Nippon Paint Holdings Co., Ltd. · TSE:4612
Nippon Paint — Investor Presentation (February 2020)
52 slides from Nippon Paint's investor presentation, Feb 21, 2020
Slide 1: Nippon Paint Holdings
Nippon Paint Holdings ～Japan Origin, Japan-Singapore Partnership, a Global Company～ February 21, 2020 Nippon Paint Holdings Co., Ltd. Chairman, President & CEO Masaaki Tanaka
Slide 2: Table of Contents
Table of Contents 1. Introduction to Nippon Paint Holdings 2. Our Strengths 3. Development of Our Partnership with Wuthelam 4. Future Strategy and Management Direction 5. Financial Highlights
Slide 3: Introduction to Nippon Paint Holdings
Introduction to Nippon Paint Holdings Image: Beijing National Stadium (China)
Slide 4: Overview of Nippon Paint Holdings
Overview of Nippon Paint Holdings Established presence as the No. 1 paint company in Asia Establishment of Nippon Paint 1881 Japan's first and largest paint company with a 140-year history Revenue (FY2019) JPY 692bn Strong growth through high growth in Asia and expansion through M&A Market Capit
Slide 5: Our History
Our History Fusion of Nippon Paint's 140-year history and Wuthelam's Asian business platform 2014 Migration to a Holdings Company Structure and the Consolidation of Asian JVs 1881 1927 2015 Establishment of Renamed as “Nippon Paint Co., Ltd.” 1975 Separation of operating predecessor “Komyosha” 1931
Slide 6: Historical Market Capitalization and Revenues
Historical Market Capitalization and Revenues Share price rose by nearly 15 times over the past 10 years Left： TOPIX Stock Price Right： Domestic Revenue Overseas Revenue (Stock Price: JPY(1)) 2015/4 2019/9 (Revenue: JPY bn) • Restructuring of the domestic business through spin-off of Appointment of
Slide 7: Global Presence
Global Presence Expanding global network across 29 geographical locations through M&As China DIY Painting Market Share c. 36% Jan. 2016: Acquisition of remaining shares to make as a wholly-owned subsidiary 1992: Entry into market Strong relationships with European OEM One of the highest brand manufa
Slide 8: Key Features of Our Business
Key Features of Our Business Globalization accelerated by consolidating Asian JV and cross-border M&A transactions FY2014 FY2019 (JPY bn) (JPY bn) Coating Peripherals 25.5 Fine Chemicals Fine Chemicals 15.5 18.9 3%4% Automotive Other Paints Other Paints 8% Coatings Automotive 22% 59.5 6% 57.0 149.6
Slide 9: Key Features of Our Business
Key Features of Our Business Operating a wide range of paint businesses centered around Automotive coatings and Decorative paints business Paints/Coatings Business Paint Peripheral Automotive Decorative Industrial Other Paints Fine Chemicals Business Coatings Paints Coatings Consolidated Revenue （JP
Slide 10: Strength of Our Business and Our Brand
Strength of Our Business and Our Brand Wide-range of products based on advanced technology Decorative Paints Business Other Paints Business Exterior/Interior Wall Paints Anti-Corrosive Paints Automotive Refinish Betek Boya LiBang Marine Coatings DuluxGroup(Oceania) Dunn-Edwards 7
Slide 11: Strength of Our Business and Our Brand
Strength of Our Business and Our Brand Technical capabilities highly regarded across society Automotive Coatings Industrial Coatings Decorative Paints Other Paints Tokyo National Stadium* Raffles Hotel (Singapore) Wat Ratchanatdaram (Thailand) Cruise Ship Fine Chemicals Sohonzan Shitennoji Temple Be
Slide 12: Our Strengths
Our Strengths Image: Sohonzan Shitennoji Temple
Slide 13: Our Strengths
Our Strengths Market with steady growth driven by world population explosion Leading player in the growing Significant room for increase in market share 1 paint industry Wide portfolio of products ranging from Automotive to Decorative Paints High market shares in Asian markets, especially in
Slide 14: Our Strengths① Sound Growth Potential of Paint Market
Our Strengths① Sound Growth Potential of Paint Market Paint market is expected to witness strong global growth World Population 8.5 （bn people） 6.9 7.8 0.7bn (JPY tn) 3.0x 35 1.9x c. JPY30tn 30 25 c. JPY20tn 20 19 17 18 16 15 13 14 1.5x 12 10 CAGR: 4.1% 10 5 0 2009 2010 2011 2013 2015 2017 2018 2019
Slide 15: Our Strengths① Opportunity to Increase Market Share
Our Strengths① Opportunity to Increase Market Share Well-balanced business portfolio with potential to increase global share Global Market Share Business Portfolio Decorative Paints Automotive OEM/Others Sherwin-Williams Paint industry Industry ～40% ～60% Nippon Paint ～55% ～45% Holdings PPG Sherwin-
Slide 16: Our Strengths① Paint Industry Growing Globally
Our Strengths① Paint Industry Growing Globally The largest growth engine in china and other parts of Asia Europe China North America 20% 43% 51% 8% 44% 49% 6% 72% 7% 3.0% USD37.6bn 2.4% 6.9% USD29.2bn USD52.8bn Japan 26% 57% 16% USD5.7bn 0.2% Other Asian Countries South America Africa 35% 45% 48% 55
Slide 17: Our Strengths② Unparalleled Market Share Across Asia
Our Strengths② Unparalleled Market Share Across Asia Operating in 15 geographical locations including China, Malaysia, and Singapore China DIY Paint Market Share Asian Presence(1) c.36% Employees: Over 16,000 Revenue: JPY 359.2bn Operating Malaysia DIY Paint Profit: Singapore DIY Paint Market Share
Slide 18: Our Strengths② Unparalleled Brand in China
Our Strengths② Unparalleled Brand in China Leading market share in the large Chinese market with strong growth potential China Paint Market Size Entry of NIPSEA into Chinese Market Approximately 30% of the global $52.8bn paint market, with the largest 1992 Brand built on advanced technology and
Slide 19: Our Strengths② China Decorative Paints (DIY) Business Model
Our Strengths② China Decorative Paints(DIY)Business Model Achieved No.1 market share (c.36%*) through unparalleled sales network and proactive promotion Wide and diversified range of sales channels Proactive promotion City Category Top & Tier 1 Tier 2 Tier 3 & 4 Repair & Segment Existing apartment N
Slide 20: Our Strengths② China Decorative Paint (Project) Business Model
Our Strengths② China Decorative Paint(Project)Business Model Secured top market share (c.17%*) through strategic alliances with TOP100 real estate developers Channel Real Estate Industry TOP 100 TOP General Customer Developers Developers Contractor Hospital School in Country in City Coating Wall Coa
Slide 21: Our Strengths② Production Management in China
Our Strengths② Production Management in China NIPSEA China has 49 manufacturing sites across China to fully leverage the high growing market Dedicated Factory 23 黑龙江 Regional Factory 19 吉林 Integrated Factory 7 辽宁 新疆 内蒙古 甘肃 河北 宁夏 山西 山东 青海 江苏 陕西 河南 安徽 西藏 上海 湖北 浙江 重庆 湖南 江西 四川 贵州 台湾 广西 福建 云南 广东 海南 17
Slide 22: Our Strengths② Advanced Supply Chain Management
Our Strengths② Advanced Supply Chain Management Advanced production system through digital transformation and automation Digital Transformation* in NP China Dashboards in NP China Factory Automation in China * Pictures are images of digital transformation strategy 18
Slide 23: Our Strengths③ Active M&A
Our Strengths③ Active M&A Our Key M&A Track Record NIPSEA Bollig & Kemper Dunn-Edwards DuluxGroup Betek Boya (Consolidated in 2014) (2016) (2017) (2019) (2019) Locations Geography across Asia Decorative, Automotive and Decorative Decorative Decorative Business Industrial Coatings, Automotive Coating
Slide 24: Our Strengths③ Active Promotion of M&A Strategy
Our Strengths③ Active Promotion of M&A Strategy Capable of fully leveraging the advantage of industrial structure and market environment for M&A Characteristics in Paint industry Advantage in Financial Market High growth potential and stability of market Leverage capacity supported Potential t
Slide 25: Our Strengths③ Spider Web Management
Our Strengths③ Spider Web Management Building trust-based partnerships between the CEOs of regional and subsidiary companies Intra-Linked structure to generate synergies through spider web management Asia Japan CEO, NIPSEA Managing Executive Officer President, Management Company Executive Officer （A
Slide 26: Our Strengths④ Establishing Global Governance
Our Strengths④ Establishing Global Governance Enhancing transparency, objectivity and fairness of management FY2018: Appointment of 5 independent external directors (50% of total) FY2019: Establishment of Governance Advisory Committee FY2020: Transition to a company structure with Three Commit
Slide 27: Our Strengths④ Governance Structure
Our Strengths④ Governance Structure New Board structure to be proposed at the annual general meeting in March 2020 Masaaki Hup Jin Manabu Hisashi Takashi Toshio Masayoshi Masataka Miharu Tanaka Goh Minami Hara Tsutsui Morohoshi Nakamura Mitsuhashi Koezuka Inside Inside Outside Director Director Insi
Slide 28: Strength of Nippon Paint: Maximization of Shareholder Value
Strength of Nippon Paint: Maximization of Shareholder Value Maximization of shareholder value as a mission, creating wealth P/L Items Stakeholders Revenue Customers SG&A Vendors Labor costs Employees Financial Interest Expense Institutions Tax Government Net Income Shareholders Residual Value Maximi
Slide 29: Development of Our Partnership with Wuthelam
Development of Our Partnership with Wuthelam Image: Raffles Hotel (Singapore)
Slide 30: Introduction of Wuthelam Group
Introduction of Wuthelam Group Organizational Structure of Asia JV Prior to 2014 Partnership Investment company in Singapore Nippon Paint Agreement Holdings Wuthelam represented by Mr. Hup Jin Goh Long-term partnership in Asia since Minority stake Majority stake 1962 40%(1) 60%(1) JV in Asia N
Slide 31: Founder of NIPSEA Mr. Cheng Liang Goh
Founder of NIPSEA Key person in NIPSEA – Growth driver of our global business① Mr. Cheng Liang Goh 1927 Born in Singapore 1955 Set up his first paint shop in Singapore and became the main local distributor of Nippon Paint - 1962 Established Pan Malaysia Paint Industries Pte.Ltd. (now Nippon Pa
Slide 32: Founder of NIPSEA Mr. Hup Jin Goh
Founder of NIPSEA Key person in NIPSEA – Growth driver of our global business② Mr. Hup Jin Goh Chairman of Wuthelam Holdings Ltd, Nipsea Holdings International Ltd and Nipsea Pte ltd Graduated with a Chemical Engineering Degree from Tokyo University and MBA from University of California, Los Ang
Slide 33: History between Nippon Paint and Wuthelam
History between Nippon Paint and Wuthelam Fusion of Nippon Paint's 140-year history and Wuthelam's Asian business platform 1881 1927 Predecessor Renamed as “Nippon Paint Co., Ltd.” 1975 “Komyosha” 1931 Entry into U.S. Market established Headquarters moved to Osaka 2016-19 1967-84 Globalization Const
Slide 34: Case study of Collaboration with NIPSEA Group
Case study of Collaboration with NIPSEA Group Collaboration with NIPSEA Group accelerated Promoting productions of next-generation paint products for Japanese manufacturers in China NPAU & NPAU(1) contributed to development of new materials for NIPSEA automakers and establishing mass production sy
Slide 35: Regarding 100% acquisition of Asian JV
Regarding 100% acquisition of Asian JV BoD to start discussion for 100% acquisition of Asia JV under the new governance structure securing minority shareholder protection, with independence and objectivity of the board Collaboration with NIPSEA has improved since 2014 consolidation. Continue to pu
Slide 36: Future Strategy and Management Direction
Future Strategy and Management Direction Image: MICA (Singapore)
Slide 37: Future Strategy and Management Direction
Future Strategy and Management Direction Promoting each strategy under notion that paint is a growing industry globally 1• SDGs/ESG as the core of management for value creation 2• Investment in domestic manufacturing sites to enhance productivity 3• Growth through M&A 4• Investing in R&D to address
Slide 38: SDGs/ESG as the Core of Management for Value Creation
1 SDGs/ESG as the Core of Management for Value Creation Maximizing shareholder value through addressing social issues through our 4 key strengths under spider web management Social Issues Nippon Paint Holdings Around Paint Output Outcome MSV Model Industry Strength③ Effective M&As under Climate Chan
Slide 39: SDGs/ESG as the Core of Management for Value Creation
1 SDGs/ESG as the Core of Management for Value Creation Acceleration of SDGs/ESG related strategies by organizing ESG Promotion Department and ESG Committee Formation of ESG Promotion Department and ESG Committee 1/1/2020: Formation of ESG Promotion Division Feb. 2020: Formation of ESG Committee
Slide 40: SDGs/ESG as the Core of Management for Value Creation
1 SDGs/ESG as the Core of Management for Value Creation Received Environment Minister’s Award for Global Warming Prevention Activity Nippon Paint Marine Co., Ltd. was awarded for the Countermeasure Technology Advanced Introduction Category for its work on the theme of "Reduction of fuel consumptio
Slide 41: Investment in Domestic Manufacturing Sites to Enhance Productivity
2 Investment in Domestic Manufacturing Sites to Enhance Productivity Restructuring supply chain to address depopulation issue and improve our productivity Restructuring supply chain models including maintenance of current manufacturing sites Improving operational efficiency through digitalizatio
Slide 42: Growth through M&A
3 Growth through M&A Promoting domestic/cross-border M&A which maximizes shareholder value Periodical review of potential target lists and pipeline Pursuing EPS accretion as well as returns exceeding on cost of capital Disciplined capital allocation and prioritization Synergy creation under
Slide 43: Investing in R&D to Address Social Issues
4 Investing in R&D to Address Social Issues Accelerating open innovation to offer more colorful, comfortable, and safer lives for all Maximizing the allure of the paint through collaboration of collective Reducing capabilities of global environmental impact technologists and external Reducing Social
Slide 44: Further Improvement of Global Governance (1)
5 Further Improvement of Global Governance (1) Global headquarters in Kyobashi, Tokyo in April 2020 In April 2020, global headquarters to be established for closer communication with countries around the world Cutting-edge digital technology enables agile decision-making Entrance of the office (
Slide 45: Further Improvement of Global Governance (2)
5 Further Improvement of Global Governance (2) Establishing a global audit system Enforcing supervisory function of management by forming audit committee with appointing majority of them as the external directors Clarifying operational initiative between audit committee and corporate audit resul
Slide 46: Financial Highlights
Financial Highlights Image: Wat Ratchanatdaram (Thailand)
Slide 47: Historical Financials
Historical Financials Revenue （JPY bn） 800 692.0 130.0% 535.7 605.3 623.0 600 470.2 80.0% 5.0% 105.6% 400 5.0% 227.4 233.4 260.6 260.6 216.5 222.3 30.0% 200 -12.2% -9.6% -2.3% 28.7% 11.7% 0.0% 2.9% 11.1% 0 -20.0% (1) (2) 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2016/12 2017/12 2018/12 2019/1
Slide 48: Historical Financials
Historical Financials Earnings Per Share （JPY） 700 180 650 170 600 160 140 122 120 116 114 108 107 100 94 80 76 60 54 47 40 33 20 0 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2016/12(1) 2017/12 2018/12(2) 2019/12 EPS (1) Account closing month was changed to December from FY2016/12. Revenues is
Slide 49: Historical Financials
Historical Financials Leverages （JPY bn） 400 0.80x 百 366.5 0.66x 0.70x 300 0.60x 0.50x 200 0.40x 0.22x 0.30x 100 0.14x 0.20x 27.0 18.0 1.9 0.10x 0 0.01x (29.8) 0.00x (41.8) (20.1) (37.5) (63.4) (0.10x) (100) (84.6) (99.1) (0.08x) (0.07x) (0.15x) (0.13x) (0.12x) (0.20x) (0.18x) (0.21x) (200) (1) (2)
Slide 50: Historical Multiples
Historical Multiples PER 60.0x 49.3x 40.0x 35.3x 29.4x 30.8x 26.7x 18.6x 20.0x 10.3x 13.5x 12.4x 12.8x 6.8x 0.0x (1) (2) 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2016/12 2017/12 2018/12 2019/12 PER PBR 4.0x 3.3x 2.9x 3.0x 2.3x 2.4x 2.1x 2.2x 1.5x 1.7x 2.0x 1.3x 1.2x 1.2x 1.0x 0.0x 2010/3 201
Slide 51: Capital Policy
Capital Policy While maintaining financial discipline, NPHD places higher priority to investments for future growth thus focusing on providing higher Total Shareholder Return (TSR) through EPS accretion Financial Discipline Disciplined Pursuing optimal capital structure Financials with balanced le
Slide 52: The forward-looking statements in this document are based on information available at the time
The forward-looking statements in this document are based on information available at the time of preparation and involve inherent risks and uncertainties. Accordingly, the actual results and performance of Nippon Paint Holdings Co., Ltd. and the Nippon Paint Holdings Group may differ significantly
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