Asahi kasei Mid-term Management Plan

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Asahi kasei Mid-term Management Plan

  1. 1. “For Tomorrow 2015”New Mid-term Management Initiative (FY2011–2015) May 2011 1
  2. 2. Contents1. Review of “Growth Action – 2010” 4–72. Basic concepts of “For Tomorrow 2015” 9–123. Business strategy (1) Expansion of world-leading businesses 14 (2) Creation of new value for society 15–244. Reformation of corporate systems 26–285. Plans by business sector 30–31 Disclaimer: The forecasts and estimates shown in this document are dependent on a variety of assumptions and economic conditions. Plans and figures depicting the future do not imply a guarantee of actual outcomes. 2
  3. 3. 1. Review of “Growth Action – 2010” 3
  4. 4. Growth Action – 2010 Ishin2000 Ishin-05 Growth Action – 2010 FY 1999–2002 FY 2003–2005 FY 2006–2010 Selectivity and Selective diversification Business portfolio focus Creation of cash flow realignment for expansion Disposal of Management speed and growth negative legacies and autonomy 戦略投資の実行 Strategic investment Expanding global Shifting to businesses growth Enhancing domestic (¥ billion) businesses FY 2005 FY 2010 results initial targetNet sales 1,498.6 1,800Operating income 108.7 150Net income 59.7 80ROE 11.8% ≥10% 4
  5. 5. Review of Growth Action – 2010Implementation of strategy for further growth in line witheconomic changesExpanding global businesses – World competitive petrochemicals business • Construction of new acrylonitrile (AN) and MMA plants in Thailand, capacity expansion for AN in Korea, study on AN project in Saudi Arabia • Construction of new solution SBR plant in Singapore – Electronics • Capacity expansion for Hipore™ Li-ion battery (LIB) separator • Electronic compass business, semiconductors for cell phones and smartphones (acquisition of Toko, Inc.’s semiconductor business, etc.) – Health Care • Polysulfone hollow-fiber membrane artificial kidneys business (incl. tie-ups with Kawasumi Laboratories, Inc. and NxStage Medical) • Market entry in bioprocess equipment and advanced medical devices businessesEnhancing domestic businesses – Reinforcing pharmaceuticals business • Market launch of Recomodulin™ recombinant thrombomodulin and Famvir™ anti-herpes agent, application for approval to manufacture and sell Teribone™ (teriparatide acetate) as an osteoporosis drug – Strengthening homes business (three-story houses for urban life, peripheral businesses, etc.)Restructuring • Unified management of naphtha crackers in Mizushima, Japan; closure of polyester filament plant, etc. 5 5
  6. 6. State of financial performance Operating income D/E ratio(¥ billion) 0.65 160 Results Return to growth 0.6 Utilizing strong financial constitution for proactive 0.55 investment in growth fields 140 127.8 127.7 0.5 122.9 0.45 120 108.7 0.4 Improvement 0.35 100 0.3 Baseline for Growth Action – 2010 target 04/3 06/3 08/3 08/9 09/3 09/9 10/3 10/9 11/3 80 Growth Action – 2010 target Growth Action – 2010 target Growth Action – 2010 target Growth Action – 2010 target (¥ billion) 57.6 FY 2010 FY 2010 60 results original target 40 Net sales 1,598.4 1,800.0 35.0 Operating income 122.9 150.0 20 Net income 60.3 80.0 ROE 9% ≥10% 0 2005 2006 2007 2008 2009 2010 6
  7. 7. Toward the new mid-term initiative Ishin2000 Ishin-05 Growth Action – 2010 FY 1999–2002 New mid-term FY 2003–2005 FY 2006–2010 Selectivity Selective initiative Business portfolio and focus diversification realignment for FY 2011–2015 Creation of expansion and growth Disposal of cash flow For Tomorrow 2015negative legacies Management speed and autonomy Strategic investment Overview of Growth Action – 2010 Framework of For Tomorrow 2015 Drastic changes in the economic climate Go “back to basics” and determine the resulted in partial underachievement of plans. proper course of action in order to • Initial targets not met continue to offer value to the world • Strategy for further growth not completed Consider economic climate and trends Find the appropriate way for Asahi Kasei Improvement in financial constitution providing sufficient strength for large investments in Pursue growth in our own way growth fields. 7
  8. 8. 2. Basic concepts of “For Tomorrow 2015” 8
  9. 9. Management climateMegatrend Threat Opportunity1. Growth of developing • Increasingly intense global • Growing demand in countries competition emerging markets • Accelerated speed of change2. Maturing of the Japanese • Asahi Kasei Group’s domestic • Proposal and contribution of economy sales account for 3/4 of overall new value for social sales systems • Unprecedented natural disaster3. Limitations of the Earth1) Shortage of natural resources • Sharp rise in feedstock costs • Creation of resources • Greater advantage in • Effective utilization of resource-rich countries resources2) Global warming • More stringent environmental • New markets (for electric regulations in advanced vehicles, batteries, countries insulation)3) Environmental deterioration4. Aging population • Change in household structure • Emerging demand and and consumer behavior social needs in healthcare, • Government efforts to cut living, nursing care, etc. medical costsBased on megatrends,capturing new opportunities in anticipation of emerging social needs. 9
  10. 10. Basis for action s ie of an co s mp es in re e o pl p iti l ci op ci p g c at M so Vi in rin rou iv id f si g er in n H e P G -te th on c Pr rati at ce sei ar L rm e A s om e r , m iv of p ou Ka op geon ing G m sa s i e s an hi re Re ah lu len y r co wi in h ou ag Ka Va al an A s an em se th e p ie m he p h Hu of t ou , C vity th alt Vis en i G s e h t rou r i na an ion G ity at r tu d ce Cre Group Mission ra c o p n le m Si nv fo i ro r t Contributing to life and living nm for people around the world en t Group Slogan Creating for Tomorrow Group Mission The Asahi Kasei Group’s unchanging reason for being Group Values Shared values that must be held by the people who work in the Asahi Kasei Group Group Vision The direction in which Asahi Kasei Group business 10 activities advance
  11. 11. Vision for the Asahi Kasei Group Offering new value based on living in health and comfort and harmony with the natural environment in anticipation of changing social needs. Continuously enhancing the corporate value of the Asahi Kasei Group. (¥ billion) Net sales ¥2.5–3 trillion 300 Operating income Operating income (2011–2015) over ¥250 billion 250 Net income Long-term Net sales investment ¥1 trillion ¥2 trillion 200 Operating income ¥200 billion 150 Net income over ¥140 billion 100 Net income ¥110 billion 50 0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 ROE 9% ≥10% ROIC 7% ≥7% Overseas sales ratio 28% 32% (excl. Homes & Const. Mat.) (39%) (45%)Aiming at continuous dividends increase, with basic standard for payout ratio of 30% 11
  12. 12. Basic strategy Creating for Tomorrow – the Asahi Kasei Group is creating new things for the Group MissionMegatrends future based on the perspectives of “living in health and comfort” and and Values “harmony with the natural environment.” Basic Strategy 1. Business Strategy 2. Reformation of corporate systemsPursuit of growth Promotion of “one AK” management1. Expansion of world-leading 1. Global business expansion businesses 2. Creation of new businesses2. Creation of new value for society 3. Propagation of our mission, values, Promotion of businesses based on and vision living in health and comfort and harmony with the natural environment 4. Human resource policies1) Environment/energy-related 5. Management control,2) Residential living-related resource allocation3) Health care-related 12
  13. 13. 3. Business Strategy 13
  14. 14. (1) Expansion of world-leading businesses Development based on world leadership Expand businesses to serve global demand growth Proactive expansion of global No. 1 & No. 2 businesses to serve global demand growth in emerging markets Profit* Acrylonitrile (AN) (¥ billion) • Thailand – Plant start-up in 2011 Net sales • Korea – Capacity expansion scheduled in 120 ¥620 billion 2013 at Tong Suh Petrochemical • Saudi Arabia – Joint venture to study AN project 100 → Expansion focused on growing Asian market to gain No. 1 position in the global AN market 80 Net sales ¥430 billion Production capacity FY 2010: 750 thousand tons/year → FY 2015: 1.4 million tons/year 60 Market share in Asia: 25% in FY 2010 → 40% in FY 2015 40 solution SBR (S-SBR) • Plant start-up in Singapore (Phase I) in 2013 20 • Plant start-up in Singapore (Phase II) in 2015 → Meeting rapidly increasing demand for fuel-efficient tires 0 2010 2015 Estimated share of capacity Overseas FY 2010: 18% → FY 2015: 26% sales ratio 62% → 69%* Operating income of each business plus equity in earnings of AN affiliates. Other world-leading businesses include Hipore™ Li-ion battery separator, LSIs, dry film photoresist, artificial kidneys, Planova™ virus removal filters, Roica™ elastic polyurethane filament, photomask pellicles, etc. 14
  15. 15. (2) Creation of new value for society Creation of new social value Fields of focus Environment Residential Health Care & Energy Living Roica™ elastic polyurethane filament (spandex), Eltas™ spunbond, Lamous™ artificial suede, Chemicals Bemberg™ cupro cellulosic fiber, Leona™ nylon 66 filament, Organic and inorganic industrial Production process technology, chemicals, synthetic resin, synthetic rubber, coating materials, latex, pharmaceutical and food & Fibers materials/processing technology additives, explosives, separation and ion-exchange membranes, systems, and equipment Saran Basis of established businesses Wrap™, cling film, Ziploc™ storage bags, plastic film, sheet, and foam. Sensors, Hall elements, Hall effect ICs, mixed-signal LSIs, Hipore™ Li-ion battery separator, photomask Energy- energy- Medical pellicles, plastic optical fiber, light-diffusion plates, APR™ photosensitive resin and printing conserving Electronics equipment plate makingbattery epoxy conservingphotosensitive polyimide precursor, Sunfort™ dry devices, systems, resin, Pimel™ devices, battery applications film photoresist (DF), glass fabric for printed wiring boards. materials materials Homes & Insulation, Hebel Haus™ unit homes, Hebel Maison™ apartment buildings, condominiums, residential Unit homes, multi- Construction highly durable dwelling homes, Rental homes for land development, remodeling, real estate, home financing, Hebel™ autoclaved aerated concrete (AAC) panels, Eazetperipheral and foundationelderly Neoma™ foam construction and other piles the systems, Materials insulation panels, BasePack™ steel-frame structural components. materials businesses Pharmaceuticals including Recomodulin™, Elcitonin™, and Flivas™, diagnostic enzymes and Pharmaceuticals, Health Care reagents, APS™ polysulfone-membrane artificial kidneys (dialyzers), Cellsorba™ leukocyte medical-related adsorption columns, Planova™ virus removal filters, Sepacell™ leukocyte reduction filters. devices & systems Environment & Residential Combined-unit Health Care Energy for Living for projects for Tomorrow Tomorrow Tomorrow Combining businesses across different business units, responding to new social needs. 15
  16. 16. (2) Creation of new value for society Expansion of environment/energy-related businessesPushing diverse technology to tackle environmental challenges(¥ billion) Operating income Hipore™ LIB separator 70 In addition to No. 1 position in LIBs for electronics, establishing Net sales firm lead in technology & market for automotive LIBs. ¥300 billion 60 Sensors, power-saving LSIs New combined- unit projects Expansion of application fields and geographic markets. 50 Broad provision of new value with unique technology. Net sales Currently: From now: ¥180 billion 40 Centered on Greater focus on consumer electronics ⇒ infrastructure, automotive Established business Centered on Japan ⇒ Accelerated globalization 30 Insulation materials 20 Contributing to energy-saving society with world-leading level insulation performance (wall, roof, and floor applications) 10 Water treatment/membrane business Development of markets in China, etc. 0 2010 2015 Creation of new businesses through combined-unit projects 16
  17. 17. (2) Creation of new value for society Expansion of residential living-related businesses Providing comfortable living to more customers, more quickly Operating income Houses, apartments Fulfillment in living in a(¥ billion) • Superior structural technology and mature urban setting Net sales lifestyle innovation to anticipate 60 emerging needs in three-story and ¥570 billion two-generation urban homes. Living New combined- • Development of unique apartment environment 50 unit projects for health and buildings for the elderly, single Net sales comfort ¥470 billion women, pet owners, etc. Established • Increased market share through Interpersonal 40 business marketing meticulously aligned with bonds each area. Energy and 30 Real estate (condominium resource development, brokerage, subleasing) conservation • Maximum utilization of land value Maximum 20 through consensus-building among utilization of diverse interested parties. land value Remodeling 10 • Providing greater satisfaction to Hebel Haus™ owners through renovation aligned to lifestyle changes. 0 2010 2015 Creation of new businesses through combined-unit projects 17
  18. 18. (2) Creation of new value for society Expansion of health care-related businesses Unique products & technologies for healthy & lively longevity(¥ billion) Pharmaceuticals Operating income 40 • Expansion of Recomodulin™, launch & expansion of Teribone™ 35 Net sales • Reinforcing pipeline by in-licensing new drugs ¥210 billion • Strengthening clinical development capability in US ⇒ Step 1: sales expanding to ¥100 billion scale 30 ⇒ Step 2: global reach with new drugs, emergence New combined- unit projects as a global specialty pharma player 25 Net sales Blood purification 20 ¥120 billion (hemodialysis, apheresis) • Full coverage of Europe, North America, and emerging Established business markets 15 • Enhanced cost competitiveness (overseas manufacturing alliances) 10 • Higher product performance (launch of innovative products) 5 Bioprocess-related business • Lineup of distinctive membrane modules • Expanded sales together with bioprocess equipment 0 ⇒ World-leading process equipment and media for biologics 2010 2015 Creation of new businesses through combined-unit projects 18
  19. 19. (2) Creation of new value for society Creation of new value through “For Tomorrow” projectsIn anticipation of emerging social needs, Asahi Kasei will offer distinctivesolutions that make the most of its diversity in business and technology. Group configuration for combined-unit projects (i) Environment & Energy (ii) Residential Living (iii) Health Care for Tomorrow for Tomorrow for Tomorrow Innovative materials, Physical and emotional Seamless advanced devices, and systems for health & comfort medical treatment from generation, storage, and Creation of social bonds acute/emergency to consumption of energy in urban areas chronic levelBattery materials, LICs, Environmental Home Sensors friendliness diagnosis Emergency andenergy-saving devices Human interaction Medical IT critical care Adjacency to Cell culturing hospitals Living supportHarmony with the natural environment Living in health and comfort 19
  20. 20. (2) Creation of new value for society: Combined-unit projects (i) Environment & Energy for TomorrowNecessary perspectives:•Generation •Transmission •Battery performance •Energy conservation •Generation efficiency • Transmission efficiency (storage,performance •Battery discharge, •Energy conservation (insulation)• Eefficiency nvironmental •Environmental efficiency • Transmission ddistance • Transmission istance durability) discharge, (storage, (insulation) • Regenerative compatibility (distribution) durability) • Battery cost •Regenerative braking* compatibility (distribution) •Battery cost braking* Power Power Power Power generation transmission storage consumption Living• Advanced solar cell • Next-generation storage • Next-generation energy-saving devices materials (encapsulant, battery materials (electrodes, (UV LED, next-generation power anti-fouling coating, etc.) electrolyte, functional management semiconductors)• Next-generation solar separators, etc.) • LED materials (encapsulant, etc.) cells, etc. • Systems using LIC modules† and LICs Households Households* Converting heat energy generated from braking into electrical energy, and storing it as power.† Modules combining LICs and control circuits, for use in backup power supplies, electric vehicles (EVs), hybrid electric vehicles (HEVs), etc. 20
  21. 21. (2) Creation of new value for society: Combined-unit projects (ii) Residential Living for Tomorrow Fresh perspectives for urban development • Interactive condominiums, purpose- specific condominiums • Coordinated medical/residential Necessary perspectives: development, revitalization of • Emotional and small/mid-size healthcare facilities physical aspects of • Communities for “sustainable living”Living inhealth and Individuals living • Safety and security Fresh perspectives forcomfort and families • Comfortable living remodeling • Preserving asset • Interactive living value (cohousing*, etc.) • At-home medical care • New home fixtures • Sense of community Fresh perspectives for Communities • Sense of security • Tasteful aesthetics fixturesHarmony and • Geothermal heating, sheet-type solar power generationwith the surroundings • Cabinet-sized “vegetable factory”natural • Utilizing the blessings • Energy conservation monitoring,environ- of nature health monitoring systems (utilizing sensor technology)ment Global • Energy conservation • Environmental Others environment friendliness • Support services • Waste reduction (from construction until after moving in) • Addressing new needs • Interior, exterior, gardening (EV charging, etc.) • Second-hand home brokerage/agency • Overseas housing business * A type of collaborative housing combining private living space with shared facilities. 21
  22. 22. (2) Creation of new value for society: Combined-unit projects (iii) Health Care for Tomorrow Tackling three challenges for a healthy society of longevity Emergency Seamless Challenge 2: Utilizing medical IT to support healthy life ・Biosync sensors, monitoring equipment ・ Health information data management ・ At-home care support services Challenge 3: Challenge 1: Applying cell Heightening therapy, Acute care emergency and regenerative Chronic care critical care Lifestyle medicine • Ease of use, ・Cell processing Safer, more effective miniaturization, of the elderly (culturing, isolation, New technology to therapeutic systems more effectively portability purification, contribute to better for critical care • Services storage) QOL coordinated with prehospital care Living w/family • Cell therapy support services Emergency ward Cancer, intractable Intensive care unit diseases Living alone Personalized Disaster medicine medicine Cell therapy/cell- At-home treatment/ based drugs nursing care Hospital-coordinated facilities Connection with community Connection with family Community Quality of Life 22
  23. 23. (2) Creation of new value for society Reweighting the composition of businesses Net sales Operating income(¥ billion) (¥ billion)2,500 250 2,000 2002,000 200 1,598.41,500 150 122.9 Health Care1,000 Health Care 100 Residential Residential Living Living 50 500 Half or 2/3 Environment more Environment & Energy & Energy 0 0 2010 2015 2010 2015 23
  24. 24. (2) Creation of new value for society Quantitative indexes to confirm the progress of our contribution Quantitative indexes are used as a guide to confirm that the Asahi Kasei Group makes steady improvement in enabling living in health and comfort and harmony with the natural environment. Number of patients benefiting Number of residents in Hebel Haus™ Living in health from Asahi Kasei products and comfort 30% increase 20% increase 2010 2015 2010 2015 Harmony with the Example targets natural environment Reduction of CO2 emissions: 5% (FY 2020 vs. FY 2005) Ratio of reduced CO2 emissions based on LCA* vs. Asahi Kasei Group CO2 emissions: Increase from current 3.2 to 8.0 in FY 2020 * Life cycle assessment of CO2 emissions reduction enabled by Asahi Kasei Group products and technologies compared to the conventional products and technologies they replace. By measuring improvements using quantitative indexes, the Asahi Kasei Group confirms progress to ensure that we are constantly contributing to life and living for people around the world in accordance with our Group Mission. 24
  25. 25. 4. Reformation of corporate systems 25
  26. 26. Promotion of “one AK” management Basic conceptsPreviously (since Oct. 2003) For Tomorrow 2015 Autonomy of each core operating company “one AK” managementObjectives: Results: Implementing dynamic• Autonomy • Improved cash flow• Optimization to • Speedy management strategy for growth by match each • Investment in growing bringing together the power of industry fields the Asahi Kasei Group• Emphasis on cash flow management Room for improvement: • Expansion of world-leading• Accelerated • Group strategy businesses transformation of • Longer-term emphasis business portfolio • Efficiency • Creation of new value for• Speed society Significant change in economic climate Significant change in economic climate Increasingly intense competition Increasingly intense competition Emergence of global issues Emergence of global issues 26
  27. 27. Acceleration of business strategy Promoting global business expansion • Strengthening regional support and businessBusiness strategy development as group functions Propagation of our mission, Expansion of values, and vision world-leading Human resource policies businesses • Utilization, interchange, and concentration of human resources (support for global business expansion and for development of new businesses) • Fostering human resources from long-term perspective Business management, Creation of new resource allocation value for society • Funding focused on key businesses • Setting targets based on quantitative contribution index Creation of new businesses • Implementation of “For Tomorrow” projects (across business units within the Asahi Kasei Group) • Identification of next strategic pillars (advanced research laboratories to be established) 27
  28. 28. New business development strategyPrevious Core operating companies: Market-focused R&D related to each business Holding company: R&D other than the above Configuration for key projects extending across different business units Focus, optimization on key group projects New fields • Project leaders with responsibility across business units CVC • Creating new value anticipating changes • Advancement with group perspective “For laboratories • Focused investment of resources Advanced これからPJ research • Alliances and utilization of external Tomorrow” これからPJ resources projects Corporate venture capital Identification of future core Core businesses of the group operating • Long-term perspective in Peripheral to technology development, market company research, and planning established business R&D • New research projects • Fostering “seed” technology (separation, bio, precise surface Near-term/ Degree of certainty of market growth Future/ processing, etc.) certainty uncertainty Coordination with production Group optimization (shift from project-centric to group-centric focus) technology from business 28 development phase
  29. 29. 5. Plans by business sector 29
  30. 30. Performance plan by business sector (¥ billion) Net sales Operating income Proportion of FY2011 vs. FY2011 vs. operating income FY 2010 forecast FY 2015 FY 2010 forecast FY 2015 FY 2010 FY 2010 10 15Chemicals & Fibers 851.0 913.0 880.0 +29.0 68.6 58.5 75.0 +6.4 56% 38%Homes & 499.0 45.5 456.6 570.0 +113.4 38.6 50.0 +11.4 31% 25%Const. Mat.Electronics 158.3 169.0 250.0 +91.7 14.3 15.5 40.0 +25.7 12% 20%Health Care 116.4 124.0 180.0 +63.6 7.0 8.0 25.0 +18.0 6% 13%Others 16.0 19.0 20.0 +4.0 -5.5 -7.5 -5.0 +0.5 -4% -3%Subtotal 1598.4 1724.0 1900.0 +301.6 122.9 120.0 185.0 +62.1"For Tomorrow" 100.0 +100.0 15.0 +15.0 8%projects (FY 2020) (FY 2020) approx. 300 approx. 50Total 1598.4 1724.0 2000.0 +401.6 122.9 120.0 200.0 +77.1 30
  31. 31. Long-term investment plan Long-term investment of some ¥1 trillion over 5-year period Major investments: AN, S-SBR ¥200 billion Chemicals Intermittent & Fibers 8% “For Tomorrow” projects expansion of Health 13% established Care businesses, Homes & ¥122.9 billion establishment of Const. Mat. 20% Electronics 6% new businesses,12% M&A Homes & Electronics 25% Const. Mat.31% Chemicals Health Care 38% & Fibers56% Major investments:-4% LSIs, sensors, -3% Others Major investments: Hipore™ Artificial kidneys, Planova™, development and in- Operating licensing of new drugs Operating income income (FY 2010) (FY 2015) 31
  32. 32. Creating for TomorrowThe commitment of the Asahi Kasei Group:To do all that we can in every era to help the people of the worldmake the most of life and attain fulfillment in living.Since our founding, we have always been deeply committed tocontributing to the development of society,boldly anticipating the emergence of new needs.This is what we mean by “Creating for Tomorrow.” 32
  33. 33. Reference 33
  34. 34. Sales and operating income by segment Sales: 1,598.4 Operating Income: 122.9742.2 Chemicals 64.4 108.8 Fibers 4.2 409.2 Homes 36.5 Health Care Construction Pharmaceuticals & 47.4 Materials 2.1 medical devicesElectronics 7% 158.3 Electronics 14.3 10% 116.4 Health Care 7.0 Chemicals & Homes & 16.0 Others* 1.7 Fibers Const. Mat. 53% FY10 results, ¥ billion 29% * Others category replaces the former Services, Engineering and Others segment. Operating expenses of one consolidated subsidiary previously included in Services, Engineering and Others are now included in corporate expenses and eliminations (no impact on sales, immaterial impact on operating income). Share of sales by business sector 34
  35. 35. History of business portfolio transformation, change in sales composition 1950 Bemberg™ 1965 Housing & 1980 Const. Mat. regenerated cellulose Expansion into • Construction of synthetic fiber petrochemical complex businesses • Start of housing business Nylon fiber ChemicalsRayon fiber Acrylic fiber • Start of LSI and dry film photoresist businesses • Formation of pharmaceuticals business unit and consolidation with Toyo Jozo Co., Ltd. • Development of housing business 2010 1995 Electronics Fibers Health Care Chemicals Business portfolio transformation aligned with new • Business portfolio currents restructuring Housing & • Expansion of global Const. Mat. businesses 35
  36. 36. Sales and operating income in yen and in US$ Sales & operating income in yen Sales & operating income in US$ (¥ billion) (US$ million) Sales (left scale) Sales (left scale) Operating income (right scale) 150 Operating income (right scale) 150 2,000 2,000 1,500 1,500 100 100 1,000 1,000 50 50 500 500 0 0 0 0 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 forecast forecast (¥ billion) (US$ million) 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 forecast forecastSales 1,489.6 1,623.8 1,696.8 1,553.1 1,433.6 1,598.4 1,724 Sales 1,326.2 1,387.9 1,488.4 1,537.7 1,541.5 1,858.6 2,155Operating 108.7 127.8 127.7 35.0 57.6 122.9 120 Operating 96.2 109.2 112.0 34.7 61.9 142.9 150income income ¥/US$ 113 117 114 101 93 86 80 exchange rate 36
  37. 37. Business strategy: Chemicals & FibersOperating climate (¥ billion)• Growth of emerging markets, particularly in Asia Net sales Operating income• Increasingly intense competition with China, the Middle East, etc. 851.0 880.0 (especially in commodity products) 800 80• Global environmental challenges, such as resource limitations. 600 75.0 60Basic strategy 68.6(1) Aiming for global No.1 position in globally competitive businesses 400 40 (acrylonitrile and S-SBR)(2) Business expansion in growing emerging countries, particularly of 200 20 Asia 0 0(3) Creation of new businesses and business fields as next strategic FY 2010 FY 2015 pillarsSpecific strategies(1) • Acrylonitrile: Serving global demand growth with the construction of cost-competitive plants → Aiming for No.1 position in the world • S-SBR: Proactive capacity expansion, aiming for No. 1 position in Asia in the growing fuel-efficient tire market(2) • Performance polymers: Enhancing established position in target markets in Asia • Water treatment/membrane businesses: Further reinforcing membrane business, expanding operations in China • Duranate™ HDI-based polyisocyanate: Expanding operations, securing leading position in China • Bemberg™ regenerated cellulose: Advancing into new markets including emerging countries, accelerating business development • Roica™ elastic polyurethane: Developing differentiated, high-function yarns through polymer modification, expanding in Asia • Spunbond: Expanding Precise™ spunbond nonwovens and differentiated PP-spunbond in Asia(3) • Expansion in healthcare areas: Developing Ceolus™ microcrystalline cellulose in emerging markets, accelerating development of pharmaceutical intermediates 37 • Creation of new businesses in optimum collaboration within the Asahi Kasei Group
  38. 38. Business strategy: Homes & Construction MaterialsOperating climate (¥ billion)• Declining population, decreasing number of households and decreasing Sales Operating income number of people per household, urban concentration• Need for energy conservation, need for high-durability homes 800 80• Market polarization: Young low-income customers focused on price – 570.0 affluent older customers focused on customization to taste 600 60 456.6Basic strategy 400 50.0 40• Unit homes: Pursuing high quality at lower price, increasing market share 38.6 200 20• Contributing to satisfaction in urban living 0 0• Construction materials: Greater cost competitiveness, higher added-value FY 2010 FY 2015Specific strategies(1) Unit homes and multi-dwelling homes: • Provision of superior products and services • Increasing market share at each branch Improving sales force, both individuals and in teams(2) Real estate operations: • Reinforcing condominium businesses based on obtaining accord in exchange of equivalent value • Maximizing utilization of land value through brokerage-related operations(3) Expansion of housing-related operations: • Expansion of remodeling and renovation work in addition to mainstay maintenance work(4) Autoclaved aerated concrete panels: • Reinforcing cost competitiveness, improving stable profitability(5) Neoma™ phenolic foam insulation panels: • Expansion with standardization of next-generation energy conservation performance 38
  39. 39. Business strategy: ElectronicsOperating climate (¥ billion)• Increased market share from medium/long-term perspective Sales Operating income (production of electronics centered on emerging countries)• Expansion of energy-saving and battery-related products 80 400• Dynamic market changes, alliances and collaboration with other companies 250.0 60Basic strategyElectronic devices: 158.3 40 200• Well-balanced expansion in infrastructure, automotive, industrial- 40.0 equipment, and mobile applications; providing new functions required 20 in each application 14.3Electronic materials: 0 0• Shifting management resources to energy-related businesses FY 2010 FY 2015Specific strategiesElectronic devices: • Market launch of new products, such as infrared• Reinforcing local capability for design and development sensors and next-generation LSIs for communication• Reinforcing customer service in each market • Improved earnings and expansion of powerElectronic materials: management semiconductorsFocused investment of resources on LIB separator • Strengthening development in Greater China - Proactive expansion of production capacity in line with market growth • Maintaining leading market position in mobile - Strengthening development of new types of membrane applications • Developing automotive applications 39
  40. 40. Business strategy: Health CareOperating climate (¥ billion)• Advanced countries: 70% of the world market, standing of Japanese Sales Operating income market declining with aging population 80• Emerging countries: Market growth with rising income, improving medical 400 standards, and increasing population• Curtailment of medical expenditure 60• Unmet needs for new medicines and medical devices 180.0 40Basic strategy 200 116.4• Expanding sales and profit with new drugs: Recomodulin™ recombinant 20 thrombomodulin for disseminated intravascular coagulation and Teribone™ 7.0 25.0 teriparatide acetate for osteoporosis 0 0• Global expansion of medical devices, including dissemination of therapeutic apheresis FY2010 FY2015Specific strategiesRecomodulin™- Nationwide sale in 2011 ⇒ Expansion of facilities and hospital departments covered, expansion of indications- Simultaneous advancement of overseas clinical development (entering Phase III)Teribone™- Approval and market launch in 2011 (planned)Famvir™ antiviral- Application for approval for herpes simplex in 2012 and approval in 2013 (planned)Hemodialysis- Capacity expansion (incl. alliances w/other companies), cost reduction ⇒ Expansion in emerging markets- Provision of next-generation membranes, devices, and services for hemodialysisBioprocess- Accelerated growth in Asia, expansion in plasma derivatives, technical service centers in Europe and US- Development of next-generation virus removal membranes 40
  41. 41. Chemicals & Fibers Acrylonitrile Basic strategy Global demand forecast Business expansion in growing Asian market (Asahi Kasei estimate) (million tons) as the No.1 supplier 6 Current status Future outlookTechnological No.1 Reinforcement of catalyst Major growth in Asiastrength - World’s highest production technology yield - Production process 5Cost- Top level • Plant start-up in Thailandcompetitiveness - Plant in Thailand, using low- • More plants in locations with cost propane as feedstock superior cost-competitiveness - Tong Suh in Korea (earnings from by-product) 4Supply capacity No.1 in Asia • Strengthened position in the FY 09 10 11 12 13 14 15 Mostly in the Far East Far East • Supply expansion ASEAN,Customer service No.1 in the Far East India, and the Middle East. Annual growth rate 3%, mainly in ABS resins 1,400 kt total Capacity expansion 1,200 kt total 200 kt in Mid-east 250 kt in 950 kt total Korea 200 kt in Expanding Thailand toward global No.1 supply 750 kt position Plant at Tong Suh Petrochemical, AN subsidiary in Korea Currently FY 2011 FY 2013 FY 2015 41 Market share in Asia 25% 40%
  42. 42. Chemicals & Fibers Solution-polymerized SBR (S-SBR) Basic strategy Global demand forecast for S-SBR (million tons) (Asahi Kasei estimate) • Proactive capacity expansion in rapidly growing 1.5 Asian market for fuel-efficient tires • Further improvement in fuel efficiency and grip 1.0 performance Open market Features of our products 0.5 High fuel efficiency without losing excellent In-house production grip performance and abrasion resistance by tire manufacturers 0.0 Less fabrication cost for customers FY 2010 FY 2015 FY 2020 Production capacity of Asahi Kasei Background of demand increase(thousand tons) Labeling requirement for Legal minimum standard for 300 performance performance Europe Since Nov. 2012 Since 2016/2017 (2 phases) 250 Additional capacity - Fuel efficiency, grip performance, - Fuel efficiency, grip (overseas) 200 noise performance, noise Phase 2 Singapore plant Japan Since 2010, voluntary standard in Not adopted 150 the tire industry Phase 1 100 Singapore plant - Fuel efficiency, grip performance Domestic capacity 50 expansion US From 2011 (planned) Not adopted Domestic capacity - Fuel efficiency, grip performance, 0 abrasion resistance 2010 2013 2015 2020 S-SBR for silica compound tires is the most optimal material to Fiscal year achieve high grip performance, high fuel efficiency, and high abrasion resistance. 42
  43. 43. Chemicals & Fibers Microza™ hollow-fiber membrane for filtration Top-tier world share: 22% Rapid demand growth in municipal water & sewage treatment, wastewater recovery • More stringent drinking water regulation in US from 2011: requirement to remove 99.9997% of Cryptosporidium parvum • Increasing water pollution/shortages in China Accelerated development of wastewater recycling business • Operation start-up at first and second projects in China 2 production sites, Japan and China • 30,000 module/y plant in Fuji, Japan • 30,000 module/y assembly plant in China 43
  44. 44. Chemicals & Fibers Business portfolio of Chemicals Volume products Specialty products Chemicals & derivative products Polymer products Basic chemicals Caustic soda General- PE Membranes Microza™ MF/UF purpose membranes Chlorine polymers ABS, SAN Ion-exchange membranes Ammonia PMMA pellet & sheet & systems Nitric acid Synthetic rubber & elastomer Performance Duranate™ HDI-based chemicals polyisocyanate Aluminum paste Monomers Acrylonitrile Performance Tenac™ POM polymers SB latex Styrene Xyron™ mPPE MMA Leona™ nylon 66 Functional Ceolus™ microcrystalline additives cellulose Cyclohexanol Adipic acid Explosives Defense explosives Metal cladding Home-use/ Saran Wrap™ cling film Consumables Packaging products Share of sales* 75% Share of sales* 25% * Based on results for FY 2010. 44
  45. 45. Chemicals & Fibers Main products of chemicals & derivative products in Chemicals As of Nov. 1, 2010 Asahi Kasei Main competitors Chemicals Asahi Kasei’s Main applications Capacity Share* Capacity† Share* position/strengths (kt/y) (%) Company (kt/y) (%) Acrylonitrile 750 13 Ineos 1,324 23 Acrylic fiber, ABS resin; 2nd largest producer in captive use for ABS, the world adiponitrile Styrene 710 2 Shell 2,070 7 EPS, ABS, SB latex, Largest production Ineos 2,052 7 unsaturated polyester, SBR; capacity in Japan Dow 1,969 6 captive use for PS, ABS, SB latex, SBR Methyl 100 3 Mitsubishi 1,356 36 MS, MBS, coating Proprietary, cost- methacrylate Rayon materials; captive use for competitive C4 process PMMA Adipic acid 170 6 Invista 640 22 Polyurethane; captive use Top-tier producer in Rhodia 455 16 for nylon 66 Asia * Share of production capacity, Asahi Kasei estimate. † Asahi Kasei estimate. 45
  46. 46. Chemicals & Fibers Specialty products in Chemicals Business field Product PositionMembranes Microza™ UF and MF membranes Top-tier world share: 22% and systems Aciplex™ ion-exchange membranes No. 1 world share: 45% Electrolysis plants No. 1 world share: 30%Performance Duranate™ HDI-based No. 1 domestic sharechemicals polyisocyanate Aluminum paste No. 2 domestic share Polydurex™ silicone-modified PVDC latex, acrylic latex, PVDC latex No. 2 world share: 20%Functional additives Ceolus™ microcrystalline cellulose No. 3 world share 46
  47. 47. Chemicals & Fibers Main products in Fibers Roica™ high-function spandex •Acquisition of spandex plants in Germany and US from Lanxess of Germany in Nov. 05, application of Roica™ technology at the plants Dormagen Plant for spandex, in Germany •World’s No. 3 share; global development of high- function and high-quality brand; production plants in Japan, Taiwan, China, Thailand, Germany, and US Bemberg™ regenerated cellulose fiber •Only producer in the world •Shift from domestic lining market to global markets and non-lining applications Full product lineup of nonwovens •Sales expansion with focus on Precisé™ multifunctional nonwoven Leona™ nylon 66 filament with superior strength andthermal resistance •Sales expansion in automotive airbag application in addition to tire cord application 47
  48. 48. Homes & Construction Materials Financial performance and actions in Homes (¥ billion) Sales growth trend Increased operating income600 through cost reductions in home construction businesses and Remodeling and other operations Operating expansion of housing-related income operations • Enhanced product proposal ¥45 billion Operating capability; i.e. remodeling for500 Operating income energy conservation Operating ¥42 billion income income • Renovation ¥28.2 billion ¥36.5 billion Maximum utilization of land400 Remodeling, etc. Real estate-related value with operations focused Real estate-related operations on obtaining accord, etc.300 Unit-homes & multi-dwelling homes • Extension of superiority in three-story homes and two-generation homes200 Unit homes and • Establishment of No.1 position in innovative multi-dwelling homes lifestyle proposals • Community-specific proposals • Greater product variation100 • Distinctive products suited to urban needs 0 FY 2005 2010 2011 2015 forecast forecast 48
  49. 49. Homes & Construction Materials “Long Life Home” strategy for Hebel Haus™ Hebel Haus™ high-end urban homes Exceptional resistance to earthquake and fire 60-year inspection system Pioneer of urban three-story homes and two-generation homes • Launch of Hebel Haus™ Frex “G3” three-story homes featuring next-generation energy conservation performance • Launch of Hebel Haus™ “i_co_i” as the latest two-generation homes Strategic marketing • Development of urban markets from Kanto westward • Focus on rebuilding demand More than 7 million houses in 3 largest areas are non-compliant with current earthquake resistance standards • Promotion with Hebel Haus™ “street-corner showrooms” Services for the ≈300,000 units sold to date Hebel Haus™ Frex “G3” • Steady increase in orders at remodeling business • Increased units under rent guarantee at real-estate business 49

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