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A chemical company providing new valuesthrough innovative technologiesg g
Code: 4114
M h 2012March 2012Investor & Public Relations Dept.
ContentsContents
1 Introduction1. Introduction2. NIPPON SHOKUBAI – Who we are3 Main Business3. Main Business4. New Business5 Development of New Technologies5. Development of New Technologies6. Return Policy
Explanation of acronymsSAP: Superabsorbent PolymersAA: Acrylic AcidAES: Acrylates
Explanation of acronyms
EO: Ethylene OxideEG: Ethylene GlycolNAII: NA Industries, Inc. (USA)NSI: PT.NIPPON SHOKUBAI INDONESIA (Indonesia)
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 2
Age of Functional Chemicals1. Introduction
Age of Functional Chemicals
Japanese Functional Chemicals: Japanese Functional Chemicals:
Hold major share of world marketJapanese companies hold a far larger share of the global
pp
Japanese companies hold a far larger share of the global functional chemicals market than they do the automotive, electronics, and electronic parts markets.
Lead the world in innovationAdvances in functional chemicals brings about innovation at
f t f bl d d t ( t bil dmanufacturers of assembled products (automobiles and electronics)
Support industry and lifestyles worldwideSupport industry and lifestyles worldwideFunctional chemicals are fundamental materials for all manufacturing and constitute a vital part of everyday life.
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 3
Nippon Shokubai1. Introduction
Nippon Shokubai
Nippon Shokubai Products and Technology:Nippon Shokubai Products and Technology:pp gypp gyHold major share of world market
Superabsorbent Polymers (SAP): Top share of global marketSuperabsorbent Polymers (SAP): Top share of global market (more than 25%)Acrylic Acid: Nippon Shokubai technology supports approximately half of the world’s productionhalf of the world s production
Lead the world in innovationThe permeability of SAP helps make disposable diapers thinner.p y p p pElectronics and information materials help make displays thinner and enable high definition properties.
Support industry and lifestyles worldwideSupport industry and lifestyles worldwideDemand in a wide range of sectors stabilizes sales performance.High proportion used for manufacturing of daily
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 4
necessities, making demand less vulnerable to economic downturn.
Results2. NIPPON SHOKUBAI
- Who we are
Results
FY 3/2011 Record in income Growth reflects demand f
FY 3/2012 New record in income Fully prepared for increase (Date) (Product) (Capacity Increase) (NS Global Capacity)
from emerging markets in Asia and other regions
in demand following Lehman shock due to timely
increase in capacity
(Date) (Product) (Capacity Increase) (NS Global Capacity)Feb. 2012 Ethylene Oxide +70,000 (Kawasaki) 324,000 tons/yearApr. 2012 Acrylic Acid +80,000 (Himeji) 620,000 tons/yearOct. 2012 SAP +60,000 (Himeji) 470,000 tons/year
First half: Price of raw materials surgesSecond half: Demand drops sharply
Major loss from revised inventory valuation
(100 million yen)
300
350
3,000
3,500Ordinary Income Sales
Across-the-board cost cutting while maintaining employment150
200
250
1,500
2,000
2,500
Increase supported by rise in capital investmentUpturn in product market conditions0
50
100
0
500
1,000
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.
Upturn in product market conditions
5
002005 2006 2007 2008 2009 2010 2011 (projections)
Raw Materials to Final Product Flowchart Major Products
2. NIPPON SHOKUBAI - Who we are
Raw Materials to Final Product Flowchart -Major Products
Petroleum
Ethylene PropyleneNaphtha
Ethylene Basic chemicals
Acrylic A idoxide
Ethylene glycols
Acrylates
Acid
Carboxylic Superabsorbent Functionalchemicals Polymer for Carboxylic
acid polymers
polymerE&I
materials
ypaints, adhesives, and tackifiersSpecialty
acrylates
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 6
Environment& catalysts
Automotive catalysts
Zirconiasheet
Process catalysts
Sales Ratio by Business Segment2. NIPPON SHOKUBAI
- Who we are
Sales Ratio by Business Segment
FY3/2011Basic chemicals Functional chemicalsEnvironment & catalyst
8%
43%
Core business
49%
Core business
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.7
Company Outline2. NIPPON SHOKUBAI
- Who we are
Company Outline
Established August 1941Common stock 25,038 million yenCommon stock 25,038 million yen
(As of March 31, 2011)Net sales 288,345 million yen
(Consolidated Statements, FY3/2011)Number of employees 3,576
(Consolidated Statements FY3/2011)(Consolidated Statements, FY3/2011)Stock listings Tokyo Stock Exchange, First Section
Osaka Securities Exchange, First Sectiong ,
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 8
History2. NIPPON SHOKUBAI
- Who we are
History
1941 ・Succeeded in first commercial production of19411943 ・Opened Suita Plant
<Technological Innovation> (1) Founding —This year marks 71st
anniversary 1941 Succeeded in first commercial production ofphthalic anhydride in Japan.
1952 ・Succeeded in mass production of maleicanhydride by oxidation of benzol.
C i li d d ti f th l id f
1949 ・Renamed Nippon Shokubai Kagaku Kogyo Co., Ltd.
1959 ・Opened Kawasaki Plant (the present ChidoriPlant of the Kawasaki Plants)
1960
1943 ・Opened Suita Planty
(2)EO 50 years since commercialization1959 ・Commercialized production of ethylene oxide for the first time in Japan with our own technology.
1960 ・Opened Himeji Plant (the present Himeji Plant)
1967 ・Opened Kawasaki Second Plant (the presentUkishima Plant of the Kawasaki Plants)
1988 ・Established NA Industries, Inc. in Tennessee, USA
1970(5) Global expansion begins
(2)EO -50 years since commercializationAdded to strategic products
(3) AA/AES -Core products for 40 yearsUSA.
1991 ・Renamed NIPPON SHOKUBAI Co., Ltd.
1996 ・Established PT. Nisshoku Tripolyta Acrylindo inIndonesia (the present PT. NIPPON SHOKUBAIINDONESIA)
1983 (4) SAP - Primary core products for 30 years
1998 ・Established NIPPON SHOKUBAI ASIA PTE LTD. in Singapore
1999 ・Established NIPPON SHOKUBAI EUROPE N.V. in Belgium
INDONESIA)1987 ・Started production of polymers for concrete
admixture
1997 ・Started production of dioxins decompositioncatalysts
2003 ・Established NISSHOKU CHEMICAL INDUSTRY CO., LTD. in China
catalysts
2000 ・Started production of functional dyes. 2004 ・Established SINGAPORE ACRYLIC PTE LTD. & SINGAPORE GLACIAL ACRYLIC PTE LTD. in
Singapore 2006 ・Started production of acrylic resins for optical
(6) Electronics and information materials business takes root
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 9
2008 ・Acquisition of the major shares of NIPPON NYUKAZAI Co., LTD. and SINO-JAPAN CHEMICAL Co., Ltd.
2006 Started production of acrylic resins for optical materials
Management Profile2. NIPPON SHOKUBAI
- Who we are
Management Profile
Masanori Ikeda PresidentMasanori Ikeda PresidentGraduated from Tokyo University, received an MBA from Cornell University.2003: Member of the Board of Directors; 2006: Managing Director; 2009: Senior Managing Director; 2010: Executive Vice President
Led many overseas projects, including NAII. Played an important role in our global expansion.
Primarily engaged in corporate planning. Demonstrated abilities in implementing ERP (integrated enterprise system) and acquiring Nippon Nyukazai, etc. Leveraged extensive experience in general business operations to contribute to the ongoing success of the company.p g g p y
Continuing the present course. Aims to achieve not only the numerical targets of TechnoAmenity 2015, but also the substance.Seeks the full confidence of stakeholders through robust CSR activitiesSeeks the full confidence of stakeholders through robust CSR activities.
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 10
Long-term Business Plan TechnoAmenity 20152. NIPPON SHOKUBAI
- Who we are
Long-term Business Plan TechnoAmenity 2015
Slogan: Challenge to the future make dreams come trueSlogan: Challenge to the future make dreams come true
Corporate Philosophy Management Philosophy
Slogan: Challenge to the future, make dreams come true Slogan: Challenge to the future, make dreams come true
Providing affluence and comfort to people and society,
with our unique technology
Based upon a deep respect for humanity Coexisting with society, and working in harmonywith the environment Pursuing innovative technology
with our unique technology Operating on the global stage
A chemical company providing new valuesth h i ti t h l i
A chemical company providing new valuesth h i ti t h l iVision
2010 – 2015 Six-Year Business Plan
through innovative technologiesthrough innovative technologies
Undertake steady global expansion of AA/SAPImprove profitability of current products (Profitability Improvement Committee)Get new businesses (materials for E&I, new energy, batteries) on track
11
( , gy, )
TechnoAmenity 2015 Business Portfolio
2. NIPPON SHOKUBAI - Who we are
TechnoAmenity 2015 Business Portfolio
B i P tf liVision/Target for
FY2025 E&I New Current Health,
Business Portfolio
Materials EnergyCurrent
Business Medical
Make one of the t i f
Fuel cell Improve Medical
Level to attain in
centerpieces of profit generation materials profitability materials
Functional food
materialsSales
¥30 billiSales
¥5 billiProfitability
Improvement
Technology-related ”green” chemistry, environmental protection
FY2015materials¥30 billion ¥5 billion Improvement
committee
Technology related green chemistry, environmental protection and evaluation
Catalyst, organic synthesis, polymer composition and production Now
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 12
technologies
Acrylic acid/Superabsorbent polymer
2. Main Business
Acrylic acid/Superabsorbent polymer
PropylenePropylene
Acrylic acid Direct acrylic acid sales
Basic chemicalsAcrylates
F ti lFunctional chemicals
etc….
Superabsorbent polymer
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved. 13
etc….
Global Expansion of SAP2. Main Business
Global Expansion of SAP
Leading Manufacturer Leading Manufacturer WorldwideWorldwide
Superabsorbent
WorldwideWorldwide
Superabsorbent polymer (SAP) *
Major application: Disposable diapers
* P d d l th i i l t i l b i
14
* Powdered polymer, the principal raw material being acrylic acid. A single gram of this polymer is able to absorb as much as 1,000 grams of liquid.
Global Expansion of SAP2. Main Business
Much Hoped-for Application: Preventing Desertification
Global Expansion of SAP
Much Hoped-for Application: Preventing Desertification
15
Global Expansion of SAP2. Main Business
Supply and Demand Trends Supply and Demand Trends
Global Expansion of SAP
pp ypp y
Demand Strong growth expected in line with economic growth in developingcountries
7 to 8% annual growth7 to 8% annual growthGlobal demand: approx. 1.7 million tons (2010 estimate)
ggSupply Emerging manufacturers, besides current majors, are planning to
enter and expand SAP businsess
Reinforcement of Nippon Shokubai FacilitiesOctober 2010 Himeji: 60,000 t/year―In operationJune 2012 America: 60,000 t/year―Build & scrapAugust 2013 Indonesia: 90,000 t/year―ScheduledJuly 2014 China: 30 000 t/year―Scheduled
Progressing as planned
16
July 2014 China: 30,000 t/year Scheduled
Global Expansion of SAP2. Main Business
Maintain the TopMaintain the Top--Class Market Share and Ensure ProfitabilityClass Market Share and Ensure Profitability
Global Expansion of SAP
pp yy
The Basis of Nippon Shokubai’s SAP Strength1) R&D strength in products and processes2) Integrated production from raw materials, AA3) Stable supply network based on production
facilities in Japan, US, Europe and China4) Intellectual property strategy to maintain
effectiveness of technology5) Excellent customers with strong growth
Risks and Countermeasures
1) New entrant products in developing countries gathering strength• Differentiation through performance and quality of products• Differentiation through performance and quality of products • General cost reductions through process innovation including AA, production efficiency, and streamlined logistics
• Proper implementation of intellectual property strategy
17
2) Reduced price competitiveness due to strong yen• Increase production at facilities with less risk from strong yen
Global Expansion of AA Major Applications
2. Main Business
Global Expansion of AA Major Applications
Paints (Acrylates) Adhesives and tackifiers
(Acrylates)
Printing ink
(Acrylates)
18
Diapers (AQUALIC CA) Water retaining agent for horticulture (ACRYHOPE)
Car paints
(Specialty acrylates, specialty methacrylates)
Global Expansion of AA2. Main Business
Supply and Demand Trends Supply and Demand Trends
Global Expansion of AA
pp ypp y
5 to 6% annual 5 to 6% annual growthgrowthGlobal demand approx. 4 million tons (2010 estimate)
Easing of supply and demand Easing of supply and demand %% ggCalender year 2010 2011 2012 2013
Demand (A) 3,960 4,150 4,340 4,550
is is expected in the midexpected in the mid--termterm (Kt)
Annual available supply (B) 5,140 5,270 5,850 6,240
Nominal operating rate (A/B) 77% 79% 74% 73%
Reinforcement of Nippon Shokubai Facilities
Growth based on increased demandGrowth based on increased demand
Reinforcement of Nippon Shokubai FacilitiesApril 2010 Himeji: 80,000 t/year-In operationAugust 2013 Himeji: 80,000 t/year-ScheduledAugust 2013 Indonesia: 80,000 t/year-Scheduled
Progressing as planned
19
g y
The majority of Shokubai’s expanded AA facilities are used for internal use for SAP production and external sales to the other SAP producers.
AA/SAP: Global Expansion to End of 20142. Main Business
AA/SAP: Global Expansion to End of 2014AA facilities (Kt/y)
SAP f iliti (Kt/ )
Belgium (Antwerp)
SAP facilities (Kt/y)
60 China (Zhangjiagang)
540 320
60
60 6060
U.S. (Houston)
Singapore (Jurong Island)
Japan (Himeji)40
90140Singapore (Jurong Island)
Indonesia (Cilegon)
90140
Current End of 2014
AA 620 780
Production capacity (Kt/y)
AA 620 780
SAP 470 590
AA/SAP: Our Positioning (End of 2010)
2. Main Business
AA/SAP: Our Positioning (End of 2010)
AA Production Capacity
590Kt/yWorldwide total: Over 5 million tons
Kt/y
SAP Production Capacity
Worldwide total: Over 1.7million tons
1,500
120500
600
Kt/y590Kt/y
(End of 2014)
780Kt/y
Kt/y
160
500
1,000
470
300
400
780Kt/y (End of 2013)
620
0
500 470
0
100
200
0A B Nippon
Shokubai
C D Others0
Nippon
Shokubai
A B C D Others
Nippon Shokubai Estimate
21
Nippon Shokubai Estimate
Ethylene Oxide2. Main Business
Ethylene OxideEthylene
Ethylene oxide Direct ethylene oxide salesEthylene oxide Direct ethylene oxide sales
Ethylene glycolBasic
Chemicals
Ethylene glycol
Ethanolamine
Higher alcohols
FunctionalChemicals
Polymers for concrete admixture
g
22
Chemicalsetc....
Ethylene Oxide Major Application
2. Main Business
Ethylene Oxide Major Application
Fabric detergents Polyester resins Synthetic detergentsFabric detergents(Ethylene oxide, Ethanolamine,
SOFTANOL)
Polyester resins(Ethylene glycol)
Synthetic detergents(SOFTANOL)
PET resins(Ethylene glycol)
Polymers for concrete admixture(AQUALOC)
23
Ethylene Oxide Business
2. Main Business
Ethylene Oxide Business
Establish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the MarketEstablish an Earnings Base That Does Not Depend on the State of the Market
Non-EG ratio: Keep of over 70% (Domestic average [including Nippon Shokubai] 50%)(Domestic average [including Nippon Shokubai] 50%)
EO centralizationExpansion of derivatives
1) Expansion of (meta) acrylic acid special ester1) Expansion of (meta) acrylic acid special esterOctober 2013 Kawasaki Plant (new land acquired in 2007) new 20,000 ton/yfacilities on stream
* Meet the growing demand* Reduction in quantity of EO shipped
2) Expansion of polymer for concrete admixtureApril 2012 Kawasaki Plant (existing premises) 16,000 ton/y facilities scheduled
3) Launch of drying shrinkage reducing agent for concreteJointly developed with 3 construction majors, with commercial production from October 2011
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Aim for flexible product configuration as a top priority Aim for flexible product configuration as a top priority to improve facility utilizationto improve facility utilization
Electronics & Information Materials4. New Business
Electronics & Information Materials
A K S f RA K S f RAcrylic resin for optical materials “Acryviewa ”
Resin: High performance Film: Shipment start from the beginning of
A Key Source of RevenueA Key Source of Revenue
Resin: High performance Film: Shipment start from the beginning of 2012
Spherical fine particlesSpherical fine particlesResist polymersProduct under development: Encapsulating materials for SiC power
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.
p p g pdevices
25
New Energy Materials4. New Businesses
New Energy Materials
A NextA Next--Generation Core BusinessGeneration Core Business
Materials for fuel cells (zirconia sheets and cells)FY3/201 1 Projected to turn profit with twice the shipment
A NextA Next Generation Core BusinessGeneration Core Business
FY3/201 1 Projected to turn profit with twice the shipment volume of previous fiscal yearFY3/2016 Long-term sales target: 5 billion yenStrength: M ldi d fi i t h l i lti tStrength: Molding and firing technologies cultivate
through catalyst manufacturing
Expansion of production facility
High quality + mass production
Expansion of production facility3 million pieces/year in 2011
Expansion of sales focusing primarily on Bloom Energy (U S )
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.
Expansion of sales focusing primarily on Bloom Energy (U.S.)
26
Battery Materials4. New Business
Battery Materials
Materials for lithium-ion batteriesLithium bis(fluorosulfonyl)imide (LiFSI)
Features: Life extension for lithium-ion batteries ea u esand greatly improved safety
Strong points: Established synthesis technology using original catalysts enabling mass production of high-puritycatalysts, enabling mass production of high-purity products cheaply (first in the world)Ensure production capacity of several hundred tons per year in 2013per year in 2013
FY3/2013 Scheduled for launch FY3/2016 Aim for sales of ¥2 billion
Solid electrolyte polymer for lithium-ion batteries
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.
Aim for early launch27
Acrylic Acid Production from Biomass Resources
5. Development of New Technologies
Acrylic Acid Production from Biomass ResourcesNew method: Glycerine method from biomass resources
OH Glycerine Dehydrate
OH OH
CH2
Acrolein
CH2OH
OAcrylic acid
Developed high-performance
catalysts!Oxidation
OAcrolein OAcrylic acid
Current method: Propylene oxidation
catalysts!
Polymerization
SAP,Adhesives.
Paints
Current method: Propylene oxidation
CH 2Propylene
Oxidation
Copyright 2011 NIPPON SHOKUBAI CO., LTD. All rights reserved.
Paints,etc.C H 3
Oxidation
28
Dividends Basic Approach
6. Return Policy
Dividends, Basic Approach Taking overall account of business expansion and corporate structural Taking overall account of business expansion and corporate structural
E pansion of In estment in Core B sinesses Large Internal Reser es
Reinforcement, and based on forecasts of the trend in consolidated earnings, Reinforcement, and based on forecasts of the trend in consolidated earnings, we are aiming to improve dividend return levels in the medium term we are aiming to improve dividend return levels in the medium term
Expansion of Investment in Core Businesses Large Internal Reserves
FY3/2011 dividendNet Income 21.1 billion yen
FY3/2012 dividend (forecast)Net Income 21.5 billion yeny
22 yen/sharey
22 yen/share
Yen/share Interim End of period Total 2 yen/share increase pOrdinary dividend 9 9 18
Commemorative dividend* 1 1 + 2 4
Total 10 12 22Yen/share Interim End of period Total
Ordinary
vs. to the previous announcement
* 50th anniversary of the Himeji Plant (2 yen) and 70th anniversary of NIPPON SHOKUBAI (2 yen)
%FY3/2005-3/20117-year average
FY3/2007-3/20115-year average
Ordinary dividend 11 11 22
Commemorative dividend - - -
Total 11 11 22
29
Average payout ratio 25.6 28.5Average total rate of
return 40.2 37.7
8 million treasury shares were cancelled.
Notes to Readers
This presentation material (“the Material”) aims to provide readers with referential
Notes to Readers
This presentation material ( the Material ) aims to provide readers with referential
information, not to solicit investment. The Material contains forward-looking
statements, and statements of this nature are based on reasonable judgments in j g
accordance with information currently available. We neither commit to nor guarantee
the contents of the Material. Readers should be aware that actual results and events
might differ substantially from these projections.
IR Contacts:
NIPPON SHOKUBAI CO., LTD. Investor & Public Relations Dept.
Hibiya-Dai Bldg. 1-2-2 Uchisaiwai-cho, Chiyoda-kuTokyo 100-0011 JapanTEL: +81-3-3506-7477FAX: +81-3-3506-7598
30
URL: http://www.shokubai.co.jp