VISION 2030
& The 6 th Mid-Term Management PlanTSE Ticker Symbol 5351

VISION 2030 & The 6th Mid-Term Management Plan
● Defining VISION 2030, our future vision toward 2030, in the VUCA* era of rapid environmental changes● Formulating The 6th Mid-Term Management Plan (2024-2026) by back-casting from VISION 2030
● Taking the opportunity of celebrating the 150th Anniversary in 2025, reassessing our corporate
philosophy to further promote management strategy and human & organization development for the future* VUCA：「Volatility, Uncertainty, Complexity & Ambiguity

The 6th Mid-TermManagement Plan
2024～2026

The 7th Mid-Term
Management Plan
2027～2030

Further promoting Management Strategy
150th andHuman & Organization Development

VISION
2030

Further into the

FUTURE

Anniversary【2025】

Reassessing Corporate
Philosophy
Refining Organizational
Capabilities and Establishing KPIs
that enable Sustainable Growth

PurposeVision
V a l u e2

VISION 2030

VISION 2030: Fundamental Policy & Future Vision【VISION 2030: Fundamental Policy】

Pursuing Business Growth while Solving Social Issues simultaneously【Future Vision＝ Shinagawa Group’s To-Be】

Go Global × Enter New Market Segments × Pursue Sustainability～ From Japan to the World, From Refractory to Insulation/Ceramics/Engineering, From Iron & Steel to Other Market Segments ～Go Global

Enter New Market Segments

Pursue Sustainability

Global Business Expansion

Sector Driven Business Expansion

Addressing Climate Changes● Securing a firm position in the global
market as a leading heat solution provider● Expanding business portfolio at eachbusiness sector: Refractory, Insulation,
Advanced Device & Material (Ceramics)
and Engineering● Providing heat solutions that contributeto customers' decarbonization● Implementing active business & capital
investments based on ROIC as a leading
KPI● Building a management foundation withfocus on “Talent Acquisition," “TalentRetention" and “Human resources /Organizational Development"⇒ Be a Global Full Lineup Supplier byimplementing PROXIMITY: On-site Sales& On-site Production● Production optimization and further
expanding R&D capabilities in Japan tosupport global activities

BusinessGrowth

Implementing Mutually Reinforcing
Business Activities

Executing Human Capital Strategies

Creating Solutions
to Social Issues

4

VISION 2023: Goals
As a Corporate Group promoting Sustainable Growth, Shinagawa has set
both “Financial Goals" and “Sustainability Goals" as long-term goals.
（Goals in 2030）

Financial Goals

Sustainability Goals■KPI addressing Climate Changes

Net Sales

2023Results

2030Goals

14４ B JPY

240 B JPY

CO2 Emissions（Consolidated, Scope1&2）
2022 Results
139 Kt※1

Green Raw Material※2 Usage（Non-consolidated）
2022 Results
8.0％

ROS（Operating Income）

9.６％

12％

2030 Goal
50％ Reduction

2030 Goal
15.0％※1: Third-party certification is scheduled to be obtained during the first half of 2024
※2: Green Raw Material= Used refractories at customers + In-house unused products+ By-products from other industries■Human Capital Strategies

ROIC

9.1％

Overseas
Sales Ratio

29.8％

10％
50％
・Increasing profit margins and secure ROIC of 10%
while actively making business and capital investments.

① Human resources and organizational
development aligning with corporate strategy② Further improving Diversity and Inclusion③ Creating a comfortable work environment

5The 6th Mid-Term Management Plan

The 6th Mid-Term Management Plan: Rationale & Priority Measures

The 6th Mid-Term Management Plan
2024～2026【Rationale】

The 1st step towards the future as celebrating 150th Anniversary～A new step forward as the Shinagawa Group promoting Sustainable Growth～*Shinagawa was founded in 1875 and welcomes the 150th Anniversary in 2025

【Priority Measures】

1
Sector Driven BusinessExpansion

2Production
Optimization in Japan

3
Accelerating GlobalExpansion

4 Promoting Sustainability Management

7

The 6th Mid-Term Management Plan: Goals
As a milestone towards implementing “VISION 2030,”
Shinagawa strengthens the organizational capabilities essential
for sustainable growth and take steps toward achieving
financial targets and becoming a more sustainable company.
【Goals for 2026】

Financial Goals
2023
Results

2026
GoalsNet Sales

14４ B JPY

1８０ B JPY

ROS

9.６％

1１％

（Operating Income）● Starting 2024, although the shutdown of blast furnaces
at major customers will somewhat negatively impact ourfinancial performances, Shinagawa plans to increase
both sales and profits through business expansion
specifically in overseas and cost reductions initiatives.
● Sales for 2026 include M&A/JV projects currently underconsideration that have a high possibility of being
realized.
【Sustainability Goal】

ROIC

9.1％

10％

Overseas
Sales Ratio

29.8％

45％

● Regarding the sustainability goals set in "Vision 2030,"
Shinagawa plans to continue considering various
measures during the period of the "Sixth Medium-Term
Management Plan": Therefore the specific targets for2026 as a milestone are not available at this time.

・Increasing profit margins and secure ROIC of 10%
while actively making business and capital investments.

821 Sector Driven Business Expansion: Promoting ROIC Management

Shinagawa group's
response to implement
management that is
conscious of capitalcosts and stock prices

From The 6th Mid-Term Management Plan, we use ROIC as aleading KPI and focus on achieving an effect that exceeds thecost of capital (6.5%) in management decisions such as
reviewing the allocation of management resources in existing
businesses and making new business and capital investments.

Advancing Growth Strategy by further creating and strengthening“Earning Power” ⇒ Maximizing Corporate Value
ROIC Management
Growth Strategy
Maximizing
Corporate Value

Building a Management Strategy that emphasizes
Capital Efficiency
Advancing Growth Strategy by further creating andstrengthening “Earning Power”
Reinvesting for further growth and enhancing
returns to stakeholders by utilizing the results
obtained by maximizing corporate value9Net Sales and Operating Profits by Sector
The 6th Mid-Term
Management Plan
（Unit： B JPY）

2023
Results

2024
Plan

2026
Plan

Net Sales by Sector※

Refractory Sector

98.4

96.2

1,03.4● In 2024, sales in the “Refractory Sector" and “Engineering

Insulation Sector

18.5

19.8

22.0

Advanced Material &Device Sector

3.5

4.6

5.4

portfolio and increase sales

Engineering Sector

24.5

22.9

24.9

Operating Profits by Sector

Refractory Sector

8.0

9.0

11.3

Insulation Sector

3.4

3.5

4.2

Advanced Material &Device Sector

0.1

0.2

0.4

Engineering Sector

1.71.3

1.7

EBITDA by Sector

Refractory Sector

10.6

11.4

14.3

● As we strengthen global expansion, Shinagawa makes

Insulation Sector

4.1

4.3

5.1

Advanced Material &Device Sector

0.2

0.5

0.8

Engineering Sector

1.9

1.5

2.0

Sector" are expected to decrease due to the impact ofcustomers' production structure restructuring● From 2025, each sector plans to expand its business● In 2024, operating profits in the “Engineering Sector" isexpected to decrease due to the impact of customers'
production structure restructuring, but “Refractory Sector" isexpected to increase them by improving its sales mix● From 2025, each sector plans to expand its businessportfolio and increase sales

each sector’s EBITDA (Operating Income + Depreciation +Goodwill Amortization) a leading management KPI from the6th Medium-Term Management Plan※：Net Sales (Consolidated) in VISION 2030 (P.5) and the goals set in the 6th Medium-Term Management Plan (P.8) include “Real estate/Elimination ofintra-company transactions” and “M&A projects with high possibility of realization” and do not match the total sales by each sector in the table102 Production Optimization in Japan
Reorganize and integrate production bases in the West and East tobuild an optimal production system for further expanding sales inJapan and growing businesses in the global market
Consolidating Monolithic
from 3 Locations to “Ako”

West Area
Hyogo

Ako

Ako

HinaseSpecialized inmold powder

Teiyo

ClosedOkayamaOkayamaTamashima

Ako

Teiyo
HinaseEast Area

Consolidating Monolithic from Yumoto to Others
YumotoShaped Refractories

Yumoto (including Precast Blocks)
Monolithic Production

Kashima Location in the East

Fukushima
Yumoto（West Area）

AkoNo ChangeIbaraki
KashimaTamashima
Specialized in refractories foriron making

Consolidating Monolithic Production in the West area
to Enhance Competitiveness (Locations: 4 ⇒ 2 )● The state-of-the-art plant built at the Ako Plant is scheduled tobegin operation in June 2024 as the central production location
for monolithic refractories in the western Japan area
⇒ Teiyo: Closed, Hinase: Specialized for mold powder production● Further restructuring of the optimal production system at theOkayama Plant will also be planned● Shaped Refractory

Initiate consolidating production bases in the East areaduring the 6th Mid-Term Management Plan period● In response to the changes in customers' blast furnace
operations, monolithic refractories other than precast blocks fromthe Yumoto Plant will be consolidated into the Kashima Plant andthe Ako Plant in the West (to be completed in March 2024)● Plan on upgrading the continuous casting refractories productionlines at Yumoto Plant to make it as the Mother Factory for theseproducts among Shinagawa Group’s overseas operations● Shape & Monolithic Refractory● Monolithic Refractory11

3 Accelerating Global Expansion
Overseas sales rapidly expanded under the 5th medium-term plan:
By further promoting PROXIMITY strategy during the 6th Mid-Term
Management Plan, Shinagawa plans to achieve overseas sales of 82.2
billion yen, with an overseas sales ratio of 45%.
82.2B JPY
45％
42.9B JPY

30％
27.７B JPY
【FY2026】2２％

180.0B JPY

22.2B JPY
16.1B JPY20％

【FY2023】14４.１B JPY

16％【FY2022】1２４.９B JPY【FY2021】110.7B JPY

Results【FY2020】100.0B JPY
Results

Results【Goals for The 6th Mid-Term
Management Plan】

Results【The 5th Mid-Term
Management Plan】

124 Promoting Sustainability Management ① Addressing Climate Changes

Establishing initiatives to address climate changes throughbusiness activities as Shinagawa’s key growth strategy element【Specific Examples】 Promoting decarbonization initiatives within Shinagawa group
Promoting Recycling（Scope 3・Upstream）▶ Established a organization exclusively in chargeof Recycling (April 2024)▶ Improving technologies to sort/process usedrefractories▶ Developing & Promoting Green Refractory
Contributing to CO2 emission reduction
through supply chain

Promoting Energy Conservation（Scope 1&2）
▶ Switching to fuels that reduce CO2 emissions,such as LNG▶ Actively introducing solar power generation▶ Increasing line-up of non-fired products

Contributing to customers’ carbon
neutrality（Scope 3・Downstream)▶ Promoting heat loss reduction in hightemperature processes⇒Developing products with low thermal conductivity⇒Providing ideal solutions by combining refractory
technology, insulation material technology, and furnace
installation engineering technology▶ Promoting the collection of used refractories(Previously treated as industrial waste)
400℃

Applying ALTIMA:
Bricks with lowthermal conductivity

50℃13

4 Promoting Sustainability Management ② Human Capital Strategies
Implementing human capital strategies as an initiative to secure,develop and retain talents, which is the basis for sustainable growth
Human Capital Strategies
Building a management foundation with focus on “Talent Acquisition," “TalentRetention" and “Human resources / Organizational Development"

123

Human resources andorganizational
development aligningwith corporate strategy

Further improving
Diversity and Inclusion

Creating a comfortable
work environment

Talent development required as a global company▶ Enriching job level-based/specialized education and training▶ Active interactions among global group companies:
One SHINAGAWA▶ Organizational development aligning with corporate philosophy

Fostering corporate culture where diverse talents can play
active roles▶ Focus on Diversity Recruitment▶ Harassment Prevention▶ Compliance Training

Supporting diverse work styles that suit work-life balance andindividual living environments▶ Introducing Flexible Working Styles (including Work from Home)▶ Active Use of Family Care Leave▶ Active Use of Annual Paid Leave

14

Financial/Capitalization Strategy① Investment for Growth

Accelerating growth investment including M&A as a key
measure to strengthen management structure for the future【Investment Policy】■Capital Investmentby Year

● Actively invest in growth markets (fields & areas)● Promoting investment considering turning
production bases in Japan into mother factories
in order to grow in the global market● Accelerating sector driven business expansion,
significantly increase investment in the“Insulation Sector" and “Advanced Material &Device Sector," which are new areas to develop
into untapped growth markets

16.1B JPY
14.0B JPY
0.6
1.3
0.2
1.6

20.6B JPY
1.7

Corporate HQ

1.1

Engineering Sector

2.2

Advanced Material &Device Sector

5.4

Insulation Sector

10.1

Refractory Sector

0.6
0.6
0.2
2.8

● Actively promoting M&A and JV investment toaccelerate business growth● Focusing on environmental investment(decarbonization) in order to create a sustainablebusiness management system● Advancing with DX investment that contributes
to improving operational efficiency and work
style reform

10.3

The 5th Mid-Term（Plan）

11.7

The 5th Mid-Term（Results）

The 6th Mid-Term（Plan）

15

Financial/Capitalization Strategy② Shareholders Return

Sustainable Return of Profits to our Shareholders【Dividend Policy】Considering the importance of enhancing
the return of profits to shareholders,
Shinagawa decided to aim for a dividend
payout ratio of 40% * 30% until the last Mid-Term Plan

■Dividend per Share & Total Dividend Payout（B JPY）（JPY）
200

Total Dividend Payout
4.10

Dividend per Share
160

3.13

【Dividend vs Growth Investment】
・ During the 6th Mid-Term Management Plan
period, Shinagawa plans to accelerate growthinvestments including M&A. As a result, cash flow
during this period will probably be allocatedpreferentially to growth investments.
・ Furthermore, as a result of M&A, the goodwill
amortization
increases
andprofits
arecompressed, so even if the payout ratio is thesame 40%, the total dividend amount may
fluctuate.
・ In order to maintain the total return amount, weplan on flexibly acquiring treasury stock based on
the cash flow situation.

12090
1.78

80

1.26
40

0.75

1627

1.22

26

1.03

38

1.87

68

40

2200.002017 2018 2019 2020 2021 2022 2023 2024

Note：The annual dividend above is the amount taking into account thestock split (effective October 1, 2023, splitting 1 share into 5 shares)＜Reference Information＞
Acquisition of treasury stock (implemented from November 6, 2023 to March 22,2024) ・Acquired shares: 1,220,800 shares ・Acquisition price: 2.24 billion JPY16