MANAGEMENT STRATEGY

A Message from the President

Moving Forward
With a Focus on
The Future

Hiroyuki Nishio
Representative DirectorPresident, CEO and COO

10

LINTEC ANNUAL REPORT 2017

The whole company is working as one to achieve the goals of our new medium-term business plan, LINTEC INNOVATION
PLAN 2019 (LIP-2019), which was introduced in April 2017 and continues through the fiscal year ending March 31, 2020.
We will be approaching our tasks in a spirit of innovation and challenge throughout the plan’s three years.
Review of LIP-2016, our previous medium-term

overseas subsidiaries. Reorganization made little head-business plan

way at MADICO, INC. in the U.S., and LINTEC (TIANJIN)

We were able to build a platform for future growtheven though we fell short of numerical targets.

INDUSTRY CO., LTD. in China, and PT. LINTEC

A major achievement of the three years under LIP-2016

action. We were also affected by an economic slowdown in

was the completion of the Advanced Technology Building,

China and other emerging countries in Asia. As a result,state-of-the-art research facilities in Japan in May 2015.

we fell far short of the LIP-2016 targets of ¥240 billion inIts large-scale pilot coaters, with their close resemblance

net sales and ¥20 billion in operating income in the fiscal

to mass-production facilities in our plants, and its cutting-year ended March 31, 2017, the plan’s final year.

INDONESIA suspended operations for a time due to strikeedge analytical equipment have significantly increased thespeed of the product development process. Overseas, weOverview of LIP-2019

lished a company in Singapore, LINTEC ASIA PACIFIC

We are building on the previous medium-termbusiness plan’s successes and disappointments
as we aim for new goals.

REGIONAL HEADQUARTERS PRIVATE LIMITED, to oversee

The new plan we have drawn up, LIP-2019, reflects ourinclusive overall business strategy planning and imple-

desire to learn from the successes and disappointments

mentation in this region. We were also active in strength-of LIP-2016 and move on to our next growth stage. Its

ening our business base in Europe and North America

basic policy is “Deepening innovation aimed at drivingwith three acquisitions in October–December 2016, buyingnew growth.” The key numerical targets are consolidated

MACTAC AMERICAS, LLC and VDI, LLC in the U.S. andnet sales of ¥270 billion, operating income of ¥25 billion,

purchasing stock in LINTEC GRAPHIC FILMS LIMITED in

and an operating profit margin and ROE of more than 9%.

the United Kingdom.

The plan has four key initiatives, as shown on the next

fleshed out our production, sales, and delivery network inSoutheast Asia and India, and in January 2015 we estab-However, there were weak performances from somepage.

LINTEC INNOVATION PLAN 2019 (LIP-2019)
Period: From April 2017 to March 2020
Basic Policy: Deepening innovation aimed at driving new growth
Quantitative Targets:
Major numerical targets in the final year of LIP-2019, the fiscal year ending March 31, 2020 (on a consolidated basis)

Net sales

Operating income

Operating profit margin

270.0 billion¥

25.0 billion

More than¥

9%

ROE
More than

9%

LINTEC ANNUAL REPORT 201711MANAGEMENT STRATEGY

A Message from the President

LIP–2019 Key Initiatives 
1 Strengthening of regional strategy( 1 ) Increase in the domestic share and development of new markets and new demands( 2 ) Strategic investment and business expansion in the Asian region( 3 ) Expansion of the existing fields in Europe and America and the pursuit of synergies with the acquired subsidiaries
2 Creation of new value( 1 ) Creation of products for differentiation which exceed customer needs( 2 ) Development of next-generation products anticipating market changes
3 Bolstering the corporate structure( 1 ) Ensuring soundness of the Group companies and continual increase in earnings( 2 ) Promotion of cross-sectional operational reforms( 3 ) Further promotion of cost structure reforms
4 Activities for realizing a sustainable society( 1 ) Promotion of business activities conducive to solving social concerns( 2 ) Promotion of work-style reforms, fostering of diverse human resources and encouragement of their active participationin the workplace

Key initiatives

analysis of the various issues facing our customers and

1 Strengthening of regional strategy

their specific requirements. To this end, it is important

Regional strategy is to be strengthened in global markets

that our sales personnel form a detailed picture of theirwith a focus on Printing and Industrial Materials Products.

customers’ requirements from day-to-day contact andIn Japan, where some markets have matured, LINTEC will

share the information with others in the Company so thatwork to expand share and create new demand by offeringbusiness operations and the R&D division can study it

new products and new applications while aiming for dif-together. We will also aim to respond more promptly thanferentiation on cost and service in established products.

before to customer expectations by making full use of theIn Asia, LINTEC ASIA PACIFIC will be given increased

Advanced Technology Building’s testing facilities tofunctionality forging stronger links between manufacturingsmooth the transition from materials development to theand sales companies and we will seek to expand businessproposal of manufacturing processes. New materials

through such measures as increasing local raw materials

development centered on electronics, optics, automobiles,procurement, launching new products tailored to local

the environment, and energy will be another priority as it

demand, and undertaking strategic M&A. Further develop-will play a key role in future growth.

ment of our markets in Thailand, Indonesia, and India will
be a particular focus. In Europe and North America, we3 Bolstering the corporate structure

will utilize the sales channels and technological strengths

In March 2017, we announced the liquidation of LINTEC

of our three 2016 acquisitions to the full and realize Group(TIANJIN) INDUSTRY CO., LTD., which is a label printing

synergies quickly. MACTAC AMERICAS products aremachine manufacturer and marketer, and we are also

already being offered to customers in Asia and we lookworking with some urgency to turn around other overseas

forward to further developments along these lines.

Group companies where earnings are weak. In June 2017,
under a radical management rationalization for MADICO,

12

2 Creation of new value

INC., we announced full withdrawal from PV backsheets,

We want to provide original LINTEC value-added products

restructuring of the production system, and downsizing ofand services derived from identification and careful

the workforce. We will be aiming to further strengthen theLINTEC ANNUAL REPORT 2017

Group structure with measures including Group company
reorganization in Japan.
At the same time, we want to make effective use of theA message to our shareholders and investors
Having fallen short of our previous medium-term business plan’s targets, we are aiming to keep the PDCA

information system infrastructure we have built and inte-

cycle* turning as we pursue the LIP-2019 targets, so that

grated into our operations to raise levels of efficiency in

we identify areas where we deviate from plan, investigate

our back-office operations, in particular, and optimize ourthe causes thoroughly, and respond promptly with correc-

allocation of human resources. We will also be paying

tive action. In line with the plan’s basic policy and with theheed to costs from the stage of product design and devel-

objectives of deepening the innovation LINTEC has built

opment onward and undertaking cost restructuring initia-

up over the years and generating new growth, we are pro-tives in procurement, production, and distribution. We

moting a radical rethink of individual employees’ mind-set

expect these measures to produce cost savings of ¥2.1 bil-and business practices.

lion over three years.

Increasing our employees’ level of satisfaction is crucial
to enhancing customer satisfaction and hence elevating

4 Activities for realizing a sustainable society

our earnings. We will therefore strive to create an even

LINTEC has long been an enthusiastic corporate citizen in

more rewarding and happier workplace for all ourrespect of corporate social responsibility (CSR). We will beemployees in pursuit of sustained growth.

looking to further promote business activities with an awareness of the issues brought up in the Sustainable Development

As we move forward, we would like to ask our shareholders and investors for their continued support.

Goals (SDGs), such as environmental and population-related
issues, and we expect this effort to be reflected in LINTEC’sgrowth and social development. At the same time, we believethat a dynamic workplace where a wide variety of people canwork together is essential for sustainable growth, and we will
strive to enhance the working environment with Group initia-

August 2017

tives in areas such as work-style reform, female participation

Hiroyuki Nishio

in business activities, jobs for persons with disabilities, andRepresentative Director

staff training at Group companies overseas.

President, CEO and COO

We are aiming to keep thePDCA cycle turning as wepursue the LIP-2019 targets.

*PDCA cycle: Plan-Do-Check-Act cycle for continuous process improvement
through repetition of its four phases

LINTEC ANNUAL REPORT 201713

MANAGEMENT STRATEGY

A Message from the CFO

Through active dialogue withshareholders and investors,
we will continue to improve
corporate value.

Hitoshi Asai
DirectorVice President Executive Officer and CFO

Review of performance in the fiscal year ended Marchcosts and the losses at the Chinese subsidiary currently

31, 2017 and performance outlook for the fiscal year

undergoing liquidation will not recur, and losses at PT.

ending March 31, 2018

LINTEC INDONESIA should narrow following the resolu-

Business conditions were severe in the fiscal year ended

tion of its labor issues. In addition, the three acquisitions

March 31, 2017, with a strong yen and a slowdown in China

will make a 12-month contribution to consolidated busi-and other Asian emerging countries. Profits were also

ness results and our business related to semiconductors

squeezed by weak performances at some overseas sub-and electronic components is expected to trend strongly.

sidiaries and one-off costs arising from three acquisitions

We therefore project year-on-year growth of 21.4%, toin Europe and North America. As a result, consolidated¥250.0 billion, for net sales; growth of 20.5%, to ¥20.0 bil-

net sales declined 2.2% year-on-year, to ¥206.0 billion, andlion, for operating income; and growth of 17.9%, to ¥13.5

operating income declined 6.2%, to ¥16.6 billion. Profitbillion, for profit attributable to owners of parent.

attributable to owners of parent increased 5.1% year-onyear, to ¥11.5 billion, as there were gains on sales of invest-

FY 2017 Business Results and FY 2018 Forecasts (year-on-year)

ment securities and a boost from tax effect accounting.
The three acquisitions involved goodwill of approximately ¥33.5 billion, which is to be amortized 10 years.
Profits will be heavily impacted during this period and weare therefore seeking early realization of synergies insales channels and technology.
Major negative influences in the fiscal year ended March31, 2017 should be eliminated in the fiscal year ending
March 31, 2018. The one-off, three-company acquisition

14

LINTEC ANNUAL REPORT 2017

FY2017FY2018 Forecasts

Net Sales¥206.0 billion(-2.2%)¥250.0 billion(+21.4%)

Operating Income¥16.6 billion(-6.2%)¥20.0 billion(+20.5%)

Profit Attributable toOwners of Parent¥11.5 billion(+5.1%)¥13.5 billion(+17.9%)(Fiscal year ended / ending March 31)

Dividends form the basis of our thinking on returns toForeign exchange impact
Yen appreciation is positive for our procurement of pulp

shareholders, which we regard as one of the most impor-and petrochemical raw materials, but overall it is a disad-tant management issues. We aim to make stable and con-vantage because it reduces the yen translation of over-tinued returns while maintaining a balance with retainedseas subsidiaries’ earnings and has a negative impact onearnings to support a healthy balance sheet. In the fiscal

the LINTEC parent’s transactions with overseas subsidiar-year ended March 31, 2017, we paid an annual dividend ofies. In the fiscal year ended March 31, 2017, the yen appre-¥66, an increase of ¥12 over the previous year. In the fiscalciation was a negative of approximately ¥6.8 billion foryear ending March 31, 2018, we plan to pay an annual divi-sales and ¥2.3 billion for operating income. The Group’s

dend of ¥66 based on our projection of net income per

overseas sales ratio was 37.8% and foreign exchangeshare of ¥187.11.

impact will now increase further following the consolidation of the three acquisitions.

Cash Dividends per Share

To date, operating income sensitivity to ¥1 movement
against the U.S. dollar has been around ¥100–¥200 million,
but it will increase as a result of the three-company consolidation. The Group undertakes many transactions inKorean won, Chinese yuan, and Taiwan dollars and this
aspect of impact from foreign currency movement also
warrants attention.

¥8066
60

40

4248

66

54

34

20

Growth investments and shareholder returns

0We intend to continue making proactive use of cash for2013

capital expenditures in growth areas and M&A. Wherenecessary, we will finance business expansion with loans.

20142015

2016

2017
2018
(Forecast)(Fiscal years ended / ending March 31)

Dialogue with shareholders and investors

I believe there are various views on ROE enhancement

We believe a good understanding of LINTEC is the key

and our view is basically that ROE will rise if we increase

prerequisite for constructive dialogue with shareholders

profits steadily.

and investors. LINTEC is sometimes difficult to understand due to the wide diversity of its business, and views
differ depending on the observer. It is important for every-ROE

one to have a proper understanding of the true situation,

%
86

7.2
5.6

6.4

5.8

6.6

and its weaknesses. To this end, we have to communicate
information at appropriate times and in appropriate ways.
We will seek to maintain diverse forms of active dialogue

4with shareholders and investors that will lead to sustained
growth for LINTEC, enhancement of corporate value over

20including LINTEC’s special characteristics, its strengths,

the medium and long term, and appropriate pricing of our2013

2014

2015

2016

2017

shares.

(Fiscal years ended March 31)LINTEC ANNUAL REPORT 201715