Financial Results Presentation

for the 2nd Quarter of FY 2022
October 27, 2021

Code number：4099

Contents
Ⅰ. Financial Results for the 2nd Quarter of FY 2022 ・・

P3

Ⅱ. Forecast of Financial Results for FY 2022 ・・・・・・

P13

Ⅲ. Long-term Vision Challenge 1000
“STAGE 1” Progress Status ・・・・・・・・・・・・・・・・・・・・・・ P16

Ⅳ. New Organizational Structure

・・・・・・・・・・・・・・・・・ P27

Ⅴ. References ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P32

2

Ⅰ．Financial Results

for the 2nd Quarter of
FY 2022

Ⅰ－１．Overview

1Year-on-year net sales increased by 7.9%, while profits increased by
52.9%. In addition, when compared with periods before the novel
coronavirus disease (COVID-19) pandemic, net sales recorded thesecond-highest number following that at the corresponding period of
the year before last, and in terms of profits, profit attributable toowners of parent was at a high level as profit hit a record high.

２

In the Chemicals industry, all sub-segments (Inorganic Chemicals,
Organic Chemicals, and Fine Chemicals) observed higher sales
than the previous year, with the year-on-year net sales up by
14.8% and segment profits up by 69.6%.

In the Housing Materials business, the impact of COVID-19 continues
３ to be felt, with year-on-year sales down by 5.9% and segment profits
down by 20.9%.

4

Ⅰ－２．Consolidated Financial Results■ Highlights of Financial Results for the Q2 of FY 2022
(Millions of yen)

Consolidated Cumulative Q2
FY2021
AmountFY2022

Percentage

AmountPercentage

Increaseof Amount

Changes

Net Sales

23,408100.0%

25,266100.0%

1,858

7.9%

Operating Income

2,609

11.1%

3,795

15.0%

1,186

45.5%

Ordinary Income

2,822

12.1%

4,116

16.3%

1,294

45.9%

Net Income Attributableto Owners of the Parent

1,924

8.2%

2,943

11.6%

1,019

52.9%

Exchange Rate (USD)

107

110

Exchange Rate (EUR)

120

131

・Net sales in the Housing Materials business were sluggish due to the continuing impact of COVID-19.
However, the Chemicals business observed a recovery trend and posted a significant year-on-yearincrease. Overall, sales increased by 7.9%, second only to the record high set in 2019.
・In terms of profits, the year-on-year operating income increased due to increased sales volume andhigher unit prices in the Chemicals business.
For the second quarter, the profit earned has been the highest ever recorded.
・The yen depreciated against both, the U.S. dollar and the euro. As a result, foreign exchange impacted
sales positively, resulting in an earning of 261 million yen over the previous year.

5Ⅰ－３．Sales and Profit by Business segments(consolidated)（Millions of yen）
Consolidate Cumulative Q2

Net Sales

FY2021
Inorganic Chemicals

Percentage

FY2022

Percentage

Changes

4,669

19.9%

5,877

23.3%

25.9%

Chemicals Organic Chemicals
Operations Fine Chemicals

5,744

24.5%

5,991

23.7%

4.3%

3,882

16.6%

4,538

18.0%

16.9%

Subtotal

14,29761.1%

16,407

65.0%

14.8%

710

3.0%

672

2.7%

▲ 5.3%

8,001

34.2%

7,527

29.8%

▲ 5.9%

8,711

37.2%

8,199

32.5%

▲ 5.9%

Other

399

1.7%

660

2.5%

64.9%

Total

23,408100.0%

25,266100.0%

7.9%

Interior, Exterior Finishes

Housing and Paving Materials
Materials Exterior Products
Operations Subtotal

Consolidate Cumulative Q2

Segment Profit

FY2021percentage

FY2022

percentage

Changes

Total of Chemicals Operations

2,131

81.7%

3,614

95.2%

69.6%

Total of Housing Materials Operations

1,337

51.2%

1,058

27.9%

▲20.9%

Other

▲ 859

▲32.9%▲ 877▲23.1%

2.0%

Total

2,609

100.0%

3,795

100.0%

45.5%

6

Ⅰ－４．Overview of Sales by Segment (Chemical Products)
8,000
5,877
（25.9％）

6,000

5,744

2020/95,991(Millions of yen)2021/9（4.3％）

4,538

4,669

（16.9％）

3,882

4,000

2,000

0

①Inorganic
Chemicals
無機化成品②Organic
Chemicals
有機化成品

③Fine
Chemicals
ファインケミカル①Sales of insoluble sulfur, a material for radial tires, have largely surpassed those of the previous fiscal year, which
was affected by the spread of COVID-19, backed by a rapid recovery in demand for automobiles and tires since
the second half of the previous fiscal year. Sales of carbon disulfide for rayon and cellophane, and sodium sulfate
for bath agents and detergents increased year on year due to a rebound from the COVID-19 pandemic.
②Regarding chlorinated isocyanuric acid for disinfectants, sales of agents for swimming pools recovered indomestic market, thanks to the partial resumption of swimming lessons at schools. Sales of agents for plumbing
systems (sanitary devices) remained strong with increased demand for sterilization and cleaning as a result of
rising awareness of hygiene at homes. Sales remained strong in the U.S. market, backed by the growing homeswimming pool market due to a recovery in economic conditions and stay-at-home demand.
③Regarding Glicoat-SMD, a heat-resistant soluble OSP (Organic Solderability Preservative) for printed wiringboards, sales remained solid, against a backdrop of the growth of electronics markets worldwide. Sales ofadvanced& specialty chemicals such as epoxy resin curing agent (imidazoles) and resin modifier (glycoluril
derivatives) increased year on year, backed by a recovery in demand for use in electronic components andautomobiles.

7Ⅰ－５．Overview of Sales by Segment(Housing Material Products)(Millions of yen)
10,00010,000

8,000

8,000

6,000

6,000

4,000

4,000

2,000
710

672

8,001

7,527
（▲5.9％）

2,000（▲5.3％）

0

0Interior, Exterior
壁材 Finishes
and Paving Materials

Exterior
Products
エクステリア◆ Although the number of new housing starts showed signs of a slight recovery, sales of interior, exterior
finishes and paving materials and exterior products remained sluggish, as governments and privatecompanies deferred or had a wait-and-see attitude for their projects or capital investment, against a
backdrop of weak domestic demand and uncertainty about the future under the state of emergency
declaration. Profitability also declined due to soaring prices of raw materials including aluminum ingots.

8

Inorganic Chemicals
Organic Chemicals

Fine Chemicals

Operating profit incurrent term

Other

Increase in costof logistics

Decrease in costof salesIncrease in sales
volumeDecline in sales
price

Other

Increase in costof logistics

Increase in costof salesDecrease in sales
volumeIncrease in sales
price

Other

Increase in costof logistics

Decrease in costof salesIncrease in sales
volumeIncrease in sales
price

Operating profit inprevious term

Ⅰ－６．Analysis of Increase/Decrease in Chemical Segment Profit（Millions of yen）

Decline in unit
price of fixed
costs
+465

9

Ⅰ－７．Analysis of Increase/Decreasein Housing Material Segment Profit
2,400

Increase inunit price ofraw materials
▲543

2,200
2,000

（Millions of yen）

237

1,800
750

1,600
1,400

1,337

5

9

3

12

766

15

1,200
1,000

1,058

120

91

物
流
コ
ス
ト
の
増
加

そ
の
他

800
600
400
200

壁材
Interior, Exterior
Finishes
and Paving Materials

当
期
営
業
利
益

Operating profit incurrent term

Other

売
上
原
価
の
増
加

Increase in costof sales

販
売
数
量
の
減
少

Decrease in sales
volume

販
売
価
格
の
上
昇

Increase in sales
price

そ
の
他

Other

物
流
コ
ス
ト
の
増
加

Increase in costof logistics

売
上
原
価
の
減
少

Decrease in costof sales

販
売
数
量
の
減
少

Decrease in sales
volume

販
売
価
格
の
上
昇

Increase in sales
price

Operating profit inprevious term

前
期
営
業
利
益

Increase in costof logistics

0

エクステリアExterior Products10Ⅰ－８．Consolidated Balance Sheets(Millions of yen)2021/32021/9

Increase ofamountCash and deposits（▲1,230）、▲ 3,043 Notes and accounts receivable – trade（▲1,254）

Current assets

65,024

61,981

Non-current assets

42,31943,816

1,497

Total assets

107,344

105,798▲ 1,546

Current liabilities

15,702

14,721▲ 981

non-current liabilities

15,075

13,524▲ 1,551 Retirement benefit liability（▲1,559）

Total liabilities

30,77828,246▲ 2,532

Total net assets

76,56677,551

Total liabilities
and net assets

107,344

105,798▲ 1,546

Capital-to-asset ratio

70.5%

72.5%

2.0%

ROE

7.9%

7.7%

▲0.2%

Machinery, equipment andvehicles, net（+987）

985 Retained earnings（+990）11Ⅰ－９．Consolidated Statements of Cash Flows(Millions of yen)

2020/92021/9Net cash provided by (used in) operating activities

3,093

2,275

Net cash provided by (used in) investing activities(1,043)(626)

Net cash provided by (used in) financing activities(2,289)(1,928)Net increase (decrease) in cash and cash equivalents

(279)

(230)

Cash and cash equivalents at end of period

32,32736,977

2,050

1,649

Flee cash flow＝Netcash operating
provided by(used in)operatingactivities=
CF from
activities- CF
from investing
activities-Net cash provided by (used in) investing activities◆Cash flows provided by operating activities totaled ¥2,275 million.
Major sources of revenue： Profit before income taxes of ¥4,135 million, decrease in trade receivables of ¥1,632 million
Major expenditure factors： Contribution to employees’ retirement benefits trust of ¥1,500 million, income taxes paid of ¥1,415 million◆Cash flows used in investing activities totaled ¥626 million.

Major sources of revenue ：Proceeds from redemption of securities of ¥2,000 million
Major expenditure factors： Purchase of property, plant and equipment of ¥1,681 million◆Cash flows used in financing activities totaled ¥1,928 million.

Major sources of revenue ：Proceeds from long-term borrowings of ¥100 million
Major expenditure factors ：Purchase of treasury shares of ¥1,290 million

12

Ⅱ．Forecast of Financial
Results for FY 2022

Ⅱ－１. The Full-Year Financial Results Forecast (Consolidated)
Progress rate to full-year result(Millions of yen)

60,000100.0%

Operating
Net sales 100.0%
incomeprogress
progress
100.0%
ratio
ratio

100.0%
50,000Progress rate to full-year forecast

74.0%

72.6%
70.9%

40,000

66.0%

49.8%

47.2%

30,000

49.1%
47.4%

45.5%
20,00010,000Net sales

24.9%

23.4%

25.0%

35.3%

Operatingincome

22.1%

22.0%

17.1%

-

1Q
Q1
(Millions of yen)

2Q
Q2

3Q
Q3

4Q
Q4

1Q
Q1

2020/338,160 51,564
5,564
7,848

3Q
Q3

4Q
Q4

1Q
Q1

FY2021

FY202012,823 25,693
Net sales
1,729
3,567
Operating income

2Q
Q2

11,592
1,262

2021/3

23,4082,609

36,024 49,590
4,888
7,401

2Q
Q2

3Q
Q3

FY2022
12,8691,7702022/325,266
3,795

4Q
Q4（forecast）

51,5008,000

Exchange rate assumed: 105 yen/US dollar, 128 yen/Euro
Note： Revisions to the consolidated earnings forecasts most recently announced： No

14

Ⅱ－２. Capital investment, Depreciation, R&D Expense(Consolidated)
Of which, production
plant related (TAP-4,
NEO2022) was
3,055 million yen(Millionsof yen)
（百万円）
7,000
6,000
5,000
4,000

設備投資額
Capital Investment

Depreciation
減価償却費

3,000

研究開発費
R&D Expenses

2,000
1,000
0
2017/3
FY2017

2018/3
FY2018

2019/3
FY20192020/3
FY20202021/3
FY2021FY2017 FY2018 FY2019 FY2020 FY2021

FY20222022/3
Forecast
予想

FY2022 (Millions of yen)
Forecast

CapitalInvestment

3,815

1,628

2,073

1,961

4,106

6,058

Depreciation

1,645

2,318

2,281

2,189

1,835

2,121

R&D
Expenses

1,235

1,310

1,295

1,338

1,207

1,412

15

Ⅲ．Long-Term Vision

Challenge 1000
“STAGE 1”
Progress Status

Ⅲ－１．Outline of Challenge 1000 ①

FY

present

2021

2026

2023

2030

Long-Term
VisionChallenge
長期ビジョン
Challenge
10001000
STAGE 11
STAGE

STAGE ２STAGE

STAGE ３STAGE

Develop up a long-term vision, address future themes,
and aim to achieve results17Ⅲ－２．Outline of Challenge 1000 ②
Yonpou Yoshi

Financial
Goals

Pillars for
Strategy

Net Sales
売上高
100 billions of
1,000億円
yen

Business Reform
PolicyCustomerCompanywide
Reform Policy

Employee

Proactive
Investment

Shareholder

Achievement of
SDGs

Community

営業利益
Operating
Income15 billionsof yen
150億円

ROE
10％

(Contributions to
Stakeholders)18Ⅲ－３．Financial goals
120.0

40.0%

Implementing various measures in line with the strategic pillars （ Billions of yen ）Net sales
35.0%
to achieve the goals set at each STAGE
100.0（Consolidated）

100.0

5.0
95.0

80.0
80.0

2.5

Existing
business
sales
25.0%

77.5
60.0

40.0

60.0
52.8

15.2%

20.0%

51.6

15.2%

49.5
14.9%

51.5
15.5%

15.0%

15.0%

10.0%
7.9%

8.0%

Operatingprofit ratio

15.0%

12.5%

20.0

New
30.0%
business
sales

10.0%
ROE

7.9%
5.0%

0.0

8.0

7.8

7.4

FY20192019/3

FY20202020/3

FY20212021/3

99期

100期

101期

8.0

7.5

12.0

15.0

FY20262026/3

FY20302030/3106期

110期

Operatingincome（Consolidated）
0.0%

FY2023
FY20222022/32023/3（予想）（Forecast）
102期
103期

STAGE 1

STAGE ２STAGE 319

Ⅲ－４．Progress Summary (FY2021-FY2022 Q2)◆ Recovery despite the impact of COVID-19
is expected to be at par with FY2019 as a result of the recovery phase from
Financial ・ FY2021
COVID-19.
Targets
Although the progress of sales is currently lagging, operating profit and operating
profit margin are expected to match the plan.

◆ Investment in production facilities was executed as planned

・ Production facility (TAP-4) for the Fine Chemicals business was completed and became operational.
Investment ・ The production facilities for chlorinated isocyanuric acid in the Organic Chemicals business is underBusiness

Yonpouyoshi

construction as planned.
=> Fine Chemicals business will be able to strengthen its production of materials for cutting-edge
photoresists, while the Organic Chemicals business will be able to increase the flexibility of its
production brands.

◆ Conduct contribution activities for each stakeholder
・ Customers: Provide products in accordance with SHIKOKU QUALITY*・ Employees: Create an environment that fosters a culture of challenge(Contributions ・ Shareholders: Implement share buyback and plan to list on the prime market.
to・ Society: Use 1% of ordinary income for social contribution; sponsorship of regional
events (75th Kagawa-Marugame International Half Marathon, etc.)
Stakeholders)
SHIKOKU QUALITY: The SHIKOKU QUALITY is ensured in all the products, services, and values delivered to customers.
The Group aims to build its brand by focusing not only on product quality, but also on services.

Ⅲ－５．Progress on Business Reform Policy
Next FY2023 is the final year of "STAGE 1".
We will achieve our goals and aim for further growth in "STAGE 2".

Business Name

Topic

STAGE 1 Target

Inorganic Chemicals•

Continue efforts to improve the quality of insoluble
sulfurConsider commercialization of products
developed from sulfur

Consolidated sales of 14
billion yen

Enhance production facilities (bulk products, ODM
products, etc.)
Strengthen sanitary products business

Consolidated net sales: 10
billion yen

Functional materials: Strengthen response to
demand for semiconductor process materials.
Develop new applications for resin modifiers (lowdielectric, CFRP)
Glicoat-SMD: Aim to sell new OSPs that arehalogen-free and have long-term storage stability
GliAS: Start handling Glicoat-SMD automatic
analyzer. Aim to propose total solutions
GliCAP: Approval of activities and achievements

Consolidated sales of 8billion yen

Strengthen sales activities by leveraging highvalue products
Create an environment that can improve
production efficiency through digitization,systemization, and automation

Consolidated net sales: 25
billion yen•

Organic Chemicals••

Fine Chemicals

•

•
•
•

Housing Materials••(Results in 2021/3: 10.4 billionyen)(2021/3 results: 10.7 billion yen)(2021/3 results: 8.7 billion yen)(2021/3 results: 18.7 billion yen)

* For an overview of the Business Reform Policy, see page 64-.

21

Ⅲ－６．Progress on Companywide Reform Policy
We are working to build a foundation that can accommodate diverse work styles, fostering a sense of selfimprovement, and creating a framework for change, and we are generally making progress as planned.
Item

Topic

Creation of values◆ Enhance brand value (Formulation of SHIKOKU QUALITY)◆ Strengthen environmental initiatives (Create CSR report)◆ Implement measures to create new businesses(Implement internal recruitment)

Creation of reserve energy◆ Promotion of telework and other initiatives to improve work efficiency
・ Promote telework, which allows employees to work efficiently regardless of
their physical location

Creating ofoperational bases◆ Consolidation of sales bases

Creation of organization◆ Start discussion to determine the organizational structure to be pursued
・ Transition to a holding company structure (see page 27 for details)

Creation of company climate◆ Dissemination of long-term vision and exchange activities to eliminate
barriers between divisions
・ Hold workshops, roundtable discussions, and other events

Creation ofhuman resources◆ Create an environment in which employees can actively tackle challenges(Review the evaluation system, including the introduction of challenge goals witha point system)* For an overview of Corporate Reform Policy, see page 66

22

Ⅲ－７．Pillar for Strategy （Companywide Reform Policy）

Semiconductor Process Materials◆Fine Chemicals starting the operation of multipurpose plant
The demand for semiconductors has been increasing because of IoT and
autonomous cars.
Needs for high-quality, high-function materials are growing among
manufacturers who manufacture and develop semiconductor processmaterials.
A plant (TAP-4) with high quality equipment, such as low metal control for
cutting-edge semiconductor process materials became operational in July 2021.
The company will promote the commercialization of extreme ultraviolet (EUV)
photoresist materials, etc., which will support the deepening of next-generation TAP-4（Tokushima Plant）
semiconductors.

Chlorinated Isocyanurates◆Construction of a new plant for Chlorinated Isocyanurates
at Kitajima Office, Tokushima Plant（NEO2022）
Globally, the impact of transboundary movements of aquatic organisms in ballast waterin concurrence with the traffic of ships on the ecosystems has turned serious. There arealso many areas where it is difficult to secure clean water, and solution of the social
issues such as improvement in the water sanitation environment is urgently demanded.
It was decided to build a new plant to respond to the increasing demands
for Chlorinated Isocyanurates for purposes such as improving water environment.
Its construction began in September 2020 with approximately 5 billion yen in
investment, and it is scheduled to be completed in April 2022.

23

Ⅲ－８．Pillar for Strategy （Achievement of SDGs）◆ Creation and publication of SDGs Handbook on the website

In the SDGs Handbook, we have introduced goals
related to each of our businesses and the social
issues that we are contributing towards.

24Ⅲ－９．Pillar for Strategy （Achievement of SDGs）

Chemical operations• Organic Chemicals contributes to the
supply of safe water to people andconservation of marine environment.

=>Providing a good hygienic
environment for people around theworld through the disinfection,cleaning, and bleaching technologies.

Housing Materials operations• Contributing to planning cities and communities where
people can live securely and safely.
=> Decorative and Home Exterior Products provides
the lineup of high-strength products and ensures highsafety.
=> Interior Materials uses human- and environmentallyfriendly raw materials and provides space where
people lead a healthy life.

25

Ⅲ－１０．Shareholders Return–Transitions in Dividend Payouts–
（百万円）
3,500
自己株式取得額
Share Repurchases

3,000
2,500

（％）
60.0

56.6
51.1

50.0

配当総額
Total Dividends
Total Payout Ratio（％）
連結総還元性向（％）

1,786

2,000

40.0
1,605
1,290

30.0

23.8

1,500
19.5

20.0

1,000

10.0

500
0

1,285

1,285

1,389

1,338

1,311

2018/3
FY2018

2019/3
FY20192020/3
FY20202021/3
FY2021

FY20222022/30.0（forecast）（予想）
Dividends per
share (annual)

22.0

22.0

24.0

24.0

24.0

26

IV. New Organizational
StructureⅣ－１．Transition to a Holding Company Structure-１
The company will begin to prepare for the transition to a holding
company structure in January 2023.

Objectives(1) Enhancement of the business operation structure
Speed up decision-making by boldly transferring authority to each operatingcompany(2) Governance structure and redefinition of the head office’s role
Specialize the holding company in group management functions
Spinning off head office indirect divisions to eliminate duplication and optimize
operations(3) Strengthening the development of management talents
From the perspective of strengthening sustainable management capabilities,
promote the development of future management human resources throughautonomous management of the operating companies

Strengthen the group structure and speed up decision-making
in order to respond to changes in the business environment and challenges.

28

Ⅳ－２．Transition to a Holding Company Structure-２[Image of Group management structure
after the transition]
Pure Holding Company(Our Company)
SHIKOKU CHEMICALSCORPORATIONSHARED SERVICES(Successor company:
newly established)

SHIKOKU CHEMICALSCORPORATIONCHEMICALS OPERATIONS(Successor company:
newly established)

SHIKOKU CHEMICALSCORPORATION HOUSING
MATERIAL OPERATIONS(Successor company:
newly established)

ChemicalsGroup Companies

Housing Materials
Group Companies

Other Group
Companies29

Ⅳ－３．Transition to a Holding Company Structure-３◆Schedule
2022

Schedule forTransitioning to
Holding Company
Structure

2023

Jan.

Apr.

June

Jan. 1

Establish a
preparationcompany fortransfer to holding
company

Approval of theabsorption-typecompany split
agreement by the
Board of Directors

Special resolution
at theshareholders'meeting

Succession ofrights andobligations to the
new company

Commencementof the holding
company
structure

The Group will be reborn as a company having
a new management structure, and will strive to achieve
the long-term vision, “Challenge 1000” to ensure its leap
toward a 100-year company in the next 25 years.

30

Thank you for listening.

V．References

Ⅴ－１．Corporate Profile（As of September 30, 2021）

 Company nameSHIKOKU CHEMICALS CORPORATION Code number

4099

 Stock exchangeTokyo

Industry：Chemicals

listing Incorporated

October 10, 1947

 Head office

Marugame, Kagawa Prefecture President and C.E.O.

Naoto Tanaka

 Capital

6,867 million yen Number of employees

1,218（Consolidated）

 Net sales

49,590 million yen （Consolidated）

33

Ⅴ－２ ． Business Structure Two main business pillars, which arechemical products and housing materials.
Inorganic
Chemicals

Chemicals
Operations

Organic
Chemicals
Fine
Chemicals

SHIKOKU
CHEMICALSCORPORATION
Housing
Materials
Operations

Interior, Exterior
Finishes
andPaving aterials
Exterior
Products
34Ⅴ－３ ． History
Oct 1947

Established in Marugame, Kagawa Prefecture with a capital of 2 million yen as a producer of carbon disulfide (=>inorganic chemical products)

Oct 1957

No. 1 Tokushima Plant (now Tokushima Plant’s Yoshinari location) was constructed and began operations in the
production of sodium sulfate (=> inorganic chemical products)

May 1961

CMC production began at No. 1 Tokushima Plant. We applied CMC to wall material later

Jun 1962

No. 2 Tokushima Plant (now Tokushima Plant's Kitajima location) was constructed

Oct 1962

The Company’s shares were listed on the Second Section of the Tokyo Stock Exchange

May 1964

Japan’s first operations to produce chlorinated isocyanurates (=> organic chemical products) were launched at No. 2
Tokushima Plant

Dec 1969

The Company began production of OSP (Organic Solderability Preservative) (which was later called Glicoat-SMD (=> Fine
Chemicals) for PWBs (Printed Wired Board) and other electronic components

Sep 1970

The Company began production in the field of housing materials, launching production of interior finishes (JULUX) at No.
2 Tokushima Plant

Jun 1972

The Company began production and sales of accordion gates (=> Exterior Products)

Mar 1975

The Company moves its share listings from the Second to First Sections of the Tokyo Stock Exchange and Osaka
Securities Exchange

Jul 1975

Tadotsu Plant was constructed in Tadotsu, Kagawa Prefecture

Nov 1975

Full-scale production of imidazole (=> Fine Chemicals) began at No. 2 Tokushima Plant (test production began in 1968)

Jun 1981

The Company opened a representative office in Los Angeles (which later became an overseas subsidiary as SIC in 1985)

Jul 1984

Production of insoluble sulfurs (=> Inorganic Chemicals) began at Marugame Plant

Sep 1992

The Research Center (now R&D Center) was constructed in Utazu, Kagawa Prefecture

Oct 1995

Ranzan Plant was constructed in Ranzan, Saitama Prefecture

Jul 2006

Shikoku (Shanghai) Co., Ltd. was established in Shanghai

2008

The Company began sales of a roughening agent for PWBs (=> Fine Chemicals), and constructed a new plant for GlicoatSMD at Marugame Plant

Aug 2013

Tokushima Advanced Chemicals Plant-3 (TAP-3) facility was constructed at Tokushima Plant

Sep 2014

Converted Nippon Ryutan Kogyo Co., Ltd., the only carbon disulfide production company in Japan, into a consolidated
subsidiaryApr 2015

Offices were established in Taiwan and Singapore

Oct 2016

Physical Testing Laboratory was constructed at R&D CenterMar 2017

Insoluble sulfur production facilities were enhanced

Apr 2017

Converted Nippon Koki Co., Ltd. into a subsidiaryJul 2021

Tokushima Advanced Chemicals Plant-4 (TAP-4) facility was constructed at Tokushima Plant

35

Ⅴ－４ ． History and Sales Trends
Net Sales

1975

Moved to Tokyo Stock
Exchange Section 1
1962
Listed on Tokyo Stock
Exchange Section 2

2008
2004
1991

1947
Establishment

1984

1972
1970
1968
1964
1957
1947

Microetching solution
for PWBs

Advanced Materials

Glicoat-SMD
Insoluble Sulfur
Exterior Products

Wall Materials
Imidazoles
Chlorinated Isocyanurates
Sodium Sulfate
Carbon Disulfide

36

Chemicals Operations

Chemicals Operations①Inorganic Chemicals

Ⅴ－５ ． Inorganic Chemicals(Millions of yen)

Inorganic
Chemicals[Major products]□ Carbon Disulfide …Essential materials for chemical
fiber rayon□ Insoluble Sulfur…Rubber vulcanization agent□ Sodium Sulfate…Warm bath effect accelerator forbath additives
Synthetic detergent cleaning aid

5,877(23.2％)

FY2022
Consolidated
Cumulative Q2
Net Sales
25,26639

Ⅴ－６ ． Insoluble Sulfur-Product Introduction□
□

□

□

□

□
□

Application: Vulcanizing agent for rubber
Main customers: Domestic and overseas tire manufacturers
The raw material rubber is hard, and it acquires the characteristic to extend and contractby adding sulfur and heating (vulcanizing).
When normal sulfur is used in the production process of radial tires, sulfur blooming(deposition) occurs on the surface of rubber and cause poor adhesion of rubber.
Since insoluble sulfur is dispersed in the material rubber, it can be used to suppress blooming.
For production of insoluble sulfur, polished handling technique for the company foundation
product “carbon disulfide” is required.
High quality is demanded in insoluble sulfur by tire manufacturers.
In March 2017, production facility expansion was completed, and our production capacity wasincreased to 1.3 times.
■ Insoluble Sulfur■ Manufacturing processes for insoluble sulfur (schematic diagram)Heating
450°C

Gaseous sulfur
Slow coolingRapid cooling(using carbon disulfide)
n=400-1,200nNormal sulfur

Insoluble Sulfur

40

Chemical Operations②Organic Chemicals

Ⅴ－７ ． Organic Chemicals(Millions of yen)

[Major products]
Chlorianted Isocyanurates（NEO-CHLOR）… for swimming pool and septic tankdisinfectants□ HIPOLKA… Wastewater/sludge treatment
agent□

FY2022
Consolidated
Cumulative Q2
Net Sales
25,266 Organic
Chemicals
5,991(23.7%)42

Ⅴ－８. Chlorinated Isocyanurates-Product IntroductionApplications: Sanitizing agent for swimming pools and septic tanks, chlorine-based sanitizing agent forspas and home baths□ Main customers: Swimming pool operators, schools, general consumers (U.S.)□ Main component: Chlorinated Isocyanurates□ Compared to other disinfectant agents for swimming pools, “NEO-CHLOR” is characterized by longer
duration in outdoor pools and little quality deterioration even after a long period of storage, as it undergoes
little degradation caused by ultraviolet rays.
□ It delivers strengths in “NAPIX,” an automatic chlorine feeder for swimming pools and business baths.
□ Utilizing the strong oxidation, bleaching, and cleaning power of chlorine, we are developing various fields
of application such as industrial and home sanitary field, ballast water (seawater used as weight on thebottom of the ship) treatment, drinking water application, and sanitation management applications invarious facilities.
□

 NEO-CHLOR product group Image of ballast water sanitization

Filter

Sanitization

Neutralization

Mixing
Cl

O

N

Cl N

O
N Cl

Sea water
injection
BackwashBallast tank
Sea water
discharge

O
ChlorinatedIsocyanurates「NEO-CHLOR MARINE」

43

Chemical Operations③Fine Chemicals

Ⅴ－９. Fine Chemicals(Millions of yen)

FY2022
Consolidated
Cumulative Q2
Net Sales
25,266[Major products]
Fine Chemicals
4,538(18.0%)

Water-soluble rust preventive agent for
printed wiring boards (OSP)□ Advanced & Specialty Chemicals…
Imidazoles (curing agent of epoxy resin)□Glicoat-SMD…

□

THEIC

□

Solder resist

Resin modifier, raw material for drug
… Raw material for heat-resistant wirevarnish45

Ⅴ－１０. OSP: Organic Solderability Preservative-Product Introduction□

□
□

□

□

□

Application: Water-soluble rust preventive agent for printed wiring boards
OSP: Organic Solderability Preservative]
Main customers: Printed wiring board manufacturers all over the world
By forming an organic coating on the copper circuit of the printed wiring board to preventoxidation of the exposed copper circuit, it ensures good soldering performance in theimplementation process, and contributes to reliable electronic component manufacture .
The main component of OSP is imidazole, which has a property to selectively undergo chemical
reaction with copper. Our strength is that we are also an imidazole manufacturer and cansynthesize the main ingredient to suit the required properties of OSP.
While rust preventive agents for printed circuit boards include metal plating in addition to OSP,
the percentage of OSP is still increasing.
Glicoat-SMD has acquired a lot of material designations from major electrical manufacturers, andhas become an industry standard.
By increasing the environmental performance ahead of other companies, we are increasing the
adoption results for automotive electrical components and semiconductor package boards.
 Printed wiring boards going throughGlicoat-SMD treatment tank

 Treatment with Glicoat-SMD (schematic diagram)
Substrate

Solder resist

Glicoat-SMD coating

O2

O2

Coppercircuit

Treatment with Glicoat-SMD (left picture)46Ⅴ－１１. Advanced & Specialty Chemicals-Imidazoles
□
□
□

□

□

□

Application: Curing agent and curing accelerator for epoxy resin*, raw material for drugs
Main customers: Resin material manufacturers and drug manufacturers
Imidazole is used in a wide range of applications, including curing agent for epoxy resin and urethane
resin, raw material of drugs and agricultural chemicals, and raw material of various industrial
chemicals such as rust preventive agents.
The majority of our company sales come from application as an epoxy resin curing agent.
Epoxy resin which used imidazole as a component has optimal properties for electrical and electronic
component applications.
We have a lineup of various imidazoles to support the diverse curing speeds and properties
demanded by the users.
In the fields where competitive products (non -imidazole products) were strong, there isa movement for customers to newly adopt imidazole to improve the product performance.

*Epoxy resin: A collective term for resin-like compounds with epoxy groups that readily react at theends of a molecule, and thermosetting synthetic resins that are formed by polymerizing
the compounds with curing agents. Used in printed circuit boards, paints, etc. in addition to adhesives.
 Electronic part using epoxy resin (example)

Applications of imidazoles from our company

Polyurethane
ポリウレタンDrugs and agricultural chemicals
医農薬
Automobiles
自動車

other
その他

･ Rubber applications･ Adhesive forstructures

Industrial
paint
工業用塗料

N

NH

Imidazole

Electrical and electronic
insulating materials47Ⅴ－１２. Advanced & Specialty Chemicals-Imidazoles
Engine CPU

Car navigation system[Laminated plate, sealing agent,solder resist ink]

[Liquid crystal sealing material]

Engine hood
[CFRP (reinforcedcarbon fiber)]Frame structure[Adhesive forstructures]Electric motor

Tires [Tire grip improving agent][Insulating powder
paint]Air hose[Acrylic rubber agent]48

Ⅴ－１３. Focused Products (Printed Wiring Boards Agents)
GliCAP®
Adhesion improving agent between copper circuit and resin on printed wiring boards.
Conventionally, unevenness was formed on surface by roughening (etching) the copper so thatthe adhesion to resin was improved by “mechanical bonding” (anchor effect).
As the performance of semiconductors is improved, it is becoming more difficult toroughen the copper on package boards implementing high performancesemiconductors, with the copper circuit width decreasing to ultrafine level.
Copper circuits with smooth surface are required for high-frequency server boards for whichfurther acceleration is being demanded to achieve practical application of the 5th generation mobile
communication system (5G), since transmission loss is caused by the unevenness of the copper
surface in the high-frequency range.
GliCAP® has both properties to “strongly bind to resin” and “strongly bind to copper,”and can improve the adhesion “chemically” without roughening the copper surface.
We are including applications other than those in printed circuit boards for GliCAP ® in the
future.










Conventional
method(roughening)
従来方法（粗化）

GliCAP®
(smooth)

Resin

Resin

CopperCopperResinStrong bonding with resin

Strong bonding with copper
Copper49

Ⅴ－１４. Focused Products (Advanced & Specialty Chemicals)











Advanced materials
Advanced materials at our company refer to the products (compounds) that can improvevarious functions by blending them as materials for electronic parts such as semiconductorsthat are used in electronic devices, etc.
Demands for improvement in the properties of resin materials to be used (heat resistance, electricalproperties, etc.) are increasing as electronic devices evolve, and there are increasing
opportunities to consider the functional materials of our company.
The range of examination for the functional materials of our company is quite wide, andexaminations are being made even with carbon fiber reinforced plastics (CFRPs) that areused as structural materials for automobiles and aircrafts with a purpose to improve heat
resistance and strength.
Using the organic synthesis technology cultivated with imidazole and isocyanuric
acid, our company is committed to research and development of new functional material
products.
Construction of a plant equipped for high quality such as
low metal control has been decided in order to produce
state-of-the-art semiconductor process materials.
Its construction began in February 2020, and is scheduled
to be completed in July 2021.

50

Ⅴ－１５. Focused Products (Advanced & Specialty Chemicals)A new isocyanuric acid derivatives
We developed this material by utilizing isocyanuric acid synthesis technology we haveaccumulated.
It has excellent heat resistance, light resistance, and transparency, and is used as a modifier for
sealing agent, etc.












New adhesion improver
A resin modifier that improves adhesion to inorganic materials such as metals through addition to
the resin. Since it delivers adhesion equivalent to the conventional modifiers while having no sulfur
content, it can improve the metal corrosivity, which was a problem with the conventional
product.
We are developing its application in a wide range of resin materials including epoxy systemcommonly used in electronic parts, acrylic system, urethane system and polyimide system.
Benzoxazine
A resin with excellent heat resistance, flame
resistance and electrical properties.
Examination is being made as a semiconductors
sealing agent and carbon fiber reinforced plastics(CFRPs) .

■ Benzoxazine51Ⅴ－１６. Focused Products (Advanced & Specialty Chemicals)

Glycoluril derivatives

A multi-functional resin modifier with transparency and high heat resistance.
It has 4 functional groups and is expected to form hardened materials with a high crosslinking
density.

Thiol groupProducts having a thiol groups (-SH) as a functional group will rapidly cure with epoxy resin at a lowtemperature. Compared to the conventional modifiers, cured resin has excellent heat resistance, moistureresistance, acid resistance, alkali resistance, and hardness, and it can significantly improve theresistance to heat and moisture, which had been a problem.
It has been adopted in the field of electronic materials that continue to advance inperformance and miniaturization.

52

Housing Materials

Operations

Housing Materials Operations④Interior, Exterior Finishes
andPaving Materials

Ⅴ－１７. Interior, Exterior Finishes and Paving Materials[Major products]□□□

Interior materials (silicate walls, natural
material walls)
Plastered wall materials withmoisture control function and harmful
chemical substance and daily odor
adsorption/decomposition function
Exterior materials
Wet exterior material for housing
Paving materials
Natural stone paving materials, recycled
glass paving materials
Rubber chip paving materials(Millions of yen)

FY2022
Consolidated
Cumulative Q2
Net Sales
25,266
Interior, Exterior Finishes
and Paving Materials672(2.7%)

55

Ⅴ－１８. Interior, Exterior Finishes and Paving Materials
Interior materials
The business started with "JULUX," the first industrial product for plastered wall material
in Japan, which was developed for in-house chemical glue CMC application.
It is difficult to handle Juraku wall, traditional Japanese wall, but with our wall materials,
uniform quality can be maintained only by mixing a specified amount of water. Our
plastered wall material is freshly drawing attention because of its property of highadsorption of chemicals that cause sick building syndrome such as formaldehyde as well asodor.
We are deploying the products characterized by high designability to our target market ofcommercial and public space design and custom-designed houses. Colors and expressions
are brought to a space by three-dimensional and various patterns that can be only achieved
with thick coating.
■ Interior materials

56Ⅴ－１９. Interior, Exterior Finishes and Paving MaterialsExterior and paving materialsWe also expand our business to “exterior” to cover the outside of buildings andexterior parts, and “paving” to cover the surfaces of roads and approaches.
Our exterior materials come in wide variations including colors and can create subtle expressions
as they are finished manually to the texture of the surface. As paving materials, we offer
materials such as natural stone, natural sand, and rubber chips.
For exterior materials and paving materials, we create synergistic effects by making use of
our sales channels for exterior products.

■ Paving materials

57

Housing Materials operations⑤Exterior Products

Ⅴ－２０. Exterior Products(Millions of yen)

[Major products]
Home Exterior Products□ Gates, fences, car ports, and decks
First product□Accordion gatesin industry(expansion type gates)
which was□ Art Walldeveloped by(aluminum system fence)
our company

Decorative Exterior Products□ Large gates, fences, pathway shelters,
bicycle parking spaces□
Garbage accumulation storage (first productin industry which was developed by ourcompany)□ Green roof, etc.

Exterior
Products
7,527(29.8％)

FY2022
Consolidated
Cumulative Q2
Net Sales
25,26659

Ⅴ－２１. Home Exterior Products









In 1971, when the motorization was rapidly progressing, we devised an “accordion
gate,” which can be easily opened and closed with an expansion mechanism, and which
can respond to the residential situation with limited space in Japan, and it became thestandard for gates in front of the car shed.
Since then, we have continued to add to the product lineup for general gates, carsheds (car ports), fences, deck materials, terraces, etc.
We also devote our efforts in design, in addition to our focus on functions, and won
the first “G mark” (current Good Design Award) in the exterior industry in 1984.
‘Fun roof,’ our terrace roof with a sample design which harmonizes to the houseusing flat, wood-like ceiling materials received the 2019 Good Design Award.

■ Terrace■ Car port

■ Accordion gate60Ⅴ－２２. Decorative Exterior Products■ Pathway shelter■ Bicycle parking space■ High strength car stops■ Garbage accumulation storage）61

Ⅴ－２３．Efforts in Housing Materials Business

We are adding to the lineup of high-strength exterior products that are resistant to wind and snow
and promoting sales expansion, based on the fact that large-scale disasters such as typhoons havebeen recently happening one after another over the country.
We deploy the strength standards and quality cultivated in the decorative area to all products andare developing products with high quality and strength.

As parts of the lineup of high-strength products, we have commercialized fences for detachedhouses, and independent terraces in addition to the large fences, archways, Large fences, and car
ports.

■ Fences■ Shelter■ Fences■ Car port

■ Terrace62

Long-Term VisionⅤ－２４. Business Reform Policy
Chemicals
Operations

Continue to develop and advance for the sake of the world

Fine

Organic

Inorganic

Desired State
Make use of materials
which are difficult to handle in a recyclingoriented manner and contribute totechnological innovation and environmental
preservation around the world

Strategic Scenario
Accumulate sulfur handling and synthesis
reaction evaluation technologies
Create new value starting from making use of
sulfur and expand the business domain

Deliver cleanliness topeople across the globe by protecting theenvironment and ensuring sanitation

Anticipate customer needs based on social
issues such as the water environment andsanitation and make optimal proposals
concerning sterilization and cleaning with ourunique technologies and services

Contribute to technological advancement
by providing highly functional products
based on unique technologies

Set unique themes by anticipating needs andestablish technologies in cooperation withprosperous customers.
Develop highly functional products based on
accumulated unique technologies

Create global standards with our new
technologies

Set themes with an eye on market trends and develop
products drawing on our strengths
Strive to propose
comprehensive solutions from the point of view ofcustomers64

Ⅴ－２５. Business Reform Policy

Housing
Materials
Operations

Design a new lifestyle in the future and contributeto the community development around the world for everyone’s happinessHousing
Materials

Desired state
Design a new lifestyle in the future
and contribute to the community
development around the world
for everyone’s happiness

Process to provide value
Attract and acquire human resourcesand engineers in Japan and overseas, withoriginal products placing focus on the design
and functionality

Promote alliance and extend operations
globally with our unique product categories65Ⅴ－２６. Companywide Reform Policy Set six companywide reform policies toward realization of the desired state in 2030 and push forward with them mobilizing
group-wide efforts
Desired statein 2030

Toward “one- step-ahead, proposal” company with Dokusouryoku(creativity)
Solve social issues with creative ideas, leading the progress of the world❶ Creation of values
Increase brand value andtake on challenges
for new business Improvement of SHIKOKU QUALITY

Companywide
reformpolicy Establishment of a framework thatmakes it easier for everyone topropose and take on challenges for
new businesses and ideas for suchbusinesses❷ Creation of reserve energy ❸ Creation of operational bases
Improve efficiency to secureresources for reforms

Gain a foothold into the world
and accelerate global businessexpansion

 Elimination of inefficiencies andsimplification and standardization ofoperations

 Formulation of companywide operationalbase strategy

 Efficiency improvement by making useof technology such as IT

 Optimization of domestic production,
development and sales operational bases

 Optimal allocation of personnel andwork style reforms

 Optimization of overseas production,
development and sales operational bases❹ Creation of organizations❺ Creation of company climate ❻ Creation of human resources

Establish a group governancestructure to realize the vision

Foster company climate whichembraces diversity andencourages challenges

Build a framework to encourage
individuals to take on challenges
and evaluate individuals fairly

 Spread of “proposal-based styles” among
employees

 Establishment of a framework forrecruitment which attracts desired humanresources Building of an optimal group
governance structure Establishment of a group governancestructure in keeping with the businessexpansion overseas

 Fostering of company climate to develop“proposal-based styles”
 Establishment of a working environment
which accommodates diverse work styles

 Creation of opportunities for growth where
each individual is respected Revision to and strengthening ofmanagement of the evaluation system66

Ⅴ－２７. Yonpou Yoshi – Contributions to Stakeholders –Customers“One-step-ahead” values
We will provide new values
with our unique, state-ofthe-art products andservices.

Employees

Community

Challenges and growth

A better tomorrow

We will support a fulfilling
life with a sense of real
growth through various
ways of working andthrough taking onchallenges.

We will contribute to theresolution of social issues
and to realize a prosperous
living environment.

Shikoku Chemicals
Group

Shareholders
Shareholders return
policyWe will aim to achievea total return ratio of 50%
on a consolidated basis.

67

Contact Information
Corporate Planning Department,
SHIKOKU CHEMICALS CORPORATION

TEL：+81-(0)877-21-4119

FAX：+81-(0)877-22-0411
www.shikoku.co.jp[Note regarding this document]
Forward-looking statements or projections mentioned in this document, including earnings are based on
currently available information and actual results may differ from the projection due to various factors.
Further, the purpose of this material is to provide information to the investors, and not to serve as arecommendation to buy or to sell. Please note that Shikoku Chemical Corporation will not be responsible forthe consequences of investments etc.