Tasks and Strategies for 2015

Transcription

1 Medium term Business Plan PEGASUS PhaseⅡ (2014~2015): Tasks and Strategies for 2015 Please refer Notes on page 45. March, 2015 (Corrected on March 26, 2015) SHOWA DENKO K.K. Hideo Ichikawa President & CEO

2 Contents 1. PEGASUS PhaseⅡ (2014~2015) 2. Business strategies for Strategies for major businesses 4. Priority tasks Appendix 2

3 1. PEGASUS PhaseⅡ(2014~2015) 3

4 1. PEGASUS Phase Ⅱ( ) Measures taken in PEGASUS PEGASUS Structural reform to cope with drastic changes in the business environment 1) Strategy to accelerate growth 2) Restructuring of business scheme 3) R&D focusing on promising themes 2015: Acceleration of structural reform Improvement in earning power PEGASUS( ) PhaseⅠ ( ) PhaseⅡ ( ) Post PEGASUS Faster Growth Post PEGASUS 4

5 1. PEGASUS Phase Ⅱ( ) Business portfolio in PEGASUS PhaseⅡ SiC epi-wafer for power devices Fuel cell catalysts LIB materials New Growth Semiconductorprocessing highpurity gases Functional chemicals Growth High-purity aluminum foil Aluminum cans PhaseⅡ Base (Growth) HD media Graphite electrodes Inorganic functional materials Basic chemicals / Industrial gases LEDs Base (Stable) LBP cylinders Shotic TM Rare earths Petrochemicals 5

6 1. PEGASUS Phase Ⅱ( ) Restructuring of business scheme Aluminum heat exchanger for cars (Sold) VGCF TM X (Terminated) GaN LED (Separated into a JV) Ethyl acetate Change in production method (Japan) Closed a plant in Indonesia Venalum (Wrote down, aluminum smelter in Venezuela) Power generation (New contract) Aluminum panels (Sold) Aluminum alloys (Sold) Alumina Closed Yokohama Plant Plant in Indonesia started operation Ceramics Integration of domestic plants Power generation plant in Kawasaki Acquisition of treasury stocks To boost shareholders return: Acquired treasury stocks amount to 68.3 million shares ( 10 billion) 6

7 2. Business strategies for

8 2. Business strategies for 2015 World economy forecast World U.S.A. Europe China Japan IMF: World economy forecast (in real GDP growth rates) (January 2015) 0.8 Overseas U.S.A.: Strong growth China: Slower growth (New normal) Europe: Prolonged stagnant mood ASEAN: Slower but steady growth We watch impacts of plunges in crude oil prices on world economy Japan Mild recovery with uncertainty Pickup in consumer spending Benefits of a weak yen Bottoming out of crude oil prices Enforcement of growth strategy by the government expected 8

9 2. Business strategies for 2015 Changes in the business environment 2014 Naphtha and petrochemicals prices plummeted Aluminum ingot prices soared 2015 forecast Naphtha price will rise somewhat in 2H Aluminum ingot prices will fall back but yen based prices will remain high Naphtha and crude oil prices Aluminum ingot prices, domestic (US$/t) 1050 Naphtha prices (left) (US$/bbl.) 170 (Thousand /t) Crude oil prices (Brent) Jan 2013 Apr. Jul. Oct. Jan Apr. Jul. Oct. Jan. Apr. Jul. Oct forecast Jan Apr. Jul. Oct. Jan Apr. Jul. Oct. Jan forecast Apr. Jul. Oct. 9

10 2. Business strategies for 2015 Priority tasks under PhaseⅡ business portfolio Growth : Accelerate intensive business expansions overseas. Strengthen earning power. Base (Growth) : HD media: Expand sales of media for near line servers Graphite electrodes: Expanded production facilities in the U.S. will start operation Base (Stable) : Maintain stable operation and high operating rates of plants New Growth : Monetize businesses through expansion 10

11 2. Business strategies for financial results; Plans for Results 2014 Results 2015 Plan* b a Net sales Operating income Net income Dividends 3 3(planned) 3 a b (Billions of Yen) Assumptions for 2015 Exchange rate: 115 yen/us$ Naphtha price: 1H: 45,000/kl 2H: 57,000/kl * Announced on February 12,

12 2. Business strategies for 2015 Sales and operating income by segment 2013 Results 2014 Results 2015 Plan* (Billions of Yen) b a Petrochemicals Net Sales O.I. ** Chemicals Net Sales O.I Electronics Net Sales O.I Inorganics Net Sales O.I Aluminum Net Sales O.I Other Net Sales O.I Adjustments Net Sales O.I Total Net Sales O.I ** O.I.: operating income * Announced on February 12, 2015 a b 12

13 2. Business strategies for 2015 (Billions of Yen) 30.0 Operating income H H 1H H 1H 2H 2015 Plan 13

14 2. Business strategies for 2015 Factors for increases in operating income, 2014 vs (Billions of Yen) Petrochemicals No shutdown maintenance +3.0 Price +5.0 Cost reductions +2.0 Inventory valuation Price Exchange rate +6.0 Cost reductions +8.0 Volume, etc Segments other than petrochemicals Plan 14

15 2. Business strategies for 2015 Strategy to accelerate growth Ongoing investment projects under PhaseⅡ China Graphite electrodes High-purity aluminum foil Semiconductor-processing high-purity gases BMC new plant Korea Semiconductor-processing high-purity gases U.S.A. Graphite electrodes Malaysia Shotic TM Indonesia Ceramics Taiwan Semiconductor-processing high-purity gases Vietnam Rare earths Aluminum cans 15

16 2. Business strategies for 2015 Capital investment plan Concentrating on carefully selected projects Strategic investment: Overseas market, centering on Asia (Billions of Yen) Capex by segment Aluminum Inorganics Others 51.2 billion for 2015 Petrochemicals Electronics Chemicals Plan* Capital investment Depreciation expenses * Announced on February 12,

17 2. Business strategies for 2015 Cost reduction plans for 2015 Cost reduction plan : 10.0 billion Take strategic measures Cost reduction by segment Aluminum Inorganics Others 10.0 billion for 2015 Petrochemicals Chemicals Electronics 17

18 3. Strategies for major businesses 18

19 3. Strategies for major businesses HD media 1 Base (Growth) Leading the industry with Best in Class strategy HDD/HD media market forecast 2 HDD HD media D/D ratio (million units) (millions) Important themes Market: Demands for near line servers will further increase Aluminum substrates: Supply and demand situation will be tighter Strengthen integrated production of media and substrates, and expand sales of media for near line servers Ratio of aluminum media and D/D ratio will rise (TSR and SDK estimates.) 19

20 3. Strategies for major businesses HD media 2 Steadily increasing our market share, as our technical advantages are recognized Base (Growth) HDD market by supplier HD media market by company Toshiba 16% Seagate 40% mil. Western Digital 28% HGST 16% Fujitsu 3% Maxtor 5% HOYA 7% 19% Fuji Electric 11% mil. units Western Digital 19% Seagate 24% HGST 12% 24% Fuji Electric 5% mil. units Seagate 29% Western Digital 25% HGST 17% HDD market by application Enterprise 12% Desktop 36% mil. Mobile* 52% (TrendFocus, TSR and SDK estimates.) *Mobile: PC, external, auto, etc. 20

21 3. Strategies for major businesses Base (Growth) HD media 3 SDK continues displaying technology leadership 2.5 Marketed 8th generation media (750GB) with PMR technology Accelerate technology development to realize 1TB/pl. 3.5 Started commercial production of TB/pl. media (GB/pl) 1TB 500GB 2.5 pl. Progress in media density and capacity 500GB 670GB 750GB 1TB 1.5TB 2TB HAMR PMR SMR (SDK estimates.) 21

22 3. Strategies for major businesses Base (Growth) Graphite electrodes (GE) 1 Returns to growth track World s EAF production: +3 5%/y growth expected Sales of SDK s graphite electrodes (%) Plan Omachi U.S.A. Sichuan Important themes Improve profitability U.S.A. Increased capacity More high end products Japan Facility renewal Raise productivity China Starts commercial production of UHP 22

23 3. Strategies for major businesses Supply & demand gap narrows thanks to reduction in global capacity and demand recovery in US. (Net S/D gap) Surplus N/C/S America Asia (excepting China) Graphite electrodes (GE) 2 GE Global Supply/Demand gap Europe/CIS MENA Capacity utilization rate 83 SEC,3% NCK,4% India 20% TKC 13% Other 3% 2014 UHP(GE) global supplier Graftech 23% SGL 21% Base (Growth) GE production capacity by supplier % Shortage Estimate (SDK estimates.) 23

24 3. Strategies for major businesses Sales in four Growth businesses Accelerate business expansion centering on Asia Growth (Billions of yen) Plan Aluminum cans High purity aluminum foil Functional chemicals Semiconductor processing high purity gases 24

25 3. Strategies for major businesses Semiconductor/LCD processing high purity gases Accelerate growth through Matrix Strategy Semiconductor market in Asia Pacific ($ billion) Forecast in spring 2014 Increased in autumn (WSTS) Application Japan China Taiwan Korea Singa pore Important themes NH 3 N 2 O HBr Cl 2 Other gases Material gas Etching Incre ase ( 15) Incre ase ( 15) Incre ase ( 15) Incre ase ( 15) Incre ase ( 15) Acqui sition ( 14) New/ Incre ase ( 15) New/ Incre ase ( 15) Showa Specialty Gas (Taiwan) Co., Ltd. Growth Infras truct ure New site ( 15) Expa nsion ( 14) Expa nsion ( 14) 25

26 3. Strategies for major businesses Growth Functional chemicals Expanding Chinese market SDK locates Second Bulk Molding Compound Plant in China BMC Important themes Europe China Zhuhai Composite materials Establish second BMC production site in China Consolidate a subsidiary in Shanghai (1Q) Increase sales for infrastructure use Bionolle TM BMC production site Bionolle TM (Biodegradable plastic) Europe & China: Stricter environmental regulation Aggressive marketing focusing on expanding markets 26

27 3. Strategies for major businesses High purity aluminum foil Established two production site formation, one in Japan and the other in China, to accelerate growth Growth (thousand ton /year) Electrolytic foil (high voltage) market forecast High end Volume '10 '13 '15 '18 '10 '13 '15 '18 Japan China (SDK estimates.) Important themes Nantong, China Commercial operation started Improved profitability Capacity t/month (March) Expand sales in China Japan More production of high-value-added products Increase domestic market share to be more than 60% Improve profitability by thorough cost reduction Revise role margin (processing fee) 27

28 3. Strategies for major businesses Aluminum cans Develop Vietnamese market in full scale Recover earning power in Japanese market Growth Sales of SDK s aluminum cans Important themes Plan conventional for coffee Vietnam Vietnam (Hanacans) Improve quality Sales expansion Lid production starts (4Q) Japan Expand sales of cans for coffee with milk Continue negotiation to revise prices 28

29 3. Strategies for major businesses Petrochemicals Base (Stable) Compact, Open, Well balanced ($/t) Market prices of ethylene and naphtha Naphtha (3 months before) Spread worsened (Naphtha price plummeted) Spread Ethylene '14/Jan. Apr. Jul. Oct. '15/Jan. Apr. Important themes Steady supply-demand balance of olefin in East Asia Market prices: Recovery expected in 2H of 2015 Ethylene: Full capacity operation continues Acetyls: Contribute to increasing profit Promote regional cooperation New production method for butadiene Commercial application in

30 3. Strategies for major businesses Base (Stable) Chemicals We will do our best to recover our revenue base Important themes NH₃: Increase the percentage of feedstock from used plastic to 65% Acrylonitrile: Improve spread Chloroprene: Increase sales to the U.S. A. market CO 2 gas, Dry ice: Tight supplydemand situation Open up new market Power generation business: Improve profitability 30

31 3. Strategies for major businesses R&D focusing on promising themes Focuses on supporting expansion of existing businesses New Growth Development in area related to growth sectors Development departments at plants Institute for Polymers & Chemicals Growth & New growth sectors (Electronics / Energy & Environment) Institute for Advanced and Core Technology Strengthen existing businesses Projects Carbon nanofiber (VGCF TM ) Strengthening SiC epitaxial wafers Plant factory units Full lineup of nano carbons (CNT, Fullerene, Graphene) 31

32 3. Strategies for major businesses New Growth Lithium ion battery materials Respond to the emerging large scale LIB market Go in to growth track Important themes Laminated film Added production lines started commercial operation Improve quality Accelerate development of new products Anode material (SCMG TM ) Expand sales of new grade products for car applications Accelerate development of large capacitance products Carbon nanofiber (VGCF TM ) Expand applicability to car use 32

33 3. Strategies for major businesses New Growth SiC epitaxial wafers for power devices Improve our position in line with the market expansion Important themes Railcars Applied to commuting trains in 2015 Smart grids Car application Widely applied by 2020 Expanded production lines for 6 SiC epitaxial wafers Capacity has been tripled Improved productivity Strengthen R&D power Attain fewer surface defects Improve uniformity Home appliances Inverter air conditioners Power control unit for solar panels 33

34 4. Priority tasks 34

35 4. Priority tasks SDK Group s priority tasks Zero disaster, Zero accident More safe and stable operation of plants Commitment to achieving the targets Strategies anticipating changes in the environment: Promote globalization and diversity Grasp customer needs quickly and achieve the targets earlier than planned Take measures considering the next medium term business plan Identify milestones to boost the competitiveness of the SDK Group 35

36 Notes Performance forecast and other statements pertaining to the future as contained in this presentation are based on the information available as of today and assumptions as of today regarding risk factors that could affect our future performance. Actual results may differ materially from the forecast due to a variety of risk factors, including, but not limited to, the economic conditions, costs of naphtha and other raw materials, demand for our products, market conditions, and foreign exchange rates. We undertake no obligation to update the forward looking statements unless required by law. 36

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