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Our goal is to become a unique and highly profitable global corporate group that inspires individual employees to achieve a sense of pride and fulfillment. We shall contribute to society through our business.

Q. Please describe the situation and business environment of the Sanyo Chemical Group?.

During the current fiscal year (April 1, 2017 through March. 31, 2018), the Japanese economy continues a mild upswing due to recovery of private consumption and export increase in addition to steady capacity investment. And, the outlook for the circumstance surrounding Japan performed smoothly such as a moderate speed-up of economic expansion in Europe and a break in Chinese economic slowdown in addition to steady economy in the United States.
In the chemical industry, business environment increases severe because a downside in raw materials costs is increasing and exchange rate kept steadily is turning stronger.
Under these circumstances, net sales of the current fiscal year increased by 7.7% from the previous fiscal year, to \161,692 million due to sales volume increase, appropriate sales price revision to respond to a rise in raw materials costs and other factors. In terms of profit, however, Sanyo Chemical Group decreased from the previous fiscal year mainly because of the reduction of spread between sales and purchase to respond to a rise in raw materials costs, despite sales volume increase. As a result, operating profit was \11,999 million (a 12.1% decrease from the previous fiscal year), and ordinary profit was \13,866 million (a 9.6% decrease). Profit attributable to owners of parent was \9,272 million (a 9.0% decrease).

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Q. Please tell us about your mid-term management plan.

Under our corporate philosophy of contributing to the creation of a better society through business, we have been diligently and sincerely engaged in fulfilling the ninth Midterm Management Plan, which has been in effect for four years from fiscal 2015 to 2018. Through the course of these activities, our goal was to become a unique and excellent global corporation dedicated to co-creating valuable products with our customers.
However, since the draft of the Midterm Management Plan, the external conditions have drastically changed because of fluctuations in raw material costs and the intensifying competition in the superabsorbent polymers (SAP) market. We have also experienced major changes in our in-house environment through the implementation of a divisional structure, establishment of joint projects with other companies, and new business development in the electronics field.
In order to respond flexibly to the constant changes in the internal and external environments, we finished the ninth Midterm Management Plan one year earlier and started the tenth Midterm Management Plan.

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Q. Please tell us about your initiatives for Corporate Social Responsibility (CSR) in 2017.

Our group provides 11 CSR guidelines that consist of one management goal per person per section. With an ongoing commitment, the schedule and specific details of our initiatives are shared within the group to jointly promote CSR activities. We follow the PDCA cycle by reporting the progress status to the CSR Committee twice a year for deliberation. In 2017, to clarify our contribution in advancing the Sustainable Development Goals (SDGs), we self-evaluated our progress status with the associated 169 themes.
Our environmental activities include involvement in the Global S-TEC Level 1 since 2015. Our primary goal is to reduce greenhouse gas emissions. Additionally, we are also preparing the Global S-TEC Level 2 to be effective during the tenth Midterm Management Plan (fiscal 2018 to 2020).
As for CSR procurement to promote CSR activities encompassing the entire supply chain, we take the initiative in conducting supplier surveys in concert with our domestic and foreign affiliates.
The Sanyo Chemical Group endeavors to respect the human rights of all people and employ a diverse workforce. We have been conducting stress tests in order to ensure the health of our employees and to take steps to prevent long working hours. Through the adjustment of our management system and work environment, we aim to encourage employees to achieve their full potential and further promote the development of a workplace where all employees can work comfortably.

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Q. Please tell us about the promotion of workstyle reform in your group.

We have made workstyle reform a primary focus of our management operations. The Human Resources Division and the Promotion Team work to improve management efficiency and play a central role in this effort. We have been working group-wide to further promote job streamlining, greater operational efficiency, and workstyle reform, as well as implementation of drastic reforms in employee awareness.
On the systematic level, we adopted flextime and the annual paid leave system, which can be taken in units of one hour, to promote a true work-life balance for each employee.
We have also implemented a variety of measures to improve work efficiency. The following are examples: we adopted a system where the in-house intranet and the e-POST system are accessible via a mobile device from anywhere around the world to enable employees to directly make recommendations to the CEO through the intranet. Furthermore, we have shifted towards paperless meetings and implemented BI solutions.
As with our efforts to create a work environment that allows diverse personnel to play an active role, we have been working to reform employee awareness and build the necessary institutions.
We are dedicated to implementing measures for the promotion of female advancement, implementing a systematic plan for the cultivation and allocation of human resources, reviewing the course-based personnel management system, and adopting development interviews. These reforms of the personnel management systems are conducted in order to promote changes in management resources.
Furthermore, we strive to strengthen human-centered management through the promotion of diversity in the workplaces and workstyle reform.
In May 2018, we launched our workstyle reform project to move further forward with our initiatives to become a corporation that inspires all individual employees to achieve a sense of pride and fulfillment. In the project, all members are appointed by public advertisements/recommendations (excluding basic members). We implemented this measure to further encourage the active engagement of our employees and to push workstyle reform and business innovation more vigorously forward than ever before.

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Q. Finally, could you give a message to your shareholders?

In our endeavors to become a unique global corporate group and achieve a sustainable society, we will make every effort to enhance corporate value through the further promotion of CSR management activities.
Also, in order to keep pace with the globalization of our sales channels, production bases, and suppliers, we will globalize employee training programs, the variety of systems we use within the company, and our approach to global environmental problems and corporate governance.
Looking forward, we intend to do our utmost to realize our motto of contributing to the creation of a better society through business. To achieve this end, we kindly ask for the understanding and support of our shareholders in our CSR activities. We hope that you will kindly read the report and give us your candid comments and advice.

July 2018

President & CEO

CSR

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