COMPANY RESEARCH AND ANALYSIS REPORT

SAKATA INX CORPORATION
4633
Tokyo Stock Exchange First Section

17-May-2021
FISCO Ltd. Analyst

Masanobu Mizuta

FISCO Ltd.
https://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Environmentally friendly products, with mainstay packaging printing inks, are a strength. ..........................
2. In global business deployment, Asia and the Americas are the pillars of earnings.......................................
3. In FY2020/12, profit increases exceeded forecasts.....................................................................................
4. FY2021/12 forecasts are for higher sales and profits. ..................................................................................
5. Has formulated and started the long-term strategic vision and Mid-term Business Plan 2023. ...................
6. New growth stage.................................. ......................................................................................................

01
01
01
01
02
02

■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. History................................................... ......................................................................................................
2. Global deployment. . .....................................................................................................................................

03
05■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. Strengths.....................................................................................................................................................
2. Environmentally friendly products field.. .......................................................................................................
3. Composition of net sales and operating income by segment......................................................................
4. Risk factors and measures. . .........................................................................................................................

06
07
07
08

■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. FY2020/12 consolidated results. . ........... ......................................................................................................
2. Trends by segment.. .....................................................................................................................................
3. Financial position.........................................................................................................................................

09
10
12

■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 14
1. FY2021/12 consolidated results outlook. .....................................................................................................
2. Plans by segment........................................................................................................................................

14
15■Medium- and long-term growth strategy-------------------------------------------------------------------------------------------- 16
1. Long-term strategic vision SAKATA INX VISION 2030..................................................................................
2. Mid-term Business Plan 2023 (CCC-I)... ......................................................................................................
3. Investment plan...........................................................................................................................................
4. New growth stage........................................................................................................................................

17
18
20
20

■Measures for SDGs-------------------------------------------------------------------------------------------------------------------------------------------------- 21■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 22

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/█ Summary
A new growth stage with environmentally friendly products, global
initiatives, and new business areas
SAKATA INX CORPORATION <4633> (hereafter, “the Company”) is the third-largest printing ink manufacturer inthe world with a history of more than 120 years since it was founded in 1896. With the business theme of “Creationof Visual Communication Technology,” it is also applying and developing basic technologies that it cultivated in thedevelopment and production of inks for its digital & specialty products business.
1. Environmentally friendly products, with mainstay packaging printing inks, are a strength
In the printing ink business, the SAKATA INX Group focuses on packaging printing inks (for printing on paper packaging, such as corrugated cardboard and containers; packaging film for food, cosmetics, toiletries, daily goods, andother products; and metal cans, such as beverage cans) for each market in Japan, Asia, the Americas, and Europe.
Its strengths include its development capabilities, extensive lineup, and high market shares of environmentally friendly,
high-function and high-value-added products, as well as the high reliability and quality of its products.
2. In global business deployment, Asia and the Americas are the pillars of earnings
The Company is globally deploying its businesses of packaging printing inks manufacturing and sales bases in
20 countries and regions in Japan and overseas. By accelerating its global development and expanding sales forenvironmentally friendly, high-function and high-value-added products, the Company’s earnings pillars are Asia andthe Americas, where markets are expanding and there is still ample room for development.
3. In FY2020/12, profit increases exceeded forecasts
In the FY2020/12 consolidated results, net sales decreased 3.4% year on year (YoY) to ¥161,507mn, operating
income increased 15.9% to ¥7,212mn, ordinary income grew 6.4% to ¥7,789mn, and net income attributable toowners of parent climbed 28.2% to ¥5,275mn. Sales decreased mainly due to the impact of the novel coronavirus
pandemic (hereafter, “COVID-19”), but each profit item exceeded the previous forecasts. The main factors increasing
profits were the improvement to ink costs (including the effects of reducing raw material costs) and increases inunit prices (such as from the effects of improving the product mix in the Americas), which absorbed the factors
decreasing profits such as the decline in ink sales volume and inventory valuation write-down in digital & specialty
products. In the results after excluding foreign currency translation effects, net sales decreased 1.5% YoY, operating
income increased 19.2%, ordinary income rose 6.2%, and net income attributable to owners of parent grew 27.6%.
4. FY2021/12 forecasts are for higher sales and profits
For the FY2021/12 consolidated results, the Company is forecasting that net sales will increase 5.3% YoY to¥170,000mn, operating income will rise 10.9% to ¥8,000mn, ordinary income will grow 18.1% to ¥9,200mn, andnet income attributable to owners of parent will climb 21.3% to ¥6,400mn. Uncertainty remains about economic
conditions in the future due to COVID-19, but in FY2021/12, sales are expected to rise due to the increase in sales
volume. In profits, personnel costs and various other costs will rise toward business expansion, but profits are still
forecast to increase from the effects of the higher sales and cost reductions. In FY2021/12 1H, operating income
was basically unchanged YoY, but a full-fledged recovery is expected in 2H. Demand is recovering, so it is possiblethat results will exceed the Company’s FY2021/12 full-year forecasts.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Summary

5. Has formulated and started the long-term strategic vision and Mid-term Business Plan 2023
The Company has formulated and started its long-term strategic vision SAKATA INX VISION 2030 and Mid-term
Business Plan 2023 (CCC-I). For its strategic direction, it has set “Strengthening our ESG (Environment, Socialand Governance) and sustainability efforts emphasizing the global environment and local community,” “Businessexpansion of printing ink and digital & specialty products,” and “Meet market challenges with solutions that create
new business opportunities,” while it has also launched three reform projects (“Strengthening of global management
cooperation and collaboration,” “Strengthen relations with stakeholders,” and “Strengthening recruitment and humanresource development and reforming a cohesive corporate culture”). Moreover, as the goal of its long-term strategic
vision, it is targeting net sales of around ¥300bn and an operating income margin of 8% in FY2030/12. The Company
has positioned Mid-term Business Plan 2023 as the (first) stage to build the foundation toward achieving the longterm strategic vision, and the plan’s targets for FY2023/12 are net sales of ¥195bn, operating income of ¥11.5bn,
ordinary income of ¥13bn, and ROE of at least 10%.
6. New growth stage
Against the backdrop of rising interest in global environmental problems and SDGs, global demand in the printing inks
market is also shifting to environmentally friendly products. Therefore, plenty of room remains for the environmentallyfriendly products market to expand and develop. In its long-term strategic vision, the Company is aiming for a new
growth stage by increasing sales of environmentally friendly products that are compliant with SDGs, conducting
global business deployment, and developing new business areas. We can expect earnings to trend upward in themedium to long term.
Key Points
Environmentally friendly products, with mainstay packaging printing inks, are a strength
FY2021/12 forecasts are for higher sales and profits• A new growth stage led by environmentally friendly products, global initiatives, and new business areas••

Results trend
Net sales (left)(¥mn)
200,000

160,000

120,000

Operating income (right)(¥mn)
15,000157,302

162,056

167,237

161,507

170,000
12,000

8,573

8,000
7,212

9,000

6,225
5,112

80,0006,000

40,0003,000

00FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12 E

Source: From the Company’s financial results

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/█ Company profile
Third-largest printing ink manufacturer in the world, boasting ahistory of over 120 years
The Company is the third-largest printing ink manufacturer in the world with a history of more than 120 years since it
was founded in 1896. The core business is the printing ink business, in which its strengths include the development
capabilities, extensive lineup, and high market shares of environmentally friendly, high-function and high-value-added
products that it has cultivated over its long history, as well as the high reliability and quality of its products, and it
has set the business theme of “Creation of Visual Communication Technology.” The Company is also applying anddeveloping the basic technologies that it has cultivated in the development and production of inks for its digital &specialty products business, and moreover, it is aiming to develop a new business pillar focusing on four chemical
fields.
1. History
Founded in 1896 in Osaka as a small business under the name of SAKATA INK SEIZOUSHO, the Company started
manufacturing and selling newspaper ink. In 1911, it successfully industrialized the production of varnish for printing
ink using linseed oil for the first time in Japan.
In 1920, it was incorporated as a limited company. In 1961, the Company listed its shares on the Second Section of
the Osaka Securities Exchange and was reassigned to the First Section in 1962. In 1987, it changed its corporatename to SAKATA INX CORPORATION. In 1988, it listed its shares on the First Section of the Tokyo Stock Exchange,
and celebrated the 120th anniversary of its founding in November 2016.
In 1960, the Company established its first overseas office in the Philippines (Manila), followed by a succession of
establishments of local subsidiaries in key overseas bases. In June 2020, the Company acquired 100% of the sharesof German company A. M. Ramp & Co. GmbH (hereafter, “RUCO”) and made it into a subsidiary.
Also, for the Company’s TPM (total productive maintenance) activities, which it has been conducting continuously formore than 20 years, it received the TPM Advanced Special Award for its four main domestic plants (Tokyo, Osaka,
Shiga, and Hanyu) in December 2017. TPM is advocated by the Japan Institute of Plant Maintenance, which has
highly evaluated the Company for its construction of innovative production methods and its business deployment
overseas. In addition, its thesis on “Improving the Equipment Guarantee Level” was awarded the second prize in
the Production Category of the TPM Excellent Paper Awards.
On March 26, 2021, Kotaro Morita, the former Representative Director, President & CEO, was appointed Chairman,
and Yoshiaki Ueno, the former Director, Managing Executive Officer, was appointed Representative Director,
President & CEO.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Company profile

HistoryYear

Main Event

1896

Founded (under the name SAKATA INK SEIZOUSHO) as a private company in Osaka City, and started manufacture and sales ofprinting ink for newspapers

1906

Name changed to SAKATA SHOKAI

1911

Successfully industrialized the production of varnish for printing ink using linseed oil for the first time in Japan

1920

Changed to limited company

1947

Established SAKATA SANGYO, LIMITED by spinning off the industrial chemicals division into an independent company

1953

Upgraded Nagoya Office to Nagoya Branch

1959

Constructed and commenced operation of Itami Plant (now Osaka Plant) in Itami City, Hyogo Prefecture

1960

Opened an overseas office in the Philippines (Manila) (a succession of major overseas offices and subsidiaries were establishedthereafter)

1961

Listed on the Second Section of the Osaka Securities Exchange

1962

Reassigned to the First Section of the Osaka Securities Exchange

1969

Constructed and commenced operation of Noda Plant (now Tokyo Plant) in Noda City, Chiba Prefecture

1982

Established SAKATA GENZOUSHO CO., LTD. (now SAKATA LABOSTATION CO., LTD.)1987

Established SAKATA INX ESPANA, S.A. in Spain
Corporate name changed to SAKATA INX CORP.

1988

INX INTERNATIONAL INC. (now THE INX GROUP LTD.) established in the U.S.A. as a holding company
Acquired ACME PRINTING INK CO. in the U.S.A.
Listed on the First Section of the Tokyo Stock Exchange

1989

Established PT. SAKATA INX INDONESIA as a joint venture in Indonesia that manufactures and sells printing ink
Acquired MIDLAND COLOR CO. in the U.S.A.
Acquired CHEMICAL PROCESS SUPPLY in the U.S.A.

1992

Consolidated ACME PRINTING INK CO. and MIDLAND COLOR CO. in the U.S.A. under the name of INX INTERNATIONAL INK CO.
Established SAKATA INX INTERNATIONAL CORP. (now SIIX CORPORATION), and transferred businesses related to international
trading of electronic components and other products to the Company
Established THE INX GROUP (UK) LTD. that manufactures and sells printing ink (now INX INTERNATIONAL UK LTD.) in the U.K.

1993

Established MEGA FIRST SAKATA INX (now SAKATA INX (MALAYSIA) SDN. BHD) in Malaysia

1994

Constructed and commenced operation of Hanyu Plant in Hanyu City, Saitama Prefecture
Renamed Tokyo Branch to Tokyo Head Office, and instituted a dual Osaka and Tokyo Head Office system

1995

Established MONTARI SAKATA INX LTD. (now SAKATA INX (INDIA) PRIVATE LTD.) in India

1996

Acquired ISO9001 certification at Tokyo Plant (Osaka Plant and Hanyu Plant later acquired certification)

1997

Completed construction of the Technology Building at Osaka Plant

1999

Agreed to strategic alliance with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co., Ltd. <4634>)

2000

Established the 50-50 joint venture company LOGI CO-NET CORP. with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co.,Ltd.)
Agreed to a capital alliance with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co., Ltd.)
Established the 50-50 joint venture company ga city Corp. with TOYO INK MFG. CO., LTD. (now Toyo Ink SC Holdings Co., Ltd.)

2001

Acquired ISO14001 certification at the three main plants (Tokyo, Osaka and Hanyu)
Established SAKATA LABOSTATION CO., LTD. and transferred photography-related businesses to the company

2002

Established ETERNAL SAKATA INX CO., LTD. in Thailand
Established SAKATA INX SHANGHAI CO., LTD. in China (Shanghai)

2003

Established SAKATA INX ENG. CO., LTD. and transferred color management businesses to the company
Completed construction of the Technology and Laboratory Building at Osaka Plant
Established SAKATA INX VIETNAM CO., LTD. in Vietnam

2004

Established a holding company INX EUROPE LTD. in the U.K.
Established INX INTERNATIONAL FRANCE SAS in France
Established MAOMING SAKATA INX CO., LTD. in China (Guangdong Province)
The three main plants (Tokyo, Osaka and Hanyu) earned the Award for TPM Excellence, Category 1, in the 2004 TPM ExcellenceAwards

2005

Established TRIANGLE DIGITAL INX CO. in the U.S.A. (Name changed to INX DIGITAL INTERNATIONAL CO. in 2009)2008

Acquired MEGAINK DIGITAL A.S. in Czech (now INX DIGITAL CZECH, A.S.)
Acquired ANTEPRIMA S.R.L. in Italy (now INX DIGITAL ITALY S.R.L.)
Acquired OSHMS certification at Tokyo Plant (including Hanyu Plant)

2009

Acquired OSHMS certification at Osaka Plant

2010

The three main plants (Tokyo, Osaka and Hanyu) earned the Award for Excellence in Consistent TPM Commitment in the 2010 TPM
Excellence Awards

2012

The three main plants (Tokyo, Osaka and Hanyu) earned the Award for TPM Achievement in the 2012 TPM Excellence Awards

2013

INX DIGITAL INTERNATIONAL CO. merged into INX INTERNATIONAL INK CO.

2014

Commenced operation at Shiga Plant in Maibara City, Shiga Prefecture

2015

Changed fiscal year-end from March to December
Acquired ISO9001 and ISO14001 certification at Shiga Plant

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04 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Company profile

Year

Main Event

2016

Celebrated the120th founding anniversary
Acquired CREATIVE INDUSTRIA E COMERCIO. in Brazil as the first production base in South America
Acquired OSHMS certification at Shiga Plant

2017

Received the certification as a leading company in Osaka City for empowering women
Further promotion of business and capital alliance with Toyo Ink SC Holdings
Earned the TPM Advanced Special Award for its four main domestic plants (in Tokyo, Osaka, Shiga, and Hanyu)

2019

The plant in China (Maoming City, Guangdong Province) was certified as a “clean production-certified company.”Completed the expansion of the R&D facility (West Chicago, Illinois) in the United States
Completed the second plant in Ho Chi Minh City, Vietnam

2020

Acquired German company A.M. Ramp & Co. GmbH
Collaboration with Shiga University in the data science field
Invested in Wonder Future Corporation (non-equity-method affiliate)
Capital participation in R Plus Japan, Ltd.

2021

Started the long-term strategic vision SAKATA INX VISION 2030

Source: Prepared by FISCO from the Company’s website, securities reports, news releases, and long-term strategic vision briefing materials

2. Global deployment
The SAKATA INX Group (at the end of FY2020/12) was composed of the Company, 25 consolidated subsidiaries and4 equity-method affiliates, and it is operating printing ink manufacturing and sales bases in 20 countries and regionsin Japan and overseas. It has also added Germany-based RUCO to its consolidated subsidiaries from FY2021/12
following completion of the acquisition in June 2020. SIIX Corporation <7613>, an independent spin-off of theCompany’s electronic parts exports and imports and EMS businesses, is an equity-method affiliate.

█ Business overview
Environmentally friendly products, with mainstay packaging printing
inks, are a strength
The Company’s core business is the printing ink business, in which it manufactures and sells packaging printing
inks and ink for information media. It is also developing its digital & specialty products business and graphic arts
materials business.
In the printing ink business, the SAKATA INX Group focuses primarily on packaging printing ink (for printing on paper
packaging, such as corrugated cardboard and containers; packaging film for food, cosmetics, toiletries, daily goods,
and other products; and metal cans, such as beverage cans) for each market in Japan, Asia, the Americas, andEurope. The percentage of total sales provided by printing ink for information media (ink used for printing newspapers
and offset ink used for a variety of commercial printing applications, such as books, magazines, catalogues, posters,brochures, vouchers, etc.) is declining and its impact on results as a whole has lessened.
In the digital & specialty products business, the Company manufactures and sells digital printing materials (industrial
inkjet ink used for large output items and textiles and color and monochrome toners used for laser and multifunction
printers), image display materials (pigment dispersions for color filters), and functional coating materials for eachmarket in Japan, Asia, the Americas and Europe.

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05 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Business overview

In the graphic arts materials business, the SAKATA INX Group procures and sells plate-making materials and related
equipment, mainly in the Japanese market. Products include computer-to-plate (CTP) setters, CTP plates, inkjet
proofers, inkjet proof paper, editing software, color management systems and ink dispensers.
In the other businesses, the SAKATA INX Group primarily conducts chemicals business (SAKATA SANGYO, LIMITED)and a display-related service business (SAKATA LABOSTATION Co., Ltd.) mainly in the Japanese market.
1. Strengths
The Company’s strengths lie in the development capabilities, extensive lineup, and high market share of environmentally friendly, high-function and high-value-added products that it has amassed over a 120-year history since it
was founded in 1896, as well as the high reliability and quality of its products.
The Company’s abundant lineup of environmentally friendly, high-function and high-value-added products includes
vegetable oil ink, which replaces mineral oil with various types of vegetables oils (including soybean oil); non-VOC
ink, which contains less than 1% of high-boiling-point petroleum solvent among its constituents; Botanical Ink,
which contains 10% or more of plant-derived components in its ink solid constituents; non-toluene, non-MEK ink,
which does not use organic-solvent toluene or MEK (methyl ethyl ketone); and water-based flexo ink, which offers
high performance while being water based.
In the field of packaging ink, it boasts the leading market share domestically for water-based flexo ink used to print
on corrugated boards, which it developed early on as a pioneer in the industry. In addition, it provides a rangeof new technologies such as functional coating materials for the paper industry. For gravure ink used for printing
on packaging film, such as food packaging, and flexo ink used for paper containers, the Company provides
high-performance, high-quality inks that are environmentally friendly, and boasts a high market share in the industry.
In particular, the Company’s original brand Botanical Ink, launched at the end of 2016, uses plant-derived ingredientsand is being used in the packaging of major convenience stores and food manufacturers. Furthermore, the productlineup in the Botanical Ink series is expanding. EcoPlata, a water-based flexo ink for paper bags, and EcoPino, awater-based gravure ink for paper cartons, have been launched. Printed items that use Botanical Ink can have theCompany’s registered trademark printed on their packages.
Botanical Ink markSource: Reprinted from the Company’s website

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Business overview

In ink for information media, the percentage of environmentally friendly products has reached more than 95%.
In newspaper ink, the high-coloration ink called NEWS WEBMASTER Ecopure (Eco Mark certified) is respected.
Moreover, the Company has earned trust from newspaper companies for its technical capabilities and track recordin responding to the shift to high quality for color pages and in its color management system for controlling thecolor aspects of newspaper production systems. For offset ink as well, it aims to introduce environmentally friendly
products to the market as an industry pioneer, and it is progressing the development of the Dream Cure series of
UV curable inks that are compatible with the high-sensitivity UV printers that have become popular in recent years.

High share in environmentally friendly products
2. Environmentally friendly products field
Against the backdrop of the global trend toward strengthening measures to address environmental issues, there is
still plenty of room for market expansion and development in the field of environmentally friendly products.
Both domestically and overseas, the Company’s mainstay products are its environmentally friendly, high-function
and high-value-added products positioned above midrange, and it has high shares in each market. Looking at its
market share in the field of packaging ink, the Company’s estimation is that it has the leading share in Japan for
flexo ink for printing on packaging, such as corrugated boards and paper containers; the second leading share in
Japan for gravure ink for printing on film packaging, such as for food, daily goods and other items; and the leading
share worldwide for metal-deco ink for printing on metal cans such as beverage cans.

Asia and the Americas are pillars of earnings
3. Composition of net sales and operating income by segment
In its consolidated accounts, the SAKATA INX Group has adopted the following reportable segments: printing inks
and graphic arts materials (Japan), printing inks (Asia), printing inks (Americas), printing inks (Europe), digital & specialty products and other businesses. The main pillars of earnings are Asia and the Americas, where plenty of roomremains for the markets to grow and develop, including through accelerating global business deployment, newly
consolidating companies (ETERNAL SAKATA INX CO., LTD. of Thailand and CREATIVE INDUSTRIA E COMERCIO
LTDA. of Brazil newly consolidated in December 2019), and increasing sales of environmentally friendly, high-function
and high-value-added products.
In the breakdown of operating income by segment in FY2020/12 (before consolidated adjustments), printing inks andgraphic arts materials (Japan) contributed 14.9%, printing inks (Asia) 37.2%, printing inks (Americas) 44.8%, printing
inks (Europe) -6.6%, digital & specialty products 7.3%, and other businesses 2.4%. Looking at the breakdown
compared to FY2019/12, the contribution from Asia and digital & specialty products declined as a result of the
impact of COVID-19, while that of the Americas rose significantly due to the increase in sales of packaging inks andthe effects of price increases. In Europe, structural reforms lessened the extent of the loss.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Business overview

Trends in the composition of net sales and operating income by segment before consolidated adjustments
FY2017/12

FY2018/12

FY2019/12

FY2020/12

Printing inks and graphic arts materials (Japan)

33.4%

32.3%

29.6%

28.4%

Printing inks (Asia)

18.4%

18.9%

20.2%

19.3%

Printing inks (Americas)

26.4%

26.5%

27.9%

29.3%

Printing inks (Europe)

5.3%

5.5%

5.6%

6.0%

Digital & specialty products

6.9%

7.2%

7.1%

7.0%

Other businesses

9.6%

9.6%

9.6%

10.0%

100.0%

100.0%

100.0%

100.0%

Printing inks and graphic arts materials (Japan)

28.4%

25.2%

15.0%

14.9%

Printing inks (Asia)

29.5%

34.2%

44.0%

37.2%

Printing inks (Americas)

23.0%

22.2%

35.4%

44.8%

Printing inks (Europe)

0.3%-17.7%-17.9%-6.6%

Digital & specialty products

14.3%

27.4%

16.8%

7.3%

Other businesses

4.4%

8.7%

6.7%

2.4%

100.0%

100.0%

100.0%

100.0%Net sales

Totals before consolidated adjustments
Operating income

Totals before consolidated adjustments

Note: Printing inks (North America) was changed to printing inks (Americas) from FY2019/12 onward
Source: Prepared by FISCO from the Company’s financial results

Strengthening measures for Group synergies to respond to theincreases in raw material prices
4. Risk factors and measures
Major risk factors that could affect earnings are fluctuations in the prices of raw materials and the impact of exchange
rates alongside global developments.
In particular, there are delays and time lags between rapid increases in raw materials prices and revisions to sales
prices, which may impact results. The main raw materials, white pigment (titanium oxide) and color pigments, areaffected by the supply capacities of Chinese manufacturers, which account for the majority of global production,
while resins and solvents are affected by the prices of crude oil and naphtha.
Looking at the trends in raw material prices, from 2017 onward rising crude oil prices drove up prices of materials
derived from petroleum. Moreover, factors such as the impact of tougher environmental regulations and changes inenergy policies in China sharply lowered the supply capacity of Chinese manufacturers, the supply-demand balancecollapsed and prices of white and color pigments soared. Furthermore, there was also an additional impact in 2018from punitive tariffs stemming from the US-China trade friction and prices of white and color pigments continued
rising. Entering 2019, prices for white and color pigments continued to rise in Japan, but started to settle down inoverseas markets. In 2020, crude oil prices plummeted due to the impact of COVID-19 which has caused pricesof petroleum-derived materials to trend lower as well.
In response to fluctuations in raw materials prices, the Company is advancing optimization through revisions to sales
prices and strengthening initiatives to mitigate the impact of rising raw materials prices by using Group synergies toreduce raw materials costs (such as through global procurement of raw materials) and raising productivity.

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/█ Results trends
In FY2020/12, profit increases exceeded forecasts
1. FY2020/12 consolidated results
In the FY2020/12 consolidated results, net sales decreased 3.4% YoY to ¥161,507mn, operating income increased
15.9% to ¥7,212mn, ordinary income grew 6.4% to ¥7,789mn, and net income attributable to owners of parent climbed 28.2% to ¥5,275mn. Each profit item exceeded the FY2020/12 results forecasts (revised forecasts
announced on August 7, 2020 were net sales of ¥161,800mn, operating income of ¥7,000mn, ordinary income of¥6,700mn, and net income attributable to owners of parent of ¥4,200mn).
The average exchange rate was ¥106.82 to US$1 (¥109.05 to US$1 in FY2019/12), and after excluding foreign
currency translation impacts, net sales decreased 1.5% YoY, operating income increased 19.2%, ordinary income
grew 6.2%, and net income attributable to owners of parent rose 27.6%.
FY2020/12 consolidated results(¥mn)
FY2020/12

FY2019/12
Results

Results

YoY

Results
forecast

vs. forecast

Foreigncurrencytranslation
impactRate ofchange after
excludingforeigncurrencytranslation
impact167,237

161,507-3.4%

161,800-293-3,234-1.5%

Operating income

6,225

7,212

15.9%

7,000

212

-208

19.2%

Ordinary income

7,319

7,789

6.4%

6,700

1,089

18

6.2%

Net income attributable to ownersof parent

4,114

5,275

28.2%

4,200

1,075

23

27.6%

Net sales

Note 1: Average exchange rates during the period ¥109.05 (FY2019/12) and ¥106.82 (FY2020/12) to US$1
Note 2: Revised results forecasts announced on August 7, 2020 are shown
Source: Prepared by FISCO from the Company’s results briefing materials and news releases

In sales, sales increased in the Americas and Europe, due to such reasons as the rise in packaging ink sales volume,
but declined in Japan, Asia, and digital & specialty products in response to the impact of COVID-19 (decreases insales of offset ink and industrial inkjet ink due to the cancellation of events and decline in advertising demand, flexo
ink for corrugated cardboard and paper bags due to reduced production volumes of various industrial products
and restrictions on movement, and toner for multifunction printers used in offices due to the shift to teleworking).
Therefore, as a whole, net sales declined. In exchange rates also, sales were impacted by the strong yen.
In profits, every profit item increased and exceeded the previous forecasts. In operating income, improved ink costs(including the effects of reducing raw material costs and structural reforms in Europe) and increases in unit prices(such as from the effects of improving the product mix in the Americas and price revisions in Brazil) were the main
factors increasing profits and offsetting declines, which included the decline in the ink sales volume, the inventory
valuation write-down in digital & specialty products, and the impact of exchange rates. Gross profit declined only
0.8%, while the gross profit margin rose 0.6 of a percentage point (pp) to 22.0%. SG&A expenses decreased 4.3%,
including due to the restrictions on sales activities, and the SG&A expenses ratio fell 0.1pp to 17.5%.

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09 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Results trends

The increase in ordinary income was less than that of operating income because in non-operating income, equity-method investment income decreased (¥741mn in FY2019/12, ¥314mn in FY2020/12), and in non-operating
expenses, forex loss increased slightly. Net income attributable to owners of parent grew significantly due to the
reduction in income taxes.
YoY changes by factor (FY2020/12)

Source: Reprinted from the Company’s results briefing materials

Looking on a quarterly basis, results fell in 2Q, in which there were lockdowns and restrictions on movement inmany regions, but they have been recovering gradually since 3Q. Respectively, net sales and operating income
were ¥41,269mn and ¥1,908mn in 1Q, ¥38,203mn and ¥1,273mn in 2Q, ¥39,945mn and ¥1,794mn in 3Q, and¥42,090mn and ¥2,237mn in 4Q.

Profits increased significantly in the Americas and structural reforms
are being progressed in Europe
2. Trends by segment
Trends by segment (before consolidated adjustments and the impact of foreign currency translations) are as follows.
In printing inks and graphic arts materials (Japan), net sales decreased 7.3% YoY to ¥48,071mn and operating
income increased 19.6% to ¥983mn. Due to the impact of COVID-19, sales in FY2020/12 1H saw increases from
special nesting (stay-at-home) demand, but on the other hand, demand for industrial-use products and inbounddemand decreased, so sales of flexo inks for corrugated cardboard and paper bags declined. Also, due to thedecline in advertising demand and the progress of digitalization, sales of newspaper and offset inks fell, as well as
printing plate materials. In profits, the decline in sales was absorbed by the effects of the strong performance ofgravure ink used for flexible packaging, price revisions (flexo ink and newspaper ink), and cost reductions (includingof raw materials, logistics, and transportation).

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10 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Results trends

In printing inks (Asia), net sales decreased 7.6% YoY to ¥32,597mn and operating income increased 1.3% to¥2,451mn. In sales, gravure ink sales volume grew in Indonesia and Vietnam. In India and China also, in whichbusiness activities were greatly restricted in 1H, sales recovered in 2H. In information media-related products, which
are being strongly affected by COVID-19, demand recovered in China in 2H, but the recovery in demand in India
was sluggish, and sales of both newspaper ink and offset ink declined for the full fiscal year. In profits, the Group
progressed cost reductions, mainly of raw materials, which absorbed the decline in sales, so an increase in profits
was secured.
In printing inks (Americas) net sales increased 1.5% YoY to ¥49,510mn and operating income increased 51.8%
to ¥2,953mn. After excluding the impact of foreign currency translations, net sales were strong, increasing 5.6%.
Against the backdrop of strong personal consumption, sales volumes increased of packaging inks (flexo ink, gravure
ink, metal can ink, and UV ink). In the Americas, the percentage of sales from metal can ink is high, and demand
increased for metal beer cans and other cans from drinking-at-home demand due to the impact of COVID-19. In
addition, in the context of the rise of the recycling movement, the progress made in shifting from PET bottles toaluminum cans also contributed. Profits increased significantly due to the effects of the higher sales volume, while
the effects of the improvements to the product mix and price strategy also contributed.
In printing inks (Europe), net sales increased 3.8% YoY to ¥10,164mn and operating loss was ¥432mn (loss of¥985mn in FY2019/12). In sales, sales volumes increased for packaging inks (gravure ink, flexo ink, and metal
can ink) in response to progress with measures such as strengthening sales operations, and positive effects fromCOVID-19. In profits, the loss was reduced by the effects of the increase in sales volumes and structural reforms(closure of an unprofitable plant in France and a reduction in outsourcing costs made possible by progressing
in-house production by strengthening facilities in the UK and Spain).
In digital & specialty products, net sales decreased 4.9% YoY to ¥11,844mn and operating income decreased 48.0%
to ¥481mn. COVID-19 strongly affected this business. Sales of pigment dispersions for color filters were strongas conditions improved in the LCD panel market, but sales of inkjet ink declined due to the decline in advertisingdemand caused by COVID-19, while toner sales were also sluggish as office demand fell due to teleworking. In
addition to the impact of the lower sales, profits were affected by an inventory valuation write-down.

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11 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Results trends

Net sales and operating income by segment in FY2020/12(before consolidated adjustments and the impact of foreign currency translations)(¥mn)
FY2019/12

FY2020/12

YoY

Printing inks and graphic arts materials (Japan)

51,87648,071-7.3%

Printing inks (Asia)

35,27732,597-7.6%

Printing inks (Americas)

48,77149,5101.5%

Printing inks (Europe)

9,790

10,164

3.8%

Digital & specialty products

12,452

11,844-4.9%

Reportable segment total

158,168

152,187-3.8%

Other businesses

16,837

16,9840.9%-7,767-7,664

19.6%

Net sales

Adjustments
Operating income

822

983

Printing inks (Asia)

2,420

2,451

1.3%

Printing inks (Americas)

1,945

2,953

51.8%

Printing inks (Europe)

-985

-432

-

Digital & specialty products

926

481

-48.0%

Reportable segment total

5,129

6,437

25.5%

369

156

-57.7%

727

618

-

Printing inks and graphic arts materials (Japan)

Other businesses
Adjustments

Source: Prepared by FISCO from the Company’s financial results

3. Financial position
Total assets at the end of FY2020/12 were ¥145,272mn, a decrease of ¥3,020mn YoY. Total liabilities were
¥63,850mn, down ¥3,001mn and total net assets were ¥81,421mn, a decrease of ¥18mn.The Company did notreport any major changes in individual items, though borrowings and cash and deposits increased in an attempt
to prepare for the impact of COVID-19 by boosting cash on hand. The equity ratio rose 0.9pp versus the end of
FY2019/12 to 52.6%, this does not present an issue for financial soundness.

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12 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION

17-May-2021

4633 Tokyo Stock Exchange First Section

http://www.inx.co.jp/english/

Results trends

Key performance indicators(¥mn)
FY2016/12

FY2017/12

FY2018/12

FY2019/12

FY2020/12

Net sales

151,198

157,302

162,056

167,237

161,507

Cost of sales

113,773

120,371

128,824

131,507126,049

Gross profit

37,42536,931

33,23235,73035,458

24.8

23.5

20.5

21.4

22.0

27,30528,35828,12029,50428,245Gross profit margin (%)
Selling, general and administrative expenses
Selling, general and administrative expenses ratio (%)
Operating income
Operating income margin (%)
Non-operating income
Non-operating expenses
Ordinary income
Ordinary income margin (%)
Extraordinary income

18.1

18.0

17.4

17.6

17.5

10,119

8,573

5,112

6,225

7,212

6.7

5.5

3.2

3.7

4.5

2,531

3,048

2,476

1,693

1,172

782

371

678

600

596

11,868

11,249

6,910

7,319

7,789

7.8

7.2

4.3

4.4

4.8

801

1,424

285

311

187

386

317

71

448

221

Income before income taxes

12,283

12,356

7,125

7,181

7,755

Total income taxes

3,798

3,466

2,155

2,427

1,849

Net income attributable to owners of parent

7,837

8,383

4,692

4,114

5,275

5.2

5.3

2.9

2.5

3.3

Extraordinary loss

Margin on net income attributable to owners ofparent (%)

6,381

9,946

756

5,339

1,839

138,012

145,489

145,857

148,292

145,272(Current assets)

71,71676,19976,241

79,064

77,640(Noncurrent assets)

66,29569,29069,61569,227

67,632

63,69866,72368,45966,852

63,850(Current liabilities)

45,30447,96849,23346,31742,315(Noncurrent liabilities)

18,39318,754

19,226

20,535

21,53574,31378,766

77,397

81,43981,421(Shareholders’ equity)

71,55574,737

77,52879,494

83,035(Capital)

7,472

7,472

7,472

7,472

7,472

Comprehensive income
Total assets

Total liabilities

Total net assets

Total number of issued shares at the end of period,
excluding treasury shares

60,507,951

58,399,679

58,399,218

58,398,924

58,418,536

Cash flows from operating activities

11,697

9,201

5,239

9,819

10,599Cash flows from investing activities-6,727-2,737-7,279-5,106-7,010Cash flows from financing activities-3,552-6,259-122-3,821-980

Cash and cash equivalents at the end of period

9,297

9,351

6,788

9,361

11,678Source: Prepared by FISCO from the Company’s financial results and materials

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13 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/█ Business outlook
FY2021/12 forecasts are for higher sales and profits, and results may
exceed forecasts
1. FY2021/12 consolidated results outlook
For the FY2021/12 consolidated results, the Company is forecasting that net sales will increase 5.3% YoY to¥170,000mn, operating income will grow 10.9% to ¥8,000mn, ordinary income will rise 18.1% to ¥9,200mn, and net
income attributable to owners of parent will climb 21.3% to ¥6,400mn. RUCO of Germany was newly consolidated
in FY2021/12. The expected average exchange rate during the period is ¥105.00 to US$1 (¥106.82 to US$1 in
FY2020/12).
The forecasts for FY2021/12 1H consolidated results are for net sales to increase 3.7% compared to the same
period in the previous fiscal year to ¥82,400mn, operating income to rise 0.6% to ¥3,200mn, ordinary income togrow 47.1% to ¥3,800mn, and net income attributable to owners of parent to increase 73.6% to ¥2,600mn.
Overview of FY2021/12 consolidated results forecasts(¥mn)
FY2020/12
1H

FY2021/12
1H E

FY2020/12

FY2021/12 E

Net sales

79,47282,4003.7%

161,507

170,000

5.3%

Operating income

3,181

3,200

0.6%

7,212

8,000

10.9%

Ordinary income

2,583

3,800

47.1%

7,789

9,200

18.1%

Net income attributable toowners of parent

1,497

2,600

73.6%

5,275

6,400

21.3%

EPS (¥)

25.65

44.50

-

90.32

109.53-

Dividend (¥)

15.00

15.00

-

30.00

30.00

-

1,273.28--

1,307.13--

BPS (¥)YoY

YoY

Note: Average exchange rates during the period ¥106.82 (FY2020/12) and ¥105.00 (FY2021/12 forecast) to US$1
Source: Prepared by FISCO from the Company’s financial results and results briefing materials

Uncertainty remains about economic conditions in the future due to COVID-19, but demand is recovering after
bottoming out in FY2020/12 2Q, and in FY2021/12, sales are expected to increase due to the growth of sales
volume. In profits, operating costs will return to the same level as before COVID-19 and personnel and othercosts will increase toward business expansion. Therefore, as of FY2021/12 1H, operating income is expected toapproximate the level seen in the same period in the previous fiscal year, but on a full-year basis, it is expected toincrease due to the effects of the higher sales and cost reductions. Ordinary income is also forecast to increase
because of the rise in equity-method investment income in non-operating income.
Looking at the trends in net sales and operating income on a half-year basis (1H and 2H), the impact of COVID-19
and other factors are anticipated to continue until FY2021/12 1H, but full-fledged recoveries of both sales and profits
are expected from FY2021/12 2H, considering the effects of such factors as higher sales volume, improvement in the
product mix, and cost reductions. Demand is recovering, and it is possible that results will exceed the Company’s
FY2021/12 full-year forecasts.

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14 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Business outlook

Half-year trends in net sales and operating income
Net sales (left)

(¥bn)
90.0
80.0

78.9

83.1

83.1

Operating income (right)

84.0

87.6
79.4

82.4

4.80

4.03

70.0
60.0
50.0

82.0

3.05
2.68

3.17

5.40
4.80
4.20

3.20

3.18

(¥bn)

3.60
3.00

2.43

40.0

2.40

30.0

1.80

20.0

1.20

10.0

0.60

0.0

0.00
1H

2H

FY2018/12

1H

2H

FY2019/12

1H

2H

FY2020/12

1H

2H

FY2021/12 E

Source: Prepared by FISCO from the Company’s results briefing materials

2. Plans by segment
The FY2021/12 forecasts for net sales and operating income by segment (before consolidated adjustments) are
shown below. Due to a review of the method for distributing costs, operating income for printing inks and graphic
arts materials (Japan) and digital & specialty products is shown and compared according to the new standard.
In printing inks and graphic arts materials (Japan), net sales will increase 4.9% YoY to ¥50,450mn and operating
income will grow 40.0% to ¥1,753mn. In sales, demand is expected to recover from 2H, while the Group will progresssales growth and price revisions of packaging inks and environmentally friendly products. In profits, cost reductions
are anticipated, including declines in raw material prices due to lower crude oil prices.
In printing inks (Asia), net sales will increase 11.1% YoY to ¥36,207mn and operating income will rise 8.7% to¥2,664mn. In FY2020/12, demand particularly declined in India due to the impact of COVID-19, but in FY2021/12,
demand is expected to recover moderately and sales to grow, centered on packaging inks. In profits, although
the prices of raw materials are forecast to rise, the plan is for this to be absorbed by the effects of the higher sales
volume.
In printing inks (Americas), net sales will increase 0.6% YoY to ¥49,820mn and operating income will decrease 6.0%
to ¥2,777mn. The Group will progress sales growth, particularly of packaging inks, but in FY2020/12, operating
income grew significantly and more than anticipated. Therefore, the FY2021/12 forecasts are somewhat cautious andit is anticipated that investments and costs will increase alongside the rise in prices of raw materials and sales growth.
In printing inks (Europe), net sales will increase 41.9% YoY to ¥14,425mn and operating loss will be ¥220mn (lossof ¥432mn in FY2020/12). Sales are forecast to grow significantly and lessen the extent of the loss as the Groupwill progress sales growth, particularly of packaging inks, and thanks to the effects of the increase in sales volume,
RUCO of Germany being newly consolidated, and structural reforms.

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15 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Business outlook

In digital & specialty products, net sales will increase 6.3% YoY to ¥12,590mn and operating income will grow 60.9%
to ¥884mn. In sales, the Group will progress sales growth of inkjet ink. In profits, raw material prices will decline on
the back of falling crude oil prices, while the inventory valuation write-down recorded in FY2020/12 is expected tohave been completed.
Net sales and operating income forecast by segment for FY2021/12(before consolidated adjustments)(¥mn)
FY2020/12

FY2021/12 E

YoY

Printing inks and graphic arts materials (Japan)

48,07150,4504.9%

Printing inks (Asia)

32,59736,207

11.1%

Printing inks (Americas)

49,51049,8200.6%

Printing inks (Europe)

10,164

14,42541.9%
6.3%

Net sales

Digital & specialty products

11,844

12,590

Reportable segment total

152,187

163,492

7.4%

Other businesses

16,984

14,423-15.1%-7,664-7,915-

Printing inks and graphic arts materials (Japan)

1,252

1,753

40.0%

Printing inks (Asia)

2,451

2,664

8.7%

Printing inks (Americas)

2,953

2,777

-6.0%

Printing inks (Europe)

-432

-220

-

Digital & specialty products

549

884

60.9%

Reportable segment total

6,774

7,858

16.0%

156

19

-87.8%

281

123

-

Adjustments
Operating income

Other businesses
Adjustments

Note: Due to a review of the method for distributing costs, figures for printing inks and graphic arts
materials (Japan), digital & specialty products, and adjustments are shown and compared according
to the new standard
Source: Prepared by FISCO from the Company’s financial results and results briefing materials█ Medium- and long-term growth strategy
Formulated a long-term strategic vision toward FY2030/12
As its corporate philosophy, based on the business theme of “Creation of Visual Communication Technology” andthe Group’s purpose of “Develop a communication culture that makes people’s lives more enjoyable,” the Company
formulated and started the long-term strategic vision SAKATA INX VISION 2030 and Mid-term Business Plan 2023
(CCC-I) in FY2021/12. With “Create and Innovate, Care for the Earth, Color for Life” as a catch phrase, it is aiming
to be a group that “Creates innovations and new opportunities, with earth-friendly technology that adds color andhappiness to life.”

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16 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Medium- and long-term growth strategy

The Company’s awareness of changes to its business environment are as follows: changes to markets and competitive environments (slump in demand for ink as people use less paper, intensifying competition in markets inemerging countries, and rising awareness of consideration for the environment, such as using less plastic), changes
to the value chain due to digitalization (significant increase in digital media and diversification and customization of
printing), and responding to environmental constraints and social issues (consideration of long-term sustainability,
rising importance of measures for SDGs, tightened resource constraints and risk of rising raw material prices, andgrowing influence of ESG investment).

Under the long-term strategic vision, is strengthening measures for
ESG and sustainability and taking on the challenge of entering new
business areas
1. Long-term strategic vision SAKATA INX VISION 2030
As the strategic direction in its long-term strategic vision SAKATA INX VISION 2030, the Company has set“Strengthening our ESG (Environment, Social and Governance) and sustainability efforts emphasizing the global
environment and local community,” “Business expansion of printing ink and digital & specialty products,” and “Meetmarket challenges with solutions that create new business opportunities,” while it has launched three innovation
projects (“Strengthening of global management cooperation and collaboration,” “Strengthening relations with stakeholders,” and “Strengthening recruitment and human resource development and reforming a cohesive corporate
culture”). For these, its policy is to work on management with an awareness of capital costs and promoting DX.
In terms of the image it is aiming for, the targets for FY2030/12 are net sales of around ¥300bn and an operating
income margin of 8%.
In the printing ink business, centered on the mainstay packaging printing field, the Group will work to progress
environmental management, fortify the value chain as a whole, strengthen relations with global partners, develop
and deploy high-value-added products, bolster optimized management that crosses countries and businesses, andinvest management resources in growth markets and new markets.
In the digital & specialty products business, the Group will work to globally deploy high-value-added products thatare tailored to social trends, further strengthen collaborations globally, enhance sales and profitability, and improve
brand power in each market.
In new businesses, the aim is to respond to social problems by utilizing core competencies based on the strategic
keywords of “safety and security, convenient and comfortable, health maintenance, low-carbon society, and sustainability.” With a focus on four chemical fields (environmental and biochemicals, energy chemicals, electronics
chemicals, and optochemicals), it is promoting open innovation toward the commercialization of strategic products,
including biomass-related digital & specialty products, CO2 absorbing materials, semiconductors and sensitizing
materials, conductive materials, insulating materials, conductive bonding materials, low dielectric materials, sensor
materials, refraction index adjustment materials, and LED sealing materials.
One example of an initiative for open innovation is that in March 2020, the Company entered into an agreement forcollaboration and coordination with Shiga University in the data science field.

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17 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Medium- and long-term growth strategy

Also, in October 2020, the Company announced that it had invested in (made a non-equity-method affiliate of)
Wonder Future Corporation, which conducts a business including the development and sales of IH (electromagnetic
induction) reflow devices. The Company will collaborate with Group companies, the equity-method affiliate SIIX
Corporation and Wonder Future Corporation, with the aim to utilize each company’s technologies to practicallyrealize innovative process technologies and new designs in the electronics chemicals field.
Image aiming to become by 2030

Source: Reprinted from the Company’s long-term strategic vision briefing materials

Mid-term Business Plan 2023 is the stage of building a foundation
toward achieving the long-term strategic vision
2. Mid-term Business Plan 2023 (CCC-I)
The Company has positioned Mid-term Business Plan 2023 (CCC-I) as the (first) stage to build the foundation towardachieving the long-term strategic vision SAKATA INX VISION 2030. The plan’s targets for FY2023/12 are net salesof ¥195bn, operating income of ¥11.5bn, ordinary income of ¥13bn, and ROE of at least 10%.
The targets for printing inks and graphic arts materials (Japan) are net sales of ¥51.8bn and operating income of¥1.8bn. Priority measures include responding to environmental and social issues, actively deploying environmentallyfriendly products (Botanical Ink), streamlining the information media business, developing inks for SDG-compliant
recyclable packaging, and continuing and deepening TPM efforts and activities to improve occupational health andsafety.
The targets for printing inks (Asia) are net sales of ¥45bn and operating income of ¥2.9bn. Priority measures include
actively deploying environmentally friendly and sustainable products, entering new markets, progressing capital
investment and sales growth, and promoting the stable supply of raw materials through global purchasing.

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18 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Medium- and long-term growth strategy

The targets for printing inks (Americas) are net sales of ¥53.5bn and operating income of ¥3bn. Priority measures
include actively deploying environmentally friendly and sustainable products, strengthening sales to global customers,
bolstering sales to and actively investing in the South American market, and progressing capital investment andsales growth.
The targets for printing inks (Europe) are net sales of ¥17.5bn and operating income of ¥200mn. Priority measures
include actively deploying environmentally friendly and sustainable products, strengthening sales to global customers,
improving profitability by rebuilding production bases, entering new markets, and progressing capital investment
and sales growth.
The targets for the digital & specialty products business are net sales of ¥17.2bn and operating income of ¥2.3bn.
Priority measures include globally deploying high-value-added products tailored to social trends (deployment togrowth-industry fields centered on inkjets for clothing, food, and homes; deployment for high-value-added flat panel
display materials; and business growth of functional products in peripheral fields, including the touch panel market)
and progressing the local production of digital & specialty products in growth markets.
The targets for other businesses are net sales of ¥17.1bn and operating income of ¥600mn.

Consolidated net sales and profit targets
Net sales (left)

(¥bn)
200.0
180.0
160.0
140.0
120.0

Operating income (right)

195.0
155.5
11.0

151.1

157.3

11.8

162.0

167.2

11.2

9.3

60.0
40.0

7.3

11.5

7.7

14.0

6.2

10.0
8.0

8.5
5.1

20.0

16.0
12.0

6.9

10.1

(¥bn)
20.0
18.0

161.5
13.0

100.0
80.0

Ordinary income (right)

6.0

7.2

4.0
2.0

0.0

0.0
FY2015/12FY2016/12FY2017/12FY2018/12FY2019/12FY2020/12
Mid-term Business Plan
2017

Mid-term Business Plan
2020

FY2023/12

Mid-term Business Plan
2023

Note: Due to a change in the settlement date from FY2015/12, figures from FY2016/12 onward are calculated based on
the past results of each company by adjusting the financial results for a fiscal year ended December 31 and the same
period for consolidation.
Source: Prepared by FISCO from the Company’s long-term strategic vision briefing materials

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19 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Medium- and long-term growth strategy

Plans to invest a cumulative total of ¥30bn over three fiscal periods
3. Investment plan
The investment plan calls for a cumulative total of ¥30bn to be invested during the three fiscal periods in which
Mid-term Business Plan 2023 will be implemented (capital investment of ¥15bn and a strategic investment frameworkto accelerate growth of ¥15bn). The plan is to invest ¥4.9bn in Japan, ¥5.6bn in Asia, ¥3.8bn in the Americas, and¥700mn in Europe. As the main capital investment plan, the Company intends to invest in strengthening facilities
particularly in Asia and the Americas. This includes that in Asia, it will invest in the second stage of plant construction
in Shanghai and construct the second plant in Maoming City, Guangdong Province in China, and strengthen
packaging- and UV-related facilities in India. In addition, it plans to renew the Osaka plant, construct a logistics
warehouse at the Tokyo plant and upgrade the core system in Japan. In the Americas, it intends to strengthen the
packaging inks facilities at the plant in Wisconsin and the metal decorating ink facilities at the plant in New York in
the US.
Main capital investment plan

Source: Reprinted from the Company’s long-term strategic vision briefing materials

4. New growth stage
Against the backdrop of rising interest in global environmental problems and SDGs, global demand in the printing
inks market is also shifting to environmentally friendly products. Therefore, plenty of room remains for the environmentally friendly products market to expand and develop.
The Company’s strengths include its development capabilities, extensive product lineup, and high market shares ofenvironmentally friendly, high-function and high-value-added products. Responding to the above-described market
trends, its policy is to actively develop and launch environmentally friendly products in markets. It has a track recordof global business deployment in advance of other companies and a wealth of expertise in launching products thatare tailored to the regional characteristics of each country.

We encourage readers to review our complete legal statement on “Disclaimer” page.

20 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Medium- and long-term growth strategy

In its long-term strategic vision, the Company is aiming for a new growth stage by increasing sales of environmentallyfriendly products that are compliant with SDGs, conducting global business deployment and developing new
business areas. We can expect earnings to trend upward in the medium to long term.

█ Measures for SDGs
In the long-term strategic vision, the Company recognizes the importance of responding to environmental constraints
and social issues (consideration of long-term sustainability, rising importance of measures for SDGs, increasing riskof tightened resource constraints and rising raw material prices, and growing influence of ESG investment), and its
policy is to strengthen measures for ESG and SDGs.
In environmentally friendly products, which are the Group’s strength, paper packaging is being reconsidered as
packaging that is considerate to the environment, and in this situation, the proprietary Botanical Ink series, which
replaces some material with plant-derived alternatives and contains at least 10% of plant-derived components in
its ink solid constituents, is already being widely used in various paper packaging. Furthermore, the Company’s
policy is to progress R&D toward improving the degree of the botanical component. Regarding the problem of foodloss, it is working to develop products that will contribute to longer preservation periods for foods using gas-barrier
agents that prevent oxidation.
In January 2019, the Company’s stock was selected for the S&P/JPX Carbon Efficient Index, which is a stock index
for ESG investment newly adopted by the Government Pension Investment Fund (GPIF). It is also participating in
the Japan Clean Ocean Material Alliance, which was established by the Ministry of Economy, Trade and Industry
in January 2019.
Measures for ESG and sustainability

Source: Reprinted from the Company’s long-term strategic vision briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

21 22

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
https://www.fisco.co.jp

SAKATA INX CORPORATION
4633 Tokyo Stock Exchange First Section

17-May-2021
http://www.inx.co.jp/english/

Measures for SDGs

In November 2020, the Company undertook a capital participation in R Plus Japan, Ltd. (started business in June2020), which is a joint venture that is progressing the development and commercialization of recycling technologies
for used plastics. To contribute to solving the problem of plastic waste, its policy is to work on the recycling of usedplastics as a member of the value chain.

█ Shareholder return policy
Targeting a consolidated dividend payout ratio in the range of about
20% to 30%, and implements a shareholder benefit program
With regards to distributing profits, the Company considers returning profits to shareholders, including dividends,
to be an important management issue, in conjunction with working to strengthen its financial position and business
infrastructure. The basic dividend policy is to steadily return profits to shareholders through dividend payments,
while targeting a consolidated dividend payout ratio in the range of around 20% to 30%.
Based on this basic policy, the dividend for FY2020/12 is the same as for FY2019/12, with an annual dividend pershare of ¥30 (¥15 interim and ¥15 year-end) for a dividend payout ratio of 33.2%. Also, the dividend forecast for
FY2021/12 is an annual dividend per share of ¥30 (¥15 at the end of 1H and ¥15 at the end of the period), the sameas in FY2020/12. The forecast dividend payout ratio is 27.4%.
The Company also offers a shareholder benefit program to shareholders who own one trading unit (100 shares) ormore of shares as of June 30 or December 31 every year. Under this program, eligible shareholders receive a QUO
card after the Annual General Meeting of Shareholders with a value corresponding to the period of time they haveheld their shares.

Divided per share and dividend payout ratio
Dividend per share (left)(¥)

Dividend payout ratio (right)

(%)
50.0

50.00
42.6
37.3

40.00

40.0
33.2
27.4

30.00
21.6

30.0

21.0

20.00

20.0
28.00

30.00

30.00

30.00

30.00

30.00

10.00

10.0

0.00

0.0
FY2016/12

FY2017/12

FY2018/12

FY2019/12

FY2020/12

FY2021/12 E

Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

22 22

Disclaimer
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This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
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by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp