Outline of Medium-term Action Plan "GS-Twins" and President Interview
Review of the GS-21 medium-term management plan
The strategies designed to strengthen the Group's corporate standing (FY2006 to FY2008)
In fiscal 2006, the Company presented its 10-year Corporate Vision setting a course for the Group's long-term development and launched the GS-21 medium-term management plan effective for the three-year period of fiscal years 2006 to 2008.
During that period, the Company implemented numerous initiatives to advance four core management strategies designed to strengthen the Group's corporate standing.
- Qualitative improvement of competitiveness and global expansion of core material businesses
- Investment of management resources concentrating on the expansion of new growth fields
- Restructuring of non-competitive businesses
- Establishment of global corporation management system
Trend of Performance (FY2006 to FY2008)
The Company aimed to establish a profit structure, through the above-mentioned measures, that achieves sales of 450 billion yen, an operating income of 50 billon yen, a return on assets (ROA) of 9% and a return on equity (ROE) of 7%, in the fiscal year 2008, the last year of the GS-21. In the fiscal year 2007, the second year of the GS-21, the Company achieved the targeted ROA and ROE index one year earlier than expected.
Therefore, the Company almost achieved the expected profit structure in the fiscal year 2007. However, the Company could not achieve the targeted management index due to the global economic crisis in and after the second half of fiscal year 2008.
Shareholder Return (FY2006 to 2008)
During the three years of the GS-21 plan, the Company targeted a dividend payout ratio of 30% or more of consolidated net income and sought to raise capital efficiency by targeting a 70% shareholder return ratio (defined as the sum of dividends paid and share buybacks as a percentage of consolidated net income). The actual results for the three-year period were a 36% dividend payout ratio and 86% shareholder return ratio.
Although the Company succeeded in improving earnings through the measures set forth in the GS-21, the Company needs further drastic efforts to restore and enhance profitability in order to overcome the present economic crisis.
[Reference] The strategies designed to strengthen the Group's corporate standing (years 2006 to 2008.)
- 1. Qualitative improvement of competitiveness and global expansion of core material businesses
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- Established a business base for Poval resin in Asia (making a joint venture manufacturing company its wholly-owned subsidiary by acquiring shares in the joint venture)
- Expanded the PVB business and sought the group synergy effect (reinforcement of facilities of a manufacturing base in Europe, acquisition of intellectual property rights from other companies, and new establishment of the PVB division)
- Reinforced the facilities and increased production of Optical-use Poval films (for liquid crystal displays) and vinylon fiber (cement reinforcing material to be used as an asbestos substitute).
- 2. Investment of management resources concentrating on the expansion of new growth fields
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- Established the Environmental Business Development and Promotion Division in anticipation of the global expansion of water treatment business; incorporated a joint venture engaging in water treatment;
- Expanded the market of heat-resistant engineering plastics and reinforced facilities
- Expanded the global basis of the dental materials business;
- Developed and commercialized new processes for man made leather and non-woven fabric
- Developed materials for new energy (solar power generation and fuel cells, etc.).
- 3. Restructuring of non-competitive businesses
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- Withdrew from the rear projection TV screen businesses
- Withdrew from the aroma chemicals (linalool) businesses
- Shut down the domestic production of methacrylic resin cast sheet business
- Spun off the dialyzer business.
- 4. Establishment of global corporation management system
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- Reinforced corporate governance through appointment of two (2) independent directors
- Appointed the presidents of overseas subsidiaries as executive officer
- Installed the CTO who supervises development and technology in an integrated manner
- Established regional management companies by integrating bases in Europe and in the US
- Established a new subsidiary in India and Northern Europe
- Introduced the global personnel education program.
