December 5, 2006 Showa Denko K.K. · Business units Major new products HD Perpendicular magnetic...

Passion ProjectFirst Year Achievements

December 5, 2006Showa Denko K.K.

Passion ProjectFirst Year Achievements

December 5, 2006Showa Denko K.K.

VISIONWe at the Showa Denko Group will provide products and services that are useful and safe and exceed our

customers’ expectations, thereby enhancing the value of the Group, giving satisfaction to our shareholders, and contributing to the sound growth of international society as a responsible corporate citizen.

VISIONVISIONWe at the Showa Denko Group will provide products and services tWe at the Showa Denko Group will provide products and services that are useful and safe and exceed our hat are useful and safe and exceed our

customerscustomers’’ expectations, thereby enhancing the value of the Group, giving expectations, thereby enhancing the value of the Group, giving satisfaction to our shareholders, satisfaction to our shareholders, and contributing to the sound growth of international society asand contributing to the sound growth of international society as a responsible corporate citizen.a responsible corporate citizen.

Unique Chemical Company with Individualized Products;Unique Chemical Company with Individualized Products;Aiming to Fulfill Corporate Social Responsibility Aiming to Fulfill Corporate Social Responsibility

This presentation contains statements relating to management’s projections of future profits and expectations for the Company’s product development program. The Company cannot guarantee that these expectations and projections will be realized or correct. Please note that actual results may differ materially from the forecast due to a variety of factors, including changes in the market conditions. The timely commercialization of products under development by the Company may be disrupted or delayed by a variety of factors, including market acceptance and the introduction of new products by competitors. The foregoing list of factors is not inclusive.

P.1

ContentsContentsContents

PARTPARTⅠⅠ Summary of First Year AchievementsSummary of First Year Achievements

1. Expecting to exceed financial goals 42. Continued growth in operating income 53. Continued cut in interest-bearing debt 64. Progress in portfolio strategy 75. Major reinforcement and capacity expansion 86. Major new products launched in 2006 97. Relentless pursuit of structural reforms 108. Results accomplished in 2006 11

PARTPARTⅡⅡ Growth StrategyGrowth Strategy

HD New stage of growth with advanced technologiesSituation of HDD/media industry (1) 13Situation of HDD/media industry (2) 14Situation of HDD/media industry (3) 15

Launching the most advanced media 16Higher capacity with PMR technology 17Evolving into an individualized growth driver 18Establishing an optimum production setup 19

Semiconductor-processing materialsAccelerating growth with unique business model 20Leading the growing high-purity gas market 21Expansions in Asia 22

Creation of new “growth driver” businessesLED 23VGCF carbon nanofiber 24

PARTPARTⅢⅢ Base Business StrategyBase Business Strategy

Graphite electrode: Stable source of profit 26Aluminum: Working to accomplish structural reform 27

ConclusionConclusionSteps toward achieving contribution to societySteps toward achieving contribution to society 2929

Yearly sales and operating income plan (by segment)Yearly sales and operating income plan (by segment) 3030

P.2


P.3

20062006 (Estimate)(Estimate) Goals for Goals for 20062006(Passion Project)(Passion Project) NotesNotes

Net sales Net sales ¥¥900900 billionbillion ¥¥800800 billionbillion Sales are up in all segmentsSales are up in all segments

Operating incomeOperating income ¥¥6767..55 billionbillion ¥¥6262..0 0 billionbillion Increased profit in Electronics and Inorganics; Increased profit in Electronics and Inorganics; Aluminum will not meet target.Aluminum will not meet target.

Profit ratioProfit ratio 7.5 %7.5 % 7.8 %7.8 %Profit ratio will decrease. (Net sales from Profit ratio will decrease. (Net sales from Petrochemicals and Aluminum are increasing, Petrochemicals and Aluminum are increasing, reflecting the rise in feedstock cost.)reflecting the rise in feedstock cost.)

ROAROA 6.6 %6.6 % 6.5 % 6.5 %

InterestInterest--bearing debt bearing debt ¥¥445445 billionbillion ¥¥461461 billionbillion Unchanged from the level at the end of 2005Unchanged from the level at the end of 2005

D/E ratio D/E ratio 2.02.0 timestimes 2.12.1 timestimes


P.4

Will exceed all financial goals, except profit ratioWill exceed all financial goals, except profit ratio

572

730

620

1,000

850

521

313

192

385

10.0

5.6

7.0

4.6

2.7

7.0

7.88.4

9.0

0

100

200

300

400

500

600

700

800

900

1,000

1,100

2001 2002 2003 2004 2005 2006 2007 2008 2010

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

Operating Income Profit ratio

(¥100 million)

Profit ratio (%)

10.0

11.0

Operating income for the first year will far exceed the initial Operating income for the first year will far exceed the initial goal.goal.

P.5

675675675

7.57.57.5


2006 estimate 67.5 billion2006 passion goal 62.0 billion2006 estimate 67.5 billion2006 passion goal 62.0 billion

5,024

5,8116,224

5,274

4,610

4,3534,000

4,488

1.0

3.2

2.8

3.9

4.5

2.1

1.61.4

2.2

3,500

4,000

4,500

5,000

5,500

6,000

6,500

2001 2002 2003 2004 2005 2006 2007 2008 2010

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Interest bearing debt D/E ratio

(¥100 million)

D/E ratio (times)

Making aggressive investments while improving financial strengthMaking aggressive investments while improving financial strength

P.6

4,4504,4504,450

2.02.02.0


2006 estimate 445 billion2006 passion goal 461 billion2006 estimate 445 billion2006 passion goal 461 billion

Growth businessesGrowth businesses Base businessesBase businesses

New growth driversNew growth drivers Growth driversGrowth drivers Cash cowCash cow

Organic chemicalsOrganic chemicals

（（acetic acidacetic acid、、vinyl acetatevinyl acetate））

Organic chemicalsOrganic chemicals （（Showa Showa Aluminum PowderAluminum Powder））

OlefinsOlefins Specialty polymersSpecialty polymers （（Showa Showa High PolymerHigh Polymer））

LifeLife--science productsscience products AmmoniaAmmonia

Fine chemicalsFine chemicals Base chemicalsBase chemicals

Ultra bright Ultra bright LEDLEDss HDHD（（expansionexpansion）） Rare earthsRare earths

CapacitorsCapacitors HDHD（（new productsnew products）） Compound semiconductorsCompound semiconductors

Semiconductor processing materialsSemiconductor processing materials

Fine carbonsFine carbons Graphite electrodesGraphite electrodes

Commodity ceramicsCommodity ceramics

Al foils for capacitorsAl foils for capacitors Cylinders for laser printersCylinders for laser printers

Commodity Al componentsCommodity Al components（（commodity foilscommodity foils））

AlloysAlloys

Heat exchangersHeat exchangers Aluminum cansAluminum cans

AluminumAluminum

InorganicsInorganics

ElectronicsElectronics

ChemicalsChemicals

PetrochemicalsPetrochemicals

【【ExpansionExpansion】】

P. 7

【【Developing new productsDeveloping new products】】【【StructualStructual reformreform】】


Business unitsBusiness units Major reinforcement and capacity expansionMajor reinforcement and capacity expansion

HDHD Expansions at Taiwan and Chiba: To 15.75 million disks a month aExpansions at Taiwan and Chiba: To 15.75 million disks a month at the end of t the end of ‘‘0606

SemiconductorSemiconductor--processing materialsprocessing materials HighHigh--purity chlorine for semiconductors/LCDs: From 300 t/y to 600 t/ypurity chlorine for semiconductors/LCDs: From 300 t/y to 600 t/y

Fine carbonsFine carbons VGCFVGCF: From 40 t/y to 100 t/y: From 40 t/y to 100 t/y

Specialty polymersSpecialty polymers Showa Highpolymer: Turned into a fully owned subsidiaryShowa Highpolymer: Turned into a fully owned subsidiary

Graphite electrodesGraphite electrodes Shifting to largeShifting to large--diameter electrodesdiameter electrodes

Commodity ceramicsCommodity ceramics New plant in Lianyungang, China, has started fullNew plant in Lianyungang, China, has started full--scale operation.scale operation.

HighHigh--purity aluminum foils for capacitorspurity aluminum foils for capacitors Expansion at Sakai Plant: From 1,500 tons to 1,800 tons per monExpansion at Sakai Plant: From 1,500 tons to 1,800 tons per monthth

OlefinsOlefins Ethylene: From 653,000 t/y to 677,000 t/yEthylene: From 653,000 t/y to 677,000 t/y

Organic chemicalsOrganic chemicals Acetic acid: From 100,000 t/y to 130,000 t/yAcetic acid: From 100,000 t/y to 130,000 t/yVinyl acetate: From 120,000 t/y to 175,000 t/yVinyl acetate: From 120,000 t/y to 175,000 t/y

Rare earthsRare earths The second magnetic alloy plant being built in China.The second magnetic alloy plant being built in China.

HighHigh--performance aluminum componentsperformance aluminum components Cylinders for laser printers: From 9 million units to 15 millionCylinders for laser printers: From 9 million units to 15 million units per monthunits per month

P.8

Capital investment in 2006 totaled Capital investment in 2006 totaled ¥¥102.3 billion.102.3 billion.Total investment in three years: Total investment in three years: ¥¥200 billion200 billion


Business unitsBusiness units Major new productsMajor new products

HDHD Perpendicular magnetic recording technology media: 100 GB/P (2.5Perpendicular magnetic recording technology media: 100 GB/P (2.5--inch) (Best in the world)inch) (Best in the world)

CapacitorsCapacitors HighHigh--capacitance, highcapacitance, high--voltage productsvoltage products

Life scienceLife science New curling agent (New curling agent (SpieraSpiera))

Fine chemicalsFine chemicalsAdditive in photoAdditive in photo--curing resins (curing resins (Karenz MTKarenz MT))Highly insulating ink using urethaneHighly insulating ink using urethane--based thermoset resinbased thermoset resinHalogenHalogen--free epoxy resinfree epoxy resin

Ultra bright LEDsUltra bright LEDs Commercial production of ultra bright AlGaInP Commercial production of ultra bright AlGaInP LEDsLEDs will be started.will be started.

Heat exchangersHeat exchangers FullFull--scale sales of scale sales of NRTNRT--ⅢⅢ condenserscondensers

OthersOthers Epitaxial wafers for Epitaxial wafers for SiCSiC power devicespower devicesPipes Pipes based on recycled PET bottles based on recycled PET bottles (Showa Eco(Showa Eco--pipepipe))

P.9

Launched new products to create new Launched new products to create new ““growth drivergrowth driver”” businessesbusinesses

PARTPARTⅠⅠ Summary of First year AchievementsSummary of First year Achievements

SegmentSegment Measures takenMeasures taken

Transferred shares in Showa Aluminum PowderTransferred shares in Showa Aluminum PowderPetrochemicalsPetrochemicalsRestructuring affiliatesRestructuring affiliates Transferred medical packaging business (Restructuring Transferred medical packaging business (Restructuring

plastic products operations)plastic products operations)

Alliance in the alloys businessAlliance in the alloys business

Withdrawal from the commodity foils businessWithdrawal from the commodity foils business

Withdrawal from the refrigeratorWithdrawal from the refrigerator--evaporators business in evaporators business in IndonesiaIndonesia

AluminumAluminumFocusing on highFocusing on high--value product linesvalue product lines

P.10

Carried out structural reform while promoting growth strategyCarried out structural reform while promoting growth strategy


P.11

Strengthened cash cow businesses【Increasing FCF】

Graphite electrodes; Petrochemicals

Strengthened cash cow businesses【Increasing FCF】

Graphite electrodes; Petrochemicals

Relentless pursuit of structural reform【Focusing resources on selected areas】

Aluminum; Petrochemicals

Relentless pursuit of structural reform【Focusing resources on selected areas】

Aluminum; Petrochemicals

Focusing resources on growth driver businesses

【Accelerating growth】HD & semiconductor-processing materials

Focusing resources on growth driver businesses

【Accelerating growth】HD & semiconductor-processing materials

Creating new growth drivers【To maintain growth】

LED, VGCF, etc.

Creating new growth drivers【To maintain growth】

LED, VGCF, etc.

Generating profitGenerating profitGenerating profit

Generating cashGenerating cashGenerating cash

Achieved sustainable growth in 2006Achieved sustainable growth in 2006Achieved sustainable growth in 2006

Growth Strategy Base Business Strategy


PARTPARTⅡⅡ Growth StrategyGrowth Strategy

P.12

P.13

PARTPARTⅡⅡ Growth Strategy/HD Growth Strategy/HD

160 168215 229 238 246

18 18

26 27 29

40 44

77108

137

2242

63

81

112

140

30

166

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007 2008

Brisk demand expected to continueBrisk demand expected to continueA 15%/Y highA 15%/Y high--growth, centering on consumer electronics (CE) applicationsgrowth, centering on consumer electronics (CE) applications

Media supply will also increase.Media supply will also increase.

→→ SDK will focus on CE applications, providing highSDK will focus on CE applications, providing high--capacity, highcapacity, high--value hard disk media.value hard disk media.

Notebook PCsNotebook PCs30%/Y growth30%/Y growth

CECE30%/Y growth30%/Y growth

ServersServers5%/Y growth5%/Y growth

Desktop PCsDesktop PCs5%/Y growth5%/Y growth

Average growth in 2006 and after: 15%/Y

Situation of Situation of HDD/HDD/media industry (1)media industry (1)

240272

381445

516

582HDD demand forecastHDD demand forecast

(Data : Trend Focus)

P.14


Situation of Situation of HDD/HDD/media industry (2)media industry (2)SDK is the largest independent supplier of HD media, with establSDK is the largest independent supplier of HD media, with established position ished position

in the growing CE market.in the growing CE market.

Total HD media shipments Total HD media shipments (CQ3)(CQ3)(Seagate(Seagate’’s share includes that of s share includes that of MMMMC.)C.)

HD media shipments for CE Market (CQ3)HD media shipments for CE Market (CQ3)(Seagate(Seagate’’s share includes that of s share includes that of MMCMMC.).)

SDKSDK19.4%19.4%

KomagKomag19.3%19.3%

Fuji ElectricFuji Electric10.7%10.7%HOYAHOYA

7.9%7.9%

FujitsuFujitsu3.3%3.3%

HGSTHGST11.5%11.5%

SeagateSeagate27.9%27.9%

InIn--househouse42.7%42.7%

IndependentIndependent57.3%57.3%

SDKSDK30.30.66%%

KomagKomag1100..88%%

Fuji ElectricFuji Electric7.7.44%%HOYAHOYA

4.1%4.1%

FujitsuFujitsu0.8%0.8%

HGSTHGST14.14.88%%

SeagateSeagate31.31.66%%

InIn--househouse4477..11%%

IndependentIndependent5522..99%%

(Data : Trend Focus)

Innovations for raising storage capacity, and Innovations for raising storage capacity, and shift to newshift to new--generation media, both occurring at a generation media, both occurring at a high speedhigh speed

Dramatic Increase in capacity due to the Dramatic Increase in capacity due to the perpendicular magnetic recordingperpendicular magnetic recordingtechnologytechnology

Division of the market into two partsDivision of the market into two partsHighHigh--capacity media (high value) capacity media (high value)

vs.vs.ConventionalConventional--type mediatype media

P.15

Situation of Situation of HDD/HDD/media industry (3)media industry (3)

2004 2005 2006 2007 2008 2009 2010

Memory density (Gbpsi)

Perpendicular magnetic Perpendicular magnetic

recording mediarecording media

Discrete mediaDiscrete media

Longitudinal Longitudinal recording recording

mediamedia

Patterned mediaPatterned media

10

100

1000

( Estimated by SDK)

PARTPARTⅡⅡ Growth Strategy/HDGrowth Strategy/HD

19991999 20002000 20012001 20022002 20032003 20042004 20052005 20062006 20072007

100 GB/P100 GB/P

80 GB/P80 GB/PPMRPMR

Long.Long.

60 GB/P60 GB/P

40 GB/P40 GB/P

30 GB/P30 GB/P

20 GB/P20 GB/P

15 GB/P15 GB/P

10 GB/P10 GB/P

6 GB/P6 GB/P

Developed the worldDeveloped the world’’s leading perpendicular magnetic recording (PMR) technologys leading perpendicular magnetic recording (PMR) technologyStarted commercial production of 100 GB/P, 2.5Started commercial production of 100 GB/P, 2.5--inch media (the highest density)inch media (the highest density)

By the end of 2007, 50% of SDKBy the end of 2007, 50% of SDK’’s output will be based on the PMR technology (100% s output will be based on the PMR technology (100% for glassfor glass--based media) (Industry average: 30% based media) (Industry average: 30% Trend FocusTrend Focus))

Leading the industry in recording densityLeading the industry in recording density

P.16

【【Trend to higher recording density in the most competitive 2.5Trend to higher recording density in the most competitive 2.5--inch media marketinch media market】】

【【 SDKSDK’’s positions position 】】

To become world's first in commercial To become world's first in commercial production of production of PMPMR R 100100 GB/PGB/P mediamedia

Mainstream: Mainstream: 4040～～6060 GB/PGB/P (Longitudinal)(Longitudinal)

(Estimated by SDK)

SDK became worldSDK became world’’s first s first in commercial production in commercial production

of of 1.891.89--inch 4inch 40 GB/P media.0 GB/P media.


N S N S N S N S N S

GMRGMR headhead

N

S N

S N

S N

S N

S N

S N

S N

S N

S

GMRGMR headhead

178Gbpsi178Gbpsi178Gbpsi

100Gbpsi100Gbpsi100Gbpsi

P.17


PMR: Realized due to the introduction of a highPMR: Realized due to the introduction of a high--level sputtering level sputtering technology and special devicestechnology and special devices

Recording densityRecording Recording densitydensity

Longitudinal recording technology

Longitudinal recording Longitudinal recording technologytechnology

Perpendicular magnetic recording technology

Perpendicular magnetic recording Perpendicular magnetic recording technologytechnology

Base Base layerlayer

Depreciation at a rapid paceDepreciation at a rapid pace

Unique business strategy: Establishing advantagesUnique business strategy: Establishing advantages

Anticipating changes in the business environmentAnticipating changes in the business environment

Providing a wide variety of HD media to meet market needsProviding a wide variety of HD media to meet market needsBoth aluminumBoth aluminum-- and glassand glass--based media;based media; covering the whole range (0.85covering the whole range (0.85--3.53.5””))Strong in the fast growing CE marketStrong in the fast growing CE market

P.18

Production at four plants in three locations; highly cost compeProduction at four plants in three locations; highly cost competitivetitiveStarting up new lines in a timely manner to meet demandStarting up new lines in a timely manner to meet demand

The worldThe world’’s leading technologys leading technology enabling higher storage capacityenabling higher storage capacityShifting toward highShifting toward high--value, nextvalue, next--generation media ahead of competitorsgeneration media ahead of competitors

Stable supply based on longStable supply based on long--term supply agreementsterm supply agreements


Focusing on highFocusing on high--value productsvalue productsTimely expansion of production lines to meet growing demandTimely expansion of production lines to meet growing demand

Total capacity: 24 Mil. /mo (end of 2008)Total capacity: 24 Mil. /mo (end of 2008)

P.19


New plant in Singapore due to start up in January 2007New plant in Singapore due to start up in January 2007

0

5

10

15

20

25

30

2003 2004 2005 2006 2007 2008

Production capacity (Million disks per month)

2424MilMillion disks/monthlion disks/month

Focusing on highFocusing on high--performance, highperformance, high--value productsvalue productsMeeting needs from the rapidly growing LCD marketMeeting needs from the rapidly growing LCD market

Focusing our resources on highFocusing our resources on high--purity gases (where we have competitive edges)purity gases (where we have competitive edges)

Establishing the leading position in the rapidly growing marketsEstablishing the leading position in the rapidly growing markets

((ClCl22、、NHNH33、、NN22OO））

Developing new highDeveloping new high--performance gases and chemicalsperformance gases and chemicals

HighHigh--purity etching gases purity etching gases （（CC44FF66, , HBrHBr））

NextNext--generation CVDgeneration CVD--filmfilm--forming materialsforming materials

To supply the Asian market (Directly selling our own products)To supply the Asian market (Directly selling our own products)

（（Advantages in quality, speed and costAdvantages in quality, speed and cost））

P.20

PARTPARTⅡⅡ Growth Strategy/SemiconductorGrowth Strategy/Semiconductor--Processing MaterialsProcessing Materials

SDKSDK 30 %30 %(To become (To become No. 1)No. 1)

SDK SDK 20 %20 %（（No. No. 33））

20052005 （（730730 tonstons））

20102010 （（2,1302,130 tonstons））

High-purity Cl2HighHigh--purity purity ClCl22

SDK SDK 35 %35 %（（No. 1No. 1））

20102010 （（7,2007,200 tonstons））

SDK SDK 20 %20 %（（No. 1No. 1））

20052005 （（2,2002,200 tonstons））

SDK SDK 30 %30 %（（No. 1No. 1））

High-purity NH3HighHigh--purity purity NHNH33

High-purity N2OHighHigh--purity purity NN22OO

20102010 （（4,1004,100 tonstons））

Expanding in growing markets based on unique refining technologyExpanding in growing markets based on unique refining technology

SDK SDK 30 %30 %（（No. 1No. 1））

20052005 （（3,4003,400 tonstons））

For large-sized LCD panelsFor largeFor large--sized LCD panelssized LCD panels

For LCD/LEDFor LCD/LEDFor LCD/LED

For semiconductors (flash memory/system LSI, etc.)

For semiconductors For semiconductors (flash memory/system LSI, etc.)(flash memory/system LSI, etc.)

The business will grow to The business will grow to ¥¥30 billion by 2008.30 billion by 2008.P.21


(Estimate by SDK)

P.22

Aiming to expand operations in AsiaEstablishing new locations

Aiming to expand operations in AsiaAiming to expand operations in AsiaEstablishing new locationsEstablishing new locations

Showa Specialty Gas (Taiwan) Showa Specialty Gas (Taiwan) Co., Ltd.Co., Ltd.

Showa SpecialtyGas Singapore

(Pte.) Ltd.

SShowahowa SSpecialtypecialtyGGasas SSingaporeingapore

(P(Ptete.).) LLtdtd..

Korea Showa Chemicals Co.Korea Showa Chemicals Co.(2006(2006））

Shanghai Showa Chemicals Shanghai Showa Chemicals Co., Ltd.Co., Ltd.

Kawasaki Kawasaki PlantPlant

Tokuyama Tokuyama PlantPlant

Taiwan Showa Chemicals Taiwan Showa Chemicals Manufacturing Co., Ltd.Manufacturing Co., Ltd.

（（20062006））

Shanghai Showa Specialty Gases Shanghai Showa Specialty Gases Purification Co., Ltd.Purification Co., Ltd.


SDK is the only company providing ultra bright full-color RGB LEDs; highest quality and lowest cost through proprietary technologies

Strengthening the ultra bright AlGaInP LED businessCapacity to be increased from 30 Mil. to 100 Mil. per month

Developing high-quality GaN-based LEDExpanding business based on proprietary technologies

【Target markets】

LCD backlighting (for TV s and PCs) 2008～

General lighting 2010～

SDK is the only company providing ultra bright fullSDK is the only company providing ultra bright full--color RGB LEDscolor RGB LEDs; ; highest highest quality and lowest cost through proprietary technologiesquality and lowest cost through proprietary technologies

Strengthening the ultra bright AlGaInP LED businessStrengthening the ultra bright AlGaInP LED businessCapacity to be increased from 30 Mil. to 100 Mil. per monCapacity to be increased from 30 Mil. to 100 Mil. per monthth

Developing highDeveloping high--quality quality GaNGaN--based based LEDLEDExpanding business based on proprietary technologiesExpanding business based on proprietary technologies

【【Target marketsTarget markets】】

LCD backlighting (for LCD backlighting (for TV TV s and s and PCPCs)s) 20082008～～

General lightingGeneral lighting 20102010～～

P.23

PARTPARTⅡⅡ Growth Strategy/Creation of new Growth Strategy/Creation of new ““growth drivergrowth driver”” businessesbusinesses

Expanding capacity for the growing lithiumExpanding capacity for the growing lithium--ion battery (LIB) marketion battery (LIB) marketDemand is increasing for use in largeDemand is increasing for use in large--currency LIB for power tools.currency LIB for power tools.Capacity expansion from 40 t/y to 100 t/y (StartCapacity expansion from 40 t/y to 100 t/y (Start--up in early 2007)up in early 2007)

Establishing the business as a new Establishing the business as a new ““growth drivergrowth driver”” through further through further improvement of volume production technology and cost reductionsimprovement of volume production technology and cost reductions

Simultaneously developing new composite applications (with resinSimultaneously developing new composite applications (with resins, s, metals and ceramics)metals and ceramics)

Sales in Sales in 20102010: : ¥¥1010 billionbillion

P.24

PARTPARTⅡⅡ Growth Strategy/Creation of new Growth Strategy/Creation of new ““growth drivergrowth driver”” businessesbusinesses


P.25

P.26


Pursuing the best quality/service and lowest cost in the worldPursuing the best quality/service and lowest cost in the world

1.1. Synergies (technical/business) of two plantsSynergies (technical/business) of two plantsU.S.:U.S.: South Carolina Plant (40,000 t/y)South Carolina Plant (40,000 t/y)

Modern, large plant focusing Modern, large plant focusing on largeon large--diameter electrodesdiameter electrodesJapan:Japan: Omachi Plant (60,000 t/y)Omachi Plant (60,000 t/y)

One of the largest graphite One of the largest graphite electrode plants in the worldelectrode plants in the worldFully utilizingFully utilizing electricity from electricity from our own hydropower plantsour own hydropower plants

2.2. Focusing on largeFocusing on large--diameter diameter electrodes for large electric arc furnaceselectrodes for large electric arc furnacesWe have the leading market share (40%)We have the leading market share (40%) in the category of 30in the category of 30-- andand3232--inch electrodes. We are aiming to expand the share further.inch electrodes. We are aiming to expand the share further.

South Carolina PlantSouth Carolina PlantSouth Carolina Plant

Working to realize individualized aluminum businessesWorking to realize individualized aluminum businessesthrough pursuit of highest performancethrough pursuit of highest performance

P.27


20062006: Low profitability due to soaring aluminum ingot price: Low profitability due to soaring aluminum ingot price20072007: Year of turnaround; To resume stable growth: Year of turnaround; To resume stable growth

11．．To take measures to recover profitabilityTo take measures to recover profitabilityHeat exchanger businessHeat exchanger business

To promote the sales of To promote the sales of ＮＲＴ－ＮＲＴ－ⅢⅢ condenscondensersersTo accelerate reform of overseas subsidiarTo accelerate reform of overseas subsidiariesies

Aluminum can businessAluminum can businessTo raise selling pricesTo raise selling pricesTo reduce costs drastically by reviewing To reduce costs drastically by reviewing production systemsproduction systems

22．．Expand businesses in which we have competitive Expand businesses in which we have competitive advantagesadvantagesCylinders for laser printersCylinders for laser printers Ensure stable supply and strengthen competitivenessEnsure stable supply and strengthen competitivenessHighHigh--purity aluminum foil for capacitorspurity aluminum foil for capacitors Stabilize feedstock purchase and expand capacityStabilize feedstock purchase and expand capacityShoticShotic forgingsforgings To develop new markets (ex. suspension and other auto parts)To develop new markets (ex. suspension and other auto parts)

33. Review price systems, increase price and reform business struc. Review price systems, increase price and reform business structureture

ConclusionConclusion

P.28

P.29

Showa Denko Group’s “Number One” and “Only One” products and technologies

Showa Denko Group’s “Number One” and “Only One” products and technologies

Unique chemical company with individualized productsUnique chemical company

with individualized products

Driving the upward spiral of growthDriving the upward spiral of growth

Contributing to sound growth of society

Contributing to sound growth of society

2005Actual results

2006Passion plan**

Sales O.I. Sales O.I.

253.015.0

6.0

24.0

11.0

11.0

(5.0)

62.0

74.0

161.0

67.0

245.0

800.0

Petrochemicals301.2

21.8

Chemicals74.0

4.7

Electronics133.9

19.7

Inorganics61.9

8.3

Aluminum and other

240.98.3

HQ costs (5.7)

Total 811.957.2

2006Forecast*

2007Passion plan**

2008Passion plan**

Sales O.I. Sales O.I. Sales O.I.

325.015.5

274.017.0

277.018.0

80.05.0

78.07.0

84.08.0

165.032.0

200.030.0

241.037.0

70.013.5

68.011.0

70.012.0

260.07.0

250.014.0

268.017.0

(5.5) (6.0) (7.0)

900.067.5

870.073.0

940.085.0

* Performance forecast for 2006: as amended on August 8, 2006

** The Passion Project was announced on November 29, 2005. (Unit: billion yen)

The performance forecast and plans are based on the economic conditions and the Company‘s policy at the time when those were announced. Please note that actual results may differ materially from the forecast and the plans due to a variety of factors, including g changes in the market conditions.

ReferenceReference

P.30

December 5, 2006 Showa Denko K.K. · Business units Major new products HD Perpendicular magnetic...

Documents

Transcript of December 5, 2006 Showa Denko K.K. · Business units Major new products HD Perpendicular magnetic...