I am Akinori Higuchi, and I assumed the position of representative director, president, and CEO on June 18, 2021. Taking this opportunity, let me express my sincere gratitude to shareholders.
Since taking on the position in 2011, the former president, Takao Ando, had been striving to improve business performance aimed at becoming a globally unique excellent corporate group and to create a work environment where diverse values are respected and where each employee feels pride and satisfaction in their work while staying true to themselves.
Under the new management structure, we will evolve the stable profit structure and corporate culture we have established and build a Waku Waku company* where employees constantly take on new challenges and feel satisfaction in their work in order to further enhance our corporate value.
It would be most grateful if you, as the shareholders, could provide continued support and cooperation.
Representative Director, President, and CEO
Q How was Sanyo Chemical Group business environment in FY2020?
A In the chemical industry, although the yen was appreciating in the forex market as expectations were increasing towards the US to extend the period of monetary easing, the yen has been depreciating at the end of the fiscal year under review due to expectations of economic recovery in the US, and raw material costs have recovered after they plunged sharply with the decline in oil prices and the global economy. Amid these unstable conditions, the business environment remains unpredictable.
During the fiscal year ended March 31, 2021, the Japanese economy deteriorated rapidly as a result of a significant drop in private consumption and exports due to the impact of the COVID-19 pandemic. After the reopening of economic activities, recovery could be seen in exports picking up and in other aspects, but a resurgence of COVID-19 infections has led to continued challenging conditions. In the global economy, while China is steadily recovering after the reopening of economic activities and the dissemination of vaccines in the US seems to have a positive impact on individual consumption, Europe is experiencing prolonged restrictions on activities due to a resurgence of COVID-19 infections, and it will likely need time to return to last year’s levels.
Q How did Sanyo Chemical Group perform FY2020?
A Net sales for the fiscal year under review decreased by 6.9% year on year, to ¥144,757 million. In terms of profit, operating profit was ¥11,932 million (a decrease of 4.1% year on year).
Under unstable environment, net sales for the fiscal year under review decreased by 6.9% year on year, to ¥144,757 million mainly due to appropriate sales price revision to respond to a drop in raw material costs. In terms of profit, operating profit was ¥11,932 million (a decrease of 4.1% year on year), and ordinary profit was ¥11,999 million (a decrease of 5.6% year on year) mainly due to a decrease in share of profit of entities accounted for using equity method. Profit attributable to owners of parent was ¥7,282 million (a decrease of 5.0% year on year) mainly due to recording of loss on cancellation of integration.
Q Explain how the organizational structure has changed.
A The Company restructured its organization as of April 1, 2021, in order to accelerate the speed of decision-making in business, shift to higher value-added products, and implement business activities from the customers’ point of view.
Now, each business division has its own sales and research organizations. Seven business divisions, three existing and four newly added, are placed directly under the president. By speeding up corporate management through the integrated operation of sales and research, we will endeavor to sophisticate the value provided for customers, including improvement of product performance and provision of products and services that can solve social issues, and to improve the profitability of each business.
Apart from the business-related policies and operation methods each general manager of business division is responsible for, we established a new management role that assumes responsibility for supporting human resource management of the sales and research functions as a cross-sectoral function that will contribute to the integrated operation of sales and research. Please note that the roles and responsibilities in the production and back-office divisions will continue to remain the same as their organizational structure and policies have not changed.
We also established the Value Creation Promotion Department in the Corporate Planning Division in order to increase both social and economic value and further strengthen corporate management for sustainable growth. In addition, we newly established the Energy Business Promotion Division in order to strongly promote the battery material business, which is one of our core businesses, and get it on track.
Q Please tell us about your CSR Activities and SDGs in Fiscal 2020.
A We will steadily continue awareness-raising activities that help employees understand the link between SDGs and the work they engage in and work with pride. In terms of environmental activities, we promoted the Global S-TEC Level 2 initiative for the period from 2018 to 2020 but failed to achieve the targets for some of the key items, unfortunately. We are committed to making up for the failure in the next initiative S-TEC21-24.
To promote CSR activities, we have established guidelines consisting of 11 items. A promotion manager has been appointed for each of these items, and specific activities and schedules, together with the commitment of each manager, are announced internally within the company. The progress is reported and discussed at the biannual CSR Committee meetings, and then a PDCA cycle is repeated. The CSR Committee was renamed the CSR Promotion and Management Committee in fiscal 2021, and its positioning was also changed to an advisory body to the management meeting. We will make CSR activities more effective by adding persons responsible for the implementation and promotion of concrete measures in the discussion and encouraging them to propose improvement plans from the standpoint closer to the front line.
The Company’s CSR activities are consistent with the philosophy and direction of Sustainable Development Goals (SDGs). In fiscal 2020, we made continued efforts to achieve deeper understanding and penetration of SDGs by linking CSR activities in business with SDGs and providing SDGs seminars and other internal educational opportunities. We will steadily continue awareness-raising activities that help employees understand the link between SDGs and the work they engage in and work with pride.
In terms of environmental activities, we promoted the Global S-TEC Level 2 initiative for the period from 2018 to 2020 but failed to achieve the targets for some of the key items, unfortunately. We are committed to making up for the failure in the next initiative S-TEC21-24. From 2021 and onward, we will promote these activities through establishing the Energy Saving Promotion Department, which will be responsible for the measures against global warming and drawing up concrete plans to reduce CO2 emissions with a goal of achieving carbon neutrality in 2050.
Q Please tell us about your management policy on diversity.
A We have been putting priority in corporate management on the creation of a work environment where diverse values are respected and each employee feels pride and satisfaction in their work while staying true to themselves.
We have been putting priority in corporate management on the creation of a work environment where diverse values are respected and each employee feels pride and satisfaction in their work while staying true to themselves.
As a new initiative for the promotion of female participation and career advancement in the workplace, we participated in the Osaka University-style Industry-University Joint Educational Project 2020, a collaborative project by Osaka University and seven private companies, for the purpose of improving the skills and career advancement of female employees and employees on childcare leave. We welcomed YouTuber Kazue-chan, who is conducting awareness-raising activities regarding LGBTQ, as a member of the Company and are assisting employees to have interactions at each branch. The Company is also facilitating employees to understand LGBTQ by improving systems and facilities, including installation of gender-neutral toilets. Thankfully, our diverse activities were appreciated, and we were granted the Platinum Kurumin certification by the Ministry of Health, Labour and Welfare in 2017 and received for the second consecutive year the highest Gold rating in the PRIDE Index, a set of indices set for the evaluation of each company’s LGBTQ-related efforts by a voluntary association named “work with Pride”.
Q Could you talk about the return of profits to shareholders?
A 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.
We aim to improve our dividend payout in the medium- to long-term, targeting a consolidated payout ratio of 30% or higher. Furthermore, we intend to use our internal reserves for investment in future growth.
The Company plans to pay the year-end dividend of ¥80 per share (an annual dividend of ¥150 per share) for the fiscal year ended March 31, 2021.
Q In conclusion, please give a message to shareholders.
A We, at the Sanyo Chemical Group, will create a Waku Waku company* where all employees are motivated to constantly take on new challenges and feel job satisfaction in order to further enhance corporate value. Shareholders’ continued support and cooperation would be highly appreciated.
*Waku Waku is a Japanese word that means positive, bright, up-lifting feeling inspired by inner motivation and/or own wills.