TOP INTERVIEW

 

 

Q How was Sanyo Chemical Group business environment in FY2019?

A In the chemical industry, while raw material costs are unstable mainly due to the tightening situation in the Middle East, and the forex market is experiencing yen appreciation due a shift to easing in US monetary policy and other factors, from the fourth quarter, the COVID-19 pandemic has had big effects on the business environment, including plunging oil prices and turmoil in the currency market, creating an unpredictable situation.

During the fiscal year ended March 31, 2020, the Japanese economy was treading water mainly due to stagnant exports which resulted from the slowdown in the Chinese economy, despite a gradual recovery in private consumption. Beginning in the fourth quarter, with a severe contraction in economic activities due to the COVID-19 global pandemic, the future has become unclear. Regarding the global economy, while there were continued effects of trade friction between the US and China on the real economy, from the fourth quarter, demand evaporated due to turmoil in the supply chain caused by the COVID-19 pandemic and stay-at-home orders, leading to a critical situation.
In the chemical industry, while raw material costs are unstable mainly due to the tightening situation in the Middle East, and the forex market is experiencing yen appreciation due a shift to easing in US monetary policy and other factors, from the fourth quarter, the COVID-19 pandemic has had big effects on the business environment, including plunging oil prices and turmoil in the currency market, creating an unpredictable situation.

 

Q How did Sanyo Chemical Group perform FY2019?

A Net sales for the fiscal year under review decreased by 3.8% year on year, to 155,503 million yen. In terms of profit, operating profit was 12,439 million yen (a decrease of 3.7% year on year) mainly due to a decrease in net sales.

Net sales will increase by appropriate sales price revision to respond to a hike in raw materials costs and increased sales volume. Profit will increase due to sales volume increase, despite reduction of spread to respond to a hike in raw materials costs.

Under these circumstances, net sales for the fiscal year under review decreased by 3.8% year on year, to 155,503 million yen. In terms of profit, operating profit was 12,439 million yen (a decrease of 3.7% year on year) mainly due to a decrease in net sales, and ordinary profit was 12,704 million yen (a decrease of 16.4% year on year) mainly due to foreign exchange losses and a decrease in share of profit of entities accounted for using equity method. Profit attributable to owners of parent was 7,668 million yen (an increase of 43.4% year on year).

 

 

 

Q Could you tell us about progress of the Tenth-Medium-Term Management Plan and future effort?

A Sanyo Chemical Group has set the long term goal aiming at our vision for 2027: “We have grown to be a unique, global, Sanyo Chemical Group has set the long term goal aiming at our vision for 2027: “We have grown to be a unique, global, and highly profitable company, where all our employees proud themselves, find meaning in their work, and contribute to society”.

Sanyo Chemical Industries, Ltd. has set the long term goal aiming at our vision for 2027 to achieve sustainable growth. The Tenth Medium-Term Management Plan, “New Sanyo for 2027” which covers the next three-year period from FY 2018 through FY 2020 was formulated to realize this vision. Sanyo Chemical Group has carried out the Ninth Medium-Term Management Plan (FY2015-FY2018) to become a “unique and excellent corporate group globally” by creating valuable products with customers based on our company motto “Let us contribute to building a better society through our corporate activities.” In addition to major changes in the business environment, such as fluctuations in raw material costs and intensified competition in SAP (superabsorbent polymer) business, the management system also underwent major changes, including the introduction of the divisional organization system and the launch of projects in collaboration with other companies. According to such changes, we have started the Tenth Medium-Term Management Plan in FY 2018, one year ahead of schedule.

 

 

 

Sanyo Chemical Group has set the long term goal aiming at our vision for 2027: “We have grown to be a unique, global, and highly profitable company, where all our employees proud themselves, find meaning in their work, and contribute to society”. The Tenth Medium-Term Management Plan “New Sanyo for 2027” which covers the next three-year period from FY2018 through FY2020 was formulated to realize this vision. Under the slogan of “KAERU” (committed to change); 1)Shift to high-value-added products, 2)Accelerate business from the customer perspective, 3)Eliminate “Waste, Impracticality and Inconsistency”, 4)Encourage flexible and diverse work styles and approaches, 5)Create an open corporate climate”, the plan promotes innovation and seeks to achieve consolidated net sales of “180.0 billion yen or higher, operating income of 18.0 billion yen or higher, and return on equity (ROE) of 10% or higher by FY2020, the final fiscal year of the plan.

 

Q Please tell us about your CSR activities for FY 2019.

A Sanyo Chemical group established 11 guidelines of the CSR activities. We promote CSR activities by appointing a leader for the promotion of each of the guidelines and by announcing within our group the details of specific efforts and schedules together with a commitment from each leader. We report the status of progress within the CSR Committee to be held twice a year while implementing the PDCA cycle.

Sanyo Chemical group established 11 guidelines of the CSR activities. We promote CSR activities by appointing a leader for the promotion of each of the guidelines and by announcing within our group the details of specific efforts and schedules together with a commitment from each leader. We report the status of progress within the CSR Committee to be held twice a year while implementing the PDCA cycle.

The philosophy and course of action of the Sustainable Development Goals (SDGs) and the CSR activities of the Company share the same basis. The Company accelerated the penetration of SDGs primarily by linking the CSR activities to the SDGs, distributing SDGs badges, and providing in-house training seminars.

For FY 2019, we linked our research themes to the SDGs and promoted theme-generating development activities by asking whether there were any items to which our research division could contribute. We also promoted work related to the SDGs and social contribution activities in which our employees can take pride.

In April 2020, we set up the Sustainability Promotion Committee to respond to the different challenges related to sustainability, including the SDGs, and to tackle management promotion issues. As for environmental activities, we have been promoting Global S-TEC Level 2 from 2018 to 2020. We are working on the activities such as global warming gas emissions as important issues.

 

 

Q Please tell us about your management policy on diversity.

A We are promoting efforts to create a more open atmosphere within the company, and we feel that our efforts are already having an effect. From now on, we will continue to work for “KAERU” (committed to change).

Sanyo Chemical, through its flexible workstyle systems, such as no dress code and enhancement of the super-flextime system with no core time, Intended to be recognized by diversity, such as senior citizens, non-Japanese, and /or handicapped employees, and all employees regardless of gender.

Diversity is not a matter of the working population alone, but in today’s society of extreme changes, we believe that companies will not continue to grow without diversity. With regard to the current spread of COVID-19, we have applied the introduced flexible workstyle system to continue business operations. As an evaluation from outside in terms of Sanyo Chemical’s approach to the activity of diversity, we were honored to receive the Gold Award of the Pride Index (*1) from the voluntary organization “work with Pride”, and also we received the platinum Kurumin certification as a corporation supporting childcare from the Ministry of Health, Labour and Welfare.

We are promoting efforts to create a more open atmosphere within the company, and we feel that our efforts are already having an effect. From now on, we will continue to work for “KAERU” (committed to change).

 

(*1) The Pride Index for LGBTQ initiatives

The private organization “work with Pride” (wwP) supports the promotion and institutionalization of diversity management relating to sexual minorities, and has set up Japan’s first benchmark for corporate LGBTQ initiatives. Two of wwP’s NPO affiliated organizations, Good Aging Yells and Nijiiro Diversity, assessed companies, corporate groups and other organizations for their diversity initiatives, and awarded gold, silver and bronze ratings according their scores.

 

 

Q Could you talk about the return of profits to shareholders?

A We will make an effort to enhance corporate value to maintain stable dividends.

We regard increasing returns to shareholders while attempting to reinforce the corporate base for the future through an improvement in Sanyo Chemical Group’s profitability as our important management issue. We aim to improve our dividend payout in the medium- to long-term, targeting a consolidated payout ratio of 30% or higher.

The Company plans to pay the year-end dividend of 70 yen per share (an annual dividend of 140 yen per share) for the fiscal year ended March 31, 2020.

Furthermore, regarding our dividend forecast for the fiscal year ending March 31, 2021, we cannot provide an outlook of the effects of the COVID-19 worldwide outbreak at this time. Due to the difficulty in providing reasonable dividend forecasts, we have left our dividend forecast for the second quarter-end and the year-end dividends undecided.

 

 

Q Finally, do you have any messages to shareholders?

A We will further promote for the creation of an environment that we respects more diverse values ​​than ever before.

In addition to the conventional support for balancing between work and childcare, we will further promote for the creation of an environment that we respects more diverse values ​​than ever before, such as system revisions to realize flexible work styles and LGBTQ initiatives. And we look forward to your continued guidance and support.

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