Medium-Term Management Plan

Toagosei’s New Medium-Term Management Plan for 2014 to 2016-All TOA 2016: Strengthen Business Structure then Create New Products

The Toagosei Group is committed to being a value-creating, highly profitable corporate group that continually produces distinctive high-performance products, and continues to grow by creating new products and businesses. The new medium-term management plan “All TOA 2016 – Strength and Creation”will start in 2014, which coincides with the company’s 70th anniversary, and will include a business reform initiative for all divisions. Under the plan, the Toagosei Group will also foster a corporate culture where employees embrace new challenges as well as encourage the constant development of next-generation products. Through these measures, the Toagosei Group will infuse “strength” in its business and “create” new businesses and products. The performance targets for 2016 are consolidated net sales of 170 billion yen, consolidated operating income of 18.5 billion yen and an operating income to sales ratio of 11%.

1. Overview of All TOA 2016 medium-term management plan “Strength and Creation”

(1) Themes

The medium-term management plan will directly tackle the key challenges facing the Toagosei Group and strengthen its operating base for future growth. To be a chemical manufacturer with a strong presence in the market, the Toagosei Group’s conventional approaches and beliefs will be updated. The following three points will form the framework of the new medium-term management plan.

  • Develop new next-generation products
  • Strengthen and qualitatively shift the production and sales systems of existing businesses
  • Qualitatively shift to an appealing company

The current medium-term management plan, All TOA 2013, uses the keywords “Knowledge and Collaboration.” Under this plan, the Toagosei Group has solidified partnerships within the Group and nearly completed the consolidation of its affiliates. To achieve further progress and growth under the new medium-term management plan, manufacturing and sales divisions will undertake fundamental reforms that include “strengthening corporate management” and “creating new businesses and new products.” This is a critical moment for undertaking the reforms necessary to take the Toagosei Group to the next step. The theme “Strength and Creation” was selected to collectively draw upon the knowledge and actions of all employees.

(2) Performance targets for All TOA 2016 “Strength and Creation”

The quantitative targets for 2016 are outlined below. In addition, the Toagosei Group plans to invest 40 billion yen in capital expenditure over the next three years as part of its growth strategy.

  2013 actual 2016 targets
Consolidated net sales 151 billion yen 170 billion yen
Operating income 14.5 billion yen 18.5 billion yen
Operating income to sales ratio 9.6 % 11.0 %
Net income 9.6 billion yen 13 billion yen

(3) Growth strategy

1 Develop new next-generation products
Toagosei will shift its current R&D system centered on each business department to one led by the General Center of Research and Development (General Center of R&D) and closely connected with each business department. This will enhance our R&D capabilities and accelerate new product development under an integrated system that spans from basic research to applied research, product development and production technology development. The keys to technological breakthroughs include having dreams and the passion to pursue them. We will leverage these to develop new technologies and products with a long-term vision.
2 Strengthen and qualitatively shift the production and sales systems of existing businesses
Project teams will be set up to lead operational reforms at electrolysis plants and acrylic plants, which are core production divisions within the group. Costs will be reduced and productivity enhanced by introducing innovative manufacturing technologies, which will also strengthen competitiveness, while stable production systems will be established through human resource development and technological sharing. To achieve sustainable growth into the future, all plant operations will be radically reformed.
Enhancing quantitative and qualitative sales activities will increase the number of customers, help us identify customer needs, make timely changes in pricing as well as improve and expand profits.
Production systems for adhesives, acrylic polymers and ARONIX located outside Japan will be optimized and sales systems will be strengthened. New product development will be undertaken in North America, while bases in Asia will be expanded to strengthen our competitiveness in the region.
3 Qualitative shift to an appealing company
Employment opportunities will be given to seniors and the employment environment will be improved, including changes in wage levels. This will enable Toagosei to qualitatively shift to a corporate culture where each employee is more motivated and willing to embrace reform.

(4) Management measures

1 Utilizing key human resources
Toagosei Group employees will be given ample opportunities to achieve career and personal growth so that they can utilize their skills anywhere in the company. Employees will also be trained to become specialists in their field or to be active leaders of the company globally. Human resources who will lead the company will be selected based on their ability, and opportunities will be given to ensure all employees can work with peace of mind. In addition, seniors will be given opportunities to extend their careers as the compulsory retirement age will be extended.
2 Strengthen cross-division collaboration
Operating efficiency will be enhanced by further standardizing and centralizing related processes and operations within the group. Cross-division collaboration will be used to promptly execute growth strategies. Furthermore, the creation of new products and businesses will be accelerated through external partnerships that complement the company’s businesses.
3 Deepening of corporate social responsibilities (CSR)
Based on our corporate philosophy of “sharing more happiness with more people through the chemical business,” each division, including overseas sites, will establish CSR targets based on the Toagosei Group’s CSR policy and carry out CSR activities that cover compliance, corporate governance, RC management, and social contribution and communication.

2. Business division action plans for All TOA 2016 “Strength and Creation”

(1) Commodity chemicals

Strengthen the foundation of existing businesses and increase revenues from high purity inorganic products

  • Build an optimized production system around three plants (Nagoya, Yokohama, Tokushima)
  • Strengthen competitiveness and expand the electrolysis business based on the gas diffusion electrode method
  • Expand the high purity inorganic products business
  • Strengthen the base of the industrial gases business

(2) Acrylic products

Complete important themes and optimize new business development and overseas businesses in the downstream segment

  • Keep the monomers business profitable through reforms, develop new applications and maximize profitability in the polymers business, and develop new products and reduce costs in the ARONIX business
  • Establish a structure for stable profitability of the business in Singapore
  • Establish a dedicated project system for focusing on new business development and strengthening the acrylics business

(3) Functional Chemicals

Develop new instant glues and expand high-value-added products businesses

  • Launch new general-use instant glues in Japan and overseas as well as increase market share of industrial instant glues in Japan
  • Stabilize profitability through the new development of functional adhesives
  • Expand the construction materials business
  • Promote the downstream expansion of amenity care materials and cultivate markets
  • Develop materials for secondary batteries

(4) Plastics

Rebuild the piping equipment business and expand the number of nursing care products

  • Rebuild production systems based on a clear future vision for plants and carry out fundamental reforms aimed at achieving cost savings
  • Enter the nursing care product rental segment
  • Improve development capabilities for the nursing care product brand Anjyu and expand the business by launching distinctive products