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Based on a “sound present,” we will create a hopeful future for all our stakeholders
Dramatic changes in the world economy and business environment
The world is undergoing big changes, including climate change, depletion of resources, demographic changes, urbanization, multipolarization of the world economy, and changes in the feedstock/energy-resources market. Moreover, dramatic technological progress, such as in artificial intelligence and IoT technologies, is transforming our economy, society, and daily life.
On the other hand, due to the lingering US-China trade frictions and Brexit issues, there are growing uncertainties about the future of the world economy, and these issues might exert some degree of influence over Japan. Despite these challenges, we need to keep managing our business from a medium- to long-term viewpoint, and avoid being easily swayed by short-term changes in the business environment.
The Showa Denko Group is a unique chemical manufacturer engaged in a wide spectrum of business segments including the Petrochemicals, Chemicals, Electronics, Inorganics, and Aluminum segments. By taking advantage of this uniqueness as well as deepening and fusing our inorganic, metal, and organic technologies, we will produce excellent KOSEIHA products to become a “social contribution company” that contributes to creating a society where affluence and sustainability are harmonized.
Results for 2018 and outlook for 2019
As for 2018, sales increased in five segments, but decreased in the Electronics segment. In particular, in the Inorganics segment, we achieved a substantial increase in sales as a result of having integrated the business of SGL GE of Germany (currently SHOWA DENKO CARBON Holding GmbH) into the graphite electrode business in the latter half of 2017, which boosted the segment’s full-year performance. Moreover, the international market showed an upward trend. Consequently, we marked a record high for operating income, ordinary income, and net income for two years in a row.
For 2019, we cannot help being conservative in the seemingly very challenging business environment, but we do expect to achieve an increase in profit by continuing full-scale operation in the Petrochemicals segment and thanks to the upward trend of the international market for graphite electrodes, which we manufacture in the Inorganics segment. In order to return profit to our shareholders in proportion to the favorable business results, we have decided to increase the dividend per share by 10 yen this year to 130 yen.
Launch of “The TOP 2021”

The Showa Denko Group was able to step up its earning power for a “sound present” by implementing the medium-term business plan “Project 2020+” from 2016 to 2018. While attention tends to focus on the substantial increase in profit in two segments—the Petrochemicals segment as well as the Inorganics segment to which the graphite electrode business belongs—we also achieved the predefined medium-term targets and steadily improved profitability in the three segments of Chemicals, Electronics, and Aluminum.

We launched our new medium-term business plan, “The TOP 2021,” in 2019 to achieve further growth and create a hopeful future based on a “sound present.”

As the key to successfully implementing this plan, we have adopted the backcasting method. Backcasting helps us clarify the gaps between our present businesses and KOSEIHA Businesses, which we should establish in the future, and foster measures to narrow the gaps.

In order to show the direction in which we should move forward to narrow the gaps, we have recategorized the existing businesses into new portfolios: “Enhance,” “Grow,” and “Change.” By adding “Create” to these three, we now have four portfolios, with which we will conduct our business operations. We will also enhance our R&D, marketing functions, measures for AI/IoT, and production bases, regarding them as the basis to support the strategies as described above.

By implementing these Group management strategies, the Showa Denko Group will increase sales by 40% to 3.4 trillion yen during the three-year period of “The TOP 2021,” relative to the figures described in “Project 2020+.” We will also expand our operating income by 1.7 times to 480 billion yen and net income to 330 billion yen over the three years.

To achieve such growth, we will give due consideration to asset efficiency, including ROA and ROE, and make efficient and proactive growth investments, which will in turn help increase our profitability.

Expansion of KOSEIHA Businesses

The term “KOSEIHA Company,” which represents the Showa Denko Group’s vision, refers to an aggregate of KOSEIHA Businesses, for each of which the Group takes the top spot in a market of a suitable size (several 10 billion to several 100 billion yen) for the Group.

To achieve this vision, we need to optimize the segments for each of Showa Denko’s businesses. Under “Project 2020+,” we have made progress with the optimal segmentation of our businesses. Under “The TOP 2021,” we will sophisticate our existing business model and achieve business expansion in growth markets as well as across regions and business domains, thereby strengthening and expanding each of the business segments. We will work to increase the number of businesses, including new businesses, that can match the success of the HD, high-purity gas for electronics, and graphite electrode businesses, with an eye to transforming at least half of our existing businesses into KOSEIHA Businesses by 2025 as our medium- to longterm management target.

While making progress to achieve the KOSEIHA Company vision we will strive to maximize the “CUSTOMER Experience,” deeming it as a value that leads us to the enhancement and expansion of the business segments.

It is becoming increasingly difficult to differentiate our products from those of our competitors by quality and pricing alone, and in response to this we will manage our business under the group-wide slogan of providing a “CUSTOMER Experience unique to Showa Denko” for both our products and services.

Toward Sustainable Growth

The Showa Denko Group has been regarding the fulfillment of its corporate social responsibility (CSR) as the basis for its business management. We have been meeting the expectations of all our stakeholders by providing products, technologies, and services that meet the needs of customers and society in addition to conducting business activities in an environment-friendly manner. At the same time, we have been implementing measures to foster compliance, diversity management, and corporate governance.
Recently, companies have been required to incorporate environmental, social, and government (ESG) viewpoints into their business management and give due consideration to the Sustainable Development Goals (SDGs). Accordingly, we will foster business that contributes to the creation of a sustainable society, thereby achieving further growth as a going concern that continues to make profit in a stable manner.

We will take actions without being afraid of confronting changes so that the Showa Denko Group can make tremendous achievements as a company contributing to creating a society in which affluence and sustainability are harmonized. We would like to ask you to pay attention to our Group’s future activities.