Mid-Term Plan (3D-III) Explanatory Documents

2

Index

Aspiration (Grand Vision 2020) P3 ～ P4

Looking back on 3D-Ⅱ P5 ～ P7

The New Mid-Term Plan（3D-Ⅲ） P8 ～ P16

Specific Plans of the Main Policies P17 ～ P31

Management Objectives (numerical values) P32 ～ P38

Specific Plans by Segment P39 ～ P44

(Grand Vision 2020)

P.4

The Daicel Group Long-Term Vision

Grand Vision 2020

Design the Future

The design and initiative phase

･We must enhance our businesses so that society and our customers recognize each business as the world leader in its respective field.

・We should establish five new business units, each capable of achieving sales of ¥10 billion.

Aspiration (Grand Vision 2020)

Develop New Value

The growth and development phase

Deliver the Best Solution

The achievement and delivery phase

3D Step-up Plan Grow

th

3D-III Mid-Term Plan (for FY 2017-2019) 3D-II Mid-Term Plan

(for FY 2014-2016) 3D-I Mid-Term Plan (for FY 2011-2013)

3D-III

Committed to becoming a company that delivers the best solutions

Looking back on 3D-II

103

93 87 79

82

100 110

120 109

321

253 303

375 372

439

345

267 277

94 62 78

106 109 106

97

51 41

Methanol Asia spot price ($/ton)

Crude oil Dubai ($/bbl)

Sales Operating profit

3,780

3,202 3,537 3,419 3,585

4,138 4,438 4,499 4,401 4,300

4,600 5,000

106

209

327

204 262

379

513

643 643

400 450

500

'08 '09 '10 '11 '12 '13 '14 '15 '16 '14 '15 '16

0.6% 5.6% 8.0% 5.5% 6.7% 9.0% 10.5% 12.2% 12.2% ROE

2.8%

6.5% 9.2% 6.0%

7.3% 9.2%

11.6%

14.3% 14.6%

3D-Ⅱ 3D-Ⅰ

9.3% 9.8% 10.0%

（FY）

Mid-term Plan 3D-II

Crude oil Dubai: $100/ bbl Methanol : $400/ton Exchange rate: 100Yen/$

(Unit:100 million yen)

Operating profit ratio

Changes in Sales and Operating Profits

P.7

To realize continuous and sustainable growth, we will carry out a radical review of conventional methods, and aim to create next

generation business

Performance Results and Issues of 3D-II

While a change was required, a drastic change was not fully achieved. We are still halfway to realization of the next new growth

Existing businesses : Need to further realize the potential growth in the global market New businesses : New products are coming out. Speed up the growth to bring them

into business units Investments : R&D investment was as planned. Further actively utilize M&A for

investment Earnings power : Progress was achieved in safety, quality and cost reduction

initiatives, and the structure of the company has been strengthened. Continuously respond to society's increasing demand for “safety” and “quality”

Performance targets and results Sales of 500 billion yen : unachieved (FY2016 : 440.1 billion yen) Operating profits of 50 billion yen : achieved (FY2016 : 64.3 billion yen) Operating profit ratio ≧ 10% : achieved (FY2016 : 14.6%)

The New Mid-Term Plan (3D-III)

P.9

[Global economy] With the progress of globalization, there is a diversification of

business partners An increase in the degree of influence on businesses due to

changes in trade policies A continuing increase in the presence of the Chinese and

Indian market

The Environment of 3D-III

[QOL] (Quality of Life) Importance of QOL in a society with low growth, decreasing

birthrate and aging population, and good longevity An increase in aspirations for reassuring, safe and healthy

lifestyles Progress of life sciences leading to an age of personalized

medicine and protection

[Rise of new technology domains] The electrification of automobiles and the acceleration of

self-driving technology Diversification of smart devices with the evolution of the IoT

and AI Increase of prediction accuracy with the arrival of the big

data era

The environment in which growth was achieved with conventional methods and ways of working is changing rapidly

We will realize new growth by responding to the changing environment. We will provide the best solutions with the highest reliability in terms of

quality and safety to a diverse and global clientele.

Enhance the business models to fully fit global customers

Speed up the creation of new businesses in areas such as medical, health care domains

Strengthen capability to provide solutions by innovation of our methods and ways of working

[The labor environment] Demand for an increase in productivity due to reduction of the

workforce and the intensification of global competition As the production base spreads out around the globe, the

personnel requirements are becoming increasingly sophisticated

An increase in mobility features with the upgrading of telecommunications (ICT)

Environmental changes (= new opportunities)

P.10

New customers Geographic

expansion, etc.

New technology and products

Application development, etc.

Continuous Growth

Best Solution Expansion of core business Growth of new business

Aspired State

Increase in number of solutions

Market expansion

Objectives of Mid-Term Plan “3D-III”: Continuous Growth

3D-II (Current state)

Realize continuous growth by providing the best solutions that respond to changes

Image of “Growth” “Growth” = Increase in number of solutions × Expansion of the market

P.11

(1) Sales 500 billion yen (FY2016 Actual 440.1 billion yen)

(2) Operating profits 70 billion yen

(FY2016 Actual 63.4 billion yen)

110 yen/$

Methanol (Asia spot price) $300/ton

Crude oil (Dubai) $55/bbl

Domestic naphtha 42,000 yen/kl

Raw

m

ater

ials

Exchange rate

Performance Targets

Assumptions

P.12

3,537 3,419

3,585

4,138

4,438 4,499 4,401

4,600

327 204 262

379 513

643 643 610 700

’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’19

Performance Targets

◎Performance targets (Unit:100 million yen)

(Unit: 100 million yen)

3D-II 3D-I 3D-III

Sales Operating profits

FY2017

4,600

610

620

370

FY2019

5,000

700

720

420

5,000

(FY)

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Sales 3,537 3,419 3,585 4,138 4,438 4,499 4,401

Operating profits 327 204 262 379 513 643 643

Ordinary profits 316 211 286 414 551 654 662

Net profits 168 118 154 228 313 403 432

◎Past Results （Unit：100 million yen）

P.13

8.0%

5.5% 6.7%

9.0%

10.5%

12.2% 12.2%

10%

ROE

2,353 2,347 2,629

2,958

3,562 3,687

3,994

4,500

168 118

154 228

313

403 432 420

Net worth

’10

’11

’12

’13

’14

’15

’16

’19 Plan

Net profit

3,537 3,419 3,585

4,138 4,438

4,499 4,401

5,000

327

204

262

379

513

643 643

700

’10

’11

’12

’13

’14

’15

’16

’19 Plan

Operating profit

9.2%

6.0% 7.3%

9.2% 11.6%

14.3% 14.6% 14%

Operating Profit Ratio

Sales

（FY）（FY）

Important Operating Indices

(Unit:100 million yen,%)

Operating Profit Ratio

(Unit:100 million yen,%)

Return on Equity (ROE)

Actual Actual

P.14

Important Operating Indices

ROE 10% or more

Profitability Sales profit ratio

Efficiency Total asset turnover

Proactive investment in “Growth Business Unit (BU) ” and growth areas

Optimize or withdraw from low growth BU Improve added value through Best Solutions Comprehensive cost reduction Increase awareness of net profit

Improve uniform management of the group including affiliated companies accounted for by the equity method

Improve productive capacity Reduce inventory Reduce working capital Reduce non-essential and non-urgent assets

Financial Leverage Maintain a healthy financial state

P.15

Change : We will CHANGE the approach of inventing strategies by abolishing simple extensions of conventional thinking.

2. Change actions, working environment

1. Change Mindset

Foundational Ways of Thinking

Change to BU approach in planning and carrying out strategies

Actions

Working environment

Challenge: We will continue to CHALLENGE ourselves to break down the status quo and accomplish major results and growth.

Courage : We will have the COURAGE to jump into new areas

Integration of diversified values and common cultural grounds forming the company

Proactive utilization of IoT and Big Data

3C Spirit “Change, Challenge, Courage”

Accelerate all business actions and processes, including decision making

Prepare and develop environment to accelerate innovation

P.16

Main policy (1) Promote selection and concentration through BU management BU management will provide the foundations for continuous growth. Promote growth through priority allocation of resources to “Growth BU”.

Main policy (2) Strategic investment to proactively introduce technologies and new products from outside Implement the proactive investment that was not fully realized in 3D-II. Accelerate the creation and growth of BU that will become the driving force for continuous growth, through M&A, etc.

Main policy (3) Improve the environment to promote growth Construct a system to promote the main policies of (1) and (2) above

Towards continuous growth for the next decade and next century

Basic Ways of Thinking, Basic Strategies and Main Policies of the Mid-Term Plan “3D-III” for Continuous Growth

Basic Ways of Thinking

Change mindset Change actions and working environment

Basic Strategies For continuous growth… Priority allocation of resources to “Growth BU” Acceleration of creation and development of “Growth BU” through open innovation

Specific Plans of the Main Policies

P.18

High

Low

Low High

[Reorganization BU] Optimize or withdraw

[Foundation BU] Stabilization and optimization

Existing BU and management to provide foundation for continuous growth.

Main policy (1) Promote selection and concentration through BU management

[Foundation] Revenue base supports

the business

[Growth] Drives the growth of

the business

[Reorganization] Consider reorganization

[Cultivation] Cultivate for [Growth]

Grow

th

Profitability

Allocate resources to “Growth BU” with priority With “New BU”, incubate growth of all businesses and expand “Growth BU”.

New BU

To change or integrate all BU to be suitable for operating strategy boldly, and to consider reorganization, such as segmentation by market.

[Growth BU] Proactive investment and allocation of resources

]

P.19

Invest 250 billion yen for growth

Capital investment: 150 billion yen

R & D Costs (including M&A): 100 billion yen

Main policy (2) Strategic investment to proactively introduce new technologies and products from outside

Capital investment

１.４ｔimes

VS 3D-II (110 billion yen)

R & D Costs (including M&A)

Double VS 3D-II

(50 billion yen)

P.20

Build the basis to support continuous growth

Strengths External environment Domain Focus

Business domain (1) Medical, health care

Optimize Daicel strengths

for a QOL society

Global base of CPI, network High degree of recognition for chiral

column related products in the pharmaceutical industry

Bio-conversion technology Excipient technology

[Importance of QOL] QOL is important in a society with low

growth, decreasing birthrate and aging population, and good longevity

Popularization and spread of generic drugs due to attempts to control medical expenses

Progress of life sciences leading to an age of personalized medicine and protection

[Smartification] Evolution of the IoT and AI has led to

the diversification of smart devices An increase in mobility features with

the upgrading of telecommunications Electrification of automobiles and

the acceleration of self-driving technology

Fine organic chemicals technology (resistant monomers, polymers)

World's first commercialized cured wafer lens

New resin, hybrid materials Distillation technology ,metal

control technology (Highly pure electrical material solvents)

Business domain (2) Electronics

Optimize Daicel strengths

for a smart society


P.21

Business domain (2) Electronics Business domain (1) Medical, health care

Turning selected new business unit prospects into BU

10 billion yen ⇒ 35billion yen 16 billion yen ⇒ 45 billion yen

Cosmetics [Existing]

1,3BG, polyglycerol [New]

Skin care products

Performance film [Existing]

Barrier film [New]

Hard-coat film for display, film related to clean energy processes

Optical parts [New] Wafer lens

Medical, health care [Existing]

Chiral core (columns, chiral stationary phase), separation services

[New] Biopolymer purifying tools (bio-separation and others), analysis services, specialty chemicals, achiral columns, pharmaceutical formulating solutions, raw materials for functional foods, new medicine administering device

Electronic materials [Existing]

LED encapsulants, resist materials for printed circuit boards, solvents for electric materials, solvent additives

[New] FPD/ArF resist materials, solvents for printed electronics devices, silicon encapsulant, low metal solvents, peripheral semiconductor materials


* Numbers indicate sales FY2016 ⇒ FY2019 (Organic and inorganic growth)

P.22

[CPI] Biopolymer purifying tools (bio-separation and others) Analysis services Specialty chemicals, Achiral columns [Organic chemicals] Resists, Low metal solvents, Cosmetic raw materials [Daicel Value Coating Ltd.] Film related to clean energy processes

Internal Company, Group Company

New Materials Development

Primary Research Items

Battery Area Themes • Solar cell materials • Heat resistant

separator • Electrode binder,

others

Primary research

Technology inspection

Draft Next New Business

Plan

Corporate Implementation of next new

business plan Co-processed excipients for Orally Disintegrating Tablets

Display film Raw materials

for functional food Wafer lens

• In 3D-III, we aim to develop BU from new BU prospects nurtured during 3D-I and 3D-II by combining Internal Company, Group Company and Corporate products • The decision to commercialize will be determined during 3D-III

• Laminated semiconductor

• Detonation nanodiamonds

• Silver nano ink • New medicine

administering device • Hollow-fiber

New BU Prospects

• Medical, health care

• Cosmetics

• Performance film

• Electronic materials

• Optical parts

Exploration and cultivation of new business themes


Product Planning Themes

P.23

仕事の取り組み方変革

[Strengths] [Product] [Growth strategy] [External environment]

Aging society Rise of macromolecule medicine Development of new medical technology ↓ Extension of healthy life expectancy Efficient separation and refinement systems Efficient drug administration methods

Medical

Health care (Health foods)

Dru

g de

velo

pmen

t su

ppor

t D

rug

Adm

inis

trat

ion

Met

hods

Low molecular

weight medicine

Macromolecule medicine

Oral administration (low molecular

weight medicine)

Parenteral administration

(macromolecule medicine)

Raw materials development

Supplement

makers

Excipient development

Consumers

Func

tion

al r

aw m

ater

ials

, ex

cipi

ents

dev

elop

men

t

Cellulose chemistry

[CPI existing business]

Chiral columns, fillers

New products (analysis services,

specialty chemicals) Global expansion

(India, China)

Separation and refinement

Product development

New technology/ product

development/ acquisition

Excipients to facilitate taking

medicine

[Customer] New

medicine/ generic drug

makers

[Customer] Supplement

makers /consumers

Distribution and Sales ready

Global expansion Expansion into health

foods Product development

Pyrotechnic engineering

New medicine administering devices

• Disperse in the tissue

• Intracellular administration

Bioconversion technology

Functional food raw materials

Excipients to facilitate taking medicine

(cellulose chemistry base) ×

Functional food raw materials (bioconversion

technology base)

Supplements

Drug industry global network,

chromatographic technology


Product acquisition

Product development

Co-development with universities

(new medical technology)

Medical, Health Care Having our CPI business based in 5 key areas around the globe is a strength.

Using our global technical services and our global network of drug industries as a base, we will further expand into the medical and health care fields.

[Area]

P.24

Cosmetics

[Strengths] [Products] [Growth strategy] [External environment]

Deregulation of the domestic cosmetics industry Growth of the Asian cosmetics market

↓ Increase in OEMs due to the formulation specialization of brands of existing cosmetic makers Acceleration of manufacturing outsourcing due to an increase in new cosmetic makers entering the market

Cosmetics

Composite power of cosmetics raw

materials

Acquire increased ability to make

proposals due to coherent raw

materials planning and formulation

planning

[Customer] Cosmetic makers

Global network obtained through

1.3 BG

Safety evaluation Evaluation and

analysis technology Quality control know-

how

Having a network of cosmetic manufacturers around the world through 1.3 BG, and our analysis/ evaluation technology and safety evaluation are strengths. We aim to expand our business by

combining our original raw materials development with cosmetics ODM compounding technology.

[Area]

Skin care/hair care base materials

Enter the Asian market

P.25

Optical Parts


A new optical sensing market has started up due to the needs of smartphones, in-vehicle devices, VR (virtual reality), the IoT, etc.

↓ Demand for miniaturized, slim, heat resistant optical parts that cannot be met by conventional injection mold technology

Optical parts

Development of

mass production technology

Infrastructure acquisition

[Customer] Module makers

Aim to set up distribution and sales in the optics market that is expected to have high growth in the future, using Daicel technologies as a base, such as heat/UV curing resin

design/development and processing technology.

[Area]

Heat cured lens (imaging

system lens)

Biometric recognition (face, iris) 3D sensing In-vehicle sensing use

Biometric recognition (face, iris) 3D sensing VR device use

Heat/UV cured resin design technology Heat/UV cured resin mold technology World's-first commercialized cured wafer lens Collaboration with precision machining companies

UV cured lens (illumination system lens)


Global expansion (approach system

makers)

P.26

Functional Films


Displays are becoming more high definition and flexible Change to clean energy

↓ Improvements in visibility and film surface strength, and combination of environmental characteristics and economic savings

Hard-coat optical films

Adoption of results of joint development with makers when launching products

Enable mass production by

obtaining clean coaters

Aim to enter the clean energy related process film and optical film markets, using the creation of new materials as a basis, derived from our strengths as a chemical company and the phase separation

structure control that Daicel has uniquely cultivated.

[Area]

• Process film that uses functional polyolefin

Become multifunctional by obtaining dry coating

technology/ manufacturing

equipment

Clean energy related process film

[Customers] Energy related

component makers

[Customers] Display makers/

display component makers

Technology of concave-convex

control from phase separation

technology

Manifestation of new features from molecular design (high mechanical

strength, etc.)

Development of coating materials and prescription

design

Combination of original raw

materials and coating

technology

• Anti-glare film with excellent visibility/clarity

• High mechanical surface strength (high hardness, scratch resistant) film

• High hardness, high flexibility film

• Smooth contact film

• Stylus film

Promotion of research and development to capture the inflection point • Display system

(OLED、μLED) • Greater flexibiilty • Move to clean energy

Obtain business infrastructure to

strengthen existing market place and expand into new

markets

P.27


Progress of IoT, AI and wearable products. ↓ Advances in semiconductor processing power Devices are becoming smaller and light weight (light, thin, mobile) Displays are becoming high-definition Production innovations in devices for cost reduction

Semi-conductor

related

FPD related

ArF resist

materials

Semiconductor peripheral materials

FPD resist

materials

Electronic materials Solvent

ArF resist polymer

[Customer] Semi-

conductor related

materials makers

[Customer] FPD resist

makers

FPD resist polymer

Relation with partner businesses with silicon

polymer design technology

Low metal solvents

Electronic materials

[Area]

Adhesion technology, and highly heat-resistant, low curing,

contracting organic and inorganic hybrid material (ESQ) structural

design technology

Acetylation technology function evaluation

technology

Solvent sales network

Metal management know-how

Highly sensitive photolytic macromolecule synthesis

technology, function evaluation technology

Post photo lithography

materials (WOW)

Next generation photo lithography materials (EUV)

With value chain makers (upstream, same stream, downstream) as a base, and by making full use of our mutual market research capability, technological development capability and production capacity, we can acquire business opportunities one after another in the drastically changing electronic material field. Based on the relationship of mutual trust we have built up with semiconductor related or FDP related customers through our simple honest efforts up to now (shaping up required functions one by one), we will provide new VALUE concentrating internal and external power.

Opto-electronic materials

Organic chemical synthesis (Precision synthesis,

Polymer structure control)

Surface control, molecular structure design

Low metal solvent manufacturing and

analysis/control technology

Organic chemical synthesis (Peracetic acid oxidization, Polymer structure control)

CMP slurry

Solvent additive (CELTOL)

New solvents specialized for

electronics

Silicon encapsulants

Joint investigations and collaborations with reliable

customers

Acquiring the de facto by the pioneering products

(collaborative research with universities)

Differentiation of functions for fine-pitch and multi-layer

Market pioneer by proposing unique solvents

for future market (printed electronics)

New value by metal guarantee

Globalization (quality, quantity, variety) Market penetration in the

semiconductor field

Full filling high resolution display materials

(OLED, 4K/8K)

Collaboration with high end LED makers

P.28

Issue Aim of improvement policy

Shorten the period of technical investigation

Promotion of a variety of ways of working

Promotion of diversity

Redesign responsibilities and authority

Optimization of work efficiency

Improve efficiency through better quality of information

sharing

◎ Use virtual laboratories Combine computational chemistry and dynamic stimulation

◎Prepare an appropriate environment for working at home

◎Promote active participation of staff that are female, senior and people of various nationalities

◎Autonomous decision making on the spot and speedy customer interaction

（From Mother plant design to regional independent and autonomous design）

◎Promote efficient work styles based on working hours analysis and utilize outsourcing

◎ Promotion of cultivation of selected global personnel, and employment of experienced people Collective hiring of mid-career employees to change company DNA

Strengthen the foundation of global management

◎Improve the level of information sharing through the use of IT technology and the arrangement of the office environment

Example of improvement policy

Enhance competitiveness

Realize a work-life balance

Change the way of tackling work, and establish and build systems

Main policy (3) Improve the environment to promote growth

P.29

Innovation Strategy

Department

Utilize open innovation and concurrent engineering in all the stages of investigation/planning, research and production (mass production), to realize innovative technological development and accelerate commercialization.

“Innovation Strategy Division" strongly promotes a combination of the three operational aspects of planning and marketing, R&D, and industrial technology and engineering, to help realize this.

< New Establishment of Innovation Park > = Aim to accelerate the creation of new businesses and strengthen existing businesses =

< Concurrent engineering > Accelerate new businesses creation through the use of virtual laboratories

< Open innovation (Collaboration) > Strengthen cooperation and collaboration with customers, universities and research

institutes through open laboratories

Catch up with demand

Speed up commercialization

Planning, marketing Reorganize BU suitable for markets （Integrate our strengths with other

technology for growth)

R&D Functional design Computational chemistry

Production technology Engineering

Process design Simulation technology

Main policy (3) Improve the environment to promote growth

P.30

< New Establishment of Innovation Park > Acceleration of open innovation and concurrent engineering

Remove hurdles between divisions ,

strengthen relations, promote concurrent

engineering

Clean room of open laboratories

▲

Multi-purpose hall with translation system

▲

▲ Realize Virtual Laboratory by using molecule/process simulation and flow/ structure analysis

▲Functional zoning （Picture:distillation equipment）

Work space that is barrier-free in order to encourage communication

▲

Through open innovation, (both internal and external) combine

knowledge,technology and know-how to develop

innovative solutions

Changing Work Styles to Improve Productivity

P.31

Become Foundation BU

Withdraw

Proactive investment and allocation of resources

Stabilization and optimization

Create New BU

Growth BU

Foundation BU

Reorganization BU

M&A strategy promotion

Change the way of tackling work, and establish and build systems

Change mindset Change actions and working environment

Basic Strategies For continuous growth… Priority allocation of resources to “Growth BU” Acceleration of creation and development of “Growth BU”

through open innovation

Optimize or withdraw Con

tinu

ous

grow

th

Overview of Mid-Term Plan “3D-III” Basic Ways of Thinking

P.32

Management Objectives (numerical values)

P.33

766 721 745 926 957 1,045 895 897 950

809 765 715 807 890 818

762 820 1,080

1,370 1,336 1,402 1,540

1,695 1,611 1,569 1,600

1,860 529 532 660

801 836 959

1,112 1,215

1,000

64 66 63

64 59 66 62

68 110

’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’19

(Plan) (Plan)

Total 3,537

Total 3,419

Total 3,585

Total 4,138

Total 4,438

Total 4,499

Total 4,401

Total 4,600

Total 5,000

■ Cellulosic Derivatives ■ Organic Chemicals ■ Plastics ■ Pyrotechnics Devices ■ Others

Sales by Segment

(Unit: 100 million yen)

(Fiscal year)

P.34

△80 △86 △87 △90 △99 △111 △138 △140 △160

121 78 136 191 257 297

230 207 250 69 54

53 60

95 112

115 90

160 146

99 112

110

159 205

216 200

260

59

50 41

105

100

139 213 245

170

13

10 8

3

0

2 7 8

20

’10

’11

’12

’13

’14

’15

’16

’17

’19

Total 327

Total 204

Total 262

Total 379

Total 513

Total 643

Total 643

Total 610

Total 700

Operating Profit by Segment

■ Cellulosic Derivatives ■ Organic Chemicals ■ Plastics ■ Pyrotechnic Devices ■ Others ■ Companywide (Unit: 100 million yen)

(Fiscal year)

(Plan) (Plan)

P.35

Sales (Unit:100 million yen)

Operating profit (Unit:100 million yen)

Plan

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2019Cellulosic Derivatives 766 721 745 926 957 1,045 895 897 950

Organic Chmicals 809 765 715 807 890 818 762 820 1,080Plastics 1,370 1,336 1,402 1,540 1,695 1,611 1,569 1,600 1,860

Pyrotechnic Devices 529 532 660 801 836 959 1,112 1,215 1,000Others 64 66 63 64 59 66 62 68 110

Total 3,537 3,419 3,585 4,138 4,438 4,499 4,401 4,600 5,000

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2019Cellulosic Derivatives 121 78 136 191 257 297 230 207 250

Organic Chmicals 69 54 53 60 95 112 115 90 160Plastics 146 99 112 110 159 205 216 200 260

Pyrotechnic Devices 59 50 41 105 100 139 213 245 170Others 13 10 8 3 0 2 7 8 20

Companywide △80 △86 △87 △90 △99 △111 △138 △140 △160

Total 327 204 262 379 513 643 643 610 700

Sales and Operating Profit by Segment

P.36

9 30 59 71 149 135

83

450 500

550

26 45

38 38

63 58 92

34

65 109 101

23 43 51

21

37

55 37 62

151 126

9

10

11 9 9

16 43

’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

Total 99

Total 187

Total 272

Total 256

Total 306

Total 403

Total 395

(Plan) (Plan) (Plan)

Capital Investment by Segment


(Fiscal year)

■ Cellulosic Derivatives ■ Organic Chemicals ■ Plastics ■ Pyrotechnics Devices ■Others

P.37

128 100 76 76 62 67 93

320 300 300 81

70 54 49

45 44 54

65 65

57 50 62 56 50

46

40

45 52 53 59

79

8

8

8 8 12 13

14

’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 (Plan) (Plan) (Plan)

Total 328 Total

283 Total 240

Total 237

Total 234

Total 239

Total 290

Depreciation Costs by Segment


(Fiscal year)

■ Cellulosic Derivatives ■ Organic Chemicals ■ Plastics ■ Pyrotechnics Devices ■Others

P.38

Shareholder Return

Basic Policies Dividend that reflects consolidated performance Internal reserves to establish a stronger revenue base Financial strategy that is conscious of an ROE of 10% or more

Profit sharing will be carried out by fully taking the above into consideration and finding a suitable balance.

Treasury stock acquisition will also be carried out flexibly to supplement dividends as shareholder return policy.

Dividend Payout Ratio Objective: 30% or more

P.39

Specific Plans by Segment

P.40

Cellulosic Derivatives Competition from other raw materials of TAC film, used for polarizing plate

protection, is intensifying Sales competition of acetate tow is continuing

Demand for tobacco is dropping around the world and rise of electronic tobacco Excessive stock problem in China (will drag on to 2018)

Sense of expectation in the market regarding the functions of cellulose

[Cellulose acetate] Develop and propose new functions for the components of the next generation panels of new LCD and

OLED equipment Expansion and promotion of new application development (development of TAC film making technology and

materials for FO (Forward Osmosis) membranes) [Acetate tow] Acquire the highest level of trust among customers through quality, technical services and cost Expand market share by utilizing demonstration facilities and rapidly responding to customers needs [Development of new cellulose products and new applications] Discover new functions that utilize the characteristics of cellulose and create new demand Integrate the features of development and quality assurance Build technology through the integration of the different underlying technologies responsible for the

functional expressions, and apply to each issue.

Discard conventional concepts of product-based businesses and find new markets by concentrating on the origin of the business, discovering new functions that make the most of the special characteristics of cellulose.

Business Environment

Change Challenge Courage

P.41

[Acetyl products] Enhance cost competitiveness Promote collaborative set ups with domestic makers [Organic functional products] Focus on growth areas, like coatings and automobile paints Enhance technical services, by utilizing our polymerization and compound technology know-how Create new markets through alliances and the M&A of subsidiary makers [Electronic materials] Continuously provide the best solutions in the FPD, semiconductor and optoelectronics markets, through a product

mix of electric materials solvents, Printed Electronics solvents, resist materials and optical/light source materials Focus in particular on the increasingly sophisticated semiconductor market, and increase our presence in the

semiconductor industry [Cosmetics, health care] Increase our productive capacity of 1.3 BG, and differentiate with odorless products Expansion of new products through technical proposals and products that utilize our odorless know-how Provide a full line up of products, in accordance with the system for food with functional claims [R&D system] Approach new markets through a deep cultivation of both the technology and the business Construct technical services bases globally Enhance international competitiveness, by jointly improving quality and reducing costs, through process innovation


Organic Chemicals (Organic Chemicals) China's excessive production capacity has unbalanced the supply and demand situation in Asia,

in the acetyl market In the electronic materials field, there has been simultaneous progress in technological

innovation and market growth, and there is potential for upheaval in the industry's supply chain There has been strong growth in the global market for cosmetics, and the demand for new

materials is high In the health care field, a system for foods with functional claims has been introduced (Japan)


Global growth through high market share, rapid growth, and concentrated investment of management resources in high earning products

Creation of new business through bold collaborations with outside companies Use existing businesses as a base for pioneering entry into next generation, future markets

P.42

[Increase the number of solutions] Develop and promote sales of new Achiral columns Promote sales of high purity Chiral reagents Expansion of consumable goods (tools) for purification of nucleic acids, and the development and sales

promotion of products for biochromatography

[Global expansion, product expansion] Expansion of contract analysis services, and Labeled Standards business Expansion of chiral column and Chiral Stationary Phase business Expansion of Preparative separation services

[Positive investment in growth businesses] Construct new buildings in India Acquire bioseparation technology through M&A, etc.

[Change the organization] A matrix organizational structure with different functions and different areas


Organic Chemicals (Chiral Separation)


Growth of the pharmaceutical industry in China and India Local needs are becoming an issue (China, India) The biopharmaceutical (macromolecule pharmaceutical) product market is expanding

around the world

Move into the macromolecule drug development business Global expansion of the low molecular drug development business, and product

expansion

P.43

Creation of high performance resin products to reduce automobiles weight, and for the computerization of self-driving vehicles

Strengthening of environmental regulations for manufacturing Rise of emerging nation makers in the electronics market Trend towards compound operations of resin makers Increase in need for extension of food "best before" dates from the point of view of reducing

food waste

Plastics

Engineering plastics: Establish a global system that fits the characteristics of the regions Resin compounds: Specialize in high-performance product businesses Plastics processing: Establish a solutions business model



[Engineering plastics] Construct infrastructure to deal with European and American business models (deal with the supply chain

and sales of non-Japanese companies) Invest in products that meet the demands of the generalized market Expand COC business [Resin compounds] Design support for customers of high-strength, high rigidity plastics (long fiber-reinforced plastics) needed

as metal substitutes Refine conductive materials and materials for electromagnetic wave shielding, which are our area of

specialty, and pursue high-grade exteriors (scratch resistant, etc.) Enhance technical services that support high-performance route shifts, and develop applications of metal

adhesive technology [Plastics processing] Expand the business through a combination of coating technology and functional expressions of our

molecular design and original raw materials Early stage cultivation of the optical components business through the development of ultra-small, ultra-

thin, and laminating technology for the sensing market which has a promising future Create markets through proposed types of businesses based on barrier abilities and new designs

P.44

[Motor vehicle safety device business] Change in the need for safety parts due to technological innovation, self-driving technology and

the increase of EV automobiles Market expansion of airbags due to the introduction and revision of regulations in emerging

nations, centered around China and India. Upheaval in the power balance of the industry that started with the inflator recall problem Awareness of safety and security is increasing, which also includes pedestrian protection [Aerospace and Defense business] A continuation of policies to strengthen island defense and missile defense equipment

Pyrotechnic Devices

Acquire reputation of being No.1 for quality Meet customer needs by rapidly developing and placing on the market competitive products Increase our ability to deal with the global market by strengthening our global business system Create new business based on pyrotechnics



[Motor vehicle safety device business] Continuation and deepening of safety and quality through the introduction of image analysis systems (step-up from

lot guarantees to individual guarantees) Product development that matches customer needs through the strengthening of collaborations with OEM and

module makers Improve our ability to deal with customer needs by establishing technical centers in America, Europe and Asia, and

the consolidation of our business structure, including India Reform product development and change work processes through the establishment of Innovation Center Harima

[Aerospace and Defense business] Establish four bases in Japan, America, China and Thailand for gas generating agents for inflators, and develop new

manufacturing processes Improve earnings by focusing on our area of specialty in the defense equipment market

[New business] Commercialization of new pyrotechnic devices of core automobile applications

Notes regarding Forward-Looking Statements

The purpose of this document is to provide information and not to persuade any individual to take any action in response to the information contained in this document. Daicel has made the greatest possible effort to prepare this document with accurate information. The information in this document, however, may be inaccurate and may involve risk, and we do not guarantee the accuracy or reliability of this information.

The reader is advised that the use of the information in this document is at your own risk. Any investment according to the prospects, target values, etc. appearing in this document might result in a loss. Daicel accepts no responsibility for such an eventuality.

All rights reserved by Daicel Corporation This document shall not be copied or distributed to a third party without the permission of Daicel Corporation.

Mid-Term Plan (3D-III) Explanatory Documents · 103 93 87 79 82 Crude oil Dubai: 100 110 120 109...

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Transcript of Mid-Term Plan (3D-III) Explanatory Documents · 103 93 87 79 82 Crude oil Dubai: 100 110 120 109...