ANNUAL REPORT Year Ended March 31, 2014

Transcription

1 ANNUAL REPORT 214 Year Ended March 31, 214

2 To Our Shareholders Ever since its founding, Iwatani Corporation has grown as a company that supplies gases and energy resources that are critical to society by adhering to our universal corporate philosophy for all employees: Become a person needed by society, as those needed by society can prosper. In the coming years, we will continue our efforts to enhance corporate value by operating in wide-ranging business fields. We will focus mainly on our core businesses the Energy business, which supports the lifestyles of 3.1 million households nationwide through the supply of LPG, and the Industrial Gases & Machinery business, which supports every manufacturing industry in Japan by supplying liquid hydrogen, helium, and other high-pressure gases. At the same time, we will be developing our Materials and Agri-bio & Foods businesses. For the coming hydrogen society, a goal now close at hand, we will draw fully on the knowledge and technologies we have cultivated, over many years as a leading supplier of industrial hydrogen, to press ahead with infrastructure development and contribute to popularizing and expanding the use of hydrogen, the ultimate clean energy source. We will further build on our strengths in our core businesses and work to establish a solid business foundation that can respond to changes in the business environment. We ask your continued support in the years to come. Chairman and CEO Akiji Makino Gas & Energy Supplying Gas & Energy to meet the needs of society Contents To Our Shareholders... 1 Business Overview... 2 Iwatani s Future... 3 An Interview with the President... 5 Performance by Segment... 8 Financial Highlights... 9 Company Information... 1 Disclaimer Regarding Forward-looking Statements: This report contains forward-looking statements regarding the Company s plans, outlook, strategies and results for the future that are based on management s estimates, assumptions and projections at the time of publication. Certain risks and uncertainties could cause the Company s actual results to differ materially from any projections presented in this report. These risks and uncertainties include, but are not limited to, the domestic and international economic circumstances surrounding the Company s businesses, competitive activity, related laws and regulations and exchange rate fluctuations. 1

3 Business Overview Energy Since Iwatani became Japan s first nationwide supplier of LPG for household use in 1953, we have been building an independent and stable supply structure that extends end to end from oil-producing countries to our customers kitchens. We support Japan s energy infrastructure by building a disaster-resilient supply system and diversifying our supply sources. Today and... Industrial Gas es & Machine ry As a unique trading company with technological capabilities range of high-pressure gases, including oxygen, nitrogen, argon, and other air-separation gases as well as hydrogen and helium, which offer prospects for future growth. We maintain a constant quest for solutions beyond industrial fields, made possible with th e appl pl ic a- tion of gas te chno nologi es. Mate teri rial s We hav ave ac hieved ed a stable supp pply of mine ral sa nd and rare eart rth meta tals and support wide de-ranging ind ndus ustr ies th roug ugh the supp pply of ma teri rial s. We enga gage ge in the mate teri rial als bu sinessss worl rldw ide, foc ocus usin ing main inly on function onal mat ater eria ls such as film lms for smartp tpho hone nes and resi sin raw ma terial s such as PET re sins. Agri -bio & Foo oods We pro rovide saf afe and reli able foo ood by operating busi sine sses in the field lds of agr gricul ture and livesto ck, includ udin ing the impo rt and sale of veg egetables, mar arin ine prod ucts, an d othe her froz ozen foo ood pr od ucts. We als lso cont ntri ribu bute to pe ople le s liv ives in a numb mber of food od-r -rel elat ated fields throug ugh acti tivities inc ludi ding the con onst stru ruct ctio ion an d installation of plant fact orie s. 2

4 Iwatani s Future A new era of hydrogen power pioneered by 212 Demand for hydrogen for industrial use 14 million m 3 Semiconductors Road to a Hydrogen Society 215 Hydrogen stations 1 locations Preliminary construction of 2 hydrogen stations by 215 Optical fibers Strengthening of supply capabilities for the future The Iwatani Group, Japan s only supplier of liquid hydrogen, operates three hydrogen liquefaction plants in Japan. Sales volume of liquid hydrogen is increasing each year, and we are considering constructing a fourth plant to further boost our supply capabilities. As we move forward, we will also consider large-scale procurement of hydrogen produced overseas. Liquid hydrogen is the critical link between hydrogen production, and its transport, storage and use As demand for hydrogen increases accompanying the popularization of hydrogen energy, it will become necessary to transport large quantities of hydrogen. This will require liquid hydrogen. We will realize a stable supply of inexpensive hydrogen by leveraging liquid-hydrogen handling technologies developed over many years to build a supply chain extending from the production of hydrogen to its transport, storage and use. 1% Liquid hydrogen share Yamaguchi Liquid Hydrogen Corporation Bases for liquid hydrogen production Iwatani Industrial Gases Corporation Chiba Plant Hydro Edge Co., Ltd. (Osaka) Liquid hydrogen container Produce Deliver 3

5 ...future 225 Demand for hydrogen for fuel cell vehicles 2,4 million m 3 Hydrogen stations 7 locations Targeting annual hydrogen sales of 6 million m 3 by 225 Hydrogen is attracting widespread attention as the ultimate clean energy source. The market introduction of fuel cell vehicles that use hydrogen as fuel is scheduled for 215, and the size of the hydrogen market is expected to increase more than fifteen-fold by 225. The Iwatani Group aims to achieve annual hydrogen sales of 6 million m 3 by 225, including hydrogen for industrial use and for household use. To that end, we are working to further boost our supply capacities and handling technologies and to create new markets. Liquid hydrogen is the key to popularization Measures to promote the use and application of hydrogen Key characteristics of liquid hydrogen are high-volume transport, high-volume storage, and high purity. Liquefaction of hydrogen gas reduces its volume by about 8 times, making it possible to increase High purity % transport efficiency approximately ten times compared to compressed hydrogen gas. Liquefaction also makes it possible to satisfy the requirement for high quality. Hydrogen liquefaction is an essential technology for the realization of a hydrogen society. The development of hydrogen infrastructure is necessary for popularizing fuel cell vehicles, and Iwatani plans to construct 2 hydrogen stations by 215. We also leverage our technological expertise to sell equipment and consult on engineering for hydrogen stations being built by other companies, and to promote the use and application of hydrogen energy. Transport efficiency Approx. 1 times Compressed hydrogen gas Liquid hydrogen Opening ceremony at Amagasaki Hydrogen Refueling Station Use 4

6 An Interview with the President The year ended March 31, 214 (fiscal 213) marked a solid start for the PLAN15 medium-term management plan. In the first year of the plan, Iwatani exceeded the targets for net sales, operating income, ordinary income, and net income announced at the beginning of the term. In fiscal 214, we will continue efforts to enhance corporate value by enhancing of capacity for sustained growth and strengthening of the financial standing. President Masao Nomura Question 1 What is the outlook for fiscal 214? Answer Business conditions in Japan appear to be headed toward a full-scale recovery. In this environment, we forecast higher profit, mainly from our two core businesses: the Energy business and the Industrial Gases & Machinery business. In the Energy business, we will work to enhance earning power by continuing efforts to increase the number of LPG consumer households and strive to establish a stable supply structure by beginning importation of LPG from the U.S., as well as other means. In the Industrial Gases & Machinery business, we will work for expansion of the business base by leveraging the Iwatani Group s strengths. These include helium, for which we have undertaken all-out strengthening of supply capabilities, and liquid hydrogen, for which we have a high market share. We plan to increase net sales by 2.9 billion and operating income by 1. billion through these initiatives. Net Sales ( billion) billion up Operating Income ( billion) billion up (FY) (Forecast) Energy Industrial Gases & Machinery Materials Agri-bio & Foods Others (FY) Energy Materials Others (Forecast) Industrial Gases & Machinery Agri-bio & Foods 5

7 Question 2 What is Iwatani s sales strategy for helium? Answer The Iwatani Group began purchasing helium from Qatar in July 213. Procurement from Qatar will increase in fiscal 214, when purchasing will extend throughout the full year. This, together with procurement from the U.S., will give Iwatani approximately 8% of world supply capabilities. We will work to ensure stable supply in Japan while also proceeding with sales expansion in growth markets such as China and Southeast Asia. Our strategy for the distribution system is to work to strengthen the supply structure and increase profitability by making continuous investments in helium containers and developing distribution bases. We will also undertake long-term reinforcement of our supply capabilities by working to secure new procurement sources. Qatar The U.S. Volume handled: Approximately 8% of world supply capabilities Bases for helium distribution Question 3 What is the plan for importing LPG from the U.S.? Answer Iwatani will import LPG sourced from shale gas from the U.S. beginning in fiscal 214, and plans to import approximately 88, tons in the first year. Since this is a small portion of the volume we handle, we expect the impact on our business performance to be slight. Since we currently rely heavily on LPG imports from the Middle East, we will work to reinforce a stable supply structure by diversifying supply sources. LPG export terminal (Houston) 6

8 An Interview with the President Question 4 Answer What is the current status of hydrogen station construction anticipating the market introduction of fuel cell vehicles? Iwatani aims to construct 2 hydrogen stations by fiscal 215. The first of these, Japan s first commercial hydrogen station, opened for business within the Iwatani R&D Center in Amagasaki City in July 214. Since this station is supplied with liquid hydrogen, it has the supply capacity to support high-volume consumption. In addition, we plan to build a hydrogen station within Kansai International Airport to supply buses and work vehicles. With the Tokyo Olympics fast approaching, we will also proceed with construction of a hydrogen station in central Tokyo, where early uptake of fuel cell vehicles is expected. Dispenser at commercial hydrogen station Question 5 What is Iwatani s dividend policy? Answer The Iwatani Group has a basic policy of reliably paying stable dividends. Our goal is to provide appropriate shareholder returns, paying careful consideration to the outlook for business results and the business environment. We paid a dividend of 7 per share for fiscal 213. We plan to pay a dividend of 7 per share for fiscal 214. Iwatani will continue efforts to enhance corporate value as a company needed by society. I request the continued understanding and support of our shareholders in the coming years. 7

9 Performance by Segment (Years ended March 31) 3.8% 1.8% 18.% Percentage of Net Sales Energy Industrial Gases & Machinery Materials Agri-bio & Foods Others 21.5% 54.9% Segment Performance Review Energy LPG for household, commercial and industrial use LPG-supply equipment and facilities LNG Petroleum products Household kitchen appliances Home energy components Daily necessities Portable cooking stoves Gas canisters Mineral water, etc. Net Sales Operating Income ( million) ( million) 4, 386,718 15, 12,75 12, 3, 9, 2, 6, 1, 3, (FY) (FY) Despite the impact of a decline in the per-unit consumption of residential and commercial customers and a review of less-profitable wholesale trading, Iwatani strove to boost earning power through continued expansion of the number of LPG consumer households and operating cost reductions. In addition, sales of LPG emergency power generators, photovoltaic power generation equipment, and other energy-related equipment increased. As a result, operating income rose by approximately 1, million. Industrial Gases & Machinery Net Sales Operating Income Air-separation gases Hydrogen Helium Other specialty gases Gas-supply facilities Welding materials ( million) 16, 151,474 ( million) 5, 4,753 Welding and cutting equipment 4, Industrial machinery and facilities 12, Industrial robots 3, Pumps and compressors 8, Disaster prevention equipment 2, High-pressure gas equipment Semiconductor manufacturing equipment Electronic-component manufacturing equipment Factory automation systems 4, 1, Medicine and food packing machinery Environmental equipment, etc. (FY) (FY) Despite the continued impact of increases in electricity charges, sales of industrial gases were stable, thanks to a trend toward recovery in plant operation at domestic manufacturers and higher demand overseas and other reasons. Sales of helium greatly increased as supply from Qatar began. In the hydrogen business, the sales volume of liquid hydrogen increased. In the machinery and facility business, sales of hydrogen-related facilities increased as well. As a result, operating income rose by approximately 8 million. Materials Stainless steel Non-ferrous metals Functional plastic products Electronic display materials Mineral sand Rare earth metals, etc. Net Sales Operating Income ( million) ( million) 15, 3, 126,885 2,683 1, 2, 5, 1, (FY) (FY) Sales of functional films for smartphones in the electronic materials business were strong. Profit improved in the resources and new materials business due to factors including recovery in the mineral resource raw materials business in Western Australia. Sales of stainless steel increased in the metals business. In the functional plastics business, profitability of plastics products declined due to soaring raw materials prices, despite strong sales of PET resin and other resin raw materials. As a result, operating income rose by 8 million. Agri-bio & Foods Frozen vegetables and fruits Health foods Livestock-related products Agri-bio related goods Food plant sanitation management, etc. Net Sales Operating Income ( million) ( million) 3, 26, , 4 1, 2 Although profitability in the foods business decreased due to factors including the impact of cost increases in producing countries and exchange rates, sales of frozen vegetables and marine products increased. In the agriculture and livestock business, sales of plant factories, livestock raising facilities, and other products were favorable. As a result, operating income rose by approximately 68 million. (FY) (FY)

10 Financial Highlights (Years ended March 31) For the year million US$ thousand Net sales 555, , , ,6 73,923 $ 6,839,516 Gross profit 133,24 138,68 144, , ,792 1,426,272 Operating income 13,732 14,868 19,171 16,79 18, ,926 Ordinary income 13,448 15,59 19,528 17,46 19, ,116 Income before income taxes and minority interests 12,93 12,85 19,535 15,465 18,32 177,827 Net income 5,539 6,193 1,543 8,26 1,466 11,69 Comprehensive income 4,888 1,58 13,691 16, ,191 R&D expenses ,368 13,291 Ratios % % Net income to net sales ROE (net income to net assets) ROA (ordinary income to total assets) Equity ratio Per share data Yen U.S. dollars Net income Shareholders equity Cash dividend applicable to the period At year-end million US$ thousand Total assets 366,11 373,94 386, ,32 416,219 4,44,12 Fixed assets 198, ,811 2,354 27, ,724 2,86,319 Interest-bearing debt 158, ,18 159, , ,99 1,565,283 Net assets 67,999 71,249 79,551 9,93 15,58 1,2,773 * The U.S. dollar amounts have been translated at the prevailing exchange rate as of March 31, 214, which was to US$1.. Net Sales ( million) Operating Income ( million) Net Income ( million) 7, 2, 12, 6, 5, 4, 3, 2, 1, 15, 1, 5, 1, 8, 6, 4, 2, Total Assets ( million) 5, 4, 3, 2, 1, Net Assets ( million) 12, 9, 6, 3,

11 Company Information (As of March 31, 214) Company Information Name Formal establishment February 2, 1945 Headquarters Osaka Head Office 6-4, Hommachi 3-chome, Chuo-ku, Osaka , Japan Tel: Tokyo Head Office 21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo , Japan Tel: Company directors and auditors Chairman and CEO* Akiji Makino Vice Chairman* Toshio Watanabe President* Masao Nomura Executive Vice President* Kazuhiko Minamimoto Executive Vice President* Hisato Ueha Senior Executive Director* Mitsuhiro Tanimoto Senior Executive Director* Masami Makise Senior Executive Director* Hirozumi Hirota Executive Director* Masanori Watanabe Executive Director* Masaaki Miyashiro Executive Director* Hiroyuki Onji Executive Director* Takashi Funaki Executive Director* Hiroshi Majima Director* Naoki Iwatani Director* Akira Ohta Director* Katsuya Takemoto Corporate Auditor Toyofumi Ohama Corporate Auditor Yoshiaki Fukuzawa Corporate Auditor Masahiro Horii Corporate Auditor Mitsuaki Naitou * An asterisk indicates the holding of concurrent positions as director and executive officer. (As of June 27, 214) Paid-in capital 2,96 million yen Number of employees 8,741 (consolidated) Website Share Information Share listing Agent to manage shareholders registry Distribution of shares by type Tokyo, Nagoya Shares of common stock issued and outstanding Mitsubishi UFJ Trust and Banking Corporation Individuals and others 32.68% Financial institutions 27.85% Other institutions 25.42% Foreign institutions and others 12.64% Securities companies 1.41% 246,385,997 (4,979,31 shares of treasury stock excluded) shareholders 22,755 Major shareholders* Name * In addition to the above, the Company holds 4,979,31 shares of treasury stock. Number of shares held (Thousands of shares) Shareholding ratio (%) The Iwatani Naoji Foundation 2, The Master Trust Bank of Japan, Ltd. (Trust Account) 9, The Chase Manhattan Bank, N.A. London S.L. Omnibus Account 7, Tetsu Iwatani Co. Ltd. 6, The Bank of Tokyo-Mitsubishi UFJ, Ltd. 6, Japan Trustee Services Bank, Ltd. (Trust Account) 6, Resona Bank, Ltd. 5, Iwatani Enyukai 5, Nippon Life Insurance Company 5, Iwatanisangyou Senyukai 4, Share Price (Yen) 8 Trading Volume (Thousand shares) 2, 6 15, Change in share price 4 1, 2 5, May Apr. Mar. Feb. Jan. Dec. Nov. Oct. Sept. Aug. Jul. Jun. May Apr. Mar. Feb. Jan. Dec. Nov. Oct. Sept. Aug. Jul. Jun. Jun. May Apr. Mar. Feb. Jan. Dec. Nov. Oct. Sept. Aug. Jul. Jun. May Apr. Mar. Feb. Jan. [211] [212] [213] [214] 1

12 Osaka Head Office 6-4, Hommachi 3-chome, Chuo-ku, Osaka , Japan Tel: Fax: Tokyo Head Office 21-8, Nishi-Shimbashi 3-chome, Minato-ku, Tokyo , Japan Tel: Fax: Corporate Website FSC LOGO Printed in Japan