IR Briefing for 2Q
Fiscal Year ending March 2018

December 2017
Inabata & Co., Ltd.
1

Contents
P.3-

Summary of the Company

P.9-

Summary of Medium-Term Management Plan
New Challenge 2016

P.15- New Medium-Term Management Plan
P.30- Corporate Governance
P.35- Returning Profits to Shareholders

P.38- Summary of Financial Results – 2Q FY3/2018
P.45- Reference* In this document, Net income = Net income attributable to owners of parent

2
Copyright © INABATA＆CO., LTD. 2017

Summary of the Company
About Inabata:
1. Founded in 1890
Founded in Kyoto in 1890 as Inabata Senryoten – animporter of dyestuffs
The business was later expanded, with the focus on
chemicals

Inabata Dye Shop
(Nishijin, Kyoto)

Asia

EuropeThe Americas
China

2. A globally expanding, multi-faceted
trading company

Japan

India

SE Asia

Around 60 locations deployed across 18 countries
Business functions include market development; manufacturing &processing; logistics; finance etc.
Planning and proposals based on expertise and know-how of products
and markets
3
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Summary of the Company
3. 5 Business Segments
Operating in 5 segments:Information & Electronics; Chemicals;Life Industry; Plastics; and Housing & Eco Materials
Housing &Life Eco Materials
Industry 4%

7%
Chemicals

8%

FY 3/17
Sales Results
586.6 billion
JPY

Plastics
43%

Information& Electronics

38%

4
Copyright © INABATA＆CO., LTD. 2017

Inabata’s Business Spheres
Operating in 5 business segments at about 60 locations, throughout Japan and
18 countries overseas

Inabata GroupJapan

23 bases of operation in 2
countries - China &South Korea

26 bases of operation in 9
countries, including Singapore
and Thailand

5 Areas of Business:

Southeast
Asia

Information & Electronics

ChemicalsLife Industry
Plastics

Northeast
Asia

Housing & Eco Materials

5 bases of operation in 4
countries, including UK& France

EuropeThe
Americas(NB) No. of overseas countries and operation bases valid as of 1 July 2017
(NB) No. of operation bases includes bona fide Inabata & Co., Ltd. affiliates

9 bases of operationin 3 countries,
including USA &Mexico5
Copyright © INABATA＆CO., LTD. 2017

Inabata’s Wide Range of Capabilities
Highly specialized people
empowered with cutting edge information

6
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Inabata’s Strengths [Manufacturing and Processing]Our strategy involves expanding our trading business by swiftly grasping with information regarding
development of new products and market trends by drawing on our worldwide processing bases and trading
company offices.
Plastics compounds: Formed by adding flame
retardants and other additives to raw plastic

Compounding
facility

Plastics
manufacturer
Proposal

Information

Collaboration

Component
manufacturer
Information

Product
manufacturer
ProposalInquiries on plastics andcoating materials

Information onmaterials

Tradingcompany office

Expanding trading businessby leveraging ourmanufacturing capabilities
Trading company capabilities
Copyright © INABATA＆CO., LTD. 20177

Inabata’s Strengths [Plastic Compounding Facilities]
China

Plastics Compound
Business Office(2 sites)
52,200 MT/Y

(Japan)・Shares information
・Coordination of facilities and raw
materials
・Reduces costs by purchasing inbulk

Vietnam
36,000 MT/Y

Philippines

Thailand
38,400 MT/Y

10,800 MT/Y
Building and dismantling of plants in line with customers’ relocation strategy
Providing consistent quality of service, anywhere.

Malaysia
21,600 MT/Y
Indonesia
37,200 MT/Y
211,200 MT/Y: 8 sites in 7 countries (as of September 30, 2017)

Mexico15,000 MT/Y
8
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Summary of
3 Year Medium-Term Management Plan
New Challenge 2016

9
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Summary of New Challenge 2016
Progress in Achieving Quantitative Targets[Quantitative targets](billion JPY)

MTMP targets
FY 3/2017

Results
FY 3/2017

Difference

Achievement %

Sales

620.0

586.6

-33.3

Op. income

12.5

12.6

+0.1 100.9%

Current profit

13.5

13.6

+0.1 101.3%

Net income

10.0

9.6

-0.3

ROE

8.2%

7.1％

Not achieved

Net D/E ratio

0.45

0.30

Achieved

38.0%

43.0%

Achieved

USD 1 = JPY 100

USD 1 = JPY 108.34

Net worth equity ratio

Exchange rate

94.6%

96.9%

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Copyright © INABATA＆CO., LTD. 2017

Summary of New Challenge 2016
Progress in Achieving Key Initiatives
Key Initiatives
1.

Evaluation

Further broadening and deepening of business outsideJapan• Further broaden and deepen core Asian business• Increase involvement in emerging countries
outside Asia
• Expand trade with non-Japanese companies

2.

Comments

Partially
achieved

Progress particularly in China, but less than anticipated inSoutheast Asia
Established bases of operations in Brazil, Turkey, but concrete
Not achieved
progress lacking
Partially
Expanded in China and also more trade with European andachieved
American companies in Southeast Asia

Focus on markets with growth potential and sectorsthat have yet to be developed• Automotive sector

Achieved

Progress largely as anticipated, with growth in sales for global
users• Environment & energy sector

Partially
achieved

In Europe, growth in solar power business, but progress delayed inlithium-ion battery business• Life science sector

Partially
achieved

A pharmaceutical-related consolidated subsidiary in Europe has been
struggling but is improving, having made progress with restructuring

3.

Development and expansion of global management
infrastructure

Achieved

Facing some delays but making progress, particularly in setting up
information systems

4.

Investment aimed at future growth(10.0 billion JPY over 3 years)

Partially
achieved

Investment amount has been higher than expected, but includes
substantial outlays for upgrades and system investment

5.

Seek further capital and asset efficiencies

Achieved

The net D/E ratio has been steadily improving

6.

Ongoing development of international-minded humanresources

Partially
achieved

Global staff meetings are being held regularlyThis initiative needs to be carried out more swiftly

We will continue to address initiatives not yet achieved under the new Medium-Term Management Plan
Copyright © INABATA＆CO., LTD. 201711

New Challenge 2016 – Performance Review :Sales by Business Segment (consolidated)[Sales](billion JPY)

700.0
600.0

-33.3

572.1
0.5
24.2

577.0
24.8 0.1

586.6
25.0 0.1

500.0
400.0
300.0
200.0
100.0

0.0

250.4

251.1

251.8

620.0
29.0 0.1
260.5

34.6
52.8

41.0
48.1

40.4
48.0

46.0
53.0

209.3

211.6

221.0

231.4

¥/USD ¥109.76¥120.15¥108.34¥100.00

Difference between FY3/17 results
and mid-term targets

-33.3
その他

0

住環境

-3.9

合成樹脂

-8.6

生活産業

-5.5

化学品

-4.9

情報電子
-10.3

FY3/15
FY3/16
FY3/17
FY3/17(Mid-Term
Target)(Result)(Result)(Result)
We will continue to address initiatives not yet achieved under the new Medium-Term Management Plan
(NB) From FY 3/17, crane business previously classified under “Other” is classified under “Information & Electronics.”
Segment information for FY 3/16 has been prepared on the basis of the new classifications.

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New Challenge 2016 – Performance Review :Operating Income by Business Segment (consolidated)(billion JPY)

[Operating Income]
+0.1

14.00
12.00
10.00

10.7
0.28 0.15

8.00

3.73

6.00

0.00

0.42

0.14

1.03
1.07

12.5
0.10
0.50
4.00

4.43

-0.23
+1.39

2.00

-0.18

1.00

+0.0

1.52

1.82

1.01

1.00

3.83

3.99

¥/USD ¥109.76¥120.15¥108.34¥100.00

FY3/15(Result)

FY3/16(Result)

FY3/17(Result)

FY3/17(Mid-Term Target)

4.48

+0.1
+0.04

5.39

4.00

2.00

11.3

12.6
0.26 0.14

Difference between FY3/17 results
and mid-term targets

-0.9

4.90

(NB) From FY 3/17, crane business previously classified under “Other” is classified under “Information & Electronics.”
Segment information for FY 3/16 has been prepared on the basis of the new classifications.

13
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Summary of New Challenge 2016
(Profit: billion JPY)

(Sales: billion JPY)

15.0

12.4
9.6

10.0

8.8
7.6
6.2
5.0

7.7
6.6

464.4

479.9

FY 3/12FY 3/13

10.9

13.2

13.6

13.5

12.6

12.5

9.6

10.0

12.2

11.3

10.7

9.5

8.6

8.6

561.1

572.1

Sales
Op Income

577.0

586.6

620.0

Current Profit
Net Income

0.0(Result)
JPY/USD ¥77.74(Result)¥79.81

IK2013

FY 3/14

FY 3/15FY 3/16

FY 3/17¥100.17¥109.76¥120.15¥108.34(Result)(Result)(Result)(Result)

FY 3/17(Target)¥100.00

New Challenge2016
14
Copyright © INABATA＆CO., LTD. 2017 New Medium-Term Management Plan

New Challenge 2020

Positioning of the New Medium-Term Management Plan
New Challenge 2020
 Our long-term vision has been drawn up as part of our new Medium-Term Management Plan

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
Ethics, aspiration, organization, role, symbiosis
Long-term Vision
IK Vision 2030 (envisioning ourselves 10 to 15 years in the future)
Medium-term Management Plan

New Challenge 2020 (targets for FY 3/2021)

Copyright © INABATA＆CO., LTD. 201716

Long-term Vision

IK Vision 2030

What Inabata envisions to be in years around 2025 to 2030

Function：
Further enhancing multi-faceted capabilities such as manufacturing,logistics and finance, in addition to trading.
Scale of operation：
Achieving more than 1 trillion JPY in consolidated sales in early stage.

Sales and operating income generated outside of Japan：
70% or more
Portfolio ：At least one-third of sales and operating income from business segments
other than Information & Electronics and Plastics segments.
Copyright © INABATA＆CO., LTD. 201717

New Medium-Term Management Plan

New Medium-Term Management Plan
New Challenge 2020 (NC 2020)[Aim]
New Challenge 2020 is geared to achieving our long-term
vision dubbed IK Vision 2030. NC 2020 is its first stage inwhich unaccomplished tasks under New Challenge 2016 willcontinue to be addressed, while trying to reach further.

Copyright © INABATA＆CO., LTD. 201718

Medium-Term Management Plan NC2020
Quantitative Targets
Four-year medium-term management plan with FY 3/2021 as its final fiscal year
Quantitative Targets

FY3/2021

Sales

730 billion JPY

Op. Income

15.5 billion JPY

Current Profit

16.0 billion JPY

Net Income

12.0 billion JPY

Net D/E Ratio

0.4X or less

Assumed Exchange Rate(*) Net D/E Ratio = (Int. Bearing Debt – Cash & Deposits) / Equity Capital
The Assumed Exchange Rate was corrected on December 27, 2017 as follows.

(*)

USD1=110 JPY
Copyright © INABATA＆CO., LTD. 2017 19

before correction: USD1＝100JPY, after correction: USD1＝110JPY

Medium-Term
Management
Plan NC2020– Key Initiatives
中期経営計画ＮＣ２０２０
重点施策
１

Further broadening and deepening of businessoutside Japan

２

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

・ Continual development of the automotive, life science & medical, and environment & energy sectors
・ Launching new initiatives in the agricultural sector, which includes food business・

３

Further enhancement of information infrastructure essential for
global management

・ Setting priority on what is best as a group
・ Further enhancement of global business management and standardization

４

Stepping up investments to expand trading business・ Making minority investments primarily to expand trading business・ Considering majority investments but with limited risk and scale

５

Continual review of assets and enhancement offinancial standing

６

Establishing global human resources management
Copyright © INABATA＆CO., LTD. 201720

NC2020 Business Strategy: (1) Information & Electronics
Business environment◆ The liquid crystal-related business poised to increase slightly in the medium-term; panel display production
continues shifting to China◆ The photocopier and printer business is a mature industry, but there is room for growth with respect to industrial
applications◆With solar power generation, expectations are low in Japan but growth persists overseas

Portfolio strategy◆ We will work to maintain steady profits in the liquid display business which will remain a mainstay businesswhile the medium-term plan is in effect◆ We will work to expand new businesses in anticipation of slowing growth in our current mainstay businesses overthe long term

Profit drivers

Growth drivers◆ Parts and materials for liquid crystal
displays◆ Parts and materials for photocopiersand printers◆ Business related to solar power generation and lithium-ion batteries(billion JPY)

[Sales]300.0◆ Development of business involving “storing, releasing and savingenergy,” in addition to “creating energy”(billion JPY)

[Op. Income]

6.00

200.0

4.00

100.0 221.0 219.0(Result) (Forecast)

261.0
2.00
(Target)3.99 0.40

4.40(Result) (Forecast)(Target)FY3/17

FY3/21

0.00

0.0
FY3/17

FY3/18

FY3/21

FY3/18(NB) Sales forecast for FY3/18 revised from 229.0 billion JPY to 219.0 billion JPY (announced on September 13, 2017)
Operating income forecast for FY3/18 revised from 3.7 billion JPY to 0.4 billion JPY (announced on November 14, 2017)21

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NC2020 Business Strategy: (2) Chemicals
Business environment◆The existing Chemicals market in Japan has changed little, and the market for products handled by Inabata is also
limited◆Foreign chemical manufacturers are moving toward having trading companies handle their marketing in theJapanese market

Portfolio strategy◆ Achieve deeper penetration in the automotive parts industry◆ Expand the coating business with a focus on the automotive industry◆ Enhance initiatives with foreign chemical manufacturers

Profit drivers◆Raw materials for automotive parts◆New products such as plastic compounds reinforced
with glass wool

◆Coatings (paints and inks)(billion JPY)

[Sales]80.0

Growth drivers◆Heat-releasing parts (Polymatech Japan Co., Ltd.)(billion JPY)

[Op. Income]

2.00

60.0
40.0
20.0
0.0

48.0 52.0

61.0(Result) (Forecast)(Target)FY3/17

FY3/21

FY3/181.00

1.00 1.10

1.60(Result) (Forecast)(Target)FY3/17

FY3/21

0.00
FY3/18(NB) Operating income forecast for FY3/18 revised from 1.20 billion JPY to 1.10 billion JPY (announced on November 14, 2017)22

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NC2020 Business Strategy: (3) Life Industry
Business environment◆In pharmaceuticals, markets for new drugs and regenerative medicine have been growing at a moderate pace
◆In home 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 food consumption isincreasing in emerging economies

Portfolio strategy◆Develop promising opportunities in the business of new drugs and raw materials, and focus efforts on leadingedge medical fields◆In home products and food products, work to increase sales driven by expanding markets, including those overseas◆In food products, continue expansion into business involving production and processing

Profit drivers◆Raw materials for pharmaceuticals (newdrugs)◆Raw materials for home products(billion JPY)

[Sales]80.0

Growth drivers◆Regenerative medicine and other leading-edge medical fields◆Agricultural products, particularly blueberries◆Develop new business models (agriculture and food processing)(billion JPY)

[Op. Income]

3.00

60.0
2.00
40.0
20.0
0.0

40.4 47.0

65.0
1.00

(Result) (Forecast)(Target)FY3/17

FY3/21

FY3/180.00

1.82 2.00

2.80(Result) (Forecast)(Target)FY3/17

FY3/21

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FY3/1823

NC2020 Business Strategy: (4) Plastics
Business environment◆Customers and suppliers are becoming increasingly more international◆Companies are opting to channel business to trading companies that are able to operate globally

Portfolio strategy◆Expand sales of plastics leveraging the plastic compounds business◆Focus on automotive sector and particularly the North American market

Profit drivers◆Plastics for the automobile, office equipment, andhome electrics sectors◆Film-related products, including manufacturing andprocessing(billion JPY)

[Sales]400.0

Growth drivers◆Sales to global users◆Further expansion in overseas business (regionallyand in different fields)(billion JPY)

[Op. Income]

6.00

300.0
4.00
200.0
100.0
0.0

251.8 273.0

308.0(Result) (Forecast)(Target)FY3/17

FY3/21

FY3/185.39 5.20

5.90(Result) (Forecast)(Target)FY3/17

FY3/21

2.00
0.00

FY3/18(NB) Operating income forecast for FY3/18 revised from 5.10 billion JPY to 5.20 billion JPY (announced on November 14, 2017)24

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NC2020 Business Strategy: (5) Housing & Eco Materials
Business environment◆The number of housing starts is expected to keep decreasing◆The market for renovations is expanding◆Major homebuilders and housing equipment manufacturers are increasingly entering overseas markets

Portfolio strategy◆Expand sales to overseas markets◆Focus on non-housing fields of businessProfit drivers◆Materials for major homebuilders and housing
equipment manufacturers(billion JPY)

[Sales]40.0

Growth drivers◆Overseas markets (flooring, etc.)◆Non-housing fields of business (urethane materials,
wood chips, etc.)(billion JPY)

0.80

[Op. Income]

0.60
20.0

0.0

25.0 28.7

34.7(Result) (Forecast)(Target)FY3/17

FY3/21

FY3/18

0.40

0.60

0.20

0.26 0.20

0.00(Result) (Forecast)(Target)FY3/17

FY3/21

FY3/18(NB) Operating income forecast for FY3/18 revised from 0.30 billion JPY to 0.20 billion JPY (announced on November 14, 2017)25

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NC2020: Sales Transition by Business Segment
Information & Electronics(billion JPY)

ChemicalsLife Industry

Plastics

1200.0

Housing & Eco Mat.

OtherIK Vision 2030

（IK Vision 2030）
1000.0New Challenge 2016

1,000.0

NC 2020

800.0

600.0

400.0

200.0

572.1

577.0

586.6

24.2 0.5 24.8 0.1 25.0 0.1
250.4

251.1

251.8

620.0
28.7 0.3
273.0

660.0
29.7 0.3
285.0

700.0
32.7 0.3

730.034.7 0.3

299.0

308.0

59.0
59.0

65.0
61.0

34.6
52.8

41.0
48.1

40.4
48.0

47.0
52.0

54.0
56.0

209.3

211.6

221.0

219.0

235.0

250.0

261.0

FY 3/15FY 3/16

FY 3/17

FY 3/18

FY 3/19

FY 3/20

FY 3/21(Result)(Result)(Result)(Forecast)(Target)(Target) (Mid-Term Target)

0.0

Future(10 to 15 years ahead)(NB) Sales forecast for FY3/18 revised from 630.0 billion JPY to 620.0 billion JPY (announced on September 13, 2017)26(NB) From FY 3/17, crane business previously classified under “Other” is classified under “Information & Electronics.” Segment information for FY 3/16 has been prepared on thebasis of the new classification.

NC2020: Operating Income Transition by Business Segment(billion JPY)

Information & Electronics

ChemicalsLife Industry

Plastics

25.00

Housing & Eco Mat.

OtherIK Vision 2030

230
～240
（IK
Vision2030）
New Challenge 2016

20.00

NC 2020

15.5
15.00

12.6
10.7
10.00

0.28 0.15

11.3

1.03
1.07

4.48

0.42 0.14
4.43
1.52
1.01

1.82

3.83

3.99

9.0

0.20

5.30

0.60 0.20

0.50 0.20
5.60

5.90

0.20 0.10
5.20

1.00
2.00

FY 3/15(Result)

FY 3/16(Result)

FY 3/17(Result)

1.10
0.40
FY 3/18(Forecast)

1.9%

2.0%

2.2%

1.5%

0.00

Operatingincome ratio

0.40

0.26 0.14
5.39

3.73
5.00

14.5

13.5

2.50

2.80

1.30

1.50

1.60

4.00

4.20

4.40

2.30

FY 3/19(Target)FY 3/20
FY 3/21(Target) (Mid-Term Target)

2.0%

2.1%

Future(10 to 15 years ahead)

2.1%(NB) Operating income forecast for FY3/18 revised from 12.5 billion JPY to 9.0 billion JPY (announced on November 14, 2017)27(NB) From FY 3/17, crane business previously classified under “Other” is classified under “Information & Electronics.” Segment information for FY 3/16 has been prepared on thebasis of the new classification.
・Operating income ratio FY3/17 was corrected on July 2, 2018 as follows. before correction:1.9% , after correction 2.2%

Sales and Operating Income (Since FY2002)(Sales: billion JPY)

(Op. Income: billion JPY)

1200.0

Sales

35.0

Op. Income（IK Vision 2030）
1000.0 30.0

1000.025.0(Target)

800.0

700.0

730.0

20.0

660.0

600.0

561.1 572.1
500.0
466.0

7.6

7.6

200.0

11.3

13.5

12.6

14.5

10.0

10.7

7.9

7.6

15.0

15.5
10.9

400.0
288.9

586.6

479.9

469.0

442.7

577.0

620.0

9.0

7.7

5.0
3.5

2.6

0.0

0.0
3/03

3/04

3/05

3/06

3/07

3/08

3/09

3/10

3/11

3/12

3/13

3/14

3/15

3/16

3/17

3/18

3/19

3/20

NC2020(NB) Revision of full-year forecasts for FY3/18 (announced on November 14, 2017)

3/21

Future(10 to 15 years ahead)28
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Overseas Sales and Operating Income (Since FY2002)
Sales(Sales: billion JPY)

Op. Income(Op. Income: billion JPY)

800.0

20.0
（IK Vision 2030）

600.0

400.0

10.0
312.9
284.3 294.0 305.4
211.6

200.0

150.5
72.4

0.0

1.2
3/03

JPY:USD
Exchange
rates

84.1

185.0

186.5

2.3

4.2

3.3 3.6 3.5
1.6

3/05

3/06

3/07

6.1

159.3 152.2

110.2

1.6
3/04

170.9

186.7

4.9 5.1

5.8

3.7 3.9

2.0

3/08

3/09

3/10

3/11

3/12

3/13

3/14

3/15

3/16

3/17

114.1

91.0

92.1

81.49

77.74

79.81

100.17109.76 120.15 108.34

3/18

3/19

3/20

NC2020
119.9

107.1

104.2

118.0

119.1

3/21

0.0

Future(10 to 15 years ahead)29
Copyright © INABATA＆CO., LTD. 2017

Corporate Governance (1)・3 outside directors (of 9 directors)
We aim to enhance supervisory functions and increase corporate value by taking
advantage of the outside directors’ extensive experience and wide-ranging insight
into company business.

Outside Directors
・Yoshimasa Takao
Former Executive Deputy Chairman ; Current Advisor– Sumitomo ChemicalCo., Ltd.

・Katsumi Nakamura*
Former Executive Vice President – Renault (France),
Former Chairman of the Board– Calsonic Kansei Corp. ;Current Director (Outside) – Kito Corp.

・Toshiyuki Kanisawa*
Former Representative Director, Executive Vice President ;Current Counselor, - Tokyo Gas Co., Ltd.
(*) Mr. Katsumi Nakamura and Mr. Toshiyuki Kanisawa are registered as independent, outside officers with the TSE. 30
Copyright © INABATA＆CO., LTD. 2017

Corporate Governance (2)The following initiatives were implemented to enhance governance

1. Established the Nominating and Remuneration
Committee (voluntary)
Ensures objectivity, fairness and transparency with respect to appointing senior
management, nominating director and audit & supervisory board member
candidates, and making decisions on director remuneration• Current membership: 1 internal director (chairperson) and 2 independent
outside directors• Held four times during FY 3/2017

31
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Corporate Governance (3)2. Evaluating the board of directors (self-evaluation)
Objective - To increase corporate value by enhancing effectiveness andtransparency of the board of directors• Evaluations of the board of directors (self-evaluation) are carried out since
FY2015• Third-party evaluation scheduled for FY2017✓ In November 2016, performed an evaluation involving all directors
and audit & supervisory board members using a survey format✓ In April 2017, disclosed analysis/evaluation results in writing

32
Copyright © INABATA＆CO., LTD. 2017

Corporate Governance (4)2. Evaluating the board of directors (self-evaluation)◆ Tasks and measures taken(1) Improve discussion of medium and long-term issues by the board of directors
We will develop a framework that enables the board of directors to focus on more important
proposals, so that its members can engage in more extensive discussions on medium- to longterm business issues and other such matters.

(2) Promote succession planning and diversity
Given that such matters are important issues for Inabata, the board of directors and theNominating and Remuneration Committee will engage in more extensive discussions on suchmatters.

(3) Adequate collaborative framework and communication amongst outside directors andaudit & supervisory board members
In March 2017, we established a forum where the outside directors and audit & supervisoryboard members can exchange views. We will continue monitoring the situation to ensurethat a sufficient collaborative framework is established.
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Copyright © INABATA＆CO., LTD. 2017

Corporate Governance (5)3. Strategically Held Shares[Basic Views]
Close business and cooperative relations with various companies are valuable assets to theCompany, and the Company believes the establishment, maintenance and development of these
relations improve the Company’s corporate value in the medium and long term and lead to the benefitof shareholders and investors. Also, as the Company believes the strategic holding of shares of suchcompanies is one effective way to establish, maintain and develop good cooperative relations, theCompany owns strategically held shares.

[Decisions on acquisition, continuous holding and disposal of such shares]
The Company bases its decisions regarding whether to maintain ownership of strategically held
shares on whether such holdings contribute to the establishment of cooperative relations, enhance theCompany’s corporate value in the medium and long term, and lead to the benefit of shareholders andinvestors.
The necessity of such holdings is validated on a yearly basis, and the rationale for such holdings is
explained to the board of directors.
Sales of other securities
FY3/15
FY3/16
FY3/17¥730 million¥1,421 million¥5,150 million

Copyright © INABATA＆CO., LTD 201634
Copyright © INABATA＆CO., LTD. 2017

Returning Profits to Shareholders (1)Policy for returning profits to shareholders

Total Return Ratio of 30-35% (target)
Total Return Ratio (%) = (amount of dividends + amount of treasury shares acquired) / consolidated net income x 100【 Treasury stock 】●Retirement of treasury shares ●Acquisition of Treasury shares(August 2014)（Details for FY 3/2018）- No. of Shares Retired: 1,660,000

No. of Shares Acquired: 400,000 (upper limit)
Value of Shares Acquired: 850 million JPY(equivalent to 2.55% of the total no. ofshares issued and outstanding prior to
retirement)(upper limit)

Acquisition Period:15th Nov.-21th Dec. 201735
Copyright © INABATA＆CO., LTD. 2017

EPS Trends
(JPY)

200
162.61
156.25151.91160
137.01 137.20
111.34120

97.45

104.29

80
40

27.08
(355)

(439)

FY 3/12(Result)

FY 3/13(Result)

(604)

(707)

(891)

FY 3/15(Result)

FY 3/16(Result)

FY 3/17(Result)

0
FY 3/10(Result)

FY 3/11(Result)

FY 3/14(Result)

FY 3/18(Forecast)(NB) The figures in brackets at the bottom of the bar chart show the amount of treasury shares acquired during the period
36(JPY million).
Copyright © INABATA＆CO., LTD. 2017

Returning Profits to Shareholders (2)Trends in Annual DPS & Shareholder Return Indicators(JPY)

Dividend

50

Dividend Payout Ratio

Total Return Ratio

60.0%

40

40

30

36.9%
30

33

40

36
34.8%

31.1%

26

31.1%

23

40.0%
30-35％
Target

30.0%

21
20
23.4%
10

21.5%

10

22.1%

50.0%

21.9%

24.1%

23.7%

25.6%

24.6%

20.0%
10.0%

(355)

(439)

(604)

(707)

(891)

0

0.0%
FY 3/10(Result)

FY 3/11(Result)

FY 3/12(Result)

FY 3/13(Result)

FY 3/14(Result)

FY 3/15(Result)

FY 3/16(Result)

FY 3/17(Result)(NB) The figures in brackets at the bottom of the bar chart show the amount of treasury stock acquired during the period (JPY million).
(NB) Figures for FY 3/11 include a special dividend of 2 JPY to commemorate the company’s 120 th anniversary.

FY 3/18(Forecast)37

Copyright © INABATA＆CO., LTD. 2017

Summary of Financial Results – 2Q FY3/2018

38

Consolidated Results Review – 2Q FY3/2018
Sales

：

304.9 billion JPY+5.6％ YoY

Increased due to effect of yen depreciation and strong performance in theplastics business

2.9 billion JPY

Op. Income：-48.2％ YoY

Decreased substantially due to having recorded an allowance for
doubtful accounts

Current Profit：

3.3 billion JPY -47.5％ YoY

Decreased due to lower operating income

Net Income：

2.7 billion JPY -41.6％ YoY

Decreased due to lower current profit etc., despite an increase in gain on
sales of investment securities
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Copyright © INABATA＆CO., LTD. 2017

Consolidated Results Review – 2Q FY3/2018(billion JPY)YoY Change
Six month Six month
ended Sep. ended Sep.
30,2016 30,2017(A)Sales

Amount％288.8 304.9 +16.0 +5.6%

Full Year
Forecast announced on
May 11, 2017

Full Year
Forecast announced on
Nov. 14, 2017

Achievement(A)/(B)%

(B)

630.0

620.0

49.2%

Op. Income

5.6

2.9

-2.7 -48.2%

12.5

9.0

32.7%

Current Profit

6.4

3.3

-3.0 -47.5%

13.0

9.5

35.5%

Net Income

4.6

2.7

-1.9 -41.6%

10.0

10.0

27.3%

Exchange Rate:
USD/JPY105.20 111.04 +5.84

110.00 110.00
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Copyright © INABATA＆CO., LTD. 2017

Sales Trends
Sales(billion JPY)

1-2Q

Full Year Forecast(as announced on
November 14, 2017)

Full Year

700.0
600.0

620.0
561.1

572.1

577.0

586.6
% Achieved

500.0

49.2％

400.0
300.0

277.3

277.7

292.7

288.8

304.9

FY 3/14

FY 3/15FY 3/16

FY 3/17

FY 3/18

FY 3/17

FY 3/18

200.0

100.0
0.0
(Reference)
Exchange
Rate:
USD/JPY

1-2Q
Full Year

FY 3/14

FY 3/15FY 3/1698.86
100.17103.01109.76121.87120.15105.20111.04108.34 (*Note)110.00* The full-year forecast for FY3/18 has been revised to 620.0 billion JPY (revised on September 13, 2017),
from 630.0 billion JPY (released on May 11, 2017).

(NB) Estimation at time of release.

41

Copyright © INABATA＆CO., LTD. 2017

Trends in Operating Income
Op. Income(million JPY)

1-2Q

14,00012,00010,936

Full Year

10,774

12,616
11,371

9,000

10,0008,000
6,000

Full Year Forecast(as announced on
November 14, 2017)

5,712

5,124

5,932

% Achieved

5,679

4,000

32.7％
2,939

2,000
0
FY 3/14

FY 3/15FY 3/16

FY 3/17

FY 3/18* The full-year forecast for FY3/18 has been revised to 9,000 million JPY (revised on November 14, 2017), from42
12,500 million JPY (released on May 11, 2017).
Copyright © INABATA＆CO., LTD. 2017

Trends in Current Profit
Current Profit(million JPY)

1-2Q

16,00014,00012,454

Full Year

13,217

13,672
12,257

12,0009,500

10,0008,000

Full Year Forecast(as announced on
November 14, 2017)

6,573

6,907

6,739

6,416

6,000

% Achieved

35.5％
3,369

4,000
2,000
0
FY 3/14

FY 3/15FY 3/16

FY 3/17* The full-year forecast for FY3/18 has been revised to 9.5 billion JPY (revised on November 14, 2017), from
13 billion JPY (released on May 11, 2017).

FY 3/18

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Copyright © INABATA＆CO., LTD. 2017

Trends in Net Income(million JPY)

Net Income

12,000

1-2Q

10,0008,669

Full year forecast(as announced on
November 14, 2017)

Full Year

8,630

9,510

9,687

10,0008,000% Achieved

6,000

4,562

5,086

4,785

27.3％
4,677

4,000

2,730

2,000
0
FY 3/14

FY 3/15FY 3/16

FY 3/17* The full-year forecast for FY3/18 is 10 billion JPY (unchanged from forecast released on May 11, 2017).

FY 3/18

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Copyright © INABATA＆CO., LTD. 2017

Reference45Summary of the Company (Business Segment 1)
1. Plastics
Sales(FY 3/17)• Sales of high performance plastics:
For automobiles and motorcycles, home electric appliances, OA
equipment, and electronic components

43% • Sales of plastics, molded plastic products and related materials(251.8 billion
JPY)

For general merchandise, sundry, architectural component, andhealthcare industries• Sales of resins/products for packaging materials and films:
Materials for garbage bags, packaging for industrial use and food
• Manufacture and sales of sheet products for sporting goods
Grip tapes for tennis rackets and baseball bats

etc.

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Copyright © INABATA＆CO., LTD. 2017

Summary of the Company (Business Segment 2)
2. Information & Electronics
Sales(FY 3/17)

38%(221.0 billion
JPY)• Sales of raw materials for polarizing films to polarizing film manufacturers,
and sales of polarizing film to panel manufacturers; also, alignment layermaterials, electronic parts for LCD backlight units, etc.
• Sales of inkjet printer dye and toner ingredients to printer and copier
manufacturers• Materials for solar cells and lithium-ion batteries, LEDs, semiconductormaterials, etc.

47
Copyright © INABATA＆CO., LTD. 2017

Summary of the Company (Business Segment 3)
3. Chemicals
Sales (FY 3/17)

8%(48.0 billion
JPY)• Sales of raw materials and additives to the resin, rubber,
textile and other industries• Sales of raw materials and additives for use in paints, inks,
adhesives, paper, etc.

4. Life Industry
7%(40.4 billion
JPY)• Raw materials for pharmaceutical intermediates, insect
repellents and insecticides, air fresheners and deodorants,
and cosmetics• Agricultural products (blueberries, fruit juices, frozen
vegetables) and marine products (ingredients for sushi)

5. Housing & Eco Materials
4%(25.0 billion
JPY)• Lumber and laminated timber• Chemicals, resin materials, stairs, flooring, prefabricatedbath units, kitchens, toilets• Recycled products (particle board made from scrap wood,and wood chips for use in wood biomass power generators)
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Copyright © INABATA＆CO., LTD. 2017

Overseas Sales (including exports from Japan)
The Americas
15.9 billion
4.4%

Europe12.6 billion
3.5%
(JPY)

Northeast Asia
201.4 billion
55.7%

FY 3/17
Overseas Sales
361.5 billion

Southeast Asia
131.5 billion
36.4%(61.6% of consolidated net sales)

Southeast Asia
Northeast Asia
The Americas
Europe49
Copyright © INABATA＆CO., LTD. 2017

Trends in Equity Capital/Net Interest-Bearing Debt/Net Debt Equity Ratio

Equity Capital

Net Int. Bearing Debt

Net D/E Ratio (Right-hand Axis)(billion JPY)

(X)

160.0
140.0
120.0
100.0

127.6

126.0

115.0
97.8

0.50

0.60

0.46

0.43
0.37

80.0
60.0

0.80

146.2

0.30
48.8

53.3

55.2

47.0

0.40

43.7

40.0

0.20

20.0
0.0

0.00
End 3/13

End 3/14

End 3/15

End 3/16

End 3/17(NB)
Equity Capital = Net Assets – Stock Acquisition Rights – Non-controlling interests;
Net D/E Ratio = (Int. Bearing Debt – Cash & Deposits) / Equity Capital
50
Copyright © INABATA＆CO., LTD. 2017

Trends in Cash Flow(billion JPY)
Operating CF
Real Operating CF*
Investment CF

20
10

0

FY 3/06

FY 3/07

FY 3/08

FY 3/09

FY 3/10FY 3/11

FY 3/12FY 3/13

FY 3/14

FY 3/15FY 3/16

FY 3/17-10-20(million JPY)
Operating CF
Change in WC
Real Operating CF*
Investment CF

FY 3/06-16,071-25,619
9,548
10,966

FY 3/07-1,150-3,873
2,723-3,132

FY 3/08-4,257-14,366
10,109-1,359FY 3/09
11,562
19,700-8,138947

FY 3/10
5,976
-968
6,944
-5,529FY 3/118,495-3,74812,243-1,436

FY 3/12-15,534-20,357
4,823-1,629FY 3/13
19,4003,414
15,986277

FY 3/14-764-15,244
14,480-5,467* Cash flows associated with operating activities – Cash flows associated with change in working capital
Working capital = Trade receivables + Inventory – Trade payables

FY 3/15
8,354-11,179
19,533-3,044FY 3/16
11,866
5,821
6,045
-161

FY 3/17
1,840-9,367
11,2074,504

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Copyright © INABATA＆CO., LTD. 2017



Trends in Share Price

Inabata’s Share Price for the past 10 years
JPY/share

52
Copyright © INABATA＆CO., LTD. 2017



Trends in Share Price

Inabata’s share price performance vs. TOPIX for the past 10 years(09/2008=100)

Continuing strong yen

Subprime loan crisis

The Great East Japan Earthquake (March)

INABATA

Bankruptcy of Lehman Brothers Holdings Inc. (Sep.)

LDP wins majority in the election. Start of the Abe Cabinet (Dec.)

53
Copyright © INABATA＆CO., LTD. 2017 IR queries should be directed to:Inabata & Co., Ltd. Financial Management Office, IR Dept.
TEL:81-50-3684-4007 (Contact:Ms. Ryoko Mitsui)
FAX:81-3-3639-6410
E-mail inabata-ir@inabata.com

 A Cautionary Note Regarding Future Estimates
The data and future predictions contained in this document are based on information available andjudgments applicable at the time of the document’s release. Consequently the data and future forecasts
contained herein may include elements that are subject to change, and the reader should be aware that thisdocument and its contents are no guarantee of future performance.
 Re:Numerical Format
Units of ‘billion’, ‘hundred million’ and ‘million’ JPY in this document use figures that have been rounded
down. Consequently there may be some discrepancy between individual values and total values, or values
showing changes between sets of data.
54