Investor Relations

Message from the President

The Nippon Kayaku Group
will implement our corporate
vision, the KAYAKU spirit,
and continue to be a corporate
group that provides happiness to
people and society.

Introduction

In response to the recent spread of COVID-19, prevention measures and vaccinations are being promoted, but the situation is still not under control. I would like to express my heartfelt sympathies to those who have been affected by COVID-19, their families, and all other concerned parties. I would also like to express my gratitude and appreciation to all healthcare workers who are working on the front lines to prevent the spread of COVID-19.
 The COVID-19 pandemic has made us realize that we are constantly faced with unpredictable situations, even in our seemingly ordinary daily lives. The new normal has become a reality. We are now experiencing rapid and significant changes in everything from our daily lives to the business environment. I was reminded of the fact that our human activities are actually based on a delicate balance. Once that balance is lost, the situation changes drastically.
 In this era of great change, we are determined to enhance our corporate value by acting flexibly and swiftly making full use of the genes of our company that has survived for more than 100 years by changing our fundamental technologies.

Environment surrounding the Nippon Kayaku Group

For the fiscal year ending March 31, 2021, the second year of the three-year mid-term business plan, KAYAKU Next Stage, the performance of the functional chemicals business and the safety systems business slowed down in the first quarter due to the significant impact of the Corona disaster. However, from the second quarter onward, a recovery was seen in automobile production volume and other market condition.
 In the functional chemicals business, sales of semiconductor-related materials and colorants for consumer inkjet printers were strong due to promotion of teleworking. The automotive products of Polatechno, which became a wholly owned subsidiary, also began to recover in the second half of the year. In the pharmaceuticals business, despite a difficult business environment affected by the annual NHI price revisions, the steady activities we have continued since 2014, when we launched the first antibody biosimilar in Japan, bore fruit. Accordingly, both sales and profits increased due to growth in biosimilars and other products. In the safety systems business, the recovery in automobile production in the second half of the year led to a recovery in demand for safety components.
 As a result, consolidated net sales for the fiscal year ending March 31, 2021 were 173.4 billion yen and operating income was 15.2 billion yen. These results exceeded the forecasts we announced in November 2020 in terms of both net sales and operating income. However, we expect consolidated net sales of 184.8 billion yen and operating income of 17.4 billion yen* in the fiscal year ending March 2022 that is the final year of the medium-term business plan KAYAKU Next Stage. That is a greater deviation than we expected from our initial target of 210.0 billion yen in net sales and 22.5 billion yen in operating income we announced in May 2019. Therefore, it is difficult to achieve these initial targets. For this reason, we believe it is essential to restructure our future growth strategy. Accordingly, we revised the vision, which we aim to achieve by the fiscal year ending March 2026 (FY 2025), and announced it in May 2021.In this revision, we specifically examined the key issues and roadmaps for each of our business segments and general administrative divisions to achieve our vision in 2025 or 2030. To achieve the vison, as of October 2021, we are thoroughly discussing internally the formulation of our next four-year medium-term business plan that is the next stage of KAYAKU Next Stage.

* Forecast announced at the time of the first quarter results in July 2021

What is necessary for the future of the Nippon Kayaku Group.

Looking over the business results for the past 10 years, even accounting for the impact from the spread of COVID-19, we cannot ignore the fact that the profitability of the Nippon Kayaku Group has been gradually declining. No matter how competitive the product is, existing products always reach the end of their life cycle. It is obvious that if we cannot prepare new products one after another, our growth will stop. It is imperative that everyone, from executives to employees, shares this awareness of the crisis and builds a system that can continue to introduce new products. As one of the measures to achieve this goal, we need to broaden our perspective and expand our interaction with people outside the company more actively than ever before.
 We have also positioned the promotion of digitalization and digital transformation as a very important issue for us, and have set up a digital transformation promotion team within the company. We will promote digitalization of both software and hardware. We will also take this as an opportunity to review the way we have been working and implement the reskilling of each and every employee.
 In the next medium-term business plan starting from the fiscal year ending March 31, 2023, we will need to conduct thorough feasibility studies on important projects and draw detailed scenarios and roadmaps to achieve the goals of each business. Furthermore, we believe that it is important to change the mindset of each and every one of us to survive the increasingly fierce market competition. Therefore, we have begun to work on reforming not only our technologies but also our corporate culture and the awareness of our group. I am also deeply involved in promoting the creation of a corporate culture that will make us a “vibrant, strong, and good company” and the “A3 Activity (KAIZEN)” that aims to establish a sense of values for improvement in each employee.

We will provide happiness and well-being to society with our presence.

The founding spirit of Nippon Kayaku is inherited in the KAYAKU spirit: “Continuously providing society with the best products through ceaseless progress and the combined forces of our consciences.” One hundred years ago, our predecessors, with an unshakable sense of mission, tackled the production of synthetic dyes and industrial dynamite, which were in short supply in Japan at the time, and succeeded in producing them domestically for the first time. More than 50 years ago, we were also the first company to develop a difficult anti-cancer drug, based on the strong belief that it is the mission of a pharmaceutical company to take on the challenge of overcoming the disease of cancer.
 Now, after experiencing the unprecedented crisis of the COVID-19 pandemic, we are keenly aware of the fact that we are a group of people ho practice the “the combined forces of our consciences.” We hope to become a company capable of perpetually providing happiness and well-being, projecting real presence.

Let each other's thoughts be what they are.
A vibrant, strong, and good company

To provide happiness and well-being to society, it is important to have a healthy organization and a vibrant group. In other words, the ideal organization is one where good communication is routine, where we stimulate each other and where we create a chain of positive reactions. Since joining Nippon Kayaku, I have acquired experience in pharmaceutical sales, and in my 30s, I was given the opportunity to work overseas. After returning to Japan, I have been involved in the safety systems business in various capacities, including planning and promotion, sales supervision, and as general manager of business units. I faced many difficult situations and experienced some failures. However, when the members of the team were able to discuss openly without hesitation and produce results as one, I realized how happy I was to be able to work with a good team despite the difficulties. Now, I would like to make the Nippon Kayaku Group a “vibrant, strong, and good company” where everyone can experience such a sense of fulfillment through their work. To achieve this, I believe that the first thing we must do is to unite the entire company and increase the energy of the organization by stimulating communication that allows us to reveal our thoughts as they are. What is important is for each employee to be able to think and discuss autonomously and with a sense of speed, and to be able to act together with the relevant people in the workplace.

 I talk about this with executives and employees on a regular basis, and also send out messages to all Group employees in various situations. For example, although it is a trivial matter, I call on executives and employees to address each other by “-san” instead of using hierarchical titles. I ask everyone in the group to call me “Wakumoto-san.” It may be awkward at first, but I think it is important to start with a formal approach. On the other hand, I think that simply saying “Let's become a healthy organization” is not enough to achieve this goal. Therefore, we have planned specific measures to revitalize communication and converted the room for executives into a room to display the mid- to long-term roadmap for each department. We have started to use this room as a place where as many employees as possible can feel free to visit as much as time permits. Once there, they can discuss with Shibuya-san (Member of the Board Representative Senior Managing Director, Head of Strategic Corporate Planning Group), Inoue-san (Senior Managing Director, Head of Research & Development Group) and other executives. They can also frankly discuss progress and plans in terms of strategic corporate planning, business operations, and research and development. We will operate this room as “the visible room of the Vision.” This will be where we can immediately understand the progress of each of our businesses and the status of our efforts to address company-wide priority issues throughout the company by stepping into it. From this room, we hope to foster a vibrant corporate culture that will become the foundation of the Nippon Kayaku Group in the future.

Discussions with Wakumoto-san using “the visible room of the Vision”

Establishing a sense of values for improvement.
A3 activities (KAIZEN)

As a manufacturer operating in a highly competitive market, we need to instill in all of our employees a sense of values that require us to constantly make improvements to eliminate waste. Looking back, we cannot say that there were no differences in consciousness within the company in the past. That was due to differences in each business field, different points of view in sales, factories, and other job categories, and differences between business departments and back-office. We will continue to take on the challenges of an increasingly competitive market through our four businesses. It is important for each and every one of us to have the same level of thinking to ask ourselves if the way we have been doing our work will be effective in the future or if there is a more efficient way. Therefore, based on the idea that no manufacturing industry can exist without cost reduction, we started activities to share the values of constant improvement with all our employees by thoroughly eliminating the 3M (“Muri, Muda, Mura”, namely difficulty, waste, and inconsistency).
 The secretariat is currently located at the head office and is promoting an initiative named “A3 Activity (KAIZEN)” with the catchphrase “Improvement through Always3% Reduction”. The objective is not just to promote a reduction in costs, but to improve operational efficiency by eliminating all 3Ms, including those in administrative departments. The secretariat plays a central role in setting up multifaceted plans and spreading values through initiatives to improve issues extracted from employees at all workplaces, debates between executives and young employees, and teachings through company newsletters. We will continue to vigorously promote this initiative as the foundation to strengthen the Group's product competitiveness, especially its cost competitiveness.

A3 activities (KAIZEN): Executives and young employees who participated in a debate held in June 2021

Finally

In addition to our efforts to become a “vibrant, strong, and good company,” and to reform our corporate culture through “A3 activities (KAIZEN),” we are currently engaged in thorough internal discussions to formulate our next four-year mid-term business plan after KAYAKU Next Stage. We would like to formulate this plan with a high degree of accuracy so that you can feel our changes and determination. We hope to explain it at the financial results briefing* held in May 2022.
 In the next mid-term business plan, we will continue to work more actively and concretely in creating new products and businesses, tackling environmental issues (responding to climate change), and implementing digital transformation as our company-wide priority issues for sustainable growth.
 We will continue to make every effort to enhance our corporate value to meet the expectations of our stakeholders. I would like to ask our shareholders and investors to continue to provide us with opportunities for constructive dialogue.
 The Nippon Kayaku Group will continue to practice the KAYAKU spirit, evolve together with all of our stakeholders, and strive to provide happiness and well-being.
 I would like to ask for your continued support and encouragement.

* This briefing is scheduled to be held on May 13, 2022 (Friday).

October 1, 2021
President, Representative Director
Atsuhiro Wakumoto

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