“For Tomorrow 2015” Mid-term Management Initiative
(FY 2011–2015) progress and outlook
May 27, 2013Taketsugu Fujiwara
PresidentAsahi Kasei Corporation
2
1. Progress of basic strategy
2. Progress and forthcoming steps of business strategy
3. Future development of “For Tomorrow 2015”
3
1. Progress of basic strategy
2. Progress and forthcoming steps of business strategy
3. Future development of “For Tomorrow 2015”
Megatrends Group Mission and Values
Creating for Tomorrow – the Asahi Kasei Group is creating new things for the future based on the perspectives of “living in health and comfort” and “harmony with the natural environment.”
1. Business Strategy 2. Reformation of corporate systems
Promotion of “one AK” management
1. Global business expansion
2. Creation of new businesses
3. Propagation of our mission, values, and vision
4. Human resource policies
5. Management control, resource allocation
Pursuit of growth1. Expansion of world-leading
businesses2. Creation of new value for society
Promotion of businesses based on living in health and comfort and harmony with the natural environment
1) Environment/energy-related2) Residential living-related3) Health care-related
Basic Strategy
Framework of basic strategy
Streamlining project for improved profit structure (Additional measure in FY 2012)4
Outlook in FY 2011 and FY 2012
5
•Falling short of performance goal due to deteriorated performance of highly- volatile businesses such as commodity chemicals and electronics with change of global and Japanese economy and market structure
•Establishment of base for growth by advancing basic strategy
Expansion of world-leading businessesExecution of aggressive investment and expansion actions; contribution from FY 2013
Creation of new value for society
• Start of actions for expansion in all businesses towards creation of value for society in three aspects
(Acquisition of ZOLL Medical Corporation to boost the Health Care business sector as a driver of growth)
• Development of “For Tomorrow” projects combining technologies and businesses from both inside and outside the Asahi Kasei Group
Streamlining for improved profit structureEstablishment of group-wide streamlining project
6
Main actions for growth in FY 2011 and FY 2012
Start of streamlining project for improved profitEstablishment of infrastructure for growth; Asahi Kasei (China) Co., Ltd. and Asahi Kasei India Pvt. Ltd.
Blue letters indicate completed actions
• Establishment of Asahi Kasei Pharma America Corp.Overseas clinical trial of Recomodulin™
• Acquisition of ZOLL- Entry into critical care- Establishment of Japanese
subsidiary• Additional indication for
Famvir™ anti-herpes agent• Acquisition of sales right for
overactive bladder drug
• R&D on cell therapy
• Product lineup of Hebel Haus™ and Hebel Maison™- 2-generation homes w/room for an
unmarried sibling- Apartment buildings which support
raising children- 2-generation homes w/system for
energy saving between families- Homes with semi-outdoor space
• Establishment of Asahi Kasei Fudousan Residence Corp.
• New lifestyle proposals Completion of “HH 2015” demonstration house
• Nonwovens New plant in Thailand
• Insulation panels Plant expansion in Sakai
• Ultraviolet light-emitting diodes (UV LEDs)- Crystal IS, Inc. in US becoming wholly owned subsidiary
- Construction of pilot line in Fuji• Lithium ion capacitors (LICs)
Establishment of joint venture and increase in capital
• Acrylonitrile (AN) New propane-process plant in Thailand and expansion in Korea
• Solution-polymerized SBR (S-SBR) Completion of plant and decision for expansion
• Hipore™ Expansion of overseas processing and sales bases, expansion of Hyuga plant
• Dry film photoresist New plant in Changshu, China, establishment of technology center in Suzhou, China
• Bemberg™: Decision of plant expansion• Roica™: Enhancement of Asian plants• LSIs: Expansion of overseas business
World-leading businesses
Environment & Energy Residential Living Health Care
Measures across different business units
Business performance in FY 2011 & FY 2012, and forecast for FY 2013
7
Business sector
Overview (black letters indicate FY 2011 & FY 2012, and blue letters indicate FY 2013)
Chemicals & Fibers
• Good performance of polymer products and specialty products in Chemicals, good performance in Fibers. Chemicals and derivative products struggled against sluggish demand in emerging markets. Decreased operating income for 2 years in a row.
• Large increase in operating income due to correction of the high yen and contribution of results of measures for expansion.
Homes & Construction
Materials
• Record high operating income in both FY 2011 and FY 2012 enabled by innovative lifestyle proposals.• Further growth by meeting increased demand before consumption tax increase. Advancing countermeasures
against demand decline after the tax increase.
Electronics• Falling far short of the plan due to strong yen, poor condition of Japanese electronics manufacturers, and
accelerated hollowing-out of domestic electronics industry. Decreased operating income for 2 years in a row.• Recovery of performance due to correction of the high yen and strengthening of overseas operations. Advancing
recovery plan for growth.
Health Care
• Rapid growth exceeding plan by volume expansion of new drugs developed in-house. Expansion of ZOLL in critical care as planned.
• Pharmaceuticals & critical care: continuing good performance Medical devices: recovery of performance of overseas businesses with correction of the high yen. Advancing measures for expansion.
FY 2011 & FY 2012: Falling short of the plan due to deteriorated performance of global businesses• Poor performance in chemicals and derivative products such as AN, electronics, etc. due to change of operating
environment, including extreme strength of Japanese yen, European sovereign debt crisis, and slowdown of Chinese economic growth.
• Good performance in other businesses, especially homes and pharmaceuticals, in line with or exceeding plan.FY 2013
Forecasting record high operating income, ¥130 billion by reaping results of actions for growth and favorable turn of environment. Return to growth.
38.657.3 65.5
7.08.8
15.920.57.38.2
68.6 47.6
48.2
50.0
27.9
14.36.4 2.8
10.0122.9
104.3 92.0
130.0
(40)
(20)
0
20
40
60
80
100
120
140
160
180
FY 2010 FY 2011 FY 2012 FY 2013 forecast
8
Operating income by business sector
Good performance of Homes & Construction Materials and pharmaceuticals & medical devices
Market slowdown due to change of business structure in Electronics and sluggish demand for AN Electronics
Chemicals & Fibers
Pharmaceuticals & medical devices
Critical Care, excluding amortization of goodwill, etc.*
Homes & Construction Materials
Others, corporate expenses and elimination, and
amortization of goodwill, etc.*
Consolidated operating income(billion $)
*
Operating income of Critical Care segment excluding amortization
of goodwill, etc. shown.
Amortization of goodwill, etc. related to acquisition of ZOLL is
included in “Others,
corporate expenses and eliminations, and amortization of goodwill, etc.”
9
1. Progress of basic strategy
2. Progress and forthcoming steps of business strategy
3. Future development of “For Tomorrow 2015”
S-SBR (synthetic rubber for fuel-efficient tires)・Plants in Singapore
Phase 1: completion of 50 kt/y plant in Apr. 2013Phase 2: new 50 kt/y plant under construction
・Smooth expansion of sales volume exceeding plan
Dry film photoresist (for printed wiring boards)・Development in China
- Suzhou: establishment of technology center- Changshu: construction of new plant
with start-up in autumn 2013→ capacity expansion of 120 million m2/y
・Continuing expansion of sales & production in line with market growth
AN (material for ABS resin and acrylic fiber)・Thailand: start of commercial production at
propane-process plant in Jan. 2013・Korea: completion of additional line in Jan. 2013・Strengthening of position as top supplier
in Asia
Hipore™ (lithium-ion battery separator)・Korea: expansion of processing capacity ・China: establishment of processing facility
in Sep. 2012・New line in Hyuga: start of commercial
production in H1 2013 → capacity expansion of 50 million m2/y
・Establishment of processing & sales bases overseas to meet growing market demand in automotive applications
World-leading businesses (1) Performance in FY 2011 and FY 2012
10
2010 2012 2013
Total capacity of annual production
200 kt in Thailand
245 kt in Korea
750 kt965 kt
1,210 kt Asahi Kasei production capacity and global market forecast for S-SBR for fuel-efficient tires
2010 2013
Domestic plants
Phase 1 plant in Singapore
Phase 2 plant in Singapore under
construction Global market
forecast: 490 ktProduction
capacity 62 kt130 kt
50 kt
11
Steady implementation of investment for growthCompletion in and after FY 2013• Dry film photoresistStart-up of plant in Changshu in autumn 2013
• S-SBRStart-up of phase 2 plant with 50 kt/y capacity in Singapore in 2015
• Bemberg™ regenerated cellulose Capacity expansion in Nobeoka; completion in 2014 and start-up in 2015
• Hipore™Successive expansions of processing capacity in major markets of China and Korea
Quick earnings contribution from plant completions• Raising product strength
Development of S-SBR and Hipore™ for automotive applications• Raising of marketing capability
Reinforced marketing of AN and dry film photoresist with aggressive investments
Cash flows of world-leading businesses• Net cash from operating activities from FY 2011 to FY 2015: about ¥300 billion• Investment for growth from FY 2010 to FY 2015: about ¥180 billion (cash out)
1 Technology to produce butadiene from butene gas
Under study (contribution to profit in and after FY 2015)•AN Joint venture in Middle East:
capacity expansion to global No. 1 capacity, 1,410 kt/y
•S-SBRNew plant at 2nd site overseas; sales expansion with market growthConstruction of BB-FLEX1 demonstration facility
• Volume expansion of Planova™, LSIs, and Hipore™
• Overseas development of dialysis business
World-leading businesses (2) Development in and after FY 2013
Creation of new value for society: Health Care (1) Performance of Critical Care in FY 2011 and FY 2012
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• Good growth of ZOLL (acquired at the end of Apr. 2012)- Growing as expected at time of acquisition
FY 2012 sales increased by 18% year-on-year on 12-month basis
- Growth of LifeVest™ wearable defibrillator FY 2012 sales increased by 57% year-on-year on 12-month basis
• Actions and progress in FY 2012- Smooth integration into Asahi Kasei Group- Up-front investment of resources for
accelerated growth- Developments in Japan
Establishment of Asahi Kasei ZOLL Medical Corp. in Oct. 2012Regulatory approval and sales launch of Thermogard™ in Feb. 2013*
0
200
400
600
800
1,000
FY 2010 FY 2011 FY 2012 FY 2013forecast
Sales of ZOLL
Revenue from LifeVest™
0
100
200
300
400
FY 2010 FY 2011 FY 2012 FY 2013forecast
Growing by >50% per year
Recalculated to fiscal years from April to March
* Central venous placement temperature management system
(million $)
(index based on FY 2010 as 100)
Pharmaceuticals• Expansion of Teribone™ osteoporosis drug• Expansion of Recomodulin™ recombinant thrombomodulin and start of Phase III clinical trial overseas
• Acquisition of sales rights for NEOXY™ Tape overactive bladder therapeutic drug
• Enhancement of product pipeline
Medical devices• Deteriorated performance of dialysis businesses overseas due to strong yen
• Strengthening of overseas development by selectivity and focus; strategic alliance and investment with NxStage Medical Inc.
Establishment of Health Care Council among Asahi Kasei Pharma, Asahi Kasei Medical, and ZOLL to advance strategy for expansion in Health Care sector
0.0
50.0
100.0
150.0
200.0
250.0
FY 2010 FY 2011 FY 2012 FY 2013forecast
0.0
5.0
10.0
15.0
20.0
25.0
Net sales (left axis)Operating income (right axis)
13
Performance of pharmaceuticals and medical devices
Creation of new value for society: Health Care (2) Performance of pharmaceuticals and medical devices in FY 2011 and FY 2012
Mar. 2012Nov. 2011 Mar. 2013
Monthly sales of Teribone™ since launch
Cumulative sales since launch: about ¥19 billion
(¥ billion)
(index based on Nov. 2011 sales as 1)
14
Pharmaceuticals ・Expansion in osteoporosis area: aiming to be No.1 company in the field of locomotive syndrome1
-Development of transdermal patch formulation of Teribone™ -Development of zoledronic acid (code name AK-156) as bisphosphonate drug for once-per-year injection
・Overseas development of Recomodulin™ – expansion to Europe, US, and Asia ・Strengthening of product pipeline by utilization of CVC 2, etc.
Medical devices ・Enhancement of overseas development, heightening competitiveness in both performance and cost
Critical care ・Reinforcement of base in Chain of Survival3
- M&A to acquire future growth business from long-term viewpoint
・Intermittent expansion of existing businesses
Pursue of synergy effect in Health Care business sector ・Accelerated expansion by sharing business base and know-how in Europe, US, and Japan
Focus on expansion as growth driving areaDevelopment of synergy effect among 3 businesses; promoting at Health Care CouncilPursuit of growth through alliance, technology licensing, and M&A
1 Conditions under which the elderly have been receiving care services or high-risk conditions under which they may soon require care services, due to problems of the locomotive organs.
2 Corporate Venture Capital3 Series of actions required for treatment in critical care
Creation of new value for society: Health Care (3) Development in and after FY 2013
0
20
40
60
80
100
120
140
160
FY 2010 FY 2011 FY 2012 FY 2013forecast
Remodeling
Real estate
Creation of new value for society: Residential living (1) Performance in FY 2011 and FY 2012
・Order-built homes (unit homes and apartment buildings)- Record high orders, sales, and operating
income in both FY 2011 and FY 2012- Succession of innovative lifestyle proposals
(Homes with features for families living with their parents and an unmarried sibling, two-generation Hebel Haus™ homes with a system for energy sharing between families, apartment buildings facilitating communication among mothers with young children, etc.)
・Housing-related operations - Expansion of remodeling and real estate
businesses by leveraging existing Hebel Haus™ customer base and reallocation of human resources
・Business combinations- Establishment of “HH 2015” demonstration house
combining various know-how from inside and outside of the company to meet emerging market needs
0
100
200
300
400
500
600
700
FY 2010 FY 2011 FY 2012 FY 2013 forecast
0
10
20
30
40
50
60
70Net sales (left axis)Operating income (right axis)
15
Net sales of remodeling and real-estate related operations
Performance of residential-living businesses
(¥ billion)
(¥ billion)
• Order-built homesCreating value in both tangible and intangible aspects- Products incorporating lifestyle proposals that match changes in society- Long Life Homes that embody unchanging security and comfort
• Housing-related businesses- Remodeling
Providing long-term services for the 300,000 Hebel Haus™ units sold to date: Enrichment of proposals and responsiveness regarding various stages in life and changes in the social environment, based on experience with 60-year inspection system
- Real estate Development: Expansion of condominium business based on building consensus
among stakeholders for rebuildingRental: Expansion of number of rental units (50,000 at end of FY 2012)
• Business combinations- Utilization of “HH 2015” demonstration house to enhance lifestyle proposals through
combinations with technology and businesses from inside and outside the Asahi Kasei Group (research on home healthcare, security/monitoring systems, etc.)
16
Advancing stable growth as an earnings platformWidening domain by dealing with market decline after consumptiontax rise, expanding housing-related businessesManifesting function as the center for expanding the scope of operations in combination with other businesses
Creation of new value for society: Residential living (2) Development in and after FY 2013
Electronic devices and materials• Struggled with high yen and slow growth in
emerging markets, rebuilt strategy and operational configuration- Devices: Strengthened overseas, expanded
automotive applications, reconfigured manufacturing infrastructure for power- management ICs
- Materials: Strengthened Hipore™ overseas, developed automotive grades
Energy conservation/environment-related• Capacity expansion for S-SBR• Capacity expansion for Neoma™ high-performance phenolic foam thermal insulation• Developed overseas business for Microza™ water treatment membranes• Building business for current sensors and infrared sensors• Start-up of propane-process AN plant
“Environment & Energy for Tomorrow” project• LICs1 – capital increase and acceleration of development at Asahi Kasei FDK Energy
Device Co., Ltd., joint venture with FDK Corp.• UV LEDs2 – development of business in the field of energy-conserving devices with UV
LEDs based on technology of Crystal IS, Inc. for aluminum nitride (AlN) substrates → World’s highest UV LED output achieved with improved crystal growth technology
0
500
1,000
1,500
2,000
2,500
FY 2010 FY 2011 FY 2012 FY 2013forecast
0
50
100
150
200
250Net sales (left axis)Operating income (right axis)
17
Creation of new value for society: Environment/energy (1) Performance in FY 2011 and FY 2012
1 Lithium ion capacitors, which are next-generation energy storage devices that enable highly efficient use of electric power.
2 Ultraviolet light-emitting diodes.
Performance of environment/energy businesses (¥ billion)
Electronic devices• Diversifying from consumer electronics applications to industrial equipment and
automotive applications using established compound semiconductor and mixed-signal LSI technology
Electronic materials• Hipore™ – expanding bases in China and Korea• Dry film photoresist – new plant in Changshu, China
Water treatment• Microza™ – meeting growing demand in Europe, US, and China• UV LEDs – advancing development of water sterilization applications;
completing a pilot line in H2 2014 (providing initial commercial supply)• LICs – advancing product development and applications development for
market growth from FY 2015 onward; applications including power assistance, power regeneration, load leveling, and backup power
• Environmental automotive products – studying 2nd overseas base for S-SBR, expansion of performance plastics business18
Demonstrating true value as a diversified chemical companySwift creation of pillar operations through business combinationsTransition from independent business models to integrated model on Asahi Kasei Group scale
Creation of new value for society: Environment/energy (2) Development in and after FY 2013
Launch of streamlining projectEstablishment of an organization focused on achieving progress
In each business unitMeasuring the project’s effectiveness with numerical data from FY 2012
Throughout all unitsRaising efficiency and enhancing operations across the Asahi Kasei GroupImproving the profit structure through more favorable procurement, reformation of cost structure, etc.
TargetsCost reduction of ¥10 billion or more in FY 2013Increasing to ¥20 billion or more between FY 2013 and FY 2015
Advancing structural reformsWithdrawal from unprofitable businesses, improving business efficiency
- Coping with declining demand in the domestic Japanese petrochemical market 19
Progress and forthcoming steps of project to enhance profitability
100104
108
120
90
100
110
120
2010 2011 2012 2015target
Quantitative indexes of achievement of Group Mission
Living in health and comfort
20
Index for number of people Asahi Kasei’s health care business contributed toInitial 2015 target was 30% higher than 2010.This is changed to 40% due to acquisition of ZOLL.
2015 target: 20% higher than 2010
Index for number of residents in Hebel Haus™ homes
Harmony with the natural environmentCO2 reduction based on LCA* vs. CO2 emissions
• Target of increasing the ratio between CO2 reduction based on LCA and CO2 emissions from 3.2 in 2010 to 8.0 by 2020 → ratio in 2012 was 6.3
• Continuous improvement through expanding sales of S-SBR for fuel-efficient tires, Hall elements, etc.
* Life cycle analysis of CO2 reduction in the entire product life cycle from raw material processing to disposal of the product.
Mill
ion
tons
/yea
r
100 107122
140
0
50
100
150
2010 2011 2012 2015target
15.96
22.5824.18
5.05 4.47 3.780
10
20
30
FY 2010 FY 2011 FY 2012
CO2 reduction based on LCA
CO2 emissions
21
1. Progress of basic strategy
2. Progress and forthcoming steps of business strategy
3. Future development of “For Tomorrow 2015”
No change in assumptions for basic trends in the economic climate→ No change in the targeted growth field
Basic trends: growth in emerging countries, maturity of Japanese economy, limitations of the Earth, and aging of the population
Implementing the basic strategy while advancing streamlining project to strengthencapability to respond to significant issues such as the sovereign debt crises in Europewhich may frequently occur.
Building up a strong foundation based on the strategic investments and measures executed in FY 2011 and FY 2012Accelerating the basic strategy while reaping results of investments executed so far.
For Tomorrow 2015FY 2011–2015
FY 2006–2010Growth Action – 2010
Strategic investment(Shifting to growth)
Business portfolio realignment for
expansion and growth
Ishin2000FY 1999–2002
Selectivity and focus
Disposal of negative legacies
Ishin-05FY 2003–2005
Selective diversification
Creation of cash flow
Future development of “For Tomorrow 2015”
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Pursuit of growth on two axes
Expansion of world-leading businesses
Creation of new value for society“Harmony with the natural
environment”“Living in health and comfort”
Continuation of basic strategy, Seeking growth and change
Asahi Kasei grows
through change
Asahi Kasei grows
through change
“For Tomorrow 2015”business strategies
Asahi Kasei’s direction for growth
23
Globally expanding businesses where we have the initiative and growth is
projectedAN, S-SBR, Hipore™,
dry film photoresist, etc.
Creating new value for society by generating new growing
businesses through collaboration both inside and
outside the company
Hebel Haus™, Neoma™, LICs, UV-LEDs, electronic compass,
Teribone™, S-SBR, LifeVest™, etc.
Creating new value for society by providing
new technology, products, and services
Implementation of strategic investment for growth with maintenance of strong financial constitution
Concept for ¥1 trillion of investment during “For Tomorrow 2015”
24
Investment plan
Investment in existing businesses¥550 billion
New operations, M&A, intermittent expansion of
existing businesses¥450 billion
→Debt/equity ratio at the end of FY 2015 after ¥1 trillion investment: 0.5
Resources for further growth
Decisions adopted in FY 2011・Capacity increase for S-SBR in Singapore
・Capacity increase for acetonitrile in Korea
・Capacity increase for insulation panels・Research complex for pharmaceuticalsTotal approx. ¥100 billion
Decisions adopted in FY 2012 ・Acquisition of sales rights for overactive bladder therapeutic drug
・Capacity increase for Bemberg™・Overseas expansion of Hipore™Total approx. ¥100 billion
Decisions adopted through FY 2012・Acquisition of ZOLL・Acquisition of Crystal IS; construction of pilot line for UV-LEDs
・Establishment of joint venture for lithium ion capacitors (LICs)
Total approx. ¥200 billion
Progressing toward ¥200 billion of operating income in few years after FY 20151. Chemicals & Fibers → Expansion of world-leading businesses by reaping results of investment2. Homes & Construction Materials → Overcoming slump in demand in FY 2014 and FY 2015 following rush in
demand before consumption tax increase3. Health Care (pharmaceuticals, medical devices, and critical care) → Accelerating expansion4. Electronics → Swift action in response to changes in market structure and customer base
47.6 270
50.070
482582
65.5508.8 23.2
28.7 35
6.4 2.8
10.020
(25)
0
25
50
75
100
125
150
175
200
FY 2011 FY 2012 FY 2013forecast
FY 2015outlook
FY 2016onward
25
Others, corporate expenses and eliminations, and amortization of goodwill, etc.*
160160
Consolidated operating incomeConsolidated operating income200200(¥ billion)
* Health Care includes operating income of Critical Care segment excluding amortization of goodwill, in addition to
operating income of Health Care segment from FY 2012.
Amortization of goodwill related to acquisition of ZOLL is included in “Others, corporate expenses and
eliminations, and amortization of goodwill, etc.“
Future development of “For Tomorrow 2015”
Chemicals & Fibers
Health Care*
Homes & Construction Materials
Electronics
Basic standard for payout ratio: 30%FY 2010 FY 2012 Target in FY 2016 onward
ROE 9% 7% ≥10%
ROIC 7% 5% ≥7%
130
104.3 92
ResidentialLiving
Health Care
Others
Environment &Energy
0
500
1,000
1,500
2,000
FY 2011 FY 2012 FY 2013forecast
FY 2015outlook
Original planfor FY 2015
0
20
40
60
80
100
120
FY 2011 FY 2012 FY 2013
forecast
FY 2015
outlook
Original plan
for FY 2015
0
100
200
300
400
500
600
700
FY 2011 FY 2012 FY 2013
forecast
FY 2015
outlook
Original plan
for FY 2015
Environment &Energy
ResidentialLiving
Health Care
Others
0
50
100
150
200
FY 2011 FY 2012 FY 2013 forecast
FY 2015outlook
Original planfor FY 201526
Sales (¥ billion)
Global-leading businesses
Target: more than
2/373%
Businesses creating new value for society
* Operating income of each business plus equity in earnings of AN affiliates
Operating income (¥ billion)
Performance of global-leading businesses and businesses creating new value for society
Sales (¥ billion)
Operating income* (¥ billion)
27
Creating for TomorrowThe commitment of the Asahi Kasei Group:
To do all that we can in every era to help the people of the world
make the most of life and attain fulfillment in living.
Since our founding, we have always been deeply committed to contributing to the development of society,
boldly anticipating the emergence of new needs.
This is what we mean by “Creating for Tomorrow.”