IR Briefing for the Fiscal Year Ended
March 31, 2019 (FY03/19)
Progress During Year 2 of NC2020,
Our Medium-Term Management Plan

Inabata & Co., Ltd.
Katsutaro Inabata, President and Representative Director

June 4, 20191

Contents

Page
3

Company Overview

5

New Challenge 2020 (NC2020),
Our Medium-Term Management Plan

8

Progress in Year 2 of NC2020

15

Outlook for Year 3 of NC2020

21

Returning Profits to Shareholders

24

Reference Materials
2Company Overview

About Inabata:
1. Founded in 1890

Inabata Dye Shop (Nishijin, Kyoto)

The Company was founded in Kyoto in 1890 as an importer ofdyestuffs. The business was later expanded with a focus on
chemicals.

2. A globally expanding, multifaceted
trading company
The company operates at 60 locations across 17 countries. Business
functions include market development, manufacturing and processing,logistics, and finance. Our plans and proposals are based on
specialized expertise and knowledge of products and markets.
3Company Overview

3. Four business segments
We operate in four segments: Information & Electronics, Chemicals,Life Industry, and Plastics. The Housing & Eco Materials segment
was combined with the Chemicals segment in April 2019.
Housing & Eco⇒ Chemicals
Materials
Life Industry

4%

6%
Chemicals

9%
FY03/19 Plastics
Net sales: 47%¥634.7 billion
Information &Electronics

34%

4 New Challenge 2020 (NC2020),
Our Medium-Term Management Plan

5

Quantitative Targets of NC2020

NC2020, a four-year medium-term
management plan ending in FY03/21
Quantitative targets

FY03/21Net sales¥730.0 billion

Operating profit¥15.5 billion

Ordinary profit¥16.0 billion

Profit attributable toowners of parent¥12.0 billion

Net D/E ratio

0.4x or less

Assumed exchange rate

Note: Net D/E ratio = (interest-bearing debt – cash and deposits) / equity capital

USD1 = JPY110

6

Key
Initiatives for NC2020
medium-term
management plan

ＮＣ2０2０

重点施策

1

Further expansion and deeper involvement in overseas businesses

2

Focus on markets with growth potential and sectors that have yet to
be developed

・Continue to focus on the automotive, life science and medical, and environment and energy sectors
・Launch new initiatives in the food business, including agriculture

3

Further enhancement of information infrastructure essential for global
management

・Prioritize infrastructure that is best for the entire Group・Enhance and standardize overseas business management

4

More proactive investment to expand the trading business・Make minority investments, primarily to expand the trading business・Consider majority investments, but with limited risk and scale

5

Continual review of assets and enhancement of financial standing

6

Establishment of global human resource management7 Progress in Year 2 of NC2020

8

Overview of Year 2 of NC2020 (FY03/19)
 All profit figures met Year 2 targets.
 In two key segments (Information & Electronics and Plastics), operating
profit levels met final-year NC2020 targets two years early.
 Net sales were below target, mainly due to a revision of European
business and the decision to forego low-profit transactions.
(Billions of yen)
FY03/18 actual

FY03/19 actual(A)

NC2020 target
for
FY03/19 (B)

621.1

634.7

660.0

-25.2

96.2%

Operating profit

5.9

14.0

13.5

+0.5

103.9%

Ordinary profit

6.3

14.3

14.0

+0.3

102.2%

Profit attributable toowners of parent

6.7

12.8

10.5

+2.3

122.8%

40.1%

44.5%

－

－

－

Net sales

Equity ratio
Exchange rate

Difference(A) – (B)% achievement(A)/(B)

USD1=JPY110.85 USD1=JPY110.92 USD1=JPY110.00

9

NC2020 Progress by Segment: (1) Information & Electronics
NC2020(Billions of yen)(Billions of yen)

300

Sales

217.9

261.0

NC2020 target
for FY03/19 (B)% achievement
FY03/21 goalin Year 2 (A)/(B)

Sales

217.9

235.0

92.7%

261.0

Operating profit

4.81

4.00

120.5%

4.40

235.0

200

FY03/19
actual (A)Main reasons for differences between actual and target figures
100

FY03/19(Actual)

FY03/21(Goal)

Operating profit

4.81

4.0

4.00

4.40

2.0

0.0
FY03/19 FY03/19(Actual) (Target)

FY03/21(Goal)

Sales

6.0

FY03/19(Target)Operatingprofit0

Achieved final-year target (¥4.4 billion) two years ahead of time
• Increased sales of polarizing films in China (+)• Favorable sales of polarizing film materials (+)• Increase in sales of new products and materials related to officeautomation (OA) (+)• Expansion of liquid crystal business (+)• Discontinuation of solar cell transactions at a European subsidiary (-)• Decision to forego low-profit transactions related to OA (-)

Profit drivers

Growth drivers• Parts and materials for liquid crystal
displays• Parts and materials for photocopiersand printers• Business related to lithium-ion
batteries• Development of business involving
the storing, releasing, and saving ofenergy, in addition to energy
generation10

NC2020 Progress by Segment: (2) Chemicals
NC2020(Billions of yen)(Billions of yen)
120
Sales

95.7
80

77.5

85.7

NC2020 target % achievementfor FY03/19 (B) in Year 2 (A)/(B)

FY03/21 goal

Sales

77.5

85.7

90.5%

95.7

Operating profit

1.42

1.70

83.8%

2.20

34.7
24.1

29.7

Main reasons for differences between actual and target figures
56.0

61.0

FY03/19(Actual)

FY03/19(Target)FY03/21(Goal)

Operating profit

2.20

0

2.5
2.0

1.70

• Review of transactions at a European subsidiary (former Chemicals)(-)• Lack of growth in sales overseas and of housing construction materials(former Housing & Eco Materials)(-)

Note: In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals segment.

0.40

Profit drivers

1.0

1.37

1.30

FY03/19(Actual)

FY03/19(Target)0.5

Former Chemicals segment exceeded target for FY03/19 (¥1.3 billion)• Favorable sales of paints, inks, and paper-related materials (+)• Sluggish sales and higher expenses (former Housing & Eco Materials)(-)

0.60

1.42
0.04

Sales

53.4

Operatingprofit40

1.5

FY03/19
actual (A)(Including the Former
Housing & Eco Materials)

1.60

0.0
FY03/21(Goal)• Materials for automotive parts• Coatings (paints and inks)• Materials for large housing andhousing equipment manufacturers

Growth drivers• Heat-dissipating parts (Sekisui
Polymatech Co., Ltd.))• New chemical products• Non-housing business (urethanematerials, chips, others)

11

NC2020 Progress by Segment: (3) Life Industry
NC2020(Billions of yen)(Billions of yen)
80
Sales

65.0

54.0
40

FY03/19
actual (A)NC2020 target % achievementfor FY03/19 (B) in Year 2 (A)/(B)

FY03/21 goal

Sales

39.0

54.0

72.3%

65.0

Operating profit

1.31

2.30

57.0%

2.80

39.0

Main reasons for differences between actual and target figures
Operatingprofit0
FY03/19(Actual)

FY03/19(Target)FY03/21(Goal)

Sales

4.0
Operating profit• Sluggish sales of highly profitable pharmaceutical ingredients (-)• Upfront expenses for new food-related business (-)• Suspension of planned food business at a European subsidiary (-)• Delays in new food-related business (-)

2.80
2.30

Profit drivers

2.0• Pharmaceutical ingredients (newdrugs)• Materials for home products

1.31

0.0
FY03/19(Actual)

FY03/19(Target)FY03/21(Goal)

Growth drivers• Areas of advanced medicine, such as
regenerative medicine• Agricultural products, particularly
blueberries• Develop new business models(agriculture and food processing)12

NC2020 Progress by Segment: (4) Plastics
NC2020 target % achievementfor FY03/19 (B) in Year 2 (A)/(B)(Billions of yen)

Sales

Sales

300.0

285.0

105.3%

308.0

Operating profit

6.34

5.30

119.7%

5.90(Billions of yen)
400

300.0

FY03/19
actual (A)NC2020FY03/21 goal

308.0
285.0

Main reasons for differences between actual and target figures

0

Achieved final-year target (¥5.9 billion) two years ahead of time
• Sales up (+)• Higher profit from newly consolidated Indian subsidiary (+)• Despite improvements, Mexican compound facility struggling on the profit
front (-)

FY03/19(Actual)

FY03/19(Target)FY03/21(Goal)

Operating profit

200

8.0

• Sales generally favorable for automotive and other plastics

6.34
5.90

Sales

Operating profit

5.30

Profit drivers

4.0

0.0
FY03/19(Actual)

FY03/19(Target)FY03/21(Goal)• Plastics for automobiles, OA
equipment, and consumer
electronics• Film-related products, including
manufacturing and processing

Growth drivers• Sales to global customers• Further expansion of overseas
business (by region and field)

13

NC2020 Investment Status

More proactive investment to expand the trading business(Billions of yen)
FY03/18 actual

FY03/19 actual

NC2020 period(FY03/18 onward)

Growth investment

3.86

2.91

6.77

Fixed investment

1.59

2.03

3.62

Total

5.45

4.94

10.39

 Major growth investments in FY03/19• Information & Electronics segment:¥0.41 billion for leased equipment (LCD-related)¥0.30 billon in investment (OA-related)
Plastics segment:¥0.36 billion for facilities (compound-related)¥0.20 billion for facilities (inflation-molding-related)14 Outlook for Year 3 of NC2020

15

Operating Environment: Information & Electronics (FPD Market)
 As TVs continue to grow larger, demand for larger LCD panel areas is projected to continue
growing gradually.
Reference: Projected increase in the area of large LCD panels

2017

2018

2019

2020

2021

5%

3%

3%

2%

2%

YoY increase (%)

44.5 inches → 45.9 inches

Average TV size: In the market for small and medium-sized displays, the trend toward organic
electroluminescence displays (OLEDs) for high-end smartphones is expected to continue,
but this segment accounts for only a limited share of the overall FPD market.
Reference: Projected increase in
the area of FPDs
3.5%

4%

6%

7.5%

97%

96.5%

96%

94%

92.5%

2017

2018

2019

2020

2021

3%

Area
LCDs

OLEDs

Note: FPD area projections are the total for small/medium-sized and large displays.

16

Operating Environment: Plastics
 Affected by trade friction between the US and China, customers have begun shifting theirfactories (assembly plants) from China to Southeast Asia.

 Crude oil prices and domestic naphtha prices, two bellwethers for plastics prices, have been
trending downward since late 2018.

(USD/barrel)

80.00

WTI crude oil prices(JPY/kl)

Domestic naphtha prices

60,00060.00
40,000

40.00
20.00

20,00017

Outlook for Year 3 of NC2020 (Comparison with Targets)(Billions of yen)
FY03/19 actual

FY03/20 forecast (A)NC2020 target for
FY03/20 (B)Difference(A)-(B)

634.7

670.0

700.0

-30.0

Operating profit

14.0

14.5

14.5

0.0

Ordinary profit

14.3

14.5

15.0

-0.5

Profit attributable toowners of parent

12.8

11.0

11.0

0.0

44.5%

－

－

－

USD1=JPY110.92

USD1=JPY110.00

USD1=JPY110.00

Net sales

Equity ratio
Exchange rate18

NC2020 Differences by Segment in Year 3 Outlook and Targets

Operating profit We expect progress in the Plastics segment to compensate for delaysin the Life Industry and former Housing & Eco Materials segments.

(Billions of yen)

Information & Electronics
Life Industry
15.0

14.03

10.0

1.42
5.0

Chemicals
Plastics

Housing & Eco Materials
Other

14.50
0.10

0.13

6.34

6.70

1.31
0.04
1.37

1.80

1.70

14.50

0.20

5.60

2.50
0.50
1.50

*

2.00

Suspension of European
solar cell transactions (-)
LCD-related growth (+)

4.81

4.20

FY03/19
actualFY03/20
forecast

4.20

0.0
FY03/20
target under* In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals segment. In FY03/20, the former NC2020
Chemicals business accounts for ¥1.55 billion and the former Housing & Eco Materials segment for ¥0.15 billion.

19

NC2020 Differences by Segment in Year 3 Outlook and Targets

Net sales
Information & Electronics
Life Industry(Billions of yen)

700

634.7

Chemicals
Plastics

670.0
0.1

Housing & Eco Materials
Other 700.0

0.3

0.2

600
500

308.0

300.0

400
300

77.5

299.0

81.8 *

59.0
32.7
59.0

217.9

232.0

250.0

FY03/19
actualFY03/20
forecast

FY03/20
target underNC2020

39.0
24.1
53.4

48.0
Combination with Chemicals

91.7

200
100
0
* In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals segment. In FY03/20,
performance in the Chemicals segment comprises ¥56.8 billion from the former Chemicals segment and ¥25.0 billion
from the former Housing & Eco Materials segment.

20 Returning Profits to Shareholders

21

Returning Profits to Shareholders

Policy on returning profits to shareholders
We target a total return ratio* of approx. 30–35%.
Dividends per share: FY03/19 results
Annual dividend: ¥48 (interim: ¥20, year-end: ¥28)
Value of treasury shares acquired: ¥936 million (600,000 shares)
Total return ratio: 30.0% (dividend payout ratio: 22.7%)
 FY03/20 (forecast)
Annual dividend: ¥48 (interim: ¥20, year-end: ¥28)

* Total return ratio (%) = (dividend amount + amount of treasury shares acquired) / consolidated net income x 100

22

Returning Profits to Shareholders

Annual dividends per share and indicators of shareholder return
(Yen)
50

Dividend

Dividend payout ratio

40

30

30

21

33

36

Total return ratio

40
34.8%

48

48

30.0%

Approx.
30–35%
target

40
46.5%

31.1%

31.1%

24.1%

23.7%

(604)

(707)

(891)

(679)

(936)

36.4%

23

20

25.6%

22.7%

26.4%

21.5%

22.1%

(355)

(439)

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20(actual)(actual)(actual)(actual)(actual)(actual)(actual)(actual)(forecast)

21.9%

60.0%

40.0%

20.0%

10

0

0.0%

Note: The figures in parentheses at the bottom of the bar chart show the amount of treasury stock acquired (in millions of yen) during the period.

23 Reference Materials

24

Content of Reference Materials

Page
26
27
28
30
32
33
34
38
40
41
42
43
44
47

Positioning of NC2020, Our Medium-Term Management Plan
IK Vision 2030, Our Long-Term Vision
Operating Environment and Business Strategies under NC2020
Sales and Operating Profit by Segment under NC2020
Net Sales and Operating Profit
Overseas Sales and Operating Profit
Focus on Markets with Growth Potential and Sectors That Have Yet to
Be Developed
Further Expansion and Deeper Involvement in Overseas Businesses
Reinforcement of Governance
Establishment of Global Human Resource Management
Earnings per Share
Annual Production Capacity for Plastic Compounds
Relationship with European Subsidiary
Company Overview
25

(Reference) Positioning of NC2020,
Our Medium-Term Management PlanIK Vision 2030 was drawn up in May 2017, prior to NC2020.
MissionPeople come first, based on the spirit of "love ( ai )" and " respect ( kei )," andtogether we strive towards contributing to the development of society.

VisionTo continually evolve, serving clients and society, through global
operations and meeting their changing needs.

IK values

IK Values
Ethics, aspiration, organization, role, symbiosis

IK Vision 2030
IK Vision 2030 (envisioning ourselves 10 to 15 years in the future)

Medium-term management plan
NC2020 (targets for FY03/21)

26

(Reference) IK Vision 2030, Our Long-Term VisionInabata’s aspirations for itself in around 10–15 years (2025–2030)
Function: Further enhancing multifaceted capabilities (such as
manufacturing, logistics, and finance) in addition to trading

Scale:

Reach consolidated net sales of ¥1 trillion at an early stage

Overseas business: 70% or more
Portfolio: At least one-third of business from segments other thanInformation & Electronics and Plastics

Formulated May 201727

(Reference) Business Strategies under NC2020(1) Operating Environment
Segment

Operating environment

Information &Electronics• The liquid crystal business is poised to increase slightly in the medium term; panel display production
continues shifting to China.
• The photocopier and printer industries are mature, but room for growth exists with respect to industrial
applications.
• In solar power generation, expectations for Japan are low, but growth persists overseas.

Chemicals• The existing chemicals market in Japan has changed little, and the market for products handled by
Inabata is limited.
• Foreign chemical manufacturers are tending to have trading companies handle their marketing inJapan.

Life Industry• In pharmaceuticals, markets for new drugs and regenerative medicine have been growing at amoderate pace.
• In household products, the Japanese market is saturated while markets in emerging economies are
expanding.
• In food products, industrialized nations are becoming more health- and safety-conscious, while foodconsumption is increasing in emerging economies.

Plastics• Customers and suppliers are becoming increasingly international.
• Companies are opting to channel business to trading companies that can operate globally.

Housing &Eco Materials• The number of housing starts is expected to keep decreasing.
• The market for renovations is expanding.
• Increasingly, major homebuilders and housing equipment manufacturers are entering overseas
markets.

Formulated May 201728

(Reference) Business Strategies under NC2020(2) Portfolio Policy
Segment

Operating environment

Information &Electronics• We will work to maintain steady profits in the liquid display business, which will remain a mainstay
business while the medium-term plan is in effect.
• We will work to expand new businesses, due to expectations of slowing growth in our current mainstay
businesses over the long term.

Chemicals• We aim to achieve deeper penetration in the automotive parts industry.
• We will expand the coating business with a focus on the automotive industry.
• We will enhance initiatives with foreign chemical manufacturers.

Life Industry• We will develop promising opportunities in the new drugs and raw materials businesses, and focus on
leading-edge medical fields.
• In household and food products, we will work to increase sales, driven by overseas and otherexpanding markets.
• In food products, we will continue expanding into the production and processing businesses.

Plastics• We aim to expand sales of plastics, leveraging the plastic compounds business.
• We will focus on the automotive sector, particularly the North American market.

Housing &Eco Materials• We will expand our sales to overseas markets.
• We will focus on non-housing fields of business.

Formulated May 201729

(Reference) Sales by Segment under NC2020(Billions of yen)

Information & Electronics

ChemicalsLife Industry

Plastics

1,200

Housing & Eco Materials

Other

IK Vision 2030

(IK Vision 2030)

1,000.0

1,000

New Challenge 2016

NC2020

800

600

400

200

730.0

0.3
670.0
634.7
621.1
0.2
586.6
577.0
572.1
0.1 24.1 0.1
25.1
0.1
308.0
24.2 0.5 24.8 0.1 25.0
308.0
300.0
286.9
251.8
251.1
250.4
65.0
48.0
95.7
39.0
40.4
42.3
41.0
34.6
81.8
48.0
53.4
51.5
52.8
48.1

209.3

211.6

221.0

214.9

217.9

232.0

261.0

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21(actual)(actual)(actual)(actual)(actual)(forecast) (medium-term target) (around 2025–2030)

0Note: In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals
segment.

Future30

(Reference) Operating Profit by Segment under NC2020(Billions of yen)

Information & Electronics

ChemicalsLife Industry

Plastics

Housing & Eco Materials

Other

27.5

230～240

IK Vision 2030

(IK Vision 2030)
22.5

New Challenge 2016

NC2020

17.5

14.0
14.5
0.10
0.10
0.04

12.6

12.5

7.5

2.5

-2.5

Operatingprofitmargin

0.14
11.3
10.7
0.26
0.14
6.34
0.28 0.15 0.42
5.9
5.39
4.43
3.73
0.12
0.15
1.31
1.03
1.82
1.52
1.37
1.07
5.54
1.00
1.01

15.5

0.20

5.90
6.70
2.80
1.80
1.70

2.20

4.81

4.20

4.40
FY03/21

4.48

3.83

3.99

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20(actual)(actual)(actual)(actual)(actual)(forecast) (medium-term target) (around 2025–2030)

1.9%

2.0%

2.2%

1. 0%

2.2%

1.92
0.25 (2.04)

Note: In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals
segment.

2.2%

Future2.1%

31

(Reference) Net Sales and Operating Profit

1,200(Net sales: Billions of yen)

(Operating profit: Billions of yen)

35

(IK Vision 2030)
1,000.0 30

1,000

Net sales

Operating profit(Mediumterm target)

800

25

730.0

634.7
621.1

600
500.0
442.7

469.0

479.9

400
7.6

7.9

15.5

572.1

15

14.0 14.5

11.3

10.9
288.9

20

577.0 586.6

561.1
466.0

670.0

12.6

10

10.7

7.6

7.7
7.6

200

5

5.9

2.6

3.5

0

0

NC2020(Around 2025–2030)

32

(Reference) Overseas Sales and Operating Profit(Net sales: Billions of yen)

(Operating profit: Billions of yen)

18

750

Net sales

Operating profit(IK Vision 2030)

14
500

10
7.3
6.1

250

3.3
1.2

72.4

1.6

3.6

4.2

3.5

2.3

4.9
3.7

312.9 327.7

1.6 2.0

110.2

150.5

170.9

185.0

159.3

152.2

6

3.9

340.6

305.4
284.3

84.1

5.8

5.1

186.5

186.7

2

294.0

211.6

(0.7)

-2

0

JPY per USD

119.9

107.1

104.2

118.0

119.1

114.1

91.0

92.1

81.4

77.7

79.8

100.1

109.7

120.1 108.3

110.8

110.9

(Around 2025–2030)

NC202033

【重点施策
Focus
on markets
with growth
sectors and(Reference)
Focus
on Markets
withpotential
Growthand
Potentialthat have yet to be developed】

Sectors That Have Yet to Be Developed

Principal initiatives in the automotive field
Plastics:

We are working to increase sales of plastics to global customers, and are also expanding incountry sales. We expect demand in China to begin decelerating in autumn. While sales toJapanese OEM companies is down slightly, our business is favorable.
Chemicals: We are expanding sales of parts and paint materials, and are focusing on sales of heat-dissipating
materials and parts.
Information & Electronics: Potential exists to sell decorative films.
(Billions of yen)

100

Sales from principal business in the automotive field (simple totals)

75

14.8
13.3
11.4
Chemicals, Other

10.5

50

Plastics

8.5
25

46.5

54.2

61.0

65.9

36.0

0
FY03/17(actual)

FY03/18(actual)

FY03/19(actual)

FY03/20(forecast)

FY03/21(medium-term target)

Notes: Results for past fiscal years include certain amounts that have been updated.
Figures from FY03/20 have been adjusted from initial forecasts, taking the most recent conditions into consideration.

34

【重点施策
Focus
on markets
with growth
sectors and(Reference)
Focus
on Markets
withpotential
Growthand
Potentialthat have yet to be developed】

Sectors That Have Yet to Be Developed

Principal initiatives in the environment and energy fields
Information & Electronics: Performance in solar cells is down sharply due to the suspension of business at
our European subsidiary. Sales of lithium-ion battery materials to manufacturers
in China and South Korea are increasing.
Housing & Eco Materials: We will focus on sales of wood chips and particle board.

Sales from principal business in theenvironment and energy fields (simple totals)(Billions of yen)

20

2.3
2.6
10

2.3

2.4

Housing & Eco Materials
Information & Electronics

13.2
2.1
8.0

10.1
7.8

4.5
0
FY03/17(actual)

FY03/18(actual)

FY03/19(actual)

FY03/20(forecast)

FY03/21(medium-term target)

Notes: Results for past fiscal years include certain amounts that have been updated.
Figures from FY03/20 have been adjusted from initial forecasts, taking the most recent conditions into consideration.

35

【重点施策
Focus
on markets
with growth
sectors and(Reference)
Focus
on Markets
withpotential
Growthand
Potentialthat have yet to be developed】

Sectors That Have Yet to Be Developed

Principal initiatives in the life science and medical fields
Life Industry: We are focusing on sales of pharmaceutical and cosmetics ingredients. Sales of antibiotic
substances are down. In the field of advanced medicine, we are promoting sales centered on
culture media. In household products, we are concentrating on overseas sales of Japanesemade products.
Plastics:
We aim to sell plastics to medical device manufacturers (for use in syringes and otherproducts).
(Billions of yen)

Sales from principal business in the life scienceand medical fields (simple totals)

50

3.5
25

2.1

2.0

3.0
Plastics, Other

2.5

Life Industry
25.7

28.3

23.1

27.1

31.2

0
FY03/17(actual)

FY03/18(actual)

FY03/19(actual)

FY03/20(forecast)

FY03/21(medium-term target)

Notes: Results for past fiscal years include certain amounts that have been updated.
Figures from FY03/20 have been adjusted from initial forecasts, taking the most recent conditions into consideration.

36

【重点施策
Focus
on markets
with growth
sectors and(Reference)
Focus
on Markets
withpotential
Growthand
Potentialthat have yet to be developed】

Sectors That Have Yet to Be Developed

Principal initiatives in the agricultural field
Life Industry: We are promoting the crop cultivation business in Hokkaido, centering on blueberries andgarlic. We are building processing plants and working to sell processed items.
Plastics:
We are concentrating on sales of films for agricultural use (for anti-fogging, for example).
Information & Electronics: Sales of animal feed (imported grass) are increasing.
(Billions of yen)

6

Sales from principal business in the agricultural field (simple totals)

4
Plastics, Other
3.5

Life Industry

2

0

2.1

2.0

0.2

0.3

FY03/17(actual)

2.5

3.0

0.6

0.0

0.0

FY03/18

FY03/19

FY03/20(actual)(actual)(forecast)

FY03/21(medium-term target)

Notes: Results for past fiscal years include certain amounts that have been updated. Figures indicated above exclude sales of refrigerated andfrozen products. Figures from FY03/20 have been adjusted from initial forecasts, taking the most recent conditions into consideration.

37

(Reference) Further Expansion and Deeper Involvement inOverseas Businesses
Progress at our compounds plant(sales to automakers in Mexico)
In FY03/19, operations were suspended at a major customer’s factory (water
damage). Partly for this reason, sales volume failed to increase.
We anticipate a major increase in sales volume in FY03/20, with the startup
of a major project in January 2019.
FY03/18
FY03/19
FY03/20

Sales of 6,100 tonnes
Sales of 6,700 tonnes
Forecast sales of 13,000 tonnes

Company: IK Plastic Compound Mexico, S.A. de C.V.
Production capacity: 15,000 tonnes/year
Location: Silao, Guanajuato, central Mexico
Commenced operations in November 2013, with mass
production starting in September 201438

(Reference) Further Expansion and Deeper Involvement inOverseas Businesses
Progress at our compounds plant(sales to manufacturers of OA equipment in the Philippines)
In FY03/19, sales volume grew sharply thanks to favorable production levels
at Japanese manufacturers of OA equipment, our principal customers.
We aim to acquire new business and so expect sales volume to continue
growing in FY03/20.
FY03/18
FY03/19
FY03/20

Sales of 7,200 tonnes
Sales of 10,200 tonnes
Forecast sales of 11,000 tonnes
Company: IK PLASTIC COMPOUND PHILS. INC.
Production capacity: 10,800 tonnes/year
Location: Laguna Province, Philippines
Commenced business and production in July 201439

(Reference) Reinforcement of Governance

Board of Directors evaluation
Objective: To enhance corporate value by increasing the effectiveness andtransparency of the Board of Directors
FY03/18
Conducted third-party evaluation⇒ In May 2018, disclosed summary of evaluation and measures going forward
FY03/19
Performed a self-evaluation of all directors and Audit & Supervisory Board
members using a survey format⇒ In April 2019, disclosed summary of evaluation and measures going forward

FY03/20
Plan to perform a self-evaluation of all directors and Audit & Supervisory Board
members using a survey format
40

(Reference) Establishment of Global
Human Resource Management

Expanding human resources and accelerating training efforts toenhance quality✓ We conducted workshops at 31 locations in 13 countries to promote “IK Values.”
The workshops were attended by 740 local staff members.
✓ We continued to hold the Global Staff Meeting.
The meeting was held in Tokyo in May 2019 (attended by 12 local staff members).
Number of overseas personnel in the trading division and(People) people on overseas assignment
1,000
Trading division
People on overseas assignment

591

628

663

693

737

764

500

90
0

90

93

95

94

90
Inabata Philippines employees who attended the workshop

Note: The number of people on overseas assignment is as of the first day of the following month.

41

(Reference) Earnings per Share

(Yen)
240

211.36200

181.83160

151.91137.01120

97.45

156.25137.20109.92104.29

80

40

0

(355)

(439)

FY03/12

FY03/13（actual）（actual）

(604)

(707)

FY03/14

FY03/15

FY03/16（actual）（actual）（actual）

(891)

(679)

(936)

FY03/17

FY03/'18（actual）（actual）

FY03/19

FY03/20（actual）（forecast）

Note: Figures in parentheses at the bottom of the bar graph indicate own-share purchases conducted during
the year (in millions of yen).

42

(Reference) Annual Production Capacity for Plastic Compounds
China
Plastics Compound
Business Office (Japan)(2 sites)
52,200 MT/Y•••

VietnamShares information
Coordinates facilities andraw materials
Reduces costs bypurchasing in bulk

36,000 MT/Y

ThailandPhilippines

38,400 MT/Y

10,800 MT/Y
Building and dismantling plants in line with customers’
relocation strategies
Providing consistent service quality everywhere

Malaysia
27,600 MT/Y

Indonesia
37,200 MT/Y

217,200 MT/Y: 8 sites in 7 countries (As of March 31, 2019)

Mexico15,000 MT/Y43

(Reference) Q2 of FY03/18
Relationship with European Subsidiary (Background)

Our European subsidiary (IKEG) was found to have made an unauthorized sale ofsolar cell modules in inventory (to Company X).



To check the facts of the case and confirm fiscal period closing results, reportingfor Q1 of FY03/18 was delayed (announcement of results delayed from August 14,
2017 to September 13, 2017).



A internal investigative committee, including third-party members, was established.
The committee thoroughly clarified the facts, analyzed the source of the problem
and submitted a report to Inabata that included recommendations on preventing
recurrence.



Upon receiving the investigation report, we set up a recurrence-prevention teamand formulated preventive measures.
These recurrence prevention measures were resolved by the Board of Directors(TSE timely disclosure: September 28, 2017)

Promote awareness of recurrence prevention
measures throughout the Group
44

(Reference) Relationship with European Subsidiary (Analysis ofResults and Measures to Prevent Recurrence) Background of the current issue•

Europe had been growing more slowly than other regions, and was experiencing
pressure to quickly expand its business.

•

The European subsidiary was established as a trading company for Europe only
recently (December 2013), and personnel training and the organizational structure
were insufficient.

•

As the Company’s overseas business was expanding rapidly, we did not have inplace an adequate structure for managing all overseas Group companies.
Recurrence prevention measures
1. Measures related to purchasing and inventory
management

1-1 Enhancement of physical stocktaking, book inventories
1-2 Establishment of decision-making standards for large-scale purchases
2. Measures related to operations management
2-1 Ensuring thorough awareness of operational rules at overseas
subsidiaries
2-2 Thorough training related to purchasing and inventory management,
credit management, and operations management
3. Measures related to smooth communication between sales departments and administrative departments
4. Measures to enhance Group company administrative
4-1 Configuration of new information systems
functions
4-2 Enhancement of the checking function of the Company’s administrative
division45

(Reference) Relationship with European Subsidiary(Impact on Consolidated Operating Performance) Impact on consolidated operating performance in 1H FY03/18• Increase in cost of goods sold due to unclear
differences in inventories of solar cell modules¥12 million• Posting of an allowance for doubtful accounts
vis a vis the receivable from the business partner(Company X) in relation to the solar cells

Approx. ¥3.1 billion• Posting of a loss on valuation of investment
securities as an extraordinary loss

¥0.25 billion

Note: In Q4 of FY03/18, the Company posted additional allowances, bringing the total allowance for doubtful
accounts related to the European subsidiary to ¥6.65 billion (¥5.90 billion in Information & Electronics,¥0.75 billion in Chemicals).
46

(Reference) Company Overview
Name

Inabata & Co., Ltd.

Founded

October 1, 1890

Incorporated

June 10, 1918

Capital stock¥9,364 million

Representative

Head offices

Employees

Katsutaro Inabata, president andCEOOsaka Head Office (1-15-14
Minami-semba, Chuo-ku, Osaka)
Tokyo Head Office (2-8-2
Nihonbashi-honcho, Chuo-ku,
Tokyo)
632 (4,184 on consolidated basis)

Issuable shares

200,000,000

Shares issued
and outstanding

63,499,227

Fiscal year

April 1 to March 31

Exchange listing

Tokyo Stock Exchange

Ticker

8098

Trading unit

100 shares

Shareholders
7,506

Major
shareholders(top three andpercentage
ownership)

Sumitomo Chemical Co., Ltd.
(22.8%)The Master Trust Bank of Japan,
Ltd. (Trust Account) (4.8%)
Japan Trustee Services Bank,
Ltd. (Trust Account) (4.6%)

The Company owns 2,710,182 shares of treasury stock. This
shareholding has not been included in the calculation of theshareholding ratio. However, 100,000 shares of the Company
held by Trust & Custody Services Bank, Ltd. (Trust account E) asa trust property under the Board Benefit Trust (BBT) system is
excluded from the number of the treasury shares, and hence, is
included in the calculation of the ratio.

47 IR-related inquiries:

IR Department, Financial Management Office
Inabata & Co., Ltd.
Phone: +81-50-3684-4007 Fax: +81-3-3639-6410
E-mail: inabata-ir@inabata.com

Cautionary note regarding forward-looking statements
The data and future predictions contained in this document are forward-looking statements, based on
information available and judgments applicable at the time of the document’s release. The data andforecasts contained herein may include elements that are subject to change. This document and its
contents are no guarantee of future performance.
Presentation of numerical figures
Figures in this document presented in millions and billions of yen have been rounded down.
Consequently, certain discrepancies may exist between individual values and total values, or values
showing changes between sets of data.

48