New Mid-Term Plan: CCP300 (FY2006 FY2008) - pilkington.com/media/NSG/Site Content/ir/IR...
Transcript of New Mid-Term Plan: CCP300 (FY2006 FY2008) - pilkington.com/media/NSG/Site Content/ir/IR...
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Copyright (C) Nippon Sheet Glass Co., Ltd. All Rights Reserved.
New MidNew Mid--Term Plan: CCP300 Term Plan: CCP300 (FY2006(FY2006--FY2008)FY2008)
November 24, 2004Nippon Sheet Glass Co., Ltd.
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ContentsContents
• Review of Current Mid-Term Plan: ACT21• Outline of New Mid-Term Plan: CCP300• Summary of Strategy by Business Area
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Review of ACT21 Review of ACT21 (FY02(FY02--FY05)FY05)
FY2001
FY2003
FY2002
FY2004
FY2005 Implementation of the Second Stage of ACT21
Setting guidelines for ACT21• Re-start from zero
(Information/Electronics)• Restructuring of unprofitable business• Selection and concentration
Revision of ACT21
Launch of New Vision (10 year plan to 2010) and ACT2 (mid-term plan from FY02 to FY05)
Recorded highest profit in history
Plunged into the red after collapse of IT bubble
Recovered to make profits
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Review of ACT21 Review of ACT21 (FY02(FY02--FY05)FY05)
Consolidated Finacial Results
15
74
13 4 4
-3
31
-2
8
1213
-1
25 5
2
8
5 4
10
13
65
1-1 -1
1 1 1
14
32
-2 -3
3
7
13
24
1
7
13
24
-3
285298 287
259 259 256 263 270250
271
307287 280
269 260
-5
0
5
10
15
20
25
30
35
FY91 FY92 FY93 FY04 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05
(¥ b
illio
n)
0
50
100
150
200
250
300
350
400
Income before extra-ordinary items Operating income Net income Net sales
Recovered to the level of ’90s (excl. IT bubble period)
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Review of ACT21 Review of ACT21 (FY02(FY02--FY05)FY05)
1. Generate stable revenue from well-developed businesses
2. Expand businesses with potential for growth
3. Withdraw from unprofitable businesses
4. Focus resources on core businesses
5. Augment R&D and create new businesses
6. Reassess overseas businesses
7. Reinforce management fundamentals
8. Use assets effectively
9. Promote corporate governance
10. Create new corporate culture
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Review of ACT21 Review of ACT21 (FY02(FY02--FY05)FY05)
Groundwork for Growth
•Southeast Asia Business•Automotive Business in China
•PDP Glass•SLED Joint Development
Growth
•LCD Glass•Printer Lenses
•Metashine
Earning Improvement, Selection & Concentration, Focus on Core Businesses
* Optical Telecommunication: restructuring & reduction in fixed costs* Building Glass: shutdown of unprofitable facilities & rationalization of production * Automotive Glass: closedown of Aichi plant & drastic cost reduction* Sale of shares in Isolite, Pelnox, etc.
Exit from unprofitable businesses
•Continuous Glass Fiber
•Glass Disk•Tianjin NSG Float
Glass
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Outline of CCP300Outline of CCP300
New MidNew Mid--Term Plan: CCP300 (FY2006Term Plan: CCP300 (FY2006--FY2008)FY2008)
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Outline of CCP300Outline of CCP300
Sales: ¥500 billionPre-tax Profit: ¥50 billROA & ROE >10%
Goals in FY2011- To survive as winner -
WIN21
WIN21ACT 21FY2002- FY2005
FY2006 - FY2008“CCP300”
FY2009 - FY2011
First StageFY2002 - FY2003
Second StageFY2004 - FY2005
Position of CCP300 in New VisionA milestone toward the attainment of the targets of “New Vision”
Growth and expansion after the phase of restructuring
What does CCP300 stand for?
New principles of conduct: Challenge, Courage, Passion
Sales target: ¥300 billion
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Outline of CCP300Outline of CCP300
Nippon Sheet GlassNippon Sheet GlassNippon Sheet Glass
Business EnvironmentBusiness EnvironmentDevelopment
of IT Technology
Growth of Biotechnology
and Energy Industries
Digital Home Appliances
Global Warming,
Reduction of CO2
Oil Price Hike
Increased CSR Requirements Globalization
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Outline of CCP300Outline of CCP300Target Direction
• New Vision– Advanced and globally-recognized corporation – Improvement of corporate value as a group
(for all the stakeholders including shareholders, customers, communities and employees)
Target Direction
• CCP300– Reinforcement of existing businesses– Further development of new technologies, new
products and new business fields
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Outline of CCP300Outline of CCP300
Strength in manufacturing;with focus on frontline operations
– 1. Excellence in craftsmanship and quality– 2. Insatiable challenge toward technical superiority
• In short term, intensive allocation of management resources to manufacturing operations
• In longer term, emphasis on competitive engineers, basic R&D and succession of manufacturing skills
Groundwork for CCP300Groundwork for CCP300
New Principles of ConductChallenge, Courage, Passion
CCP300
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Outline of CCP300Outline of CCP300Shift in PriorityShift in Priority
ACT21 CCP300
Groundwork for Growth
Exit from Unprofitable businesses
Creation of New Businesses
Selection & Concentration
Expansion of New Businesses
Reinforcement of Overseas Businesses
Expansion and Growth
Improvement of Profitability by Reinforcing Frontline Operations
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Outline of CCP300Outline of CCP300Basic StrategyBasic Strategy
Realize High Profitability and Efficiency by Allocating
Resources to Growth Areas
Generate Stable Income through Cost Reduction and Efficiency
Improvement
Flat Glass Business(Building and Automotive Glass)
Flat Glass Business(Building and Automotive Glass)
Information/Electronics BusinessInformation/Electronics Business
Glass Fiber BusinessGlass Fiber Business
New BusinessNew Business
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Outline of CCP300Outline of CCP300Business Portfolio by AreaBusiness Portfolio by Area
Glass (’04)Glass (’07)
182
Information/Electronics (’04)
Information/Electr
onics (’07)
72Glass Fiber (’04)
Glass Fiber (’07)
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<Operating Income>
15%
10%
5%
0% 5% 10% 15%
<CAPEX/Asset>Others: 12 (‘04)
6 (‘07)
164
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37Size of circles shows amount of sales.
Figures are sales amount in ¥ billion.
Total CAPEX in this period is planned between ¥15-20 billion per annum and R&D expenditure is to be increased to more than ¥9 billion from ¥7.7 billion this year.
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Outline of CCP300Outline of CCP300Target Sales and IncomeTarget Sales and Income
5.01.1
-2.3
23
13
25
1216
7
287
260
300
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
FY02 FY05(Forecast)
FY08 (Target)
(Income / ¥ bil)
0
50
100
150
200
250
300
350
(Sales / ¥ bil)
Operating income Income before extra-ordinary items Net income Net sales
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Outline of CCP300Outline of CCP300Improvement in ROA and ROEImprovement in ROA and ROE
In order to achieve 10% targeted in New Vision, CCP300 aims at 6-7%.•Definition of ROA: (Income before extra-ordinary items + Interest) / Total Asset•Definition of ROE: Net income / Shareholders’ equity
10
1.6
10
2.3
-1
1
3
5
7
9
11
FY04Actual
FY08Target
FY11NV
(%)
ROAROE
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Outline of CCP300Outline of CCP300
186
159174
160
134125
0
20
40
60
80
100
120
140
160
180
200
FY00 FY01 FY02 FY03 FY04 FY05 FY08
(¥ bil)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Interest-bearing debtEBITDA multipleCF multiple
Further improvement, while coping with the growth strategy
InterestInterest--bearing Debtbearing Debt
•EBITDA: Operating income + Depreciation & Amortization•CF: Net income + Depreciation & Amortization
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Summary of Strategy by Business AreaSummary of Strategy by Business Area
Nippon Sheet Glass Co., Ltd.
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Flat Glass BusinessFlat Glass Business
Architectural glass(glass and materials for architectural use)
Architectural glass(glass and materials for architectural use)
Automotive glass(transportation vehicle
glass)
Automotive glass(transportation vehicle
glass)
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Flat Glass Flat Glass -- Summary of StrategySummary of Strategy
<Architectural Glass><Architectural Glass>• Japan:
– Becoming the leading functional glass supplier• Expansion in growth areas such as heat-insulation and burglary
prevention glass• Asia:
– Maintaining top market shares in Vietnam and Malaysia– Maximizing group synergy in the region including Japan
<Automotive Glass><Automotive Glass>• Expansion of high added-value products and cost
reduction by “production system innovation”• Maximization of synergy with Pilkington
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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassNew Building Construcion
108 110 110 110
62 60 60 60
50
70
90
110
130
150
2004Forecast
2005Forecast
2006Forecast
2007Forecast
Residential housing starts (current year) (in10,000 units)Non-residential building construction(previous year) (in million m2)
Ratio of new houses with double glazing (in area)
55%
56%
57%
58%
52%
53%
54%
55%
56%
57%
58%
59%
60%
2004Forecast
2005Forecast
2006Forecast
2007Forecast
Single-family housings
Ratio of new houses with double glazing (in area)
30%
32%
34%35%
25%
30%
35%
40%
2004Forecast
2005Forecast
2006Forecast
2007Forecast
Condominiums
Business Business EnvironmentEnvironment
Demand for double glazing in Japan:
forecasted to be strong forecasted to be strong for both single family for both single family housings and housings and condominiums
Demand for double glazing New building New building construction market in construction market in Japan: Japan:
forecasted to stay forecasted to stay flat in medium term
in Japan:
flat in medium termcondominiums
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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassArchitectural glass sales value in Japan by product typeArchitectural glass sales value in Japan by product type
0
20
40
60
80
100
120
140
160
180
FY01 FY05 FY08Target
ConventionalFunctional
FY01 = 100
Expansion of functional glass ratio from 63%
(current) to 70% in FY07
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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassBusiness Environment Business Environment -- House Renovation Market in JapanHouse Renovation Market in Japan
5.1 5.6 6.0 6.4
6.8 8.0 9.2 10.5
8.09.1
10.010.7
27.625.2
22.619.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1995 2000 2005 2010
(¥ tr
illio
n)
Maintenance Repair Renovation
(Ministry of Land, Infrastructure and Transport, Japan)
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Flat Glass Flat Glass -- Architectural GlassArchitectural GlassSocial Requirements for Architectural GlassSocial Requirements for Architectural Glass
Energy Saving
Pursuit of Comfort
•Functional Double Glazing•Vacuum Glass
•Self-cleaning Glass
Expansion of House Renovation Market
Crime Prevention
Increase in Glass Demand
Increase in Increase in Glass DemandGlass Demand
•Laminated GlassDisaster
Prevention
•Fire Prevention Glass
Glass Exteriors
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Flat Glass Flat Glass -- Automotive GlassAutomotive GlassBusiness Environment Business Environment -- Global Production Forecast of Global Production Forecast of Japanese Nameplate (JNP) VehiclesJapanese Nameplate (JNP) Vehicles
9.6 10.1 10.2 10.4
0.41.8 3.2 4.4
0.51.0
1.31.4
3.2
4.04.3
4.4
1.9
3.1
4.24.5
25.123.2
19.9
15.5
0
5
10
15
20
25
30
2001 2004 2007 2010
(mill
ion
unit)
Japan China Thailand North America ROW
(J.D. Power)
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117.0 133.0
47.049.0
182.0164.0
020406080
100120140160180200
FY05Forecast
FY08Target
(¥ billion) Sales - AutomotiveSales - Architectural
Operating Income
12.08.00.05.0
10.015.0
FY05Forecast
FY08Target
Flat Glass Flat Glass -- Expansion during CCP300Expansion during CCP300
<Architectural Glass>• Japan
– Growth in functional glass; shift to multi-functional glass
• Abroad– Capacity increase in Asia for
local markets• Re-start of a furnace in
Malaysia in 2005• Start-up of a new furnace in
Vietnam in 2007<Automotive Glass>• Improvement in productivity by
replacing old facilities and equipment
• Penetration into Chinese market– (Numerical target is not
included.)
Sales
Operating Income
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Flat Glass Flat Glass -- TopicsTopics
<Capacity Increase for Architectural Laminated Glass>• Timing: first half of FY06• Total investment: ¥1.3 billion• Added capacity: 700 K m2/year • Total capacity after expansion: 1,400 K m2/year
Domestic Demand for Laminated Glass
11501,500
2,1502,400
2,700
3,600
0500
1,0001,5002,0002,5003,0003,5004,000
2003 2004 2005 2006 2007 2010
K m
2/Y
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Information/Electronics BusinessInformation/Electronics Business
Information / Telecommunications DevicesSLA, SLED, chemically enhanced glass, components for office equipment such as printers, scanners and copiers, SELFOC micro lenses, telecommunication devices
Display GlassLCD substrates, PDP substrates
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Information/Electronics Information/Electronics -- Summary of StrategySummary of Strategy
<Information / Telecommunications Devices><Information / Telecommunications Devices>• Information Devices
– Establishment of leading position in lenses and light sources for home and office equipment such as printers, copiers and scanners
• Telecommunication Devices– Becoming key player in component markets, making
best use of SELFOC’s advantages– (As short-term goal, turning business into the black)
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Information/Electronics Information/Electronics -- Information / Information / Telecommunications DevicesTelecommunications Devices
Global Ink Jet Printer Market Forecast
90
63 66
8090
67 70
0
20
40
60
80
100
2001 2002 2003 2004Forecast
2005Forecast
2006Forecast
2007Forecast
0%10%20%30%40%50%60%70%80%90%100%
Multifunctional Printer Conventional PrinterMFP ratio Total
Rapid growth
(million units)Business EnvironmentBusiness Environment
Slow growth
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Information/Electronics Information/Electronics -- TopicsTopics
<Increase of SLA Production>• Timing: Spring 2005• Volume: from 3 million to 5 million units/month• Total investment: ¥1.5 billion
– Hot process (glass melting process): • Addition of melting capacity for 2 million units/month at
Yokkaichi plant
– Cold process (fabrication process): • Capacity expansion for 1 million units/month in China• (Further investment will be made in line with actual market
growth)
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Information/Electronics Information/Electronics -- Summary of StrategySummary of Strategy
<Display Glass><Display Glass>• Penetration into PDP substrate glass market• Expansion of TFT substrate glass production• Expansion of active display related businesses• Increase in volume and market share of UFF (ultra
fine flat glass)– Growth in STN substrates based on increase in mobile
phone usage in BRICS area– Introduction of new applications such as e-book
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Information/Electronics Information/Electronics -- Display GlassDisplay Glass
Global Passive Matrix LCD Market Forecast by Type
0
2
4
6
8
10
12
14
2001 2002 2003 2004 2005 2006 2007
(million m2)
TN Monochrome STN Color STN
Gradual 2% growth after 2003
Business EnvironmentBusiness Environment
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Information/Electronics Information/Electronics -- Display GlassDisplay GlassBusiness EnvironmentBusiness Environment
Global Mobile Phone Growth Forecast
28.7 46.6136.3
185.0 204.3 219.0 214.4
324.2 304.0
227.0179.5 118.0 85.4 71.5
19.3 48.2111.7
148.3 214.2 262.6 306.1
0.90.2
0.00.2
0.52.0
4.0
0
100
200
300
400
500
600
700
2001 2002 2003 2004 2005 2006 2007
mil
units
/yea
r
C-STN BW-STN TFD/TFT OLED Forecast 2003 (TSR)
13% 24% 52% 65% 78% 85% 88%
Ratio of color display
10% increase over 2003 forecast (after 2004)
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Information/Electronics Information/Electronics -- Display GlassDisplay GlassGlobal PDP Market and NSG Share TargetGlobal PDP Market and NSG Share Target
0
2
4
6
8
10
12
14
2003 2004 2005 2006 2007 20100
20
40
60
80
100
120
140
Market size (NSG assumption)
NSG share target
Panel Unit Number (42' conversion) (million unites/year)
Market share target: 20%
Share (%)
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Information/Electronics Information/Electronics -- Expansion during CCP300Expansion during CCP300
22.034.0
25.0
38.047.0
72.0
01020304050607080
FY05Forecast
FY08Target
(¥ b
illio
n)
Information/Telecommunications Display
1.2
7.0
0.0
5.0
10.0
FY05Forecast
FY08Target
<Information/Telecommunications Devices>
• Production increase of SLA for MFP– 5 million units/month
• Focus on communication equipment components
<Display Glass>• Penetration into PDP substrate
market• Stable increase in C-STN sales• Expansion of TFT assembly
operation (Nanox)• Focus on active matrix display
fabrication operations
Sales
Operating Income
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Glass Fiber BusinessGlass Fiber Business
Glass Cord
Glass Flake Air Filter
Battery SeparatorFor automotive timing belts
Plastic reinforcement and anticorrosion fillerHighly glittering metallic pigment
For clean-rooms
For lead-acid batteries for automobiles, uninterrupted power supply equipment
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Glass Fiber Glass Fiber --Business Environment and StrategyBusiness Environment and Strategy
Glass CordGlass Cord Glass Flake, MetashineGlass Flake, Metashine
Battery SeparatorBattery Separator
85%
15%
NSGOthers
Global market share: 85%
100%
NSGOthers
Only one in the world
• Cosmetics applications• Development of new applications
35%
65%
NSGOthers
Domestic market share: 90%Asia market share: 35%
• Market share expansion through growth in China
25%
75%
NSGOthers
Top market share in Japan: 25%
• To meet demand increase from semi conductor and LCD plants
• Development of new products and new markets
Air FilterAir Filter
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Glass Fiber Glass Fiber -- Expansion during CCP300Expansion during CCP300
Sales37.0 40.0
05
1015202530354045
FY05Forecast
FY08Target
(¥ b
illio
n)
4.65.0
4
5
6
FY05Forecast
FY08Target
<Glass Cord>• Increase in automobile
production<Battery Separator>• Share increase in Asia<Air Filter>• Expansion into medical
market<Glass Flake>• Development of new
applications
Sales
Operating Income
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CCP300 CCP300 -- Performance TargetsPerformance Targets
(¥ billion) FY05 FY08Sales 260.0 300.0 Flat Glass 164.0 182.0
Information/Electronics 47.0 72.0Glass Fiber 37.0 40.0Others 12.0 6.0
Operating income 13.0 23.0Flat Glass 8.0 12.0Information/Electronics 1.2 7.0Glass Fiber 4.6 5.0Others -0.8 -1.0
Income before extra-ordinary items 12.0 25.0Net income 7.0 16.0
5.01.1
-2.3
13
23
12
25
7
16
287260
300
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
FY02 FY05(Forecast)
FY08 (Target)
(Income/¥bil)
0
50
100
150
200
250
300
350(Sales / ¥ bil)
Operating incomeIncome before extra-ordinary itemsNet incomeNet sales
41
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• New VisionImprovement of corporate value as a group
(for all the stakeholders including shareholders, customers and employees)
CSR Management System is to be launched
in 2005
Employees Social Contribution
ShareholdersCustomer Satisfaction
Highest rating awarded by Development Bank of Japan for
environmental activities (August ’04)
Included in “Corporate Governance Fund” of Pension Fund Association
in Japan (August ’04)
Environment Compliance
CCP300 CCP300 -- CSR ActivitiesCSR Activities
• Management Principle: – Focus on social responsibilities of company and serve the community and the nation
42
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NoticeNotice
The projections contained in this document are based on information currently available to us and certain assumptions that we consider to be reasonable, so the actual results may differ. Among the major factors that may affect the results are the economic environment in major markets (such as Japan, Europe, the US, and Asia), product supply/demand shifts, and currency exchange fluctuations.
Nippon Sheet Glass Co., Ltd.