid hydrogen chloride ■ High-purity caustic potash ■ High-purity acrylic polymers Applications: Washing and polishing when manufacturing semiconductor devices Net Sales of High-purity Liquid Hydrogen Ch
Slide 30: Toagosei Group’s Initiatives to Improve Our Price-to-Book Ratio (PBR)
Toagosei Group’s Initiatives to Improve Our Price-to-Book Ratio (PBR) 29
Slide 31: Our Recognition of Our Current Situation
Our Recognition of Our Current Situation Our Current Situation We have continued to have a price-to-book ratio (PBR) of less than 1x according to the market valuation of our group since 2018. → The slump in our return on equity (ROE) due to an imbalance between our operating income and net worth is
Slide 32: Measures to Improve Our PBR
Measures to Improve Our PBR 2027年にROE8%を実現した上で、PBR1倍超えの実現を目指す。 We will aim to achieve a PBR of 1x or more upon achieving an ROE of 8% by 2027. Strengthen development capabilities and expand overseas in the mobility, モビリティ・半導体・メディカルケア分野の開発力強化と海外展開 semiconductor and medical care fields ・研究開発力強化による高機能製
Slide 33: Numerical Targets until Achieving an ROE of 8%
Numerical Targets until Achieving an ROE of 8% 2022 2025 2027 Net sales 160.8 billion yen 183.0 billion yen 205.0 billion yen Growth Operating income 14.3 billion yen 20.0 billion yen 24.0 billion yen strategy EBITDA 25.0 billion yen 32.0 billion yen 38.0 billion yen ROE 6.1% 7.3% 8% or more 2022 20
Slide 34: Growth Strategy: Priority Items by Segment
Growth Strategy: Priority Items by Segment Consolidated Operating 成長ドライバー Growth drivers モビリティ、半導体分野 Mobility and semiconductor fields 連結営業利益目標 Income Targets 第4の柱 Fourth pillar セルロースナノファイバー、メディカルケア Cellulose nanofibers and medical care 2025年200億円 20.0 billion yen by 2025 24.0 billion yen by 2027 St
Slide 35: Financial Strategy: Strengthening of Shareholder Returns
Financial Strategy: Strengthening of Shareholder Returns We will strengthen shareholder returns and control the size of our net worth. • We will strengthen shareholder returns aiming for consolidated total shareholder returns of 100% during the period of our current medium-term management plan (2023
Slide 36: Non-financial Strategy: Promotion of the Active Participation of Diverse Human Resources
Non-financial Strategy: Promotion of the Active Participation of Diverse Human Resources Human Capital Strategy to Support Our Growth Strategy 1. Proactive Recruitment of Specialist Human Resources and Utilization of External Resources • Proactively recruit specialist human resources (medical care a
Slide 37: Appendix
Appendix 36
Slide 38: ESG Initiatives (E, S)
ESG Initiatives Jun. 2019 Endorsed the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) Aug. 2021 Held an event for the Riko Challenge (science and technology challenge) organized by the Cabinet Office, Ministry of Education, Culture, Sports, Science and Technology (
Slide 39: ESG Initiatives (G)
ESG Initiatives Mar. 2019 Abolished anti-takeover measures Mar. 2019 Elected a female director for the first time Mar. 2020 Introduced a restricted share remuneration system for directors Oct. 2021 Revised the Toagosei Group Basic Policy on Corporate Governance • Aim for improved shareholder returns
Slide 40: Sub-segment Year on Year Comparison of Net Sales ①
Sub-segment Year on Year Comparison of Net Sales ① Year-on-year Comparison Commodity Chemicals 2Q 1Q to 2Q FY2023 FY2023 Reason for the Change Business Accounting Cumulative Period Total Sales volume decreased, but net sales increased due to Inorganic chemicals 114% 119% price revisions from the pre
Slide 41: Sub-segment Year-on-Year Comparison of Net Sales ②
Sub-segment Year-on-Year Comparison of Net Sales ② Year-on-year Comparison Adhesive Materials 2Q 1Q to 2Q FY2023 FY2023 Reason for the Change Business Accounting Cumulative Period Total Net sales decreased slightly due to a decrease in sales volume For consumer use: Decrease in number of visitors to
Slide 42: Sub-segment Year on Year Comparison of Net Sales ③
Sub-segment Year on Year Comparison of Net Sales ③ Year-on-year Comparison 2Q 1Q to 2Q Plastics Business FY2023 FY2023 Reason for the Change Accounting Cumulative Period Total Net sales decreased due to a decrease in sales Piping equipment 93% 90% volume because of little progress in the number of p
Slide 43: Quarterly Net Sales by Segment
Quarterly Net Sales by Segment (Millions of yen) FY2022 FY2023 Full- 2H Full-year 1Q 2Q 3Q 4Q year 1Q 2Q (forecast) (forecast) Commodity 15,941 19,079 19,315 19,594 73,929 17,243 17,859 39,098 74,200 Chemicals Polymer and Oligomer 9,116 8,884 8,921 8,886 35,807 8,525 7,900 18,675 35,100 Adhesive 2,7
Slide 44: Quarterly Operating Income by Segment
Quarterly Operating Income by Segment (Millions of yen) FY2022 FY2023 Full- 2H Full-year 1Q 2Q 3Q 4Q year 1Q 2Q (forecast) (forecast) Commodity 1,769 2,094 2,154 790 6,807 1,165 1,040 3,295 5,500 Chemicals Polymer and Oligomer 1,317 983 1,069 889 4,258 809 530 1,561 2,900 Adhesive 77 (18) (26) (288)
Slide 45: Earnings forecasts disclaimer
The earnings forecasts include forecasts based on information available as of the date of the publication of this document. Actual results may differ to the figures contained herein due to various factors which may change in the future. This document is not intended to solicit investment. Please