JSR New Mid-Term Business Plan FY March 2015 to FY March 2017

Transcription

1 JSR New Mid-Term Business Plan FY March 2015 to FY March 2017 Announced in April 2014 Representative Director and President Mitsunobu Koshiba JSR Corporation (4185JP)

2 -INDEX- (i) Results and Review of JSR20i3 (ii) Outline of JSR20i6 Petrochemicals business Elastomers business Fine Chemicals and Other Products business -Fine Chemicals business (Semiconductor materials business and FPD materials business) -Strategic business Common measures for JSR group (iii) Summary 2

3 JSR20i6 Mission Management Policy toward 2020 Establish a corporate structure (including operating income and cost structure) resistant to environment changes. Build up competitiveness that enables us to achieve sustainable growth. Develop a third pillar of business following the Petrochemicals business and the Fine Chemicals business. JSR20i3 We failed to achieve the financial targets due to stagnation of the Fine Chemicals business and a delay in launching strategic businesses. However, we were able to improve profitability in the Petrochemicals business. Meanwhile, we defined strategies that are necessary for activation toward growth and decided on the allocation of resources, laying the foundation for JSR20i6. JSR20i6 Achieve the target 1. Increase market share in the core business S-SBR: Bring JBE, a plant in Thailand, into the black. ArF/multilayer materials: Obtain market share for 14nm or later generation products. Increase product lineups of display materials for mobile equipment. 2. Expand business and regional portfolios Strategic businesses: Intensively invest in the Life Sciences business and the LIC business. Increase exposure to Europe and North America. 3. Middle line control Terminated S-SBR capacity rights (in Europe), etc. JSR

4 (i) Results and Review of JSR20i3 4

5 Results of JSR20i3: Operating income remained flat. We failed to achieve the initial targets due to stagnation of the Fine Chemicals business. Operating income remained at the same level. The Petrochemicals business expanded more strongly than expected, posting a record operating income during the term of JSR20i3. The Fine Chemicals and Other business saw operating income stagnate because the growth scenario went away. Failure to increase operating income according to the plan in the Fine Chemicals business Delay in development of a third pillar Change in net sales (100 million yen) 3,407 3,500 3,715 3,908 4,200 Change in operating income (100 million yen) Mar.11 Mar.12 Mar.13 Mar.14 Mar.14 Initial plan JSR20i3 Fine Chemicals and Other business (FY) Mar.11 Mar.12 Mar.13 JSR20i3 Mar.14 Mar.14 Initial plan Petrochemicals business 5

6 Results of JSR20i3: Stagnation of the Fine Chemicals and Other business The Fine Chemicals and Other business stagnated mainly due to failure of achieving the challenging scenario. We overestimated the market growth potential and were hit by declining market share. Market factors JSR factors Semiconductor materials Global silicon wafer starts CAGR JSR20i3 plan: 6-7% vs Results: minus 1% We lost market share for ArF photoresist for 40nm to 30nm generation products. We focused on investment in 20nm generation products The 20nm generation production started in the second half of FY Mar.14. FPD materials Global LCD panel area market CAGR JSR20i3 plan: 10 to 11% vs Results: 8% Our market share for color pigmented resists declined due to the progress of commoditization in the field of TV sets. Strategic business - We failed to sufficiently boost sales of our products in the field of precision materials and processing (ITO films, ARTON resin). 6

7 Results of JSR20i3: Progress of qualitative objectives We defined strategies that are necessary for activation toward growth and decided large investments, laying the foundation for JSR20i6. Petrochemicals business Main tasks Globally market S-SBR. Strengthen resistance and capability to respond to environmental changes and volatility. Progress of JSR20i3 Began operation of JBE, a plant in Thailand. Decided to set up a new base in Europe, Lowered the break-even point. Progressed with the examination of On- Purpose BD. Fine Chemicals business Strategic business Semiconductor materials: Increase market share for ArF. FPD materials: Cope with cutting edge technology. Strengthen competitiveness in the South Korean and Taiwanese markets. Expand product line-ups on the peripheral of current products. Create scenarios for business development. Prepare business infrastructure. Allocate resources into research on next generation products (10% of R&D staff members). Captured high market share for ArF20nm generation and multilayer products. Established manufacturing, marketing, and R&D systems in South Korea and Taiwan. Our market share for color-pigmented resists began recovering. Explored business opportunities in the Fine Chemicals segment. Defined the outline of the strategic businesses. Established JSR Life Sciences Corporation (JLS). Invested in MEDICAL & BIOLOGICAL LABORATORIES (MBL). Decided to construct a plant to mass manufacture LIC. Commenced Corporate Venture Capital activities. 7

8 (ii) Outline of JSR20i6 8

9 Business environment of customers industries till 2016: Petrochemicals market The business environment is expected to be difficult in the coming one to two years. Both the petrochemical raw materials market and the synthetic rubber market are likely to be sluggish. Change in BR and butadiene (BD) prices 5,000 $/M 4,000 3,000 BD Spot SPOT FOB prices SK BR Spot SPOT CFR prices AP 2,000 1,000 - '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 (CY) 9

10 Business environment of customers industries till 2016: Fine Chemicals business The business environment has been unclear for JSR. Semiconductor market: The market has stagnated for the past three years. The business environment is likely to remain uncertain for the time being. FPD market: (Large-size displays) Commoditization is expected to accelerate; (Small- to medium-sized displays) High growth is likely to continue. Change in shipments from 2010 to 2013 MSI 10,000 Semiconductor: Silicon wafer inputs Minus 1% CAGR Million m FPD: Panel area and amounts +8% CAGR (area) (Breakdown of area: large-sized panels +7%; small- to medium-sized panels +16%) Ratio of small- to medium-sized panel shipments to total shipments (Area) 16% 17% 18% 20% 100 million$ 200 7,500 5, E (CY) Source: Gartner area 面積 (largesized panels) medium-sized (all sizes) ( 大型 ) 面積 area(small- ( 中小型 to ) Amount 金額 ( 全体 ) panels) Source: Display Search 0 (CY) 10

11 Agenda of JSR20i6 Achieve results of an increase in net sales and operating income. Expand market share for the core business. Expand business and regional portfolios. Middle line control 11

12 Financial objectives of JSR20i6 Achieve net sales of 500billion yen and operating income of 50billion yen. Top Line Expansion and Middle Line Control are drivers to achieving the target. JSR20i6 Top line expansion Middle line control Petrochemicals business Operating income 26billion yen Maximize the production at JBE (S-SBR). Sell S-SBR capacity rights (in Europe). Continue lowering the break-even point (70%s). Fine Chemicals business Strategic business Operating income 24billion yen * Aim to bring the Strategic business into the black on an EBITDA basis. Semiconductor materials: Launch ArF and multilayer materials for 20nm generation; and achieve market shares for 14nm or later generation products. FPD materials: Expand the adoption of our materials for mobile equipment. Life Sciences: Expand the business through cooperation with MBL. LIC: Start full-scale business operations with outstanding quality and the construction of a mass-production plant. Concentrate R&D investment in the Yokkaichi base. Further shift research and manufacturing functions to East Asia. Intensively invest in the Life Science and LIC businesses. 12

13 JSR20i6 Operating income: 50billion yen JSR20i6 Operating income plan (100 million yen) Fine Chemicals and Other Products business Petrochemicals business Mar.14 Mar.15 Mar.16 Mar.17 Net sales 3,943 4,100-5,000 Petrochemicals 2,612 2,700 3,200 Fine chemicals 1,331 1,400 1,800 and Others JSR20i6 (FY) 13

14 (ii) Outline of JSR20i6 Petrochemicals business 14

15 Numerical target of the Petrochemicals business: Hit a record operating income. We will secure No.1 share in the S-SBR market. We aim to post a record operating income, based on a business model that generates stable operating income. Change in operating income of the Petrochemicals business (100 million yen) 300 Point: Maximize JBE s profit JSR20i6-50 (FY) 15

16 S-SBR business: Our business will expand along with the growth of the market. The S-SBR market has been steadily expanding even amid the downward trend of the petrochemical market. Our sales of S-SBR have also increased for the past three years. From FY March 2015, JBE in Thailand is expected to fully contribute to earnings. Change in our sales volume of S-SBR and demand in S-SBR market CAGR customer s market (unit: %) 200% Sales volume of JSR S-SBR: tons (FY) S-SBR market: tons (CY) Demand for passenger car tires (CY) +8% (Mar.11 to Mar.14) 100% 0% Mar.08 Mar.09 Mar.10 Mar.11 Mar.12 Mar.13 Mar.14 Mar.15E (JSR prepared the chart based on statistics of LMC2013, etc.) (FY) 16

17 The supply-demand balance will be loose in the middle-end market, a volume zone, in Mar.15 to Mar.16 because Japanese manufacturers will expand production capacity. We will overcome this obstacle with demonstrating three advantages to capture No.1 position in the S-SBR market. (i) Economies of scale Global leader in the S-SBR market Production capacity of 200,000 tons or more in Mar.18 and experience of manufacturing middle-end products 300,000 (Forecast of JSR s S-SBR production capacity; unit: ton) 200, ,000 Hungary Thailand Germany (ii) Stronger relationship with customers (iii) Overwhelming market share in the high-end market 0 Mar.10 Mar.12 Mar.14 Mar.16 Mar.18 (FY) Japan Retain customers obtained through upfront investment in the Yokkaichi Plant in FY Mar.13. Establish a supply chain with three bases across the world to promptly meet customers' demand. Continue differentiating our company from competitors with our quality to maintain an overwhelming market share in the high-end market where demand is expected to expand. 17

18 (ii) Outline of JSR20i6 Fine Chemicals and Other Products business 18

19 Numerical target of the Fine Chemicals and Other Products business: Steadily expand operating income. We aim to steadily expand net sales and operating income by increasing market share for cutting-edge semiconductor and FPD materials. We will launch the LIC and Life Sciences Businesses as a third pillar of our earning base. (100 million yen) 2,000 1,500 1, Change in net sales 1,800 1,330 1,400 Mar.14 Mar.15 Mar.16 Mar.17 JSR20i6 (FY) (100 million yen) Change in operating income Mar.14 Mar.15 Mar.16 Mar.17 JSR20i6 (FY) 19

20 Semiconductor materials: Growth driver We fully launched sales of cutting-edge materials from the second half of FY Mar.14. We provide materials for 20nm to 16nm generation products, clearly increasing our market share. We will focus on the development of materials for 14nm or later generation products next. We will realize optimization of the business process through intensive development and manufacturing at the Yokkaichi Plant. (100 million yen) +50% Growth rate of sales of immersion ArF photoresist (FY Mar.13 to FY Mar.14) 200 Change in sales of cutting-edge lithography materials nd half of Mar.13 1st half of Mar.14 2nd half of Mar.14 1st half of Mar.15 2nd half of Mar.17 Topcoat Under layer materials, etc. ArF Dry Immersion ArF (FY) 20

21 FPD materials: Growth driver We will further step up business development in Asia by using JSR s technologies. We aim to expand our market share for both commoditized and cutting-edge products. Change in sales of FPD materials (100 million yen) Component ratio of small- to medium-sized displays in FY Mar.14: JSR35% vs Market 20% 65% 60% Materials for large-sized panels We will expand our market share in the growing markets by strengthening our activities in East Asia. 35% * Materials for small- to medium-sized panels include precision materials and processing and ARTON. More than 40% Materials for small- to medium-sized panels We will enhance our added value by strengthening our product portfolio. (FY) 21

22 The trends of the Fine Chemicals business Point 1 The Internet of Things (IoT) is becoming widely available in the digital industry, connecting all people and things by the Internet. Point 2 There are five key words in technology that supports the digital industry. We will focus on sensor products in addition to existing product lineups in the Fine Chemicals business. Lithography materials Process materials Cutting-edge packaging materials Extension of a domain Memory Evolve in existing domains Power Drive Sensing Transmission Display Source: CISCO Near infra-red shield filter (NIR) Functional coating materials (OPSTAR) CMOS image sensor materials Bio sensor materials LCD materials OLED materials ARTON retardation film OFC Water proof materials (OPSTAR) 22

23 Strategic business: Define a key area of focus. We decided to focus on the LIC and Life Science businesses. Strategic businesses under JSR20i6 (i) LIC business (ii) Life Sciences business *Businesses previously classified as strategic businesses Play a role of adding value Performance Chemicals business Precision Materials and Processing business * Applying to the development of new applications in the Petrochemicals business * Adding value to products in each business as a crosssectional function 23

24 Examples of adopting LIC LIC business: Grow track record We have established a track record as a front-runner in the LIC market. Sales LIC adoptions have spread from low voltage and floor-standing products to high voltage and portable products. We started full-scale sales activities. Konica Minolta Portable X-ray imaging device Development Cell products Okamura Corporation Automatic Guided Vehicles (AGV) Sumitomo Construction Machinery Excavators Optare/ BLUWAYS Buses We began marketing small-sized prismatic-type cells in addition to laminated cells and largesized prismatic-type cells. High-voltage MDs are also available. * MD: Module New massproduction plant 2014 Completion Laminated cells Module products (MD) Prismatic-type cells Existing plant 既存工場 2015 Commencement of commercial production Standard MD Multiple-connection and high-voltage MD Water-cooled MD prototype JM Energy is constructing a mass production plant with capacity of 3 million cells per year. 24

25 LIC business: Market forecast The large-capacity capacitor market is forecast to expand significantly toward 2020 (including automobile applications). We aim to become a leader in the large-capacity capacitor market using differentiating technology and mass production capability. (100 million yen) Estimated market size for largecapacity capacitors Target in 2020 Our market share: more than 20% Status of LIC among rechargeable devices Our sales growth will accelerate (CY) *1. Market size of super capacitors(>300f) is estimated by JME. (Reference data: HIEDGE, Fuji-Keizai, Navigant Research) Largecapacity capacitor 25

26 Life Science business: Accelerate business expansion We have achieved a track record in the diagnostic reagent and medical polymer businesses over a long period of time. We aim to accelerate the development of the Life Sciences business by taking the opportunity to invest in MBL. (100 million yen) JSR Group s sales plan for the Life Sciences business Expand the scope of business into the bio/drug discovery fields. Accelerate global development. M&A Investment in MBL Establishment of J&W Establishment of JLS 0 (FY) JSR 20i6 (Note: The above net sales include sales of equity method affiliates.) 26

27 Life Science business: Expand the scope of business. We will focus on the bio-drug discovery process market. We will try to expand the scope of business-from raw materials to downstream and research reagents to drug discovery. Bio-drug discovery process Fundamental research Application research Clinical trial Review and approval Product Upstream Raw materials Beads Medical polymer Bio-process materials It takes 10 to 20 years to launch a product. Process materials Diagnostic reagents Research reagents and kits Cell culture and kits From research reagents to diagnostic agents discovery Test reagents Companion diagnostic reagents Appliances Downstream Equipment and devices Analysis system OEM service OEM From raw materials and reagents, to appliances, equipment and devices JSR s domain MBL s domain Overlapping domains 27

28 (ii) Outline of JSR20i6 Common measures for JSR group 28

29 Allocate resources Capital expenditures during the period of each mid-term business plan (on a capitalized assets basis) JSR20i6 We will invest approximately 100billion yen in total over three years. Main investment projects JSR20i3 2015: 2nd phase of JBE s plant construction Construction of a mass production plant by JM Energy 0 1,000 Petrochemicals business (100 million yen) Fine Chemicals business Strategic business and other 2016: Construction of a plant in Hungary Persons 7,000 5,250 3,500 1,750 Employment plan (all Group companies) 17% 26% 28% The percentage of employees working overseas to total employees is expected to increase along with the further expansion of overseas businesses. 0 Mar.2011 Mar.2014 Mar.2017 日本 Japan 海外 Overseas (FY) 29

30 Improve return on invested capital. We expect to achieve ROE at 12% and ROIC at 15% because our upfront investment is certain to increase profitability during JSR20i6. (100 million yen) 3000 Business valuation management (NPV, IRR, etc.) Company-wide activities: E100PlusC (cost down+ improvement of asset efficiency) Return to investors % % 13% 13% 12% Working capital % 10% 10% 10% 8% Non-current asssets ROIC ROE Mar.11 Mar.12 Mar.13 Mar.14 - Mar.17 ROIC: Net profit (Working capital + Non-current assets) (FY) 30

31 (iii) Summary 31

32 Summary: JSR20i6 Mission Although the business environment is expected to remain uncertain we will achieve operating income of 50 billion yen by steadily reaping the fruits of investment under JSR20i3. Achieve results Expand market share for S-SBR and cutting-edge lithography materials Fully launch the LIC and Life Sciences businesses Middle line control Achieve market capitalization of 1.0 trillion yen Establish a corporate structure resistant to changes. Build up competitiveness that enables us to achieve sustainable growth. Develop a third pillar of business. Define strategies Make an upfront investment JSR20i3 PhaseⅠ JSR20i6 Phase Ⅱ JSR

33 * "FY ended March 31 "JSR's accounting period (fiscal year) is defined as the period from April 1 to March 31 of the following year. When noted "FY March 2015", this indicates the period from April 1, 2014 to March 31, 2015 * The forecasts, future plans and strategies made in this document contain a variety of uncertain factors, since it has been prepared based on judgments from currently available information. Actual business results may differ from those projected, depending on factors such as the economic status of the market surrounding the company.