Mitsu chem 20101208-3


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Mitsu chem 20101208-3

  1. 1. Mitsubishi Chemical Holdings Group Presentation of Mid-term Management Plan Investors Meeting December 8, 2010The forward-looking statements are based largely on information available as of the date hereof, andare subject to risks and uncertainties that may be beyond company control. Actual results could differlargely due to numerous factors, including but not limited to the following: Group companies engagein businesses across many different fields, such as information and electronics, performanceproducts, polymers and processed products, pharmaceuticals, carbon and inorganic products, andpetrochemicals, and these businesses are subject to influences such as world demand, exchangerates, price and procurement volume of crude oil and naphtha, market price trends, speed intechnology innovation, National Health Insurance price revisions, product liabilities, lawsuits, lawsand regulations.
  2. 2. In attendance on company side: P4: Review of APTSIS 10 APTSIS 10 got off to a difficult start, as we had toMitsubishi Chemical Holdings Corporation (MCHC) push back the announcement from February 2008 toYoshimitsu Kobayashi May that year in light of a major accident at theRepresentative Director, Member or the Board, Kashima Plant. And after September 15, 2008, whenPresident & Chief Executive Officer(Representative Director, Member or the Board, Lehman Brothers filed for bankruptcy protection, wePresident and Chief Executive Officer,Mitsubishi Chemical Corporation) revamped our APTSIS 10 slogan as, “Respond to economic contraction by business reform,Shotaro YoshimuraRepresentative Director, Member of the Board, accelerating innovation, and leaping ahead.”Senior Managing Executive Officer(Member of the Board,Senior Managing Executive Officer, P5: Operating Results under APTSIS 10Mitsubishi Chemical Corporation) Here, we present our operating income and netHitoshi OchiMember of the Board, Managing Executive Officer income under phases 1 and 2 of the KAKUSHIN Plan and APTSIS 10. I’d like you to look at operatingMitsubishi Tanabe Pharma Corporation income and earnings after adjusting for extraordinaryMichihiro Tsuchiya items because of the impact of those accountingPresident & Representative Director factors on net income. You will note that we haveMitsubishi Plastics, Inc. regained the earnings levels of fiscal 2004 throughHiroshi Yoshida 2007.Representative Member of the Board,President & Chief Executive Officer P6: Operating Income by Business SegmentMitsubishi Rayon Co., Ltd. The table on the left compares our fiscal 2010Masanao Kambara forecasts with our targets for the final year of APTSISRepresentative Director and President 10 and excludes the declines of fiscal 2008 and 2009. We targeted 190 billion yen in operating income forPresentation—Yoshimitsu Kobayashi the final year of APTSIS 10, but we will likely reachThank you all for making time to attend today’s at least 203 billion yen in fiscal 2010.gathering. We will review APTSIS 10, which endsthis fiscal year, and outline our business initiatives The Performance Products domain will representthrough 2015 under the five-year APTSIS 15. 20% of that total, with the Health Care domain contributing 37% and Industrial Materials domainP3: Agenda accounting for 42%.After reviewing APTSIS 10, we will detail APTSIS 15and finish by explaining the deployment of our The reference table on the right presents theKAITEKI indexes. Please note that we are still operating income results of growth and innovationquantifying these indexes and deliberating on how to strategies, excluding those for leaping aheadfinalize and incorporate them into our operations, so through M&As. Only our Chemicals segment willwe will only explain our basic stance today. achieve a better figure than our target, and this is largely because our terephthalic acid and coke 1
  3. 3. operations are performing quite solidly. The 11 billion Mizushima.yen change for the Chemicals segment over fiscal2010 estimates includes results from restructuring. P9: Basic Strategies and Results Under APTSIS 10, we focused on growthAt the same time, Mitsubishi Rayon, Nippon businesses, notably flat panel display componentsSynthetic Chemical Industry, and Quadrant, as well and pharmaceuticals, while significantly trimmingas other new companies in the Group, have added assets as part of structural reforms. For operations49 billion yen to operating income. under our innovation strategy, we focused acceleration on white LEDs and four lithium-ionP7: Strategic Investments for Leaping Ahead battery materials for hybrid electric vehicles. LeapingMCHC characterizes mergers and acquisitions as ahead efforts centered on promptly materializingstrategic investments. mergers and acquisitions.We have invested around 250 billion yen to bring Our prime strategic initiatives through APTSIS 10four companies into the Group, so we thus look to were to integrate Mitsubishi Rayon and restructure,increase fiscal 2010 net sales by 640 billion yen and as well as to agree to unify naphtha crackeroperating income by 49 billion yen. operations of Mitsubishi Chemical and Asahi Kasei Chemicals in Mizushima.We have also made 15 billion yen in growth strategyinvestments, notably for a capital and business We thus look to exceed our operating income target.alliance with Pioneer, spending for our OPV modules We project a return on assets of just 4.6%. Webusiness, and our acquisition of Freecom. expect to reduce greenhouse gas emissions as planned.P8: Restructuring of BusinessesThis slide presents amounts for withdrawals from That completes my overview of APTSIS 10.unprofitable businesses as a result of restructuring. P10: From APTSIS 10 to APTSIS 15We will shut down styrene monomer and polyvinyl Here, we show our key issues and goals by businesschloride chain operations in March next year. So area in the shift from APTSIS 10 to APTSIS 15.after including that impact, net sales will drop 320billion yen, reducing a 17 billion yen operating loss to We have three overall objectives. The first is tozero, with an accumulated extraordinary loss of 17 swiftly strengthen our financial position and reducebillion yen. assets. The second is to generate integration synergies with Mitsubishi Rayon. And the third is toWe pushed ahead with a project to cut fixed costs by address compliance issues and prevent recurrences.35 billion yen in fiscal 2009 and 32 billion yen in We have also set specific priorities for each businessfiscal 2010. segment.In April 2011, we plan to launch a joint venture withAsahi Kasei to unify naphtha cracker operations in 2
  4. 4. P11: APTSIS 15 to demands for sustainability, the environment, andThe prime focus of APTSIS 15 is on orchestrating new energy. The other will be China, India, andgroup strengths to generate synergies. The elsewhere in Asia, where the main preference will bechallenge is to realize such synergies not only commodities.between our four core Group companies but alsowith our alliance partners. P14: Aspirations 2025 As under APTSIS 10, we have positionedWe have also formulated the KAITEKI concept to Sustainability, Health, and Comfort as our three mainidentify the extent to which we can contribute as a decision criteria in launching new businesses and inchemical enterprise to addressing such concerns as growing existing operations.environmental, population and water and otherresource issues for society in the 21st century. P15: MCHC’s Corporate Value We will augment traditional economic benchmarks,So, we consider orchestration and KAITEKI as major like return on equity, sales, and operating income,focuses. with KAITEKI values, which encompass sustainability for the planet, humankind, and society.P12: Aspirations 2025 and Goals 2015 We aim to quantify KAITEKI values, internallyWe applied the same techniques as for APTSIS 10. assess and apply them, disseminate them externally,We are exploring what we should do now in light of and ultimately position them as industry standards.the projected impacts 10, 20, and 30 years ahead. So, MCHC’s corporate value will be the sum ofP13: Vision 2025—Global Trends economic and KAITEKI values.To summarize, a major focus in terms of theparadigm shift we anticipate is how the chemicals P16: Goals 2015industry can contribute to sustainability, switch to For 2015, we target 400 billion yen in operatingrenewable resources and energy, and address income, of which 330 billion yen would come fromenvironmental, water, and population issues. our growth and innovation strategies, and another 70 billion yen would be from leaping ahead. We look forAs populations age, we question whether the a return on assets exceeding 8%, a netconventional blockbuster sales model will be debt-to-equity ratio of 1.0, an overseas sales ratio ofsustainable and we do not believe that allocating as more than 45%, and net sales of around 5 trillion yen.much as 100 billion yen or more to R&D will One of our KAITEKI index goals will be to lower ournecessarily guarantee positive results. It will likely environmental impact by 30% from fiscal 2005become vital to personalize overall healthcare and to levels.look into systematizing healthcare solutions. P17: Vision 2015—Revenues and OperatingIt will be crucial to address two world domains. One Incomewill be Europe, the United States, and Japan, where For fiscal 2010, we project net sales of 3.2 trillion yenthe prime focus will be high added value in response and operating income of 203 billion yen. 3
  5. 5. Contributions to operating income from the As in APTSIS 10, next-generation growthPerformance Products, Health Care, and Industrial businesses include organic photovoltaic modulesMaterials domains will not be of equal amounts. By and materials, organic photo semiconductors,fiscal 2015, however, we should generate 5 trillion healthcare solutions, and sustainable resources. Weyen in net sales and 400 billion yen in operating added advanced performance products andincome, and our portfolio should draw on equal agribusiness solutions to the mix under APTSIS 15.operating income contributions from those three We reduced the number of next-generation growthdomains. business from seven under APTSIS 10, to six. That is because we have placed lithium-ion batteryP18: APTSIS 15 Strategies and Initiatives materials and white LED lighting and materials in theThe basic strategies slogan of APTSIS 15 is to growth business category as they now generate“Grow, innovate, and leap ahead by orchestrating more than 10 billion yen in sales.the Group’s strengths.” We aim to become a Groupthat generates synergies in pursuing strategies of We have 11 growth businesses. They include flatgrowth, innovation, and leaping ahead. panel display components, performance composite materials, high-performance molding products,P19: Assumptions specialty chemicals, water treatment systems andIn formulating APTSIS 15, we assumed that the services, pharmaceuticals, high-performanceprice of naphtha would be 50,000 yen per kiloliter graphite, performance polymers, and MMA/PMMA.through fiscal 2012 and 55,000 yen per kiloliterthrough fiscal 2015. That would mean oil would be Our cash-generating businesses are cash cows,95 dollars a barrel through fiscal 2012 and 105 having operated for a long time and providing highdollars a barrel through fiscal 2015. We assume an rate of 80 yen to the dollar. We expectdrug price revisions every two years, with the use of We have 15 businesses in the category “to begenerics expanding. restructured”, most of which are now small businesses.P20: Business PortfolioThe chart on this slide presents our portfolio of four I will be explaining our Performance Products,businesses. They are next-generation growth Health Care, and Industrial Materials operations inbusinesses, growth businesses, cash-generating terms of these four categories.businesses (businesses that may not producesignificant growth but nonetheless generate cash), P21: Strategiesand businesses that need restructuring. We have The basic stance of APTSIS 15 is to keep generatingcategorized these businesses according to synergies, improving our financial position, andprofitability, including the return on invested capital, reforming our business structure. Our growthas well as market share and growth, and their strategy is to accelerate our transformation to deliverattractiveness. high-performance products and high-value-added businesses and to expand green businesses. This 4
  6. 6. strategy also seeks to bolster our drug development As well as organic photovoltaic modules andpipeline to fulfill unmet medical needs beyond 2015 materials, organic photo semiconductors, healthcareand to operate globally, particularly in Asia. solutions, and sustainable resources, our next-generation growth businesses now includeP22: Growth Strategy agribusiness solutions and advanced performanceI will now present our basic approaches in our three products, which I will detail a little P24: Investments and R&DIn Performance Products, we will draw on the As I explained earlier, we aim to generate net salesexpertise of the cluster of our four business of 5 trillion yen and operating income of 400 billioncompanies to build high-value-added businesses, yen by fiscal 2015. To that end, over the next fiveexpand green businesses, and accelerate our global years we will invest roughly 1 trillion yen, spendingexpansion. 750 billion yen on R&D and 500 to 600 billion yen on M&A.In Health Care, we will employ life cyclemanagement to increase the sales of Remicade and Most of the investments will be on the Performancekey major products. We will step up efforts to Products domain, which comprise the Electronicsmaximize profits from new ethical drugs and Applications segment and the Designed Materialsincrease drug approvals. We will also accelerate the segment, and the Health Care domain.globalization of our operations and strengthen ourpipeline. P25: Leaping Ahead (M&A) As explained a littler earlier, our M&As will largely beIn Industrial Materials, we will accelerate for the Performance Products and Health Careglobalization in businesses in which we are the domains, and we plan to accelerate globalnumber one or two player, and will strengthen ties expansion.with regional partners. We will pursue balancedgrowth in our MMA and PMMA product chain. At the P26: Performance Productssame time, we will continue to restructure in Japan, I will start by talking about the Performance Productscentered on our naphtha cracker operations. domain.P23: Strategy for Innovation P27: Performance Products—StrategiesI will now outline our approach for six Our basic strategy is to further add value andnext-generation growth businesses. accelerate global expansion, centered on green businesses.We have recategorized white LED lighting andmaterials, lithium-ion battery materials, and P28: Performance Products—Growth Strategy 1automotive chemical components as growth By 2015, we aim to increase sales of performancebusinesses. composite materials from the current 42 billion yen to 110 billion yen. 5
  7. 7. In carbon fibers, the addition of Mitsubishi Rayon has production of this material next year. We rolled outenabled us to generate various synergies, bolster Verbatim-branded lighting in Europe in Septemberour lineup, and broaden our product chain and this We will leverage increased capacity tocultivate core technologies. The Designed Materials domain is also a major strategic priority for us.In alumina fibers, where we are doing very well, weaim to maintain our top market share by expanding We seek to become a global leader in lithium-ionbeyond applications for diesel engine emission battery materials, increasing sales from the currentcontrols. 17 billion yen to 80 billion yen by fiscal 2015. We will draw on Lucite International’s sites to build plants inIn high-performance molding products, we will Europe and the United States that each producesextend our operations from Europe to China and 10,000 metric tons annually of electrolytes,elsewhere in Asia by drawing on our integrated additionally boosting production in Yokkaichi. We willtechnologies in engineering plastics, resins, and also strengthen our capabilities in all other materials,carbon and glass fibers, principally from Quadrant. including anodes, cathodes, and separators.We have many specialty chemicals companies in the P30: Performance Products—Growth Strategy 3Group, including Chuo Rika Kogyo, Nippon In flat panel display components, we are seeingSynthetic Chemical Industry, Nippon Kasei Chemical, Samsung, LG, and Taiwanese manufacturers shift toMitsubishi Rayon, and Mitsubishi Plastics. We seek China. It is therefore vital for that we globalize ourto generate synergies from these companies, manufacturing structure and other operations,including from organizational streamlining, to centered on producing in China. To remain a leadingproduce 110 billion yen in specialty chemicals sales global player, we will concentrate investments inby fiscal 2015. OPL and PET films, acrylic resin plates for light guide plates, and color resists to generate sales of 190P29: Performance Products—Growth Strategy 2 billion yen.Green business expansion is central to our growthstrategy. In water treatment systems and services, we will expand our industrial water reclamation businessIn white LED lighting and materials, the business using membrane bioreactors, centered on PVDFmodel is based on outsourcing production and membranes, and are preparing to expand in theassembly. We will reinforce our capabilities in gallium Chinese market.nitride (GaN) substrates, phosphors, and othermaterials, and cultivate our Verbatim brand globally, P31: Performance Products—Innovationto generate 100 billion yen in sales. We are pushing Strategyahead with joint research in GaN substrates with We have started making steady progress towardProfessor Shuji Nakamura of the University of reaching our fiscal 2015 sales goals for four of ourCalifornia, Santa Barbara, and aim to begin mass next-generation growth businesses that I outlined 6
  8. 8. earlier. Vertex-deployed agents should also contribute much to earnings.P32: Performance Products—Cash-GeneratingBusinesses P37: Health Care—Growth Strategy 2Our cash-generating businesses are our cash cows In our domestic healthcare business, we arein the Performance Products domain. managing the life cycles of Remicade, Radicut, and other current main products. We aim to expand salesWe aim to maintain our global lead in recording and maintain profits by securing additional dosagemedia, while entering the LED lighting business and formulation approvals. We will deploy such newunder the Verbatim brand. Note that we are not offerings as escitalopram, MP424, FTY720, andincluding lighting revenues in our net sales figures. TA-7284 to maximize domestic earnings.In performance films, we will step up our expansion P38: Health Care—Growth Strategy 3into medical, battery, and other applications. Our main overseas priorities are on the United States and China. In China, we are cultivatingIn food ingredients, we will strengthen our markets for Radicut and Talion. The prime focus iscapabilities in erythritol and other fermentation on securing royalties for FTY720, licensed out totechnologies, and will look into cultivating the Novartis, and TA-7284, licensed out to Johnson &Chinese market. Johnson.P33: Performance Products—Operating Income Another priority is to build our market presence byand Resource Allocation Plans securing early approvals, including for such renalWe plan to increase R&D spending by 30%, treatments as MCI-196 and MP-146, which weinvesting a relatively large 440 billion yen over five developed in-house and are looking to marketyears. independently in the United States and Europe.P35: Health Care Strategies P39: Health Care—Innovation StrategyI will not discuss this slide today, as I have already Under APTSIS 15, we look to build on the APTSISoutlined our healthcare approach. 10 goal of cultivating personalized medicine capabilities, while offering both treatment andP36: Health Care—Growth Strategy 1 preventive care. Mitsubishi Tanabe Pharma,This slide shows our current drug pipeline. We do Mitsubishi Chemical Medience, and other Groupnot have so many substances in Phase 1, but we companies already offer medical and healthcarehave quite a solid lineup in Phase 2 and 3, and those solutions, and we will leverage synergies to usein the pink boxes are expected to contribute Mitsubishi Tanabe Pharma’s vaccines and Mitsubishisignificantly to profitability. FTY720 is undergoing Chemical Medience’s information services for peoplePhase 2 trials in Japan. It recently received U.S. and with health insurance in broadly cultivatingRussian approval, and sales should start first in the healthcare solutions.United States. MP424, MP513, TA-7284 and other 7
  9. 9. P40: Health Care—Cash-Generating Businesses sales of around 200 billion yen each. We will positionWe aim to increase sales from Mitsubishi Chemical them for the future by improving processMedience’s diagnostics and support for new technologies and minimizing costs, including in thepharmaceutical development from 81 billion yen in PTA, coke, polypropylene, and phenol chains.fiscal 2010 to 115 billion yen in fiscal 2015. We willbuild this area into a cash cow, drawing on a clinical P44: Industrial Materials—Growth Strategytrial collaboration with Tsukuba University—the first We look for 430 billion yen in fiscal 2015 sales fromsuch effort between industry and academia in our MMA and PMMA businesses. We will reopenJapan—and a medical IT analysis service that we plants and take other steps to attain a global marketare working on with NTT Data. share of 45% for these products. We will push ahead to secure a market share of 60% to 80% in lightIn generics, we are targeting fiscal 2015 sales of 50 guide plates for flat panel displays.billion yen on the strength of the launches of majorproducts and the creation of a low-cost In performance polymers, we will cultivate globalmanufacturing and sales structure. automotive and healthcare demand.P41: Health Care—Operating Income and Our high-performance graphite strategy is to secureResource Allocation Plans coal tar sources, largely from China, and draw onWe will invest in biologics technologies and facilities. technology transfers in our knowledge business forWe will lift R&D spending from the average 73 billion growth.yen allocated annually under APTSIS 10 to 82 billionyen annually under APTSIS 15. P45: Industrial Materials—Global Operations China and other Asian markets will be central to ourP43: Industrial Materials—Strategies globalization.Our priorities for Industrial Materials, our third keybusiness domain, are to globalize and shift to We are moving forward with the Alpha Project inhigh-performance products. Saudi Arabia for MMA monomers.Our growth strategy is to strengthen collaboration I will detail our collaboration with SINOPEC a littlewith regional partners, particularly in the MMA and later.PMMA chain, performance polymers, andhigh-performance graphite, particularly needle coke. P46: Industrial Materials—New Process for C3/C4 and Sustainable ResourcesOur innovation strategy is to cultivate sustainable To prepare for reduced cracker production capacityresources, centered on polymers made from and possible C3 and C4 shortages, we are makingbiomass resources, and to contribute to the good progress on a project with JGC to makeenvironment and carbon sustainability for society. propylene from dimethyl ether. With tight demand and supply conditions for C4, we are working onMany of our cash-generating businesses provide process technologies to convert butane to crude 8
  10. 10. butadiene. And while it will take several decades to Mitsubishi Chemical and Asahi Kasei Chemicals inreach fruition, we will make preparations for Mizushima and flexible downsizing will be thesustainable resource–based crackers and centerpieces of restructuring. In Kashima, we arebiorefineries. undertaking regional partnerships to lower costs and will explore collaboration with refineries. DependingP47: Industrial Materials—Innovation Strategy on circumstances, we will consider a single crackerOne example of sustainable resources is the use of in Mizushima and collaboration there with refineries.isosorbide in bio-based engineering plastic offeringoutstanding optical properties for flat panel displays. P50: Industrial Materials—Operating Income andWe are collaborating with PTT of Thailand to lower Resource Allocation Planthe costs of GS Pla. We will cultivate bio-based Here, we plan to increase investments in MMA andpolyethylene produced by Braskem of Brazil. other areas, while lowering R&D spending.Mitsubishi Plastics will build its polylactic acidcompounds and other businesses. P51: Industrial Materials—Operating Income by SegmentP48: Industrial Materials—Cash-Generating With total operating income of 400 billion yenBusinesses planned for fiscal 2015, we anticipate a goodIn PTA, we aim to generate 260 billion yen in net balance from three main drivers, comprised of 120sales, lowering costs, refining our technologies, billion yen from Health Care, 130 billion yen fromstrengthening our knowledge business, and Performance Products, and 105 billion yen frompartnering with Chinese and Indian companies. Industrial Materials.In coke, we seek 250 billion yen in net sales, and will P53: Global Operationsdeploy comprehensive coal chemistry. Overseas businesses currently account for 34% of net sales. We seek to raise this proportion to 45% byWe will increase sales of PP and compounds, fiscal 2015. These businesses currently representparticularly for the automotive market. 26% of operating income, and we seek to increase that to 50% by fiscal 2015, drawing on royalties fromIn PHL, BPA, and PC, we will launch a BPA and PC Johnson & Johnson, Novartis, and other companies.joint venture with China’s SINOPEC in June 2011,and aim to generate 40 billion yen in sales from that P55: Synergiesoperation in fiscal 2015. PHL, BPA, and PC When we announced our agreement on Novemberoperations should thus produce an aggregate 135 19, 2009, to integrate with Mitsubishi Rayon, webillion yen in net sales. We ultimately aim to expand projected 10 billion yen from synergies. We now lookoverseas by using a non-phosgene DPC process. to generate 43 billion yen from synergies by fiscal 2015.P49: Industrial Materials—Restructuring ofEthylene Center and Optimization of Derivatives P57: Enhancing Shareholder ValueIntegration of ethylene center operations of We continue to target a payout ratio of at least 30% 9
  11. 11. to boost shareholder value. We will prioritize a corporate activities decision criteria of Sustainability,balance of stable dividends while maintaining Health, and Comfort in exploring new businesses,sufficient internal reserves to fund business while maintaining a balance between our Healthdevelopment. Care, Performance Products, and Industrial Materials business domains.P58: Management of SustainabilityWe are currently exploring sustainabilitymanagement because we consider it important inmanagement to go beyond economic benchmarks toencompass the public interest and the environment.P59: KAITEKI ActivitiesCSR forms part of our KAITEKI values.P60: KAITEKI IndexesWe are looking to quantify our Sustainability, Health,and Comfort index components.P61: TargetsWe plan to monitor overall evaluationsencompassing everything from procurement toproduction and stakeholders, harnessing PDCAcycles in this process.P62: Organization for KAITEKI ProjectWe will push ahead with a common approach,including for business companies, with a chiefKAITEKI officer overseeing efforts.P63: The KAITEKI Institute: Focuses andProgressThis institute began operating in April 2009. MCHC iscurrently considering how best to prepare for thenext 20 to 50 years.P64: Aspiration—The MCHC GroupThe philosophy of “Good Chemistry for Tomorrow”underpins everything that the Group does. Ouraspiration is to realize KAITEKI by factoring in our 10