IR Briefing for
the Fiscal Year Ended March 2020
Progress During Year 3 of NC2020,
Our Medium-Term Management Plan

Inabata & Co., Ltd.
Katsutaro Inabata, Director, President
June 4, 2020
Inabata & Co., Ltd. held the financial results briefing for the fiscal year ended
March 2020 via live broadcast on June 4.

1

Contents
Page
3

Company Overview

5

Operating Environment

10

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

13

Progress in Year 3 of NC2020

22

Returning Profits to Shareholders

28

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.

Life Industry

6%
Chemicals

12%

FY03/20 Plastics
Net sales: 45%¥600.3 billion
Information &Electronics

37%

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

4◼ Operating Environment

5

Response to the Spread of the Novel Coronavirus Pandemic◼ Strove to prevent the spread of the virus and continued
operations from a perspective centered on business continuity
planning (BCP)◼ Established a companywide task force on February 13, 2020
◼ Achieved a teleworking rate of about 80% at our head officein Japan◼ Currently, we have no infected personnel on record

6Impact of the Novel Coronavirus Pandemic on Operations
in FY03/20◼ The virus had almost no impact on the Information & Electronics and Chemicals segments.
However, it led to reduced demand that had a negative impact on the Life Industry and Plastics
segments.
Segment
Information &Electronics

Business fieldPrimary impact during FY03/20

1. LCD-related business1. (no impact) The front-end processes of panel manufacturers escaped impact from the virus
and operations continued at high capacity rates.
2. (no impact)

2. Office automation (OA)related business
Chemicals

All fields in general(-) The virus had no major impact overall, but falloff concentrated in China during February andMarch brought down full-year sales slightly.

Life Industry

1. Life sciencerelated business1. (-) Operations were affected by plant shutdowns at suppliers in China.

2. Food-related business

Plastics

1. Commodity resins

2. Functional resins(OA-related business)
3. High- performance resins(automotiverelated business)

2. (-) Japan: Sales of fishery products fell, including sales of sliced fresh fish for conveyor-beltsushi restaurants, cut fish for food service establishments, and shrimp products
for restaurants.
(-) Overseas: Sales of seafood soft-shell crab and other fishery products for restaurants
declined.
1. (+) Sales of food containers and containers for liquid sanitizers were favorable.
(-) Sales of synthetic rubber for use in automobiles declined.
(-) Construction delays brought down sales related to construction materials, civilengineering works, and electric cables.
2. (-) Sales of cladding for Japanese client companies in Asia fell.

3. (-) China: Sales to both Japanese and non-Japanese client companies decreased.
Overall, we encountered no major sales interruptions to Tier 1 or Tier 2 companies
through March 31.

7

Operating Environments in FY03/20:
Information & Electronics (FPD Market)◼ As TVs continued to grow larger, demand for larger LCD panel areas also grew.
◼ Toward the end of FY03/20, panel manufacturers in China continued operating at highcapacity rates despite impact from the novel coronavirus pandemic.
◼ Sales of organic electroluminescent panels for smartphones continued to grow, but thisgrowth was limited when measured in terms of area.

Reference: Projected increase in
the area of FPDs
3%

4%

5%

6%

97.5% 97%

96%

95%

94％

2017

2019

2020

2021

2.5%

Area

Reference: Projected increase in the area of large LCD panels
2017

YoY increase (%)

105％

2018
108％

2019
(forecast)

103％

2018

forecast
LCDs

OLEDs

※2020～2021年予測にコロナ禍の影響は加味していません。

Note: Projected figures are provided for reference and represent company predictions based on various data

8

Operating Environments in FY03/20: Plastics◼ Plastics prices fell year on year due to stagnant naphtha prices.
◼ During the first half of FY03/20, exports from China to North America fell due to trade
friction between the US and China.
Mainly Japanese and South Korean companies continued moving their production facilities
from China to locations in Southeast Asia.
◼ Global end-user demand plummeted toward the end of FY03/20 due to impact from thenovel coronavirus pandemic.

（ USD/barrel ）WTI crude oil prices, Domestic naphtha prices

80（ JPY/kl ）60,00054,200706044,80050

41,20040
FY03/1930

40,00040,200FY03/2020

20,000WTI crude oil prices (USD)

Domestic naphtha prices (JYP)

Note: Naphtha prices in Q4/19 have been calculated based on preliminary figures for January through March 2020.

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

10

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

11

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 management12◼ Progress in Year 3 of NC2020

13

Overview of Year 3 of NC2020 (FY03/20)◼

Net sales fell short of projection◼

Operating profit also came in below projection due to the shortfall in net sales, but we were able tosecure operating profit margin in line with projection◼

Our net debt/equity ratio continued to improve, and our financial strength grew(Billions of yen)

FY03/20
actual(A)

NC2020 target for
FY03/20(B)

Difference(A)-(B)

Achievement
rate(A)/(B)%Primary reasons for differences

Net sales

600.3

700.0

-99.6

85.8% Explained on following slides

Operating profit

13.2

14.5

-1.2

91.2% Explained on following slides

Operating profit
margin

2.2％

2.1％

+0.1％

Ordinary profit

14.2

15.0

-0.7

94.7％

Increase in dividend income and adecrease in interest expenses

Profit attributable toowners of parent

11.4

11.0

+0.4

103.8%

Higher gain on sales of investment
securities

Net debt/equity ratio

0.16

0.4x or less

45.2%

－

－

－

USD1=¥108.70

USD1=¥110.00

Equity ratio
Exchange rate14

Differences between Targets and Actual Results for
Net Sales and Operating Profit by Segment◼

Operating profit exceeded projections in the Information & Electronics and Plastics segments(Billions of yen)

Net sales

OperatingprofitFY03/20
actual
(A)

600.3

13.2

NC2020target for
FY03/20 (B)

700.0

14.5

Difference(A)-(B)

-99.6

-1.2

Segment

Difference（A）-（B)

Information &Electronics‐31.3

Chemicals-17.5Life industry-22.0

Plastics

-28.6

Other

-0.1

Information &Electronics+0.2

Chemicals-0.7Life industry-1.3

Plastics

+0.6

Other

-0.0
15

NC2020 Progress by Segment: (1) Information & Electronics◼

Sales fell below projection, but operating profit achieved forecast level and was on par with target for the final fiscal year of NC2020(Billions of yen）

FY03/20
actual(A)

NC2020target for
FY03/20(B)

Difference(A)-(B)

Achievement
rate（A)/(B)Primary reasons for differences

218.6

250.0

-31.3

87.5%

(+) Growth in liquid crystal-related sales(-) Decision to forgo less profitable businesses (OA-related
business)(-) Business restructuring at European subsidiaries (solar cells)

4.48

4.20

+0.28

106.7%(+) Growth in liquid crystal-related materials

2.0％

1.7％

+0.3％

Sales

Operating profit

Operating profit margin

300.0

6.00

Sales

(Billions of yen)

200.0

100.0

218.6

250.0

Operating profit(Billions of yen)

Products Factored into NC2020
at the Time of its Formulation

4.00

Products as an earnings base

261.0
2.00

4.48

4.20

4.40

Parts and materials for liquid crystal
displays
OA-related products
Products in growth areas

0.0

FY03/20 FY03/20(Actual) (Target)

FY03/21(Goal)

0.00

FY03/20 FY03/20

FY03/21(Actual) (Target)(Goal)

Secondary cell-related products(Solar cells, lithium-ion cells)

16

NC2020 Progress by Segment: (2) Chemicals◼ Sales and profit fell short of targets due to stagnation in the former Housing & Eco Materials segment(Billions of yen）

FY03/20
actual(A)

NC2020target for
FY03/20(B)

Difference(A)-(B)

Achievement
rate（A)/(B)Primary reasons for differences

Sales

74.1

91.7

-17.5

(-) Stagnation in the former Housing & Eco Materials
80.9%
segment (overseas sales of construction materials)(-) Generally sluggish in the Chemicals segment

Operatingprofit

1.20

2.00

-0.79

(-) Sales fell short of targets
60.4% (+) Growth in heat-dissipating materials forautomobiles

Operating profit
margin

1.6％

2.2％

-0.6％

(Billions of yen)(Billions of yen)
Sales

100.0

Products Factored into NC2020
at the Time of its Formulation

Operating profit

3.00

Products as an earnings base

2.00
50.0
74.1

91.7

Materials for automotive parts, coatingrelated products, housing materials

95.7
2.20

Products in growth areas

FY03/20 FY03/20

FY03/21

New products, including heatdissipating materials; housing materials(sold overseas); and environmental
materials(actual) (target)(goal)

2.00

1.00
1.20

0.0

FY03/20 FY03/20

FY03/21(actual)(goal)(target)0.00

17NC2020 Progress by Segment: (3) Life Industry◼ Both sales and profit came in below targets due in part to delays to new food-related projects(Billions of yen）

FY03/20
actual(A)

NC2020target for
FY03/20(B)

Achievement
Rate(A)/(B)

Difference(A)-(B)Primary reasons for differences

36.9

59.0

-22.0

(-) Transactions volume in China fell due toenvironmental regulations
62.6% (-) Slumping sales of materials for insect repellent andpesticide(-) Delays to new food-related projects (related toagriculture and food processing)Operatingprofit

1.16

2.50

-1.33

46.6% (-) Sales were below forecast

Operating profit
margin

3.2％

4.2％

-1.0％

Sales

80.0

Sales

(Billions of yen)

40.0

59.0

3.00
(Billions of yen)

Products Factored into NC2020
at the Time of its Formulation

2.00

Products as an earnings base

2.50

65.0

2.80

1.00

36.9
0.0

Operating profit

1.16

FY03/20 FY03/20

FY03/21(actual)(goal)(target)0.00• Pharmaceutical ingredients (new drugs)• Materials for home products• Fishery products (for conveyor-belt sushi
restaurants)
Products in growth sectors

FY03/20 FY03/20

FY03/21(actual) (target)(goal)

Devices and materials related to advanced
medicine (regenerative medicine) andagricultural products (blueberries, etc.)

18

NC2020 Progress by Segment: (4) Plastics◼

Sales fell below projection, but operating profit achieved forecast level and was on par with target for the final fiscal year of NC2020(Billions of yen）

FY03/20
actual
(A)
270.3

Sales

NC2020target for
FY03/20(B)

Difference(A)-(B)

Achievement
Rate(A)/(B)

299.0

-28.6

90.4%

(+) Higher sales of high-performance plastics for use
in automobiles
111.3%(+) Overall increase in profit margin(-) Sales came in below forecast

OperatingprofitOperating profit
margin400.0(Billions of yen)

Sales

6.23

5.60

+0.63

2.3％

1.9％

+0.4％

8.00

Primary reasons for differences(-) Drop in plastics prices(-) Impact from the novel coronavirus pandemic

Operating profit

Products Factored into NC2020
at the Time of its Formulation(Billions of yen)

300.0

Products as an earnings base

4.00

200.0
270.3 299.0

6.23

308.0

5.60

5.90

100.0
0.0

Plastics for OA equipment andconsumer electronics
Films and sheets (for food products),
including manufacturing and processing
Products in growth areas

FY03/20 FY03/20

FY03/21(actual) ( target)(goal)

0.00

FY03/20 FY03/20

FY03/21(actual) ( target)(goal)

High-performance resins for use inautomobiles, sports-related products(grip tape)19

NC2020: Qualitative Assessment of Third-Year Progressin Priority Areas◼ Focus on markets with growth potential and sectors that have
yet to be developed
Priority areas
Automotive

Life science and medical

Environment and energy

Food, including agriculture(Agricultural field)

Comments
Sales of high-performance resins to global customers grew despite
impact from the novel coronavirus pandemic.
Meanwhile, the company recorded growth in sales of heat-dissipating
materials for electric vehicles and strong sales related to decorative
films.
Sales of pharmaceutical ingredients fell below projection due in part toenvironmental regulations in China and the spread of the novel
coronavirus.
Meanwhile, sales of growth media, devices, and other products in thefield of advanced medicine were delayed, and sales of home products
such as insect repellent and pesticide materials struggled.
We have revised our forecast for solar cell sales due suspensions ofrelated transactions in Europe.
We recorded growth in system-related projects in Japan and material
sales. Despite slight delays to lithium-ion cell-related sales, we
experienced growth in terms of associated material sales to Chineseand South Korean manufacturers.
Cultivation of blueberries and garlic in Hokkaido took more time than
expected, but crop growth was strong nevertheless.
Sales of imported grass and other types of animal feed were robust.

Assessment

◎

×

△

△
20

NC2020 Investment Status

More proactive investment to expand the trading business(Billions of yen)
FY03/18
actualFY03/19
actualFY03/20
actual

NC2020 period(FY03/18
onward)Growthinvestment

3.86

2.31

1.85

8.03

Fixed
investment

1.59

2.03

2.01

5.63

Total

5.45

4.34

3.86

13.66

◼ Major growth investments in FY03/20• Information & Electronics segment:
Start-up loans ¥0.50 billion (related to mask blanks)• Plastics segment:
Plant relocation loans ¥0.54 billion (related to specialty paper)¥0.17 billion for facilities (related to inflation molding)• Life industry segment:•
Share acquisition¥0.15 billion (related to pharmaceuticals)¥0.10 billion in investment (related to regenerative medicine)21◼ Returning Profits to Shareholders

22

Returning Profits to Shareholders

Policy on returning profits to shareholders
We target a total return ratio* of approx. 30–35%.
Dividends per share:◼ FY03/20 results
Annual dividend ¥53（interim ¥20 year-end ¥33）
Value of treasury shares acquired: ¥425 million (300,000 shares)
Total return ratio: 31.9% (dividend payout ratio: 28.1%)◼ FY03/21 (forecast)
Annual dividend
Undecided* Total return ratio (%) = (dividend amount + amount of treasury shares acquired) / consolidated net income x 100

23

Returning Profits to Shareholders

Annual dividends per share and indicators of shareholder return
(Yen)
60

Dividend

Dividend payout ratio

Total return ratio

53 ［Undecided］

80.0%

48
40

30

33

36

40

46.5%
34.8%

30.0%

31.9%

23

31.1%

22.1%

24.1%

23.7%

25.6%

(604)

(707)

(891)

(679)

(936)

(425)

31.1%

Approx.
30–35%
target

40.0%

36.4%

20

0

40

21.9%

(439)

28.1%
22.7%

0.0%

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21(actual)(actual)(actual)(actual)(actual)(actual)(actual)(actual)(forecast)

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.

24◼ Forecast for FY03/21, the Final Fiscal Year ofNC2020, our Medium-Term Management Plan

25

◼ Regarding our Forecast for FY03/21, the Final Year ofNC2020Due to a large number of uncertainties, we are currently unable to makerational estimates regarding the future impact of the global novel
coronavirus pandemic. Accordingly, we have postponed disclosures of our
FY03/21 earnings and dividend forecasts. We will closely monitor trends
moving forward and will promptly release a consolidated earnings forecast
based on rational estimations as soon as possible.

26

Projected Impact on Businesses in FY03/21◼

Based on the spread of the novel coronavirus pandemic, we project the following impact on
our businesses (as of June 4, 2020)
Segment

Information &Electronics

Chemicals

Business field
1. Liquid crystalrelated business
2. OA-related business1. (-) Panel manufacturers could reduced their rates of operations due to substantial declines in
end-user demand for TVs and smartphones
2. (+) Extraordinary demand for consumer inkjet printers associated with teleworking(-) Impact on office copying machines amid the spread of teleworking

1. Automotive- related
business
2. Communication paper
and ink- related business3. Construction materialsrelated business1. (-) Decrease in volume of automobiles produced in China and Southeast Asia

1. Life science- related
business
2. Food-related business1. (-) Decrease in sales of ingredients for influenza medication due to a spreading culture of
prevention(-) Lower sales of sunblock and insect repellent spray due to a tendency of remaining indoors
in response to stay-at-home orders
2. (-) Decline in sales of cut fish for school lunches due to school closures(-) Delayed launches of fishery product processing projects due to overseas travel restrictions(-) Lower exports of Japanese food ingredients due to a tendency of remaining indoors in
response to stay-at-home orders.

1. Commodity resins
2. Functional resins(OA-related business)
3. High- performance resins(automotive-related
business)

1. (- ) Impact of a projected drop in naphtha prices accompanying a rapid decline in oil prices
2. (-) Decline in exports from Japan due to sluggish production and sales overseas

Life industry

Plastics

Primary impact in FY03/21

2. (no impact) Strong trend in terms of package-related sales

3. (-) Impact on construction material-related sales due in part to housing exhibition closures
following state of emergency declarations

3. (-) Decrease in global automobile production
Impact from the timing of launches for mass production related to new car models andrecovery in production related to existing models

27◼ Reference Materials

28

Content of Reference Materials
Page
30
31
32
34
36
33
37
42
44
45
46
47
48
51

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
Annual Production Capacity for Plastic Compounds
Reinforcement of Governance
Establishment of Global Human Resource Management
Earnings per Share
Relationship with European Subsidiary
Company Overview
29

(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)

30

(Reference) IK Vision 2030, Our Long-Term Vision◆Inabata’s aspirations for itself in around 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 201731

(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 2017
Note: In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals segment.

32

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

Operating environment

Information &Electronics• We will work to maintain steady profits in the liquid crystal display business, which will remain amainstay 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 2017
Note: In FY03/20, the Housing & Eco Materials segment was combined with the Chemicals segment.

33

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

Information & Electronics

ChemicalsLife Industry

Plastics

1,200.0

Housing & Eco Materials

Other

IK Vision 2030

(IK Vision 2030)

1,000.0

1,000.0

New Challenge 2016

NC2020

800.0

600.0

400.0

200.0

730.0

572.1
24.2 0.5

0.3
634.7
621.1
586.6
600.3
577.0
0.1 24.1 0.1
25.1
0.1 308.0
0.1
24.8 0.1 25.0

250.4

251.1

251.8

286.9

34.6
52.8

41.0
48.1

40.4
48.0

42.3
51.5

39.0
53.4

36.9
74.1

95.7

209.3

211.6

221.0

214.9

217.9

218.6

261.0

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21

Future(actual)(actual)(actual)(actual)(actual)(actual) (medium-term target)(around 2030)

300.0

270.3
65.0

0.0

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

34

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

Information & Electronics

ChemicalsLife Industry

Plastics

Housing & Eco Materials

Other

27.50

IK Vision 2030

230～240(IK Vision 2030)

22.50

New Challenge 2016

NC2020

17.50

15.5
14.0
0.20
0.10 13.2
0.04
0.13 5.90
6.34
6.23

12.6

12.50

7.50

2.50

-2.50

Operatingprofitmargin

0.14
11.3
10.7
0.26
0.14
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

2.80
1.16
1.20

2.20

4.81

4.48

4.40

4.48

3.83

3.99

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21

Future(actual)(actual)(actual)(actual)(actual)(actual) (medium-term target)(around 2030)

1.9%

2.0%

2.2%

1.0%

2.2%

1.92
0.25 (2.04)

2.2%

2.1%

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

35

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

(Net sales: Billions of yen)

1,200.0

35.0(IK Vision 2030)
1,000.0 30.0

1,000.0

Net sales

Operating profit(Mediumterm target)

800.0

25.0

730.0

20.0

634.7
600.3
621.1

600.0

577.0 586.6

561.1
466.0

500.0
442.7

469.0

479.9

400.0

572.1
11.3

10.9
288.9
7.6

7.9

15.5

14.0

15.0

13.2

12.6

10.0

10.7

7.6

7.7
7.6

200.0

5.0

5.9

2.6

3.5

0.0

0.0

NC2020(Around 2030)

36

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

(Operating profit: Billions of yen)800

Net sales

Operating profit(IK Vision 2030)

18

600

14
10

400

7.3 6.9
6.1
3.3

200
1.2

1.6

3.6

4.2

3.5

2.3

4.9

3.7

84.1

0
JPY
per
USD

119.9

107.1

110.2

104.2

150.5

170.9

159.3

152.2

6

316.3
312.9 327.7

340.6

305.4
284.3

72.4

5.8

3.9

1.6 2.0

185.0

5.1

186.5

186.7

2

294.0

211.6

(0.7)

-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

108.7

(Around 2030)

NC202037

(Reference) Focus on Markets with Growth Potential and
Sectors That Have Yet to Be Developed
Principal initiatives in the automotive field
Performance was strong overall, but slowed down toward the end of FY03/20, due to the spread of the novel
coronavirus pandemic
Plastics:
We are working to increase sales of plastics to global customers, and are also expanding in-country
sales.
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)

100.0

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

75.0
11.5

11.9

11.7

Chemicals, Other

10.5

50.0

Plastics

8.5
25.0

46.5

54.0

56.9

58.2

FY03/19(actual)

FY03/20(actual)

FY03/21(medium-term target)

36.0

0.0
FY03/17(actual)

FY03/18(actual)Notes: FY03/21 figures reflect targets in place when our Medium-Term Management Plan was formulated.
Results for past fiscal years include certain amounts that have been updated.

38

【重点施策
成長が見込める市場・未開拓分野への注力】(Reference)
Focus on Markets with Growth Potential and

Sectors That Have Yet to Be Developed
Principal initiatives in the environment and energy fields
Information & Electronics:

Chemicals:

Overall trend toward recovery thanks to growth in system-related projects in Japan andmaterial sales despite substantially lower solar cell-related sales due to suspension oftransactions at European subsidiaries.
Sales of lithium-ion battery materials to manufacturers in China and South Korea are
increasing.
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)

30.0

3.4

20.0

Chemicals, Other

2.3
Information & Electronics

10.0

1.9

2.3
13.2

2.0
8.0

18.6

8.4

4.5
0.0
FY03/17(actual)

FY03/18(actual)

FY03/19(actual)

FY03/20(actual)

FY03/21(medium-term target)

Notes: FY03/21 figures reflect targets in place when our Medium-Term Management Plan was formulated
Results for past fiscal years include certain amounts that have been updated.

39

【重点施策
成長が見込める市場・未開拓分野への注力】(Reference)
Focus on Markets with Growth Potential and

Sectors That Have Yet to Be Developed
Principal initiatives in the life science and medical fields
Life Industry: Focus on pharmaceutical and cosmetics ingredients; large impact from environmental regulations in
China
Delayed sales despite concentration on sales related to regenerative medicine in the advanced
medicine field
Lower sales of home products such as insect repellent and pesticide ingredients
Plastics: Impact from unit price reductions on sales of plastics for medical equipment manufacturers (for use insyringes, etc.)(Billions of yen)

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

50.0

5.1

25.0

2.1

25.7

2.1
2.4

28.3

Plastics, Other
2.2

Life Industry
33.3

23.1

21.7

FY03/19(actual)

FY03/20(actual)

0.0
FY03/17(actual)

FY03/18(actual)

FY03/21(medium-term target)

Notes: FY03/21 figures reflect targets in place when our Medium-Term Management Plan was formulated.
Results for past fiscal years include certain amounts that have been updated.

40

【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
Life Industry: In the cultivation business, growth of blueberries, garlic, and other crops are delayed slightly, but
progressing satisfactorily.
Sales of processed products and new projects are delayed.

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)

6.0

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

4.0
Plastics, OtherLife Industry
2.0

0.0

2.0
2.1

2.1

0.2

0.3

FY03/17

FY03/18(actual)(actual)

2.5

2.2
0.8

0.0

0.0

FY03/19

FY03/20

FY03/21(actual)(actual)(medium-term target)

Notes: FY03/21 figures reflect targets in place when our Medium-Term Management Plan was formulated.
Results for past fiscal years include certain amounts that have been updated.

41

(Reference) Further Expansion and Deeper Involvement inOverseas Businesses
Progress at our compounds plant(sales to automakers in Mexico)
FY03/20 sales volume fell below projections due in part to suspended production of
new car models from Japanese manufacturers.

FY03/18
FY03/19
FY03/20
FY03/21

Sales of 6,100 tons
Sales of 6,700 tons
Sales of 9,000 tons
Sales forecast undetermined◼ Impact from the spread of the novel coronavirus pandemic (as of June 4, 2020)
FY03/20
Nearly no impact
FY03/21
Suspension of operations in April and May in response todirectives issued by the Mexican government
Company: IK Plastic Compound Mexico, S.A. de C.V.
Production capacity: 15,000 tons/year
Location: Silao, Guanajuato, central Mexico
Commenced operations in November 2013, with mass
production starting in September 2014
42

(Reference) Further Expansion and Deeper Involvement inOverseas Businesses
Progress at our compounds plant(sales to manufacturers of OA equipment in the Philippines)
Volume of sales fell below targets due to low production at major manufacturers ofJapanese OA equipment in FY03/20.
Launched of new businesses, including business related to two-wheeled vehicles.
FY03/18
FY03/19
FY03/20
FY03/21

Sales of 7,200 tons
Sales of 10,200 tons
Sales of 9,300 tons
Sales forecast undetermined◼ Impact from the spread of the novel coronavirus pandemic (as of June 4, 2020)
FY03/20
Near suspension-like operating conditions since March
FY03/21
Impact will be large and we do not know when production will recoverCompany: IK PLASTIC COMPOUND PHILS. INC.
Production capacity: 10,800 tons/year
Location: Laguna Province, Philippines
Commenced business and production in July 201443

(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

42,000 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

223,200 MT/Y: 8 sites in 7 countries (As of March 31, 2020)

Mexico15,000 MT/Y
44

(Reference) Reinforcement of Governance

Board of Directors evaluation
Objective: To enhance corporate value by increasing the effectiveness andtransparency of the Board of Directors
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
Performed a self-evaluation of all directors and Audit & Supervisory Board
members using a survey format⇒ In April 2020, disclosed summary of evaluation and measures going forward

FY03/21
Plan to conduct third-party evaluation
45

(Reference) Establishment of Global
Human Resource Management

Expanding human resources and accelerating training efforts toenhance quality✓ We conducted workshops at 36 locations in 14 countries to promote “IK Values.”
More than 700 local staff members participated.
✓ We continued to hold the Global Staff Meeting.
However, we cancelled the meeting scheduled for May 2020 due to the spread of the novel
coronavirus pandemic.
Number of overseas personnel in the trading division and(People) people on overseas assignment
1,000

Trading division

628

663

People on overseas assignment

693

737

764

783

500

90
0

93

95

94

90

93
Inabata Mexico, S.A. de C.V. employees withdirectors from our head offices

46
Note: The number of people on overseas assignment is as of the first day of the following month.

(Reference) Earnings per Share

(Yen)
240

211.36200

188.82160

151.91137.01120

97.45

156.25137.20109.92104.29

80

40

0

(355)

(604)

(439)

(707)

(891)

(679)

(936)

(425)

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）（actual）

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

47

(Reference)
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 Group48

(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
division49

(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).
50

(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, Director,
President

Osaka Head Office (1-15-14
Minami-semba, Chuo-ku, Osaka)
Tokyo Head Office (2-8-2
Nihonbashi-honcho, Chuo-ku,
Tokyo)
648 (4,282 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
10,648Major
shareholders(top three andpercentage
ownership)

Sumitomo Chemical Co., Ltd.
(22.9%)The Master Trust Bank of Japan,
Ltd. (Trust Account) (4.4%)
Japan Trustee Services Bank,
Ltd. (Trust Account) (4.2%)

The Company owns 3,010,320 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.

(As of March 31, 2020)51 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.

52