FY2016 Results Briefing Contents - Toyo Ink Group · Market factors, etc. (negative impact of 1.7...

FY2016 Results BriefingCopyright © 2017 TOYO INK SC HOLDINGS CO., LTD. All Rights Reserved.

FY2016 Results Briefing

Toyo Ink SC Holdings Co., Ltd.May 19, 2016

Contents◆ Summary of Consolidated Business Performance◆ Summary of Performance and Business Plan by Segment◆ Long-Term Vision SIC27◆ [Reference] Balance Sheet Overview

Performance by Region and by Segment

The forecast or projections set out in this presentation are based on the assumptions andbeliefs of our management in light of the information available to it as of May 19, 2017.Changes in global, economic and business conditions could cause actual results to differmaterially from these forecasts. All amounts are rounded to the nearest 100 million yen.

Copyright © 2017 TOYO INK SC HOLDINGS CO., LTD. All Rights Reserved.


Consolidated Business Performance

Dividend(full-year, yen)

FY2016

16.0

FY2017 (ending

December 31, 2017)

(forecast)

16.0

*3: Net income attributable to owners of parent

Capitalinvestment

Depreciation

11.5

10.6

FY2015

14.2

10.6

FY2016

9.5

9.5

FY2017 (ending

December 31, 2017) plan

[Change of fiscal year-end]The forecasts for FY2017 (ending December 31, 2017) are for the period from April to December for the domestic business and for the period from January to December for the overseas business.*1: April to December 2016 for the domestic business and

January to December 2016 for the overseas business*2: January to December 2017 for the domestic business and

January to December 2017 for the overseas business

1

* Figures in parentheses are percentage changes from FY2015 Actual.

Net sales

Operating profit

Profit*3

Ordinary profit

Operatingmargin

Overseas salesratio

ROE

FY2015Actual

283.2

18.5

18.7

12.2

6.5%

44.0%

5.9%

FY2017 (ending December 31, 2017)

forecast

235.0

16.3

16.6

10.0

274.7

6.9% 7.3%

– 43.0%

20.0

20.4

14.4

(Reference)Figures converted on a twelve-month

basis*2

– 6.6%

(Unit: 1 billion yen)

FY2016Actual

268.5

19.2

19.3

12.7

7.2%

42.2%

6.0%

(-5.2)

FY2016forecast

290.0

19.5

20.0

12.0

6.7%

45.0%

5.9%

(4.1)

(3.0)

(4.1)

(0.1)Point

(0.7)Point

(-1.8)Point

228.8

6.8%

–

15.5

15.5

8.3

FY2016 Actual after adjustment*1

–

(2.7)

(5.0)

(7.4)

(19.8)

(0.1)Point

Decrease in sales: Net sales did not grow, for reasons including foreign exchange fluctuations and a decrease in resale products.

Increase in profit: Profit increased thanks to sales expansion in overseas markets and stable raw material prices.

(Unit: 1 billion

yen)



Analysis of Factors Behind YoY Difference in Sales for FY2016

Remarks

Sales expansion in new regions (positive impact of 7.9 billion yen)Sales expansion in India, Turkey and Brazil

Sales expansion in new markets (positive impact of 0.7 billion yen)Sales expansion of medical business

Impact of foreign exchange fluctuations(negative impact of 15.5 billion yen)

Decrease in resale products (negative impact of 3.0 billion yen)Decrease in offset printing materials and equipment, gravure solvents, etc.

Clearance of unprofitable products (negative impact of 2.2 billion yen)

Review of selling prices (negative impact of 0.9 billion yen)

Market factors, etc. (negative impact of 1.7 billion yen)

FY2016 268.5 billion yen


2

Impact of foreign exchange

fluctuations

100 million yen

FY2015 FY2016

Sales expansion in new regions

Sales expansion in new m

arkets

Decrease in resale products

Clearance of unprofitable

products

Review

of selling prices

Market factors, etc


FY2016 Operating Profit and Analysis of Factors Behind YoY Difference

Remarks

Increased profits due to fall in raw material prices(positive impact of 3.1 billion yen)Switched to alternative raw materials Revised raw material prices

Increased profits due to rise in quantity sold (positive impact of 0.3 billion yen)

Impact of foreign exchange fluctuations(negative impact of 1.1 billion yen

Review of selling prices (negative impact of 0.9 billion yen)

Increase in fixed costs (negative impact of 0.5 billion yen)

Decreased sales of high performance products (negative impact of 0.2 billion yen)



3

100 million yen

Increased profits due to fall in raw m

aterial prices

Impact of foreign exchange fluctuations

Decreased sales of high perform

ance products

FY2015 FY2016

Increased profits due to rise in quantity sold

Review

of selling prices

Increase in fixed costs



4

Performance and Plan by Segment

Colorants and Functional Materials

Polymers and Coatings

Packaging Materials

Printing and Information

Others, Adjustment

Consolidated

FY2016 Actual after adjustment*1

Net sales Operating profit

57.5 3.448.7 5.653.6 2.569.8 2.8-0.8 1.2

228.8 15.5

FY2016 plan


72.5 4.863.5 6.367.5 3.488.5 4.0-2.0 1.0

290.0 19.5

FY2016 Actual


65.9 4.658.3 6.663.0 2.981.7 3.3-0.4 1.8

268.5 19.2

FY2017 (endingDecember 31, 2017)

Plan


59.0 4.451.0 5.856.0 2.871.0 3.0-2.0 0.3

235.0 16.3

(Reference) Figures converted on a twelve-

month basis*2


67.4 5.660.6 6.865.4 3.282.9 3.5-1.6 0.9

274.7 2.0


Assumed indexes for plan

1USD=

1EUR=

Exchange rate

1RMB=

¥121.0

¥133.7

2015 avg.

¥19.2

¥109.4

¥120.6

2016 avg.

¥16.4

¥110.0

¥115.0

FY2017 (ending December 31, 2017) basis for projections

¥16.0

NaphthaRosin

¥42,800/kL$2,026/t

FY2015 avg.

¥34,700/kL$1,800/t

FY2016 avg.

¥40,000/kL$1,900/t

FY2017 (ending December 31, 2017) basis for projections

[Overall policy for FY2017 (ending December 31, 2017)]To complete the final phase of the medium-term plan (SCC-III) and take on the challenge of the next step-up as the preparatory stage toward the next medium-term plan.

*1: April to December 2016 for the domestic business and January to December 2016 for the overseas business

*2: January to December 2017 for the domestic business and January to December 2017 for the overseas business



59.0

4.4

Summary of Performance and Progress by Segment(Colorants and Functional Materials)

Key Product Sales Targets

Media materials

LiB (Lithium-ion Batteries) carbon dispersants

Sales

Operating profit

Summary of Performance

71.9

4.5

FY2015 Actual

FY2015 Actual

21.1

0.23


72.5

4.8

FY2016 Plan

FY2016 Target

22.5

0.4

19.8

FY2016 Actual

0.2

FY2016 Actual

65.9

4.6

(-8.3)

(3.0)


Target

18.5

0.22


Plan

(2.6)

(29.4)

57.5

3.4

FY2016 Actual after adjustment

Summary FY2016

Chemicals Decrease in both sales and profit

Pigment sales were slow in the printing segment, but profit increased due to the contribution of production process improvement and variety integration.

Demand for CF paste declined and profit declined.

Sales expansion of pigments overseas using the global SCM

Sales expansion of new dispersants, combining pigment technology and dispersion technology

Display Materials

Decrease in both sales and profit

Profit decreased despite a recovery in the second half due to larger panels and strong domestic sales. New green resist is partially adopted, and sales thereof will be secured for the next fiscal period.

Acceleration of sales expansion of resist through business in China

Offering and sales of new devices such as next-generation displays and wearable sensors

Colorants Decrease in sales and

increase in profit

Sales of functional products, such as CNT compounds and design polymer alloys

Cultivation of new customers and improvement of profitability by sales expansion of functional products and strengthening of the global network

Major issues for FY2017 (ending December 31, 2017)

5




Key Measures by Segment (Colorants and Functional Materials)

Sales expansion of new dispersants by strengthening the development of original pigments and process innovation

Realization of high gloss, high transparency and high pigmenting power that are in demand in the market with a new manufacturing method and nanoparticle dispersion technologyExpand application to coatings for automobiles, ink jet inks, tonners and water-based flexographic inks

Pigment production process

Primary particles to be made fine and

uniform

Pigment dispersion process

Fine dispersionStabilization

&

6

New technology

Existing technology

Particle diameter

Large Small

More uniformity and less cohesion in both particle diameter and resin film than in the case of existing technology

Boosting sales in the CF Business

Market expectations:

Key measures:

Expansion of demand for resists due to larger panelsFall in panel price due to the operation of the new panel production line in ChinaShare expansion with general-purpose and high-quality lines suited to the Chinese marketStrengthening of development of new colorants of RGB, violet and yellowFurther improvement of suitability to photo lithographyCost reduction with a new manufacturing method

FY2016 Results BriefingCopyright © 2017 TOYO INK SC HOLDINGS CO., LTD. All Rights Reserved.Copyright © 2017 TOYO INK SC HOLDINGS CO., LTD. All Rights Reserved.

51.0

5.8


Electronic/optical products

Healthcare-related products

Sales

Operating profit


60.9

5.5

FY2015 Actual

FY2015 Actual

3.4

1.2

63.5

6.3

FY2016 Plan

FY2016 Target

4.0

2.0

3.5

FY2016 Actual

1.9

FY2016 Actual

58.3

6.6

(-4.7)

(19.7)


Target

4.5

2.1


Plan

(4.7)

(3.6)

48.7

5.6


Summary of Performance and Progress by Segment(Polymers and Coatings)

Summary FY2016

Coating materials

Decrease in both sales and profit

Functional films: delay in input of new products Tape-related: strong sales of industrial applications in Korea

and Taiwan

Implementation of overseas sales expansion measures and increase of productivity

Adhesives Decrease in sales and increase in

profit

Display application: sales expansion with advancement of new adoption

Industrial application: strong sales in North America Hot melt: occupation for packaging

Sales expansion in the electronics market Further expansion of the overseas area

Paint resin Decrease in sales and increase in

profit

Can coating: strong sales both in Japan and abroad Resin: sales expansion of high value-added products

Input of eco-friendly products Sales expansion of high value-added products

Healthcare Continued efficient business management since July Establishment of the foundation of the adhesive-based medical products business

Sales expansion of related products




7


Key Measures by Segment (Polymers and Coatings)

Key Targets

Business expansion in the key regions

- Expansion and strengthening of the SCM foundation in North America and IndiaSales expansion of products of the adhesive business

- Business expansion in Turkey and the Middle EastExpansion and strengthening of the business foundation of can coating

Expansion of medical science products

- Strengthening of development of the adhesive-based medical products business

- Expansion of healthcare products line

Three Pillars of Growth Strategy

8

New products and new markets

Global expansion

New businesses

Electronic/optical products New energy market

Shift to one-component*, environmental measures

Global expansion of SCM TPF expansion

Expansion of emerging country networks

Entry to medical science business

* Adhesives based on one-component acrylic solvents

Sales expansion in the electronic/optical product markets

- Entry into the next-generation panel market and sales expansionFunctional films and adhesives

- Sales expansion of display adhesives and functional resinDevelopment in the Chinese market with a foothold in Japan, Korea and

Taiwan


56.0

2.8


Flexographic inks for films

Liquid inks(Southeast Asia/China)

Sales

Operating profit


64.6

2.7

FY2015 Actual

FY2015 Actual

1.3

17.2

67.5

3.4

FY2016 Plan

FY2016 Target

1.5

18.5

1.6

FY2016 Actual

15.2

FY2016 Actual

63.0

2.9

(-2.6)

(5.4)


Target

2.3

16.0


Plan

(4.5)

(12.0)

53.6

2.5


Summary of Performance and Progress by Segment(Packaging Materials)

Summary FY2016

Domestic Decrease in both

sales and profit

Strong sales in the packaging market; however, slow sales in the printing market.

Continued new entry into film flexographic inks from different industries.

Sales expansion by launch of new gravure products onto the market Construction of the system for increasing the production of liquid inks Development, market input and promotion of biomass product lines

Overseas Decrease in sales

and increase in

profit

The technology center in Asia/China got on track; advancement of sales expansion of middle-grade inks.

Business expansion through M&A in Turkey. Sales of water-based gravure and flexographic inks in

Taiwan and China.

Sales expansion of water-based gravure and flexographic inks in Europe under the license agreement

Launch of the production base for water-based inks and sales expansion thereof in the China region

Business expansion by offering new water-based products


Liquid inks(India, Brazil, and Turkey) 1.0 4.5 3.7 4.6

9




Summary of Performance and Progress by Segment(Printing and Information)

Summary FY2016

Domestic Decrease in sales and

increase in profit

Despite decreases in both quantity and sales in the offset rotary, sheet-fed and newspaper markets due to reduced demand, increased profit was secured by changing the production system, reducing the cost of materials and other cost-cutting measures.

Sales expansion of UV mainly in response to demand for energy conservation following an increase in demand while switching from sheet-fed to UV advanced.

Optimization of the production base for offset inks and reconstruction of the sales system

Sales expansion of new UV products

Overseas Decrease in both sales and

profit

While sales of sheet-fed have been expanding in India and Brazil, the market for sheet-fed in Europe has been shrinking.

Sales expansion of UV-LED as global expansion advances.

Strengthening the foundation of the global SCM system for sheet-fed

Sales expansion of new UV products for the market of Southeast Asia. Increasing demand for energy conservation.


71.0

3.0


UV inks

Inkjet inks

Sales

Operating profit


87.4

3.0

FY2015 Actual

FY2015 Actual

22.0

2.1

88.5

4.0

FY2016 Plan

FY2016 Target

23.0

3.0

20.1

FY2016 Actual

2.1

FY2016 Actual

81.7

3.3

(-6.6)

(11.4)


Target

20.8

2.9


Plan

(1.7)

(7.1)


69.8

2.8


Offset inks(India, Brazil, and Turkey) 2.8 6.0 5.0 6.0

10



Strengthening of the system for manufacturing Strengthening of product development

Dom

estic

• Liquid inks- Establishment of the system for increasing production

• Offset inks- Optimization of production bases

• Promotion of development of new products- Liquid: promotion of development of next-generation eco-friendly inks

- IJ: focus on development of new products- Screen: strengthening of development for industrial applications

• Early sales and sales expansion of new products- Gravure: sales of new main products for general-purpose

use- UV: sales expansion of new high-performance products

Overseas

• Establishment of global SCM- Integration of materials- Production complement- Promotion of initiatives for BCM

• Launch of a production base- Water-based inks in China

• Improvement of technical services- Strengthening of the functions of the overseas technology center

• Early sales and sales expansion of new products- Liquid: input of new middle-grade products- Flexographic: sales expansion of high-speed water-based products

- Sheet-fed: input of food-quality products for Europe- UV: input of new products for packagingpromotion of sales expansion in the UV-LED market

- Metal: promotion of sales expansion in the two-piece can market

Key Measures by Segment (Packaging Materials/Printing and Information)

11



Long-term Vision SIC27

12

FY2008 (ended March 31, 2009)~ FY2016 (ended March 31, 2017)


FY2018 (ending December 31, 2018) ~

SIC-IFrequent challenges

SIC-IIAccumulation of new

results

SIC-IIICreation of sustainable

corporate character/structure

SIC27

■ Concept for corporate activities

Scientific Innovation Chain (SIC)- Scientific implementation- Innovative ideas- Chain of activities

SCC2017 Final process

For A Vibrant World

■ Ideal for 2027To aim to become “a corporate group that contributes to the world where all consumers, life and the global environment share vibrant lives upon the reform of the corporate structure that will ensure sustainable growth for the next 100 years.”

Estimated sales scale for SIC-I: 350 billion yen (the next medium-term plan to be separately reported upon determination)

FY2021 (ending December 31, 2021) ~

FY2024 (ending December 31, 2024)~ FY2026 (ending December 31, 2026)



Long-term Vision SIC27

The key fields shall be redefined as new domains to contribute to the solution of the issues of society and consumers such asthe realization of healthy lives, spiritual happiness and a sustainable society.Through the creation of specific business in each domain, we aim to establish a strong business structure that respondsflexibly to changes in the market.

■ Examples of business expansion by domain under SIC 27

Life Communication Sustainability

PackagingMedical

Healthcare

Agriculture Living space

Mobility

ImagingElectronics

IoT

EnergyEnvironmentInfrastructure

Natural materials

Strengthening and expansion of the foundation of the medical product

businessOffering materials in the life science field

Strengthening of optical and insulating materials

Entry into the semiconductor field

Use and expansion of natural materialsRepair, reinforcement and entry into the

field of the detection of deterioration

13



(Reference) Consolidated Balance Sheet

As at March 31, 2017

Increase/decrease (%)


Current assets

Non-current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Total net assets

Total of liabilities and net assets

182.0183.3365.2

95.949.6

145.5

219.7365.2

-1.2

3.9

1.3

-0.2

2.3

1.3

12.0

-17.6

6812

Consolidated subsidiaries

Equity method companies


6710



184.1176.5360.5

85.760.2

145.9

214.7360.5


67.357.70.35

Interest-bearing debt(1 billion yen)

Net worth ratio (%)

63.558.4


D/E ratio 0.33

14

The increase in current liabilities is due to the conversion of the repayment period for syndicate loans from long term to short term.

The decrease in interest-bearing debts is due to foreign exchange calculations.


(Reference) Performance by Region

15

Asia-Oceania

Europe

The Americas

Adjustment

Total consolidated

Japan


1st Quarter 3rd Quarter 4th Quarter Total

42.2 2.3

21.4 1.5

4.6 0.1

3.3 -0.1

-6.0 0.1

65.5 3.8

44.6 3.4

21.5 1.5

4.3 0.2

3.2 -0.0

-6.6 -0.1

67.0 5.0

45.0 3.7

22.6 1.5

4.7 0.3

3.2 0.1

-7.1 -0.1

68.4 5.4

176.3 12.7

86.6 6.2

18.4 0.6

12.8 -0.1

-25.6 -0.1

268.5 19.2

44.6 3.4

21.1 1.7

4.8 0.0

3.1 -0.1

-5.9 0.0

67.6 5.1

Net sales

2nd QuarterOperating

profit Net sales Operating profit Net sales Operating

profit Net sales Operating profit

Actual by quarter(1 billion yen)

Asia-Oceania

Europe

The Americas

Adjustment

Total consolidated

Japan


Results for 4th Quarter FY 2016 (3 months)

(1 billion yen)

Increase/Decreasefrom the 3rd Quarter of

FY2016 (%)

Total Results for FY2016

(1 billion yen)

Net sales

Increase/DecreaseYear on Year (%)

Operating profit Net sales Operating

profit Net sales Operating profit Net sales Operating

profit

FY2016 Actual

Increase/DecreaseYear on Year (%)

45.0 3.7

22.6 1.5

4.7 0.3

3.2 0.1

-7.1 -0.1

68.4 5.4

0.8 9.4

5.2 -3.4

7.5 7.7

2.5 -

- -

2.1 8.0

0.5 34.0

-9.6 -20.6

29.9 -

-9.2 -31.2

- -

-2.0 16.0

176.3 12.7

86.6 6.2

18.4 0.6

12.8 -0.1

-25.6 -0.1

268.5 19.2

-3.1 6.6

-14.0 -2.3

26.8 63.6

-9.9 -

- -

-5.2 4.1


(Reference) Performance by Segment

16

Others

Adjustment

Total consolidated

PackagingMaterials

Japan

Overseas

Total

Printing and

Information

Polymers and

Coatings

Colorants and

Functional Materials

Japan

Overseas

Total

Japan

Overseas

Total

Japan

Overseas

Total

Results for Forth Quarter of FY 2016

(1 billion yen)

Net sales Operating profit Net sales Operating

profitNet sales Operating profit

Total Results(1 billion yen)

Net sales Operating profit Net sales Operating

profit

-2.5 -19.8

1.7 -7.9

1.7 -15.2

4.9 9.3

2.0 19.5

0.7 12.0

-0.9 -10.8

7.0 20.8

2.0 -2.3

1.6 24.1

8.1 -21.3

2.8 -2.2

-6.4 325.1

- -

2.1 8.0

1.7 77.8

-4.1 6.9

-0.4 43.6

5.7 31.2

-7.5 7.5

-3.1 20.9

-2.0 -27.3

-0.6 -12.4

-1.8 -23.6

-2.4 52.5

-9.0 -29.3

-4.6 4.9

-1.9 23.1

- -

-2.0 16.0

10.3 1.2

9.8 0.3

17.0 1.4

11.3 1.1

5.4 0.8

14.7 1.8

9.5 0.3

6.4 0.3

15.7 0.6

12.9 0.5

9.3 0.4

20.9 0.9

1.5 0.6

-1.4 0.0

68.4 5.4

-0.4 25.7

-14.9 -30.6

-8.3 3.0

-1.0 18.2

-8.9 22.0

-4.2 19.7

-3.1 -0.3

-1.4 15.6

-2.6 5.4

-7.1 32.4

-7.5 -4.6

-6.6 11.4

2.3 -35.5

- -

-5.2 4.1

40.5 3.9

37.6 0.9

65.9 4.6

43.5 3.9

21.0 2.7

58.3 6.6

38.7 1.7

24.8 1.1

63.0 2.9

49.9 1.4

36.2 1.8

81.7 3.3

6.1 1.8

-6.5 0.0

268.5 19.2

(Note) The segment performance for Japan and overseas does not take into account eliminations between regions.

Increase/Decrease (%)Year on Year

Increase/Decrease (%)Year on Year

Increase/Decreasefrom the 3rd Quarter of

FY2016 (%)



17

(Reference) Performance by Segment

10.3 1.2

9.8 0.3

17.0 1.4

11.3 1.1

5.4 0.8

14.7 1.8

9.5 0.3

6.4 0.3

15.7 0.6

12.9 0.5

9.3 0.4

20.9 0.9

1.5 0.6

-1.4 0.0

68.4 5.4

40.5 3.9

37.6 0.9

65.9 4.6

43.5 3.9

21.0 2.7

58.3 6.6

38.7 1.7

24.8 1.1

63.0 2.9

49.9 1.4

36.2 1.8

81.7 3.3

6.1 1.8

-6.5 0.0

268.5 19.2


1st Quarter


2nd Quarter


3rd Quarter


4th Quarter


Total for FY2016


9.4 0.3

9.1 0.2

15.7 0.5

10.5 0.9

5.3 0.7

14.5 1.6

9.5 0.3

6.2 0.2

15.6 0.6

11.9 0.2

9.2 0.3

19.9 0.6

1.6 0.6

-1.8 0.0

65.5 3.8

10.2 1.0

9.1 0.0

16.4 1.0

10.9 1.0

5.1 0.7

14.6 1.6

10.2 0.7

6.2 0.3

16.3 1.0

12.4 0.3

9.2 0.6

20.5 1.0

1.4 0.5

-1.6 0.0

67.6 5.1

10.6 1.5

9.6 0.3

16.8 1.7

10.8 1.0

5.3 0.6

14.6 1.6

9.6 0.4

6.0 0.3

15.4 0.7

12.7 0.4

8.6 0.5

20.3 0.9

1.6 0.1

-1.7 -0.0

67.0 5.0

Others

Adjustment

Total consolidated

PackagingMaterials

Japan

Overseas

Total

Printing and

Information

Polymers and

Coatings

Colorants and

Functional Materials

Japan

Overseas

Total

Japan

Overseas

Total

Japan

Overseas

Total

(Note) The segment performance for Japan and overseas does not take into account eliminations between regions.

FY2016 Results Briefing Contents - Toyo Ink Group · Market factors, etc. (negative impact of 1.7...

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