Our Management

From the President

Drawing on my experience, I will direct concerted efforts
toward further growth.
My name is Hiroyuki Nishio, and I was appointed president of LINTEC
Corporation in April 2014. Having inherited a ﬁrm management foundationthat has been built up over many years, I and the rest of LINTEC’s
management team will direct all our efforts toward further growth.
I would like to present a simple rundown of my career. As I had
majored in development engineering at university, for about 18 years
after joining LINTEC I was mainly involved in the building and installationof production facilities. For roughly ﬁve and a half years, I was transferred
to a production subsidiary in the United States and thus was able togain valuable experience overseas, too. Following my return to Japan,
I was assigned to the Corporate Strategic Ofﬁce, where I made use of
the knowledge I had built up when in charge of facilities and wasresponsible for the rationalization and consolidation of our production
bases in Japan and overseas production subsidiary start-ups.
Subsequently, under previous president Akihiko Ouchi, I was involved informulating and managing the progress of three times medium-termbusiness plans.
Coinciding with my appointment as president in April, we launched
our new medium-term business plan, LINTEC INNOVATION PLAN 2016
(LIP-2016). In the coming years, as part of my having taken over thehelm of management, I will draw on the experience I have amassed
thus far while reﬁning my sense of management and making rapid andappropriate decisions.
As president, I would like to take this opportunity to express my gratitude
for the ongoing support of all our shareholders and investors.
Looking Back at Our Previous Medium-Term Business Plan

We were unable to achieve the numerical targets amid
a severe management environment.
Firstly, I would like to take a look back at our previous medium-termbusiness plan, LINTEC Innovation Plan III (LIP-III), which ran for thethree years from April 2011. We promoted a raft of measures that had
four key initiatives: strengthen and expand overseas businesses; expand
domestic businesses and increase proﬁtability by optimizing quality,
cost, and delivery (QCD); create original new products that will supportthe next generation; and strengthen global management. Our basic
policy was to “achieve sustainable growth and maximize corporate value
through aggressive and bold innovation.” With regard to the numerical

10LINTEC ANNUAL REPORT 2014

targets under LIP-III, we assumed consolidated net sales of ¥260.0 billion andoperating income of ¥26.0 billion and worked to achieve those targets. However,
the management environment in which the Company operates has become severe
due to the Great East Japan Earthquake that struck immediately prior to LIP-III’slaunch, the deepening of the European ﬁnancial crisis, the ﬂoods in Thailand, andan excessively strong yen.
As for the global economy in the ﬁscal year ended March 31, 2014, the ﬁnal ﬁscal
year of LIP-III, the United States continued its economic recovery against a backdropof strong consumer spending, and signs of recovery from a long-term downturn

Net Sales¥ Billion
250

203.2

200
150
10050

could be seen in Europe. Contrastingly, the pace of growth slowed in emerging

0economies, such as China and India. Meanwhile, in Japan, there were improvements

201020112012

2013 2014 FYin corporate performance, consumer spending, and employment conditions, due tosuch factors as government economic policies and the depreciation of the yen anda recovery in stock prices brought about by the Bank of Japan’s monetary easing
policies, and the gradual economic expansion continued due to such additional
factors as the surge in demand ahead of a consumption tax hike.
As a result of the above factors, sales and income both increased in

Operating Income /Net Income¥ Billion
2520

comparison with the year ended March 31, 2013, with consolidated net sales up
6.5% year on year, to ¥203.2 billion, operating income up 30.3%, to ¥13.8 billion, andnet income up 10.7%, to 8.5 billion. However, these ﬁgures mean that we were

13.8

15
108.5

unable to achieve the numerical targets set under LIP-III.
5New Medium-Term Business Plan LIP-2016 Launched

We are targeting net sales of ¥240.0 billion andoperating income of ¥20.0 billion.

0

2010

2011

2012

2013 2014 FY

Operating Income
Net Income

The LINTEC Group formulated its medium-term business plan LIP-2016, the ﬁnalyear of which is recognized as being the ﬁscal year starting April 2016 and ending
March 31, 2017, as efforts toward a return to a growth path are essential in order togrow and develop into the future. The basic policy set under LIP-2016 is to “returnto a growth path through active management and continuous innovation.” There isa strong sense that we are once again making a new start with an aggressive attitude
in order to further deepen the spirit of innovation rooted in all of the Group’s
employees, and build a strong corporate structure that will not be substantiallyaffected by severe management environments.
There are ﬁve key initiatives stated under the new medium-term business plan,
the ﬁrst of which is to “further promote global development.” Under LIP-III, we had
worked to strengthen our production and sales systems with a particular emphasis
on Asian markets, but under LIP-2016 we will fully utilize each of these bases and,P.23

in addition to assessing market trends, work to further bolster production andPerformance by Operational Segment
For details of performanceby operational segment, please see“Performance by Operational Segment”
on page 23.

sales bases. For the Group to achieve growth over the medium to long term,

LINTEC ANNUAL REPORT 201411Our Management

From the President

Overview of LIP-2016(From April 1, 2014, to March 31, 2017)

Basic policies

Return to a growth path through active management
and continuous innovation
Key initiatives
1. Further promote global development(1) Expand overseas businesses with a particular focus on Asian region(2)Establishﬁ rm business foundations in new regions

2. Create innovative new products that will support the next generation(1) Explore new markets and demand by creating new products(2)Enhance the base of our research and development in order to create new products

3. Transform into a robust corporate structure(1) Strengthen cost competitiveness(2)Select and concentrate our management resources

4. Promote strategic M&A(1) Clarify the targets that are suited to a growth strategy(2)Strengthen the system to promote M&A

5. Foster human resources(1) Secure and foster global human resources(2)Implement continuous stratiﬁed training

Major numerical targets (on a consolidated basis)
Net sales:

240.0

¥

12

Operating income:billion

LINTEC ANNUAL REPORT 201420.0¥billion

Operating proﬁt margin:More than

8%

ROE:

More than8%

overseas sales expansion will be essential. In emerging economies and elsewhere,
we will aim to increase sales to existing customers and acquire new customers by,for example, planning and developing products that fulﬁll the needs of eachmarket, while again taking up the challenge of targeting an overseas sales ratio of
more than 40%, something that we were unable to achieve under LIP-III. TheCompany will also embark on full-scale market research in regions where growthis expected, such as in Eastern Europe and South America, where the Company
has yet to make any inroads into the respective markets, and advance the creationof a future-oriented business foundation.
The second key initiative is to “create innovative new products that will support
the next generation.” Needless to say, this is the key that will determine the future
growth of the LINTEC Group. Naturally, it will be our policy to further deepen ourcore technologies and enterprisingly acquire new technologies from outside theCompany, while fostering new business pillars by linking those technologies.
In particular, our focus will include ﬁelds related to electronics and automobiles or,alternatively, environment- and energy-related businesses. We will also steadily
induce growth in new buds, including a promising high barrier ﬁlm*1 as an element

Carbon nanotube sheet

in next-generation displays and the carbon nanotube*2 sheeting technology that
we expect to be utilized for certain electrodes in high-capacity electricity storage
devices. Also, having invested around ¥6.0 billion, we are increasing our R&D
buildings and installing the latest experimental research facilities, which aretargeted for completion in autumn 2015. By accelerating the process times from
R&D to volume production, we will work to establish an edge in the market and tocreate innovative products.
The third key initiative is to “transform into a robust corporate structure” that is
capable of generating a certain level of proﬁt even in a severe business environment.
Established in April 2013, the Cost Innovation Division had been producing results

Illustration showing planned new research
center buildings after completion

and was reformed in April 2014 as the Cost Innovation Ofﬁce under the directcontrol of top management to strengthen its activities. We are planning to work on
optimizing the full gamut of processes, from raw material procurement to thedelivery of products to customers, and to improve labor productivity. In addition,
we will be actively implementing build-and-scrap practices for QCD strengthening
by making existing production facilities more efﬁcient and by the installation ofhigh-performance facilities. As part of our plans to select and concentrate ourmanagement resources, we will proceed with rebuilding and reorganizing ourbases inside and outside Japan and invest management resources mainly ingrowth areas.
*1 High barrier ﬁlm:
Film material that maintains a level of transparency roughly equal to that of glass and also has properties thatmake it difﬁcult for water vapor to permeate*2 Carbon nanotube:
Tubular carbon material with a diameter measured at the nano level (one billionth of a meter)

LINTEC ANNUAL REPORT 201413

Our Management

From the President

Operating Proﬁt Margin%
15

The fourth key initiative is to “promote strategic M&A.” Mergers and acquisitions
are an effective means for gaining technologies in new ﬁelds, markets andproduction facilities as well as for bringing in human resources and know-how in

12a short period of time. Not limited to the gaining of new markets and production
sites, our aim is to popularize the LINTEC brand particularly in growth markets, to96.8

6acquire the brand power enjoyed by local companies, and to gain new technologies
that are expected to offer high synergistic effects with the Company’s core technologies. We will conduct active information gathering, centered on the team in

3

charge of M&A that was organized in April 2014, and promote M&A with a view to02010

2011

2012

2013 2014 FY

the early realization of business strategies through speedier decision making.
The ﬁfth and ﬁnal key initiative stated under LIP-2016 is to “foster humanresources.” The securing and fostering of human resources will be crucial for us

ROE

to continue the further strengthening of our global development. We will be focusing%
15

on such areas as the training of staff who will be working at overseas subsidiaries,

12quarters, and the active recruitment and training of local staff. In addition, we will

the strengthening of the global support system at our corporate division of headwork to further reinforce and make effective use of the in-house training program

9that has been implemented up to now. At the same time, we will adopt the5.8

6of the management-level employees who will lead the next generation through30

medium- to long-term perspective and encourage the training and strengthening
planned job rotations.

2010

2011

2012

2013 2014 FY

By proactively implementing these measures, we are aiming for net sales of¥240.0 billion, operating income of ¥20.0 billion, and both an operating proﬁt margin
and ROE of more than 8% in the ﬁnal ﬁscal year of LIP-2016, ending March 31, 2017.
Forecasts for Fiscal Year Ending March 31, 2015, First Year of LIP-2016

Following domestic and overseas economic recovery,
we are expecting increased sales and income.
Forecasts for the current ﬁscal year expect that U.S. economic growth willcontinue against a backdrop of robust consumer spending and that the recovery inEurope will be moderate. In contrast, it is anticipated that the decelerating trend
will continue in emerging economies, centered on China. In Japan, it is envisaged
that there will be a temporary drop in consumer spending following the consumption tax hike, but the economy is expected to follow a growth trend. In this economic
environment, in the ﬁscal year ending March 31, 2015, we are forecasting net salesof ¥210.0 billion, up 3.3% year on year, operating income of ¥16.0 billion, up 16.2%,
and net income of ¥10.5 billion, up 23.5%.

14

LINTEC ANNUAL REPORT 2014

Shareholders Returns

Cash Dividends per Share

We intend to issue dividend payments of ¥44, an increase of ¥2,in the ﬁscal year ending March 31, 2015.

¥50

LINTEC regards enhancement of return of proﬁts to shareholders as one of its

40

most important management issues and fundamentally aims to provide stable and4430continued returns after consideration of each ﬁscal year’s consolidated performance
while strengthening its management base. Internal reserves are used effectively toreinforce the Company’s ﬁnancial base and provide increased future corporate
value through investment in production facilities and R&D. Adhering to this basicpolicy, we issued dividend payments of ¥42 per share for the period ended March31, 2014. Based on projections of consolidated net income of ¥10.5 billion, we intend

201002011

2012

2013

2014 2015 FYForecast

to increase dividend payments by ¥2 per share for the current ﬁscal year, to ¥44.
In Closing
The ﬁve key initiatives cited in LIP-2016 look further ahead than the three-year
period of the plan. I believe we will achieve LIP-2016’s numerical targets andcontinue to build a robust foundation toward sustainable growth by inheriting theaggressive management style advocated by my predecessor, former president
Akihiko Ouchi, and having all the Group’s employees tackle these initiatives as one.
We will also endeavor to implement corporate social responsibility (CSR)-based
management to further develop as a company that is highly regarded and trusted
by all of its stakeholders.
In the years ahead, too, please expect greatt things to come from LINTEC, as we
aim to make major leaps on the way to becomingming a yet more forceful, yet more
attractive company.
August 2014

Hiroyuki Nishio
Representative Director,President, CEO & COO

LINTEC ANNUAL REPORT 201415