Investor Relations

“We will fully leverage a stable financial base and aggressively spend in growth areas to continuously increase corporate value.”|Tomoo Shibuya|Member of the Board, Managing Director, Head of Financial Group

Financial Strategy Aimed at Sustainable Growth

The Nippon Kayaku Group aims to achieve Nippon Kayaku Group Vision and subsequent further growth. We will accomplish this by maintaining our solid financial structure, which is our strength, at a certain level while actively investing in growth and innovation in our existing portfolio. We will also respond to climate change to achieve the FY2030 goals of the Mid-term Corporate Master Plan for the Environment and will actively invest in businesses that are the seedlings for new growth in synergy with our existing businesses.
 The Company will procure the funds needed for investment in growth through corporate bonds, loans, and other forms of financing, with consideration for the cost of capital. We are managing business resources appropriately through balance sheet management focused on optimal capital structure, and are building a solid financial base that will enable the Company to respond flexibly to changes in the market environment as well as business risks and other risks. We will concentrate on enhancing corporate value while maintaining our corporate rating by R&I (Rating and Investment Information, Inc.) as an objective evaluation of our credit rating.

Nippon Kayaku Group Financial Policy

While fiscal year ended March 31, 2021, the second year of KAYAKU Next Stage, our three-year mid-term business plan, has ended and we still cannot predict the impact from the COVID-19 pandemic, there has been no change in our policy of maintaining a well-balanced portfolio through our three main business segments. We aim to stimulate business activity and maximize corporate value while maintaining an appropriate financial condition based on the three pillars of our financial policy: 1) Engaging in financing, R&D, and capital investment for business development while keeping an eye on trends in demand for products, 2) Appropriately managing business resources that form the financial base in accordance with conditions, and 3) pursuing fiscal planning with an awareness of the cost of capital.

Appropriate Management of Business Resources that Form the Financial Base

The Nippon Kayaku Group focuses on cash flow management and balance sheet management. ROE is the KPI for economic performance, which was established as one of the CSR Key Themes (“Materiality”), and we consider ROE of 8% as an appro-priate level for increasing sustainable corporate value of the Nippon Kayaku Group.
 ROE was 5.8% as of March 31, 2021, the end of a fiscal year substantially impacted by the COVID-19 pandemic. We will target profit growth through medium and long-term business growth while shortening and appropriately managing the days of receivables and inventories on hand as operating capital.
 We examine the reasons for cross-shareholdings every year and sell those we have deemed as no longer needed, while taking the impact on the market into consideration. In addition to this, we will also consider other measures, including the appropriate timing for reducing holding of idle assets, mainly consisting of former plant premises with the goal of managing and maintaining cash and equivalents at an appropriate level and targeting ROE at an appropriate level for the corporate group.

Trend in Assets | Trend in Cash Flows

Shareholder Return

Nippon Kayaku regards returns to our shareholders as important. We are targeting a dividend payout ratio of around 40% of net income over the medium-term, while taking stable, consistent profit returns and internal reserves into consideration. We will use internal reserves to cover investment in business growth, R&D and other expenses, and enhance corporate value.
 Annual dividends for fiscal year ended March 31, 2021 were 30 yen per share, for a dividend payout ratio of 40.7%. We intend 10 20 Total return ratio to maintain annual dividends per share at 30 yen in fiscal year ending March 31, 2022, with interim dividends of 15 yen per share and year-end dividends of 15 yen per share. The Company also introduced a restricted stock compensation plan for its direc tors and executive directors in June 2021. One of the purposes of the plan is to have directors and executive directors share value with shareholders. The Company allocated 88,067 shares of Company stock as restricted stock compensation in August 2021. We also bought back a total of 2.63 million shares (1.54% of the total number of shares issued, excluding treasury shares) from May through September 2021.

Financial Group Vision

The Vision for the Financial Group, which consists of the Finance & Accounting Division and the Information Systems Division, is to contribute to business growth by strengthening the financial base to support active investment, pursue timely and appropriate disclosure of information for the benefit of all stakeholders, and be a trigger for business innovation through digital transformation (DX) in addition to controlling the finance and accounting aspects of Nippon Kayaku Group companies.
 We will start by improving the level and efficiency of existing businesses by utilizing IoT and AI to step up the level of manufacturing operations and improve the efficiency of equipment maintenance, speed up product development in manufacturing divisions, expand channels of communication with customers in marketing and sales divisions, and improve the operating efficiency of administrative divisions, among other improvements. We will undertake digital transformation (DX) within the company aimed at generating new business schemes and the Information Systems Division will take the lead on this.
 The Finance & Accounting Division will also utilize IT to improve operating efficiency of the Nippon Kayaku Group as a whole, strive to achieve further improvements in business efficiency and efficient use of resources through appropriate management indicators, and establish a system capable of ensuring timely disclosure of accurate information on performance.

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